Technology & Marketing Law Blog

August 05, 2010

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

[Post by Venkat]

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

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

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

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

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

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

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

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

__

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

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

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

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

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

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

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

August 03, 2010

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

[Post by Venkat]

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

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

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

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

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

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

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

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

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

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

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

___

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

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

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

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

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

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

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

July 26, 2010

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

By Eric Goldman

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

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

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

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

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

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

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

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

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

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

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

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

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

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

July 14, 2010

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

By Eric Goldman

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

July 08, 2010

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

By Eric Goldman

Career Agents Network, Inc. v. Careeragentsnetwork.biz, 2010 WL 2632298 (E.D. Mich. June 29, 2010). The CMLP page.

The underlying dispute involves a non-commercial gripe site. The trademark owner sells a type of "business in a box" (like a franchise). The defendant was an unhappy buyer of the "business in a box." The defendant set up a gripe site, warned potential buyers that they weren't likely to recoup their investment, and then SEOed the gripe site. In late February, the court dismissed trademark infringement and ACPA claims on summary judgment. Career Agents Network v. careeragentsnetwork.biz, 2:09-cv-12269-RHC-MJH (E.D. Mich. Feb. 26, 2010). I didn't blog the February decision because it seemed rather straightforward, but other people covered the decision (Wendy Davis, Tom O'Toole, Ars Technica).

Having dispatched the underlying lawsuit, the defendant moved for attorneys' fees under the Lanham Act fee-shifting provision. The court says that the plaintiff's ACPA claim became objectively unreasonable when plaintiff realized that the griper was a disgruntled customer (i.e., bummed-out business buyer) rather than a competitor or cybersquatter (cite to the Sixth Circuit's 2004 Lucas Nursery case, binding law on this court). The trademark claim was "weak but colorable" because the domain name didn't include the "sucks" suffix. (In this era, try to find me a trademark case that isn't colorable at some level). In terms of the plaintiff's subjective intent, "the court finds that Plaintiff's principal motivation was to silence Defendant White's criticism of Plaintiff's business." The court also praises the defendant's persistence given his counsel's settlement advice and an initial TRO loss.

In theory, the court could have just awarded the ACPA fees and excluded the trademark fees, but the court says the entire lawsuit "stood on thin ice" and therefore gives the whole enchilada to defendant. The court does take a haircut on the fees associated with seeking the fee award--too high an hourly fee for too many hours for a fee request motion the court unfairly characterizes as "only as difficult as shooting fish in a barrel." Nevertheless, the defendant got a lot of what it asked for--a total fee award of $23k. All told, this is another case where a plaintiff picked a fight only to end up writing a check to the defendant. Another poor enforcement decision by a plaintiff.

UPDATE: Paul Levy provides a behind-the-scenes look at this ruling.

Posted by Eric at 08:36 AM | Domain Names , Trademark | TrackBack

July 06, 2010

Puzzling 9th Circuit Dilution Opinion Over eVisa.com--Visa v. JSL

By Eric Goldman

VISA International Service Ass'n v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010)

A number of us in the trademark community are scratching our heads at last week's Ninth Circuit trademark dilution opinion, authored by Judge Kozinski. The case involves evisa.com, run by Joseph Orr. The domain name's origin is explained:

Orr traces the name eVisa back to an English language tutoring service called “Eikaiwa Visa” that he ran while living in Japan. “Eikaiwa” is Japanese for English conversation, and the “e” in eVisa is short for Eikaiwa. The use of the word “visa” in both eVisa and Eikaiwa Visa is meant to suggest “the ability to travel, both linguistically and physically, through the English-speaking world.”

We might be skeptical of this explanation, but the case poses two doctrinal problems for dilution. First, eVisa.com is not the same trademark as "Visa." As the opinion says, the "marks here are effectively identical." Well, yes and no. We have a line of cases ignoring the top level domains in trademarks, and many cases ignore an "e" or "i" prefix in Internet-related trademarks. But they are not literally identical, and given dilution's power to preempt all uses of a trademark irrespective of confusion, we have to tread carefully when extending protection beyond truly identical uses. The opinion treats this issue too breezily.

Second, and perhaps more importantly, the word "Visa" already has several dictionary definitions. This poses a problem for the blurring analysis. Visa the trademark can't co-opt the existing dictionary meanings. So does dilution-by-blurring mean that Visa the trademark can preempt every non-dictionary commercial use of the word? That seems to be a logical implication of this opinion. The court says "despite widespread use of the word visa for its common English meaning, the introduction of the eVisa mark to the marketplace means that there are now two products, and not just one, competing for association with that word."

Even so, the defendant argued it was using eVisa to invoke the dictionary meaning of the term Visa, i.e., Visa as a passport for Japanese who are going to travel to an English-speaking country. If the dictionary meaning isn't covered by the trademark, it seems logical that everyone should be free to suggest the dictionary meaning in their own trademarks. On that basis, if we believe the defendant's explanation for how it ended up using eVisa.com, the defendant should be in the clear.

Yet, instead, Visa the trademark wins the blurring case. The opinion treats the defendant's suggestion of the dictionary meaning as a "multiplication" of the word's meaning: "these allusions to the dictionary definition of the word visa do not change the fact that JSL has created a novel meaning for the word: to identify a 'multilingual education and information business.'" Apparently, any use of a dictionary word for anything other than a literal invocation of its dictionary meaning could now support a dilution claim.

This case has been floating around since 2002, so perhaps it's not surprising that the entire dispute seems a little old-school. The ruling reminded me a lot of the 1990s pre-ACPA domain name disputes where courts were so frustrated with cybersquatters that they stretched dilution law well beyond its intended scope because dilution was the only tool to effectively nail cybersquatters. Many of those dilution-stretching cases dropped away after the ACPA provided a better anti-cybersquatting tool for judges, and in some ways, the 2006 TDRA has made it even harder to use dilution in a domain name enforcement action. That makes this case that much more anomalous. Putting aside the law, it's logical to say that Visa the trademark should be the owner of eVisa.com. Yet, because infringement and the ACPA weren't getting the job done, the panel expands (bastardizes?) dilution law to make it happen. The outcome may make sense, but the intellectual shortcuts along the way are still a little cringe-inducing.

One final sour note in the opinion. The opinion says that plaintiffs can rely solely on intuition-based arguments to support their likelihood of dilution cases. The court says "a plaintiff seeking to establish a likelihood of dilution is not required to go to the expense of producing expert testimony or market surveys; it may rely entirely on the characteristics of the marks at issue." This is deeply troubling ruling for 9th Circuit law (now reversible only through an en banc opinion). We have never been clear what evidence was required to support a plaintiff's "likelihood of dilution" showing, but I had always assumed the plaintiff had to show some evidence, i.e., greater than zero. So now, what exactly must a plaintiff show to establish its prima facie dilution case? Under the 9th Circuit's standard, apparently anything that can convince a judge.

This case's tortured application of dilution law is a good excuse for me to remind you: if you haven't been there before (or recently), check out the materials from the High Tech Law Institute's 2007 academic symposium on trademark dilution, where we attempted to come up with good rationales for the dilution doctrine and largely struck out.

Posted by Eric at 11:20 AM | Domain Names , Trademark | TrackBack

June 10, 2010

Google Can't Shake Cybersquatting Claim--Vulcan Golf v. Google

By Eric Goldman

Vulcan Golf, LLC v. Google Inc., 1:07-cv-03371 (N.D. Ill. June 9, 2010). My 2007 blog post when the complaint was filed. My 2008 blog post on the denial of a motion to dismiss. My 2008 blog post on denial of class certification.

A year ago I blogged about Solid Host v. NameCheap, a case that raised the specter of a "contributory cybersquatting" claim under the ACPA. This case also deals with a type of contributory cybersquatting. It might represent the vanguard of increased trademark owner efforts to proliferate ACPA cybersquatting claims against a wider range of defendants.

This long-running case involves Google's AdSense for Domains program, which the plaintiffs believe violates their trademark rights when the parked domains contain their trademarks or variations thereof. The case appears to be entering the home stretch. In late 2008, the plaintiffs were denied class certification, which substantially narrowed the scope of the lawsuit. All other defendants have now settled, leaving only Google's liability for resolution. This ruling addresses Google's unsuccessful attempt to knock out the ACPA claim on summary judgment. As a result, the ACPA claim is queued up for trial unless the parties settle.

Google's ACPA liability turns on whether it is an "authorized licensee" of the parked domains. If so, the ACPA is clear that a licensee of a cybersquat domain name can be on the hook. The court holds that if there is a license agreement that calls itself a license, then the ACPA applies to the agreement. However, the court will not infer a licensing agreement from some less explicit arrangement, i.e., presumably not from a parking arrangement where the ad provider (Google) does not expressly license the domain name. Therefore, it appears that where Google licensed the domain name from the parker (a seemingly unnecessary step for delivering ads to parked domains), Google put itself into the ACPA liability chain.

With the legal standard established, normally this should be an easy case to resolve on summary judgment. However, apparently Google and the plaintiffs can't agree on the accurate copy of the applicable agreements with domain parkers (specifically Dotster). If the parties can work out the confusion over documents, the ACPA claim is ripe for a settlement.

Posted by Eric at 07:05 AM | Derivative Liability , Domain Names , Licensing/Contracts , Search Engines , Trademark | TrackBack

May 10, 2010

Geographic Trademark Leads to Interesting (& Tortured) Injunction--Skydive Arizona v. Quattrocchi

By Eric Goldman

Skydive Arizona, Inc. v. Quattrocchi, 2010 WL 1743189 (D. Ariz. April 29, 2010).

A jury found that the defendants had committed trademark infringement, false advertising and cybersquatting and awarded $2.5M in damages, which the judge doubled. Unfortunately, the court's opinion does not precisely spell out what the defendants did wrong. This story gives a little background,and this site shows that the defendants are pretty unpopular. The opinion indicates there was testimony that the defendants had sold bogus gift certificates for the plaintiffs' offerings and had offered inferior services using the same name as plaintiffs'. The court also says "numerous websites operated by Defendants falsely claimed Defendants owned or operated skydiving centers in Arizona, Phoenix, Tempe, Scottsdale, Mesa, Glendale, Yuma, Flagstaff, Chandler, Peoria, and Tucson when Defendants neither owned nor operated any such facilities. Additionally, the Court found that Defendants engaged in unfair competition by using photographs of Plaintiff's business on their website."

The main trademark at issue appears to be "Skydive Arizona," one of those lousy trademarks that sits right at the border of descriptive and generic. See, e.g., the Boston Duck Tours case. With such a crummy trademark at issue, the court sliced injunctive relief carefully. On the question of Internet marketing, the court says:

Plaintiff also requests that this Court prohibit Defendants from using the “Skydive Arizona” trademark or other confusingly similar terms in links or keywords on their websites. The Court finds that such relief is appropriate, especially because Defendants' business primarily utilizes the internet, and will extend Plaintiff's request to include the phrases “Arizona Skydiving” and “Skydiving Arizona” as well. Persons searching for Plaintiff's business should not be erroneously led to Defendant's website due to these marks placement in a meta tag or other link on Defendant's websites. See, e.g., Bernina of America, Inc. v. Fashion Fabrics Intern., Inc., 57 U.S.P.Q.2d 1881, 1884 (N.D.Ill.2001) (preliminarily enjoining defendant from using plaintiff's trademark in meta tags); DeVry/Becker Educ. Dev. Corp. v. Totaltape, Inc., 2002 U.S. Dist. LEXIS 1230, *7-8 (N.D.Ill. Jan. 22, 2002) (enjoining use of plaintiff's trademark in internet links and keywords, and “in any other manner in connection with the internet that would cause consumers to believe erroneously that [defendant's] goods or services are somehow sponsored by, authorized by, licensed by, or in any other way associated with [plaintiff]”.). In taking this step, the Court is not unaware of Defendants' concerns that the generic nature of the words “skydive” and “Arizona” will unfairly prevent Defendants from practicing their business in Arizona. The injunction, however, is not a blanket prohibition against using these words on its website or in meta tags. It merely prohibits Defendants from using “Skydive Arizona,” “Arizona Skydiving,” “Skydiving Arizona,” and any other combination of those words that is confusingly similar to that mark. There is, for example, a difference between using those words in combination as proper nouns, and merely utilizing them individually or in the course of a sentence. The former, depending on the circumstances, is likely prohibited by this injunction, but the latter usage probably is not.

This translates into the following injunction:

from using the trademark “Skydive Arizona,” or any marks that are confusingly similar to or colorable imitations of that trademark, and from using “Skydiving Arizona,” and “Arizona Skydiving,” on or in connection with or as part of any website, including in meta tags, keywords in pay-for-placement or payfor-rank search engines, in source code or other computer code, for the retrieval of data or information or as search terms, in the domain names of any websites, in any titles, headings, statements, links or other text appearing on any page of any website in any location on any websites registered, owned, or used, directly or indirectly, by any of the Defendants

I find the fretting about metatags anachronistically amusing (in a cynical way), but I wonder about the specific contours of this injunction. For example, is it a violation for the defendants to broad-match "skydive" or "skydiving" and geographically restrict the ad to Arizona? It also appears that the site can include statements like "Skydiving in Arizona" or "If you're in Arizona and want to skydive, visit us." I appreciate that the judge recognized the speech restriction concerns of an overbroad injunction, but these types of language contortions are a good sign that the trademark may not have deserved the protection it apparently is getting.

The court also rejected some other overreaching plaintiff requests, such as that the defendants be barred from using the word "Arizona" in any domain name or website and limiting the defendants to operating only 1 skydiving-related website. The defendants also get to keep skydivinginarizona.com.

Posted by Eric at 02:09 PM | Domain Names , Search Engines , Trademark | TrackBack

April 12, 2010

Ninth Circuit Applies California law to Domain Name Ownership Dispute and Remands for Determination of Whether "Innocent Purchaser" Defense Applies -- CRS Recovery, Inc. v. Laxton

[Post by Venkat]

CRS Recovery, Inc. v. Laxton, 9th Cir. (April 6, 2010).

Background: Mayberry registered rl.com through Network Solutions in 1995. At the time, mat.net was also registered to him. Mayberry provided dale@mat.net as the email address for the registrant and administrative contacts. The mat.net domain name ultimately expired and was later registered by Li Qiang. Qiang - who the court notes is probably judgment proof - receives an email (at dale@mat.net) from Network Solutions relating to rl.com. Qiang then transfers rl.com to himself and then sells rl.com to Barnali Kalita, an Indian citizen, who later sells rl.com to Laxton, the defendant below.

[Keeping your registration information current is common sense, but if there's ever a case that illustrates the importance of it, this is definitely one of them!] [Eric's addition: the Meyerkord v. Zipatoni case really highlighted this point IMO]

Once Mayberry realizes that he has lost control of rl.com he tracks down the current registrant, which happens to be Laxton, and requests that Laxton transfer the name back to Mayberry. Laxton - having just spent significant resources prevailing in a WIPO domain name proceeding brought by Ralph Lauren - understandably declines. Mayberry sues, and the trial court grants Mayberry summary judgment and orders the domain name transferred back to Mayberry. The trial court concludes, over Laxton's objection, that California law applies. On appeal, the Ninth Circuit affirms that California law applies, but remands for a determination of whether theft or fraud resulted in the original loss of the domain name. If Laxton obtained the property from someone who obtained title by fraud, the "innocent purchaser" defense comes into play, and Laxton cannot be held liable for conversion.

The Ninth Circuit Beats Up on Umbro: The key threshold question addressed by the court was whether California law or Virginia law applied. Mayberry, a citizen of Virginia, argued that California law, and not Virginia law should apply. Although Laxton was a citizen of California, he argued that Virginia law should apply because the domain name was "located" in Virginia. (Here's a post discussing Office Depot v. Zuccarini, a recent Ninth Circuit case which looked at where creditors can levy against domain names.) Laxton also argued that Virginia law should apply, because Virginia law provided for a different outcome:

Laxton argues that a garnishment case from the Supreme Court of Virginia, Network Solutions, Inc. v. Umbro . . . holds that domain names are contract rights under Virginia law.

The Ninth Circuit rejects Laxton's argument, abrogating (or at least drastically minimizing the applicability of Umbro), noting that "Umbro tells us only about how Virginia law treats domain names in garnishment actions . . . Umbro does not compel the conclusion that Virginia considers domain names to be contracts rights for purposes of conversion suits . . . ." This is nice to see, since (as discussed in a previous post talking about whether creditors can levy against domain names) Umbro is often mistakenly cited for the proposition that domain names are not property.

Innocent Purchaser Defense: The court next discusses whether Laxton can be held liable under California law. The common law rule provides that Laxton assumes the risk of whether the domain name had good title; however, this is subject to an "innocent purchaser defense." The innocent purchaser defense allows an innocent purchaser who lacked notice of any underlying improprieties to escape liability for conversion where the vendor procured the goods in question through fraud. The key question is whether the underlying transfer to Qiang was procured through fraud or whether it was just mere theft. The court concludes that it's unclear from the record as to whether Qiang procured initial transfer of rl.com through fraud or theft.

Did Laxton Abandon the Domain Name: The Ninth Circuit also breathes life into an argument which the district court treated as a throwaway argument. The court notes that it's not so clear that "Mayberry's failure to change the contact information . . . [does not constitute] an affirmative abandonment of his rights to the domain." A dissenting Judge Noonan takes issue with the majority's abandonment argument, likening it to a position where a plaintiff who throws away a bank statement containing bank account information is deemed to have abandoned the underlying bank account.
__

This is an interesting case which illustrates the downside of Kremen v. Cohen, the Ninth Circuit case which found that domain names are property which may support a conversion action. The factual scenario and the court's ruling here, leaves domain name purchasers in a tricky situation. They will have a tough time determining whether they have clean title. It didn't seem like Laxton, the purchaser here, did anything wrong. He even testified that he checked the WIPO domain name ruling records prior to the purchase to see if the domain name he purchased was subject to a dispute. It wasn't. Nevertheless, he's being put in a situation where he may be liable for conversion and have to return the domain name. It's easy to say that purchasers have to conduct due diligence and obtain adequate representations from sellers, but this factual scenario illustrates why, in practice, that's not always feasible. A blemish to the title that goes back several transactions can be particularly difficult to ferret out. Obviously, given the existence of multiple judgment proof-looking defendants, someone is going to be out some money.

The prospect of multiple state laws coming into play to determine the ownership of domain names with disputed title is also worrisome.

[Eric's addition: Venkat's post reinforces the weakness of the WHOIS database as a record of chain of title. I'm not aware of a way to see archival versions of a WHOIS record; the database only shows the most current record. Compare other government-operated databases for recording property title, where it's possible to see the chain. I wonder if WHOIS should make it possible to see a chain of records as well? UPDATE: this tool offers historical WHOIS information for a fee. That's useful, but I think the info should be treated equivalent to a public record and searchable for free.]

Posted by Venkat at 09:30 AM | Domain Names

March 31, 2010

March 2010 Quick Links

By Eric Goldman

Internet Exceptionalism

* Stern v. Sony Corp., CV 09-7710 PA (C.D. Cal. Feb. 8 2010) "to the extent Plaintiff is suing Sony as a manufacturer of video games, and the provider of online services, Sony is not a ‘place of public accommodation’ and is therefore not liable for violating Title III of the ADA" Nice complement to the Estavillo case. My prior post on Internet exceptionalism.

Online Competition

* Microsoft’s head algorithms guru says that Google's search engine beat Microsoft because Microsoft ignored the long tail of search queries. If Google and Microsoft made different product design choices and the marketplace liked Google's choices better, doesn’t this make it hard for Microsoft to complain about Google’s "anti-competitive" practices? I wonder if this talk was pre-cleared by Microsoft’s antitrust counsel.

* SJ Mercury News: Google's most recent 10-K lists some new self-identified competitors, including Yelp, Kayak & WebMD. By identifying some vertical players as competitors, such as Kayak and WebMD, does Google lend credence to the arguments by TradeComet and myTriggers that Google does compete with vertical search engines?

* In re eBay Seller Antitrust Litigation, 2010 WL 760433 (N.D. Cal. March 4, 2010). eBay wins summary judgment in an antitrust challenge: "Despite the voluminous briefing permitted in connection with both of the instant motions-which includes hundreds of pages of supporting documents-Plaintiffs have not drawn the Court's attention to any actual proof of antitrust injury caused by eBay's alleged anticompetive acts-on an individual or a classwide level."

Online Pornography

* U.S. v. Beckett, 2010 WL 776049 (11th Cir. March 9, 2010). A man posed as a 17 year old girl on MySpace and AOL, engaged boys in discussions, induced them to send nude photos, and then coerced them to have sex with him to prevent his dissemination of the photos.

* Miller v. Mitchell, No. 09-2144 (3rd Cir. March 17, 2010). This is the case where the government prosecutor threatened to bring felony charges against girls for "sexting." The court upholds a preliminary injunction against requiring the girls to go through an education program in lieu of felony prosecution.

* U.S. v. Durdley, 2010 WL 916107 (N.D. Fla. March 11, 2010). No privacy expectations in a flash drive left in a public computer.

Online Security

* Cormac Herley of Microsoft Research, "So Long, And No Thanks for the Externalities: The Rational Rejection of Security Advice by Users." In my observations, users are actually intensely rational when it comes to privacy and security issues, and privacy and security advocates who don't fully account for this user behavior do so at their peril.

* Reuters takes a deep look at Innovation Marketing, a Russian scareware operation.

User-Generated Content

* Who does what on Wikipedia.

* Josh King explains why Avvo supports the proposed federal anti-SLAPP law.

* T.V. ex rel. B.V. v. Smith-Green Community School Corp., 2010 WL 935574 (N.D. Ind. March 11, 2010). Denying class formation for a lawsuit in response to a ridiculously harsh school suspension for a MySpace photo of ribald off-campus activity.

* Melton v. Boustred, 2010 WL 881919 (Cal. App. Ct. Mar 12, 2010). Boustred throws a ragin' party and advertises it via a MySpace open invitation. The plaintiffs show up and were beaten and stabbed at the party by unknown assailants. The court concludes that Boustred isn't liable for the physical injuries. Note to self: stay away from parties advertised via MySpace.

* Yelp Litigation Mania!
- Cats & Dogs Animal Hospital v. Yelp first amended complaint
- LaPausky v. Yelp complaint. A write-up.
- Levitt v. Yelp complaint.
- ClickZ: Ex-Yelper Helps Law Firms Go After Yelp

Anonymity

* Park West Galleries, Inc. v. Global Fine Art Registry, LLC, 2010 WL 742580 (E.D. Mich. Feb. 26, 2010). Using an online pseudonym can lengthen the defamation statute of limitations.

* White v. Baker, 2010 WL 1009758 (N.D. Ga. March 3, 2010). Mandatory reporting of Internet usernames by registered sex offenders violates the First Amendment.

Advertising and Marketing

* ClickZ: New Facebook Policies Clamp Down on 'Loose' Ad Copy.

* Coyote Pub., Inc. v. Miller, 2010 WL 816936 (9th Cir. March 11, 2010). Upholding the constitutionality of Nevada's restrictions on advertising prostitution.

Trademark

* WSJ: It's a crowded namespace for bands.

* 1-800Contacts, Inc. v. Memorial Eye, P.A., 2010 WL 988524 (D. Utah March 15, 2010). It was not objectively baseless for 1-800 Contacts to bring a trademark enforcement action over competitive keyword advertising.

* Rhea Drysdale tells how she busted the trademark application for "SEO."

* The Utah governor has signed SB 26, which (among other things) creates a bastardized version of ACPA. My initial comments on the proposed bill.

Copyright

* James Grimmelmann on Reed Elsevier v. Muchnick.

* Ben Sheffner has some updates in the Scribd lawsuits. My initial post on Scott v. Scribd.

* Ars Technica on an experiment to block users who are using ad blocking software from accessing its site.

General

* Hudson v. University of Puerto Rico, 2010 WL 1131462 (D. Minn. March 23, 2010). Passive blog does not confer general jurisdiction.

* Doe 1 v. AOL LLC (N.D. Cal. Feb. 1, 2010). "Plaintiffs' claims for violation of the ECPA (Count I), unjust enrichment (Count VI) and for public disclosure of private facts (Count VII) are subject to the forum selection clause because none are California consumer law claims." Prior blog post.

* Commonwealth v. Interactive Media Ent’mt and Gaming Ass’n, Inc., No. 2009-SC-000043-MR (Ky. Mar. 18, 2010). Challenge to Kentucky's seizure of 141 gambling-related domain names tossed on standing grounds. Prior blog post.

Posted by Eric at 08:42 AM | Content Regulation , Copyright , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark , Virtual Worlds | TrackBack

March 02, 2010

February 2010 Quick Links

By Eric Goldman

Copyright

* Mavericks Recording Co. v. Harper (5th Cir. Feb. 25, 2010). 17 USC 402(d) precludes an innocent infringement defense in P2P downloading case when the record companies place proper copyright notices on their works. This is consistent with language from BMG v. Gonzalez in the Seventh Circuit.

* Perfect 10 and Amazon settle on confidential terms; Perfect 10 v. Google will keep going. Previous blog coverage of this case (1, 2, 3, 4, 5).

* Veoh won in court (1, 2, 3) but still got knocked out of the marketplace.

* Project DoD, Inc. v. Federici, 2010 WL 559115 (D. Me. Feb. 11, 2010). In a 512(f) lawsuit I blogged about in December, the judge upheld the magistrate report dismissing for lack of personal jurisdiction because the plaintiff had moved and no longer had ties to Maine.

* MCS Music America, Inc. v. YAHOO Inc., 2010 WL 500430 (M.D. Tenn. Feb. 5, 2010). MCS sued Yahoo over infringement of its songs, and the court says that it can only get statutory damages for each song infringed. This means that if Yahoo performed 8 different covers of the song, MCS is only entitled to statutory damages for one infringed work.

Trademark

* Monex Deposit Co. v. Gilliam, 2010 WL 325570 (C.D. Cal. Jan, 25, 2010). The courts says a gripe site called "MonexFraud.com" may cause initial interest confusion of the Monex trademark. Are you kidding me?

* Typographically erroneous phone numbers always struck me as a much greater problem than "typosquatters."

Contracts

* Jacobsen v. Katzer settles.

* Asch Webhosting, Inc. v. Adelphia Business Solutions Investment, LLC (3rd Cir. Jan. 25, 2010). 3rd Circuit upholds consequential damages waiver in B2B Internet connectivity contract. Prior blog discussion.

Blogging/Social Networking Sites

* Cats & Dogs Animal Hospital v. Yelp (C.D. Cal. complaint filed Feb. 24, 2010). The plaintiffs allege that Yelp violates California B&P 17200 by using a pay-for-play scheme.

* Rick Frenkel speaks about his Troll Tracker blogging days.

* In re Perry, 2010 WL 374770 (Bankr. S.D. Tex. Feb. 3, 2010). Emailing links to a third party's defamatory blog constituted "publication" of the blog for defamation purposes. The court doesn't discuss 47 USC 230 at all!

* Cunningham v. West Virginia, 2010 WL 415257 (S.D. W.Va. Jan. 26, 2010). MySpace does not impermissibly discriminate against sex offenders.

* Evans v. Bayer, 2010 WL 521119(S.D. Fla. Feb 12, 2010). A student's off-campus creation of a Facebook Group called "Ms. Sarah Phelps is the worst teacher I've ever met" may not be an appropriate grounds for school discipline.

* Snowball fight leads to a rampage at Macy's? Blame Facebook!

* Marshall v. City of Savannah, 2010 WL 537852 (11th Cir. Feb. 17, 2010). A probationary firefighter posted an official fire department photo on her MySpace page. After a reprimand, the employment relationship deteriorated and she was fired. The 11th Circuit affirms the dismissal of her discrimination and retaliation claims.

* BoingBoing gets an anti-SLAPP win--including its attorneys' fees--in a defamation lawsuit over one of its blog posts. The anti-SLAPP ruling.

* Berkery v. Estate of Stuart, 2010 WL 610631 (N.J. Super. A.D. Feb. 23, 2010). "The investigative function an author performs is not substantively different from an investigative journalist. The dispositive element is not the form of the investigative process. In an era marked by a diminution of the classic newsmedia and the print investigative journalist and the proliferation of investigative reporting in media such as cable television, documentary journalism-both televisions and movies-internet reporting and blogging, the need for protection remains the same. Whether Hornblum was writing a book, news article, a screenplay or a blog, the substance of his body of work remains the same."

Search Engines

* After some innuendo about Microsoft’s role in harassing Google on antitrust/competition issues, Microsoft effectively admits as much. Also see this Wall Street Journal article on the Microsoft-Google tussles.

* Search Engine Land: Google AdSense Using Search History In Contextual Matching

* Munger v. State, 2010 WL 537641(N.C. App. Feb. 16, 2010). Rejecting a taxpayer challenge against a NC law designed to provide financial incentives for Google to build a facility there.

* Lengthy Wired article on Google's algorithm.

* Nature: Chinese researchers don’t want to lose access to Google. My blog post on this topic.

* Business Insider: In Case You Had Any Doubts About Where Google's Revenue Comes From

Advertising

* Thomas O'Toole: Does "No Contract" Really Mean No Contract?

* MediaPost: Start-Up Links 65 Million IP Addresses To Users, Readies Targeting Platform. This is not going to end well.

* More troubling words for online advertisers from FTC BCP Director David Vladeck.

* Zelotes v. Rousseau (Conn. Grievance Committee). Attorneys participating in an Internet lead generation system that allocated leads geographically didn't violate the attorney Rules of Professional Conduct.

Online Crimes

* F.T.C. v. Pricewert LLC, 2010 WL 329913 (N.D. Cal. Jan. 20, 2010). FTC gets a default injunction against an Internet access provider that allegedly provided connectivity for activities such as child pornography, botnets, spyware, and viruses.

* US v. Little. The Eleventh Circuit disagrees with the Ninth Circuit regarding the appropriate geographic scope to measure the obscenity of Internet material.

* 3 Google executives were convicted in Italy of criminal privacy violations for a user-uploaded video to Google Video. NYT article. Google's response. A refresher on the Felix Somm conviction from 1998.

* Online ticket sellers are getting the smackdown. Criminal prosecutions of online ticket brokers who allegedly played dirty in jumping the queue. The FTC cracks down on Ticketmaster and warns other online ticket sellers.

Posted by Eric at 05:04 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Search Engines , Trademark | TrackBack

March 01, 2010

Ninth Circuit: Creditor Can Execute Against Domain Name Where Registry is Located -- Office Depot v. Zuccarini

[Post by Venkat]

The Ninth Circuit affirmed the district court's ruling in Office Depot v. Zuccarini [Scribd link], agreeing that a creditor may levy against a domain name in the jurisdiction where the domain name registry is located. The decision is significant for two reasons. First, it affirms (or reaffirms) that domain names are property subject to the claims of creditors. Second, it allows creditors to proceed against domain names where the registry is located, thus allowing creditors to proceed against domain names in one proceeding and more importantly levy against domain names located abroad (where the registry is located in the United States). Overall, this makes getting at a domain name much easier for creditors.

Background: Office Depot originally obtained a judgment against frequent cybersquatting defendant John Zuccarini. Office Depot then assigned the judgment to DS Holdings. Office Depot obtained the judgment in 2000 and it's surprising that 10 years later the judgment is finally being enforced against something. Although Zuccarini is proceeding pro se, it seems like he was or became well versed in putting up roadblocks and delaying resolution of the litigation.

DS went after 190 .com domain names that were registered in Zuccarini's name. DS originally tried unsuccessfully to have the domain names transferred directly to it. (This was the technique successfully used by the plaintiff in Bosh v. Zavala.) Later, DS sought to have a receiver appointed over the domain names. The district court granted DS's request to have the receiver appointed, and Zuccarini appealed. Zuccarini's appeal focused on whether it was proper to appoint the receiver in the Northern District of California, since the domain names were not necessarily "located" there.

The court's ruling: The court runs through basic principles of in rem jurisdiction and what rules apply. The court then looks to federal rules to determine where the receiver should be appointed in this case. Finding no applicable federal rule, the court looks to California law. California law provides that a writ of execution may be issued "in the county where the levy is to be made." With this in the background, the two questions presented by the court are: (1) "are domain names property that is subject to execution?" and (2) "if so, where are the domain names located for purposes of execution?"

With respect to the first question, the court cites to Kremen v. Cohen, and easily concludes that (under California law) "domain names are intangible property subject to a writ of execution." Kremen undermined Network Solutions, Inc. v. Umbro Int’l, Inc., 259 Va. 759, 770 (Va. 2000), a Virginia case widely cited for the proposition that creditors cannot get at domain names because domain names are contract rights rather then property. To the extent Kremen did not refute Umbro, this decision definitely provides the necessary ammunition to creditors. (Again, collection is state-specific, and apart from the analysis of the nature of domain names, the outcome in these cases turns on the statute in question, which vary from state to state. That said, I think given the robust marketplace in domain names, Umbro's conception of the domain name as a personal services agreement seems outdated, and most courts will easily recognize this.)

With respect to the second question, the court acknowledges that "attaching a situs to intangible property is ... a legal fiction," and the determination must be made in a "context-specific" manner. Fairness was relevant to the court's determination of the appropriate situs, and the court was understandably not receptive to Zuccarini's policy arguments that allowing a court to issue an order directed to the registry would mean that every .com and .net domain name could be levied through courts in the Northern District of California. The court also looked to the ACPA, which provides for in rem jurisdiction over certain cases where the "registrar, registry, or other domain name authority" is located. Although this was not an ACPA case, the court found the structure set up by the statute persuasive and that the writ was appropriately issued from Northern District of California since VeriSign (the registry for .com domains) is located there.

My reaction: The decision clears up two things. Although post Kremen v. Cohen there shouldn't have been much dispute that domain names are property which are subject to the claims of creditors, the case clears up any lingering doubt that may have existed. (Kremen and this case applied California law, but the result shouldn't vary much across other states.) Second, the decision makes clear that a court which has jurisdiction over the registry can issue an order allowing the creditor to get at the domain names. The case also implicitly affirms that getting a receiver appointed to sell the domain names is the appropriate route for the creditor. Getting the name transferred to the creditor is not a remedy allowed under California law (Palacio Del Mar Homeowners Ass'n, Inc. v. McMahon). Additionally, a transfer of domain names from a cybersquatter to a judgment creditor raises some issues around potential infringement of third party rights through sales or other exploitation of the domain names. (See this post on Bosh v. Zavala for some discussion of those issues.) The method ultimately used by DS in this case (a receiver) avoids all of these issues, or at least shifts them over to the receiver rather than the creditor.

One of the more significant aspects of the case is that the ruling makes clear that regardless of whether a domain name is registered through a foreign registrar, a court having jurisdiction over the registry can issue an order directing transfer of the domain names to a receiver. With respect to .com and .net domain names, this means that creditors can try to get at these domain names through proceeding in the Northern District of California (as the court notes, VeriSign is the registry for .com and .net domain names and is headquartered in Mountain View). While the ACPA allows plaintiffs to file in rem suits where the registry is located, it's nice (for creditors) to have a similar ruling in the post-judgment context, and one from the Ninth Circuit as well.

Will this cause a rush of similar claims to be filed in the Northern District of California? It's tough to say, but even post Kremen, it does not seem like there's been a ton of post-judgment collections activity with respect to domain names. From a practitioner's standpoint, it's certainly nice to have this rule on the books.

An odd footnote: Zuccarini is a colorful character whose internet exploits have gotten him in trouble with the law. He was arrested in 2003. (Here's a post at CircleID rounding up reactions to his arrest.) According to his Wikipedia entry which contains a link to a Bureau of Prisons search, he was released in 2005.

Previous post: "Domain names as property subject to creditor claims -- Bosh v. Zavala"

Additional coverage: Mike Atkins covers the ruling in a post here.

Posted by Venkat at 06:58 AM | Domain Names , Internet History , Trademark

January 27, 2010

Utah May Repeal Its Spyware Control Act--SB 26

By Eric Goldman

It's that time of year again. The Utah legislature is back in session and cooking up new schemes to regulate the Internet. So far I only see one Internet-specific bill in queue, SB 26. Surprisingly, it does not directly attempt to regulate keyword advertising.

SB 26 is sponsored by Sen. Stephen H. Urquhart, who rocketed to national cyberlaw fame (infamy?) in 2004 when he sponsored Utah's Spyware Control Act. It was such a misguided law that it motivated me (in part) to write a 71 page magnum opus explaining its policy deficiencies. It was also hampered by its fairly obvious unconstitutionality, which was confirmed by a Utah court a few months after passage. (Note: I helped write an amicus brief in that court challenge, so you might interpret my assessment as an advocacy statement). Following the judicial thumping, then-Rep. Urquhart shepherded an amendment to the Spyware Control Act in 2005 that effectively neutered the law. Since then, I believe the law has sat largely dormant. The only court citation I know of was in the 2008 Overstock v. SmartBargains case, easily rejecting Overstock's mystifying attempt to make a claim under the superseded 2004 version of the law.

Among other items I'll discuss in a moment, SB 26 proposes to repeal the Spyware Control Act entirely. If passed, that would be a remarkable development because most legislators let their failed laws sit on the books unused. It takes some work to repeal a law, plus it can be a little embarrassing to repeal a law--especially after hyping up the law to get it passed initially (Urquhart had a lot of tough talk about spyware/adware in 2004-05, see, e.g., here). Kudos to Sen. Urquhart for having the fortitude to admit and fix his errors publicly.

While repealing the law would be a remarkable step on its own, it's even more remarkable in the context of the Utah legislature's track record of Internet regulation. By my count, repealing the Spyware Control Act would be at least the THIRD Utah Internet law that its legislature repealed in the past few years--the other two being Utah's 1995 digital signature act and its infamous Trademark Protection Act. For a legislature that meets only a couple of months a year, a trifecta of repealed Internet laws in the past couple of years is a stunning waste of scarce legislative resources. Wow.

As bad as that is, the three repealed laws don't even tell the full story of the Utah legislature's incompetence when it comes to Internet regulation. Recall Utah's failed attempt to line its coffers by taxing email (which turned into a big money-loser), and don't forget its repeated attempts to regulate Internet content that have spawned years of costly litigation (see, e.g., Free Speech Coalition v. Shurtleff). From my perspective, anyone looking objectively at the Utah legislature's track record of regulating the Internet would logically conclude that they should cut their losses and focus on other legislative priorities.

Unfortunately, SB 26 indicates that either hope springs eternal in the Utah legislature or they are doomed to forget the lessons of history. Despite doing some good by putting down the Spyware Control Act, the bill amazingly proposes more regulations of the Internet! To Sen. Urquhart's credit, the bill is largely clone-and-revise proposals from other places and not drafted from scratch, which may contribute less from a regulatory standpoint but at least they aren't quite as error prone. The proposed law has three main components:

1) anti-phishing/anti-pharming restrictions. I'm not sure where the original text came from. California has an anti-phishing law but I don't think this is a clone-and-revise of that law. Maybe it's cloned from another state's anti-phishing law. In any case, the anti-"phishing" proposal is noteworthy because the regulation doesn't restrict itself to email (presumably to avoid any risk of CAN-SPAM preemption). As a result, as currently drafted, it's an unlimited anti-pretexting law applicable to both online and offline conduct.

2) anti-spyware restrictions. After wiping out the Spyware Control Act, the new anti-spyware proposals are based on the California model of state anti-spyware laws, which have been followed by a couple dozen other states. The California model regulates various types of "intentionally deceptive" conduct regarding software activity. This is what Utah should have done in 2004-05 rather than trying to develop its own sui generis law. I generally don't have a problem with regulating intentionally deceptive software behavior, but it seems a little late to be enacting the laws now. Most of the regulations contemplate practices more common in 2003-06 and largely defunct now, so Utah is showing up late to a party that ended years ago.

3) a state version of the federal Anti-Cybersquatting Consumer Protection Act. I know some other states have enacted domain name protection laws (California comes to mind), but it's not clear what benefits these state laws have. As far as I know, California's law is almost never used. Tom O'Toole speculates that this bill will make it easier for Utah trademark owners to bring in rem lawsuits, but it's not clear to me how much this law will help given the rarity of ACPA in rem lawsuits (UDRPs are usually cheaper and faster for the same results) and already expansive jurisdictional principles under ACPA. Further, I wonder if this law is preempted either by the dormant commerce clause or via field preemption of the federal ACPA.

I should add that I’ve observed that Utah bills can change radically from draft to draft with little warning, even if the law is on the legislative floor for a final vote, so we'll have to see if this law transmogrifies through the process. And I am keeping a vigilant watch for any resurrected attempts to regulate keyword advertising.

Posted by Eric at 09:58 AM | Adware/Spyware , Domain Names , Internet History , Spam , Trademark | TrackBack

January 11, 2010

Top Cyberlaw Developments of 2009 (Eric's List)

By Eric Goldman

Guest blogger John Ottaviani recently dropped by to offer his perspectives on 2009’s top Cyberlaw developments. While I like his list a lot, I independently developed my own top 10 list that has a different emphasis. You might enjoy the contrasts. My list:

#10: Louis Vuitton v. Akanoc. After the judge ordered a web host to stand trial, a jury awarded the trademark owner $32 million due to the web host’s contributions to trademark infringement by its customers. This case stands out for the big damages award and as a rare example where an online provider was held liable under a contributory trademark liability theory. Many trademark practitioners are scratching their heads trying to figure out the import of this case, however. Does this case represent a dangerous new frontier of online liability? Was this a bad jury verdict fueled by poor defense lawyering? Or was this an appropriate outcome because the web host actually engaged in bad behavior that distinguishes it from most “legitimate” web hosts? 2010 may help us understand if this case is part of a new trend or an aberration.

#9: Gordon v. Virtumundo. We’ve seen a lot of silly anti-spam litigation, including the emergence of an entirely new group of entrepreneurs called “spam litigation entrepreneurs” who try to make a living on anti-spam lawsuits. These folks have a true love-hate relationship with spam; they hate it so much that they devote their lives to fighting it, but they love getting spam because each one is a potential revenue source. In general, judges hate spam a lot too, so over the years we have seen a number of doctrinally unsupportable results where judges bent the law to make sure spammers lost.

However, the judicial pendulum has swung in the opposite direction, and in Gordon v. Virtumundo, the Ninth Circuit destroyed a serial anti-spam plaintiff’s entrepreneurial business in a doctrinally questionable but strongly worded opinion. In short order, a number of other spam litigation entrepreneurs have seen their lawsuits shut down with emphasis. Due to this ruling, the era of anti-spammers partying in courts may be on the wane.

#8: Zango v. Kaspersky. The question raised in this issue is simple to state but hard to answer: who should decide what constitutes spam, spyware or a virus? Vendors of software designed to curb these threats would like unfettered discretion to make their classifications; businesses who are classified as a threat would like judges to overturn adverse decisions. As it turns out, in a relatively obscure provision (47 USC 230(c)(2)), in 1996 Congress said that software vendors get to make classifications decisions and unhappy businesses can’t complain about them. In June, the Ninth Circuit upheld Kaspersky’s decision to classify Zango’s software as a threat and rejected Zango’s efforts to take the classification decision out of Kaspersky’s hands. This ruling gives enormous freedom to vendors of anti-spam/anti-spyware/anti-virus software to do their best to keep us safe.

#7: Columbia Pictures v. Fung. This case came out just before the Christmas holiday, so it got lost in the holiday hoopla a bit, but it’s a case of potentially significant import. First, it held that the specific torrent sites at issue induced copyright infringement. Second, the court denied the torrent sites’ eligibility for the DMCA online safe harbors. In part, the court said that an inducing website was categorically disqualified from the DMCA online safe harbors. Like the Akanoc case, it’s not entirely clear if this result was a legal aberration or an appropriate reaction to the defendants’ poor choices. Either way, it is possible that more “legitimate” websites may change their behavior to minimize their exposure based on the legal precedents in this case. If they do, this case could have a major impact on UGC websites.

#6: Lori Drew’s acquittal. Megan Maier’s suicide remains a heartbreaking tragedy, but unfortunately, overzealous prosecutors compounded the tragedy by prosecuting Lori Drew using bogus legal doctrines. The tragic facts got a jury to convict Drew of some misdemeanor crimes. Fortunately, the judge recognized the legal errors of the prosecution’s theory and the jury’s conclusions and granted Drew an acquittal despite the jury findings. The judge finally got to the right result as a matter of Cyberlaw, but the case remains a chilling testament to prosecutorial power.

#5: Harris v. Blockbuster. The rule is really clear. Service providers can't amend online user agreements in the provider’s sole discretion without notice. As the Ninth Circuit informed us in 2007, those contracts don’t fare well in court. So although these provisions are in just about every online user agreement, they don’t work--as Blockbuster found out the hard way.

As part of the litigation detritus from the Facebook Beacon experiment, users sued Blockbuster for sharing their rental transactions with Facebook and all of their friends, allegedly in violation of the Video Privacy Protection Act. Blockbuster tried to bust the class action by invoking the contract’s arbitration clause. Instead, because Blockbuster had the impermissible amendment provision in its user agreement, the court said the contract was illusory and refused to send the case to arbitration.

This case should signal the end of the ridiculous amendment clauses. We’ll see how long it takes the lawyers to give the provisions up.

#4: Battles Over the First Sale Doctrine. We have seen numerous legal battles this year over the First Sale defenses in both copyright and trademark law.

Copyright owners try to engage in price discrimination by carving up the world into geographic territories with different prices for the same product. If they can use copyright law to keep the cheap products from entering the other geographic market, this keeps the product from effectively price-competing with itself.

This year, two cases involved European textbooks which were functionally equivalent to the textbooks being sold in the United States at higher prices. Entrepreneurs were buying the cheap European texts, shipping them to the US and then selling them online. The entrepreneurs invoked the First Sale doctrine, which says that copyright law can’t prohibit the legitimate purchaser of a tangible copyrighted item from reselling the item to whomever they want at whatever price they want.

However, copyright law has another provision that allows copyright owners to block the importation of copyrighted works into the United States. In the 1998 Quality King case, the US Supreme Court said that the First Sale doctrine trumped the importation right when the goods were manufactured in the US, sold overseas, and then imported back to the US. However, in Pearson v. Liu and John Wiley & Sons v. Kirtsaeng, the judges said that the importation right trumps the First Sale doctrine when the goods were initially manufactured overseas. This issue is ripe for further adjudication, though. A similar importation case, Costco v. Omega, is pending before the US Supreme Court, which is deciding whether or not it wants to hear the case. If it does, we may get clearer instructions about the interplay between the First Sale doctrine and the copyright importation right.

Copyright’s First Sale doctrine was also at issue in Vernor v. Autodesk, where the purchaser of a software disk wanted to resell the disk on eBay despite restrictions in the software licensing agreement barring such resales. The court held that the First Sale doctrine applied and allowed the resale. There are other cases percolating through the court system involving the resale of tangible media contained copyrighted material despite contractual restrictions on resale, so this issue remains a hot one.

Trademark owners also try to prevent competition with their products that leak out of their official channels of distribution. eBay has been the site of a couple battles over the First Sale doctrine in trademark law. In Mary Kay v. Weber, the court held that the trademark First Sale doctrine may not permit the eBay resale of expired cosmetics by a Mary Kay independent beauty consultant. In Beltronics v. Midwest, a trademark owner shut down the eBay resale of radar detectors that had leaked out of the manufacturer’s channel and were being sold (at a cheaper price) without the manufacturer’s warranty.

Clearly, the First Sale doctrine matters a lot to eBay and other consumer-to-consumer e-commerce websites. With a possible pending Supreme Court case and lots of IP owners looking to stifle competition from goods they have already profited from, expect the First Sale doctrines to get lots of attention in 2010.

#3: 47 USC 230. In my opinion, 47 USC 230 is the most important Cyberlaw statute, so new 230 developments will make my top 10 list for the foreseeable future. This year, there were three federal appellate court rulings interpreting 47 USC 230(c)(1):

* in Barnes v. Yahoo, the Ninth Circuit held that 230 protected a website’s negligent delay in removing user content. However, if the website had promised removal to the user, the user could have a viable claim for promissory estoppel that would not be preempted by 230.
* in FTC v. Accusearch, the Tenth Circuit held that a website’s resale of pretexted phone records—even if those records were supplied by third party suppliers—did not qualify for 47 USC 230 protection because of their illegality.
* in Nemet Chevrolet v. ConsumerAffairs.com, the Fourth Circuit held that a consumer review website was not liable for user-supplied reviews, even when the website worked with the user to submit the review, and despite the plaintiff’s unsubstantiated claims that the website had fabricated the reviews itself.

Really, the big 47 USC 230 news in 2009 is the absence of big news. Specifically, 2009 reinforced that the Ninth Circuit’s 2008 Roommates.com decision—one of the most significant defense losses under 47 USC 230—did not rip open a major hole in the statutory protection of websites. Of the 13 cases that I have seen that have cited the Roommates.com en banc opinion, eleven have cited the case in favor of the defense. (See the list here). The two exceptions are the Accusearch case, mentioned above, and the New England Patriots’ lawsuit against StubHub over season ticket resales, an odd opinion that may not have much influence. Therefore, despite our fears about Roommates.com, the 47 USC 230 immunity remained healthy and vibrant in 2009. For more on this topic, see my special recap of 47 USC 230's year-in-review for 2009.

#2: Keyword Advertising Battles. Keyword advertising battles are another perennial topic on these year-in-review lists. A multi-billion dollar a year industry has sprung up around the sale of keyword-triggered advertising, including some keywords that may be third party trademarks, and trademark owners don’t like it at all. This has led to a multi-front battle between trademark owners, keyword advertising sellers (such as Google), and keyword advertising buyers.

One of the biggest Cyberlaw cases of the year was the Second Circuit’s ruling in Rescuecom v. Google. In the district court in 2006, Google won an easy victory against a trademark owner because the court said that Google did not make the requisite “use in commerce” of the trademark. The Second Circuit reversed the district court, sending the case back for further proceedings. The reversal does not ensure Google’s defeat; Google will now litigate other legal doctrines and might very well win on one of those. However, the Second Circuit’s opinion largely spells the end of any “use in commerce” defense by either keyword advertising sellers or buyers.

Because of the “use in commerce” defense’s demise, keyword advertising cases will now likely turn on whether the advertisements create a likelihood of consumer confusion. One case, Hearts on Fire v. Blue Nile, offered up a new and complicated test for gauging consumer confusion. If other courts adopt this test, keyword advertising cases will get even more expensive and complicated—highlighting how important it was that the Rescuecom case eliminated an easy way to end these lawsuits early.

Meanwhile, despite the fact that keyword advertising battles have been taking place for at least a decade, we have not heard what a jury thinks about the practice—until the November jury ruling in Fair Isaac v. Experian. In that case, the jury found for the defense that the keyword-triggered ads did not create the requisite likelihood of consumer confusion. It remains to be seen if other juries reach the same conclusion. If they do, keyword advertising lawsuits should slowly fade away over time because the trademark owners can’t win in the end.

As for now, keyword litigation is going strong and hardly fading away. In Spring, Google made two changes to its trademark policies where it voluntarily agrees to take down certain types of ads at the trademark owner’s request. In May, Google extended its more liberal US-based policy to nearly 200 other countries, replacing the more restrictive policies it had in place there. Shortly thereafter, Google modified its US policy to do less for trademark owners in situations involving product resales, review websites and sales of complementary/replacement parts. Trademark owners were none too pleased with these changes. In response to these changes and the door opened by the Second Circuit Rescuecom decision, Google got hit with about a dozen new lawsuits, including some class action lawsuits, of which I believe 10 are currently still active.

Finally, all of the wrangling in court and over voluntary trademark policies could be mooted by legislative action, and for the third time, the Utah state legislature considered resolving the keyword advertising issue itself. A law regulating keyword advertising passed the Utah house but died in the Utah senate. Expect the pro-regulatory forces to round up the troops for a fourth try in 2010.

#1: FTC Endorsement Guidelines for Bloggers. The Obama administration has breathed new life into a pro-regulatory FTC, and the FTC sure is interested in all things Internet. The FTC has been nosing around Internet privacy and Internet marketing practices pretty carefully, and I expect 2010 to bring more FTC pronouncements designed to tackle the Internet.

But nothing stirred up a hornet’s nest of confusion and anger in 2009 like the FTC’s Endorsement and Testimonials Guidelines. I think it’s fair to say that the FTC’s guidelines rollout was a complete failure. As usual, the FTC’s guidelines were mealy-mouthed and filled with conditional statements (the FTC hates to lay out bright line rules that might constrain their future discretion). However, the FTC’s general gist was clear: bloggers should disclose when they receive financial or other consideration for their blog posts.

Unfortunately, this general principle leaves open some fairly fundamental questions, like when is disclosure required in situations less clear than straight cash-for-posting, and where should disclosure be made, especially in space-constrained media like Twitter. Needless to say, unhappy bloggers can be very noisy, so blogger response to the FTC’s announcement was loud and vituperative. The FTC tried to backpedal a little by saying that it did not intend to pursue individual bloggers, but this announcement only reinforced that bloggers do not understand what the FTC wants from them.

Meanwhile, the FTC’s proposed guidelines also took an interesting position about an advertiser’s liability for rogue blogger’s posts. This position is generally consistent with government enforcement agencies’ views that commercial players can be legally responsible for content they endorse or link to (see, e.g., my comments on the SEC’s liability-for-linking policy), but this position runs directly contrary to 47 USC 230’s provisions that say A isn’t liable for B’s online content. As a result, I believe that part of the FTC’s proposed guidelines violate 47 USC 230 and would not survive a court challenge.

Overall, the firestorm over the FTC’s Endorsement and Testimonials guidelines is a small part of a larger effort to regulatorily separate advertising from content. The Internet has collapsed those distinctions, perhaps irreparably, so regulators may be trying to accomplish the impossible. Nevertheless, the FTC seems determined to prop up the distinction, and I expect 2010 will bring more FTC efforts on this front.

* * * * *

While that concludes my top 10 list, there were a number of other interesting developments in 2009 that are worth a brief note:

* Moreno v. Hanford Sentinel. A woman trashed her hometown in an obscure but public MySpace posting and learned there is no “do-over” for Internet content publication. My vote for the most factually interesting Cyberlaw case of 2009.

* Google’s keyword metatag announcement. Courts generally treat the inclusion of third party trademarks in keyword metatags as per se trademark infringement. But Google has confirmed that it ignores keyword metatags. Will courts get the message?

* Google Book Search settlement. If the Google Book Search settlement ever gets approved, it may reshape the book industry, redefine libraries, and make all kinds of other socially significant changes. But the list of opponents to the settlement is long and growing. Professor James Grimmelmann of New York Law School is our community’s maven for all things “GBS.”

* Kindle book deletion. The Kindle store sold e-books it didn’t have the right to sell, so it took them back. Users learned of a key factual difference between physical books and e-books—the vendor can remotely make e-books go poof.

* States’ efforts to impose sales tax efforts based on marketing affiliates. For years, states have been looking for ways to make online retailers collect sales tax for them. They are generally stopped by Supreme Court precedent, but in 2008 New York finally figured out a workaround. The New York statute said that marketing affiliates were like traveling salespeople and thus created the physical nexus required for a state to impose sales tax collection obligations. The New York statute survived its first legal challenge, which opened the floodgates of other states passing similar laws hoping to get their piece of the action. Meanwhile, online retailers aren’t just rolling over; instead, they are threatening to cut off (or actually cutting off) marketing affiliates in states that enact these laws—thus potentially costing the states income tax from the marketing affiliates’ revenue, and creating the potential for the entire affiliate industry to be torn apart.

* Maine kids privacy law. Maine thought it could pass a law banning marketing to kids. It was wrong. The state had to withdraw the law and go back to the drawing board.

* UMG v. Veoh. Veoh won another nice DMCA online safe harbor victory.

* US v. Kilbride. The Ninth Circuit says that online obscenity prosecutions need to evaluate national attitudes towards obscene content, not local community standards.

* Kentucky domain name seizure. Kentucky tried to grab 141 domain names that enabled Kentucky residents to engage in illegal gambling. But those domain names also serviced customers for whom the gambling was completely legal, so the Kentucky courts are rethinking the grab.

* FTC v. Sears. As another example of the new pro-regulatory winds blowing through the FTC, the FTC cracked down on Sears for installing spyware on users’ computers that looked at the users’ hard drives, even though Sears paid the users for the installation and disclosed the spyware’s snooping in the user agreement (though in an inconspicuous manner). This case has made a lot of lawyers concerned that adverse disclosures in user agreements won’t satisfy the FTC.

* Facebook the Drama Queen. Ah, Facebook. Love it. Hate it. Facebook is a pretty nifty site and part of my daily routine, but boy, they sure do have a knack for stirring up trouble.

- In February, they made a relatively modest change to their user agreement that caused people to freak out.
- In response to this, Facebook took the provocative step towards user self-governance. Facebook let users vote on some choices and promised to be bound by the results, but with an asterisk: Facebook decided what options users could vote on, and Facebook would honor those choices only if a prohibitively large number of users exercised their franchise. Still, it was a nice gesture towards cyberspace community self-governance.
- In summer, they tried to settle their Beacon litigation, but that also reminded folks of how much Beacon irritated them in the first place.
- Summer also brought allegations of click fraud on Facebook, and lawsuits followed.
- Finally, in Thanksgiving, Facebook rolled out some changes to its privacy options that it pitched as giving users more choices, but it also took away some choices and defaulted users into some options that surprised them.

Given this track record, is it unrealistic to expect more Facebook drama in 2010?

* Estavillo v. Sony. Speaking of self-governance, virtual world enthusiasts would love to establish the legal proposition that virtual worlds are legally equivalent to governments and therefore obligated to restrain their actions just like governments are. One virtual world enthusiast sued Sony for kicking him off the network, claiming that Sony was legally governed as a “company town” and therefore lacked the discretion to kick him off. WRONG (and it wasn’t even close).

* Wikipedia's policy change. In August, the English-language Wikipedia announced that it was going to tighten up its editorial policies, and people Freaked Out. (In fact, I have predicted that Wikipedia cannot avoid increased editorial restrictions over time, so this change should not have been surprising). However, it turns out that everyone got it wrong, and Wikipedia’s editorial changes are far less dramatic (and consequential) than initially reported. I will post a separate recap on Wikipedia shortly.

If you would like a stroll down memory lane, you can see my previous top 10 lists from 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

Posted by Eric at 10:46 AM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark , Virtual Worlds | TrackBack

December 26, 2009

November-December 2009 Quick Links, Part 1

By Eric Goldman

Trademarks/Domain Names

* Yahoo and Mary Kay settled Mary Kay's trademark lawsuit over Yahoo's email shortcuts.

* uBID Inc. v. The GoDaddy Group Inc., No. 09-cv-2123 (N.D. Ill. Nov. 5, 2009). uBid’s anti-domain name parking lawsuit failed on jurisdictional grounds. Tom O'Toole explains why this is an unusual jurisdictional ruling.

* Trademark Blog: “Sellify, operator of ONEQUALITY.COM, sues Amazon over Amazon affiliates' alleged misuse of ONEQUALITY.COM as Google keywords.”

* In an unenlightening memo opinion, Second Circuit affirms the Cintas v. Unite Here opinion involving union activists’ web activities using a target company’s trademark. My initial blog post on the case.

* Bloomberg: Buyers of counterfeit luxury goods understand they are getting counterfeits, and many of them upgrade to the real thing eventually.

* Transamerica v. Moniker Online Services, 2009 WL 4715853 (S.D. Fla. Dec. 4, 2009). Domain name registrar does not qualify for ACPA's registrar safe harbor when: "Transamerica alleges that Oversee and the Moniker Defendants, together with the ostensible registrants-the John Doe Defendants-are the de facto registrants of the domain names in question. Transamerica claims that Moniker was not merely acting as a registrant in providing registration services to the John Doe Defendants for the infringing domain names, but instead was part of a scheme to profit from the use of the infringing names. As Transamerica points out, Moniker receives a fee each time an internet user clicks on one of the links attached to the infringing domain sites; such payment establishes at least partial ownership in the domain name." Troubling ruling.

* SafeWorks, LLC v. Spydercrane.com, LLC (W.D. Wash. Dec. 7, 2009). A trademark owner's preemptive registration of domain names containing typographical errors of the registrant's trademarks does not infringe a third party trademarks.

Marketing and Advertising

* In re Gemtronics (FTC ALJ decision Sept 16, 2009). A dietary supplement seller wasn't liable for comments on a website that it didn't own or control but (among other things) it had linked to. While this is great, I still believe the FTC needs to rethink its entire liability scheme of online content endorsement or adoption due to 47 USC 230. See 1, 2.

* Avvo settles Florida bar lawsuit and gets Florida to admit that client testimonials on Avvo aren't lawyer advertising. Rebecca explains why an analogous South Carolina regulation violates 47 USC 230.

* After the FDA spooked pharmaceutical companies to stop engaging in search advertising, the FDA held hearings on Internet pharmaceutical marketing. The Arnold & Porter recap. Ironically, BusinessWeek ran a story wondering if pharmaceutical ads reduce consumer demand.

* The FTC cracks down on online negative option/"continuity plan" offerings.

* In re Miva Inc. Securities Litigation, 2009 WL 3821146 (M.D. Fla. Nov. 16, 2009). The court dismissed a securities class action lawsuit over Miva's/FindWhat's investor disclosures relating to click fraud and spyware. My initial blog post on the case.

* NYT: False advertising litigation is a growth industry.

Search Engines

* A Milwaukee lawyer has alleged that another lawyer buying keyword advertising triggered by his name violates his publicity rights. I’ve posted the complaint to Scribd.

* Google is now personalizing search results for everyone, not just logged-in users. In 2006, I wrote about how universal personalization would affect SEO and concerns about search engine bias. Danny Sullivan believes Google’s change deserves "extraordinary attention."

* Google took out an ad from itself to explain why its image search results for Michelle Obama contained an offensive result. This is after it first tried to remove the image on the pretext that the website was hosting malware.

* Danny Sullivan asks some good questions about Google's integration of Twitter into its search database.

* BusinessWeek: Matt Cutts, Google’s search engine anti-spam superstar, talks about his job. He doesn't sound like the most fun person to travel with

* Rose Hagan, Google's chief trademark counsel, is retiring after 7 years at Google. She leaves behind big shoes to fill.

Posted by Eric at 02:59 PM | Adware/Spyware , Derivative Liability , Domain Names , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

December 18, 2009

Top Cyberlaw Developments of 2009

By John E. Ottaviani

(Thanks to Eric for letting me post this list here!)

[Eric's note: some of you may recall John, a regular blog guest contributor from 2005-07. It's great to have another contribution from him.]

Eric will post his own list later, but I thought we could start off the holiday season with one person’s view of the top Cyberlaw developments of 2009. It was an interesting year. While intellectual property issues continue to dominate, and we continue to see plaintiffs and their attorneys running smack into Section 230 of the Communications Decency Act, we’ve also seen developments in the areas of Constitutional law, criminal law, and state and federal regulation. So, let’s recap 2009. Unlike David Letterman’s lists, this list is in no particular order of importance.

1. File Sharing Decisions.

After years of lawsuits against file sharers, we finally have two trial decisions. Both held against the peer-to-peer file sharers. Jammie Thomas managed to turn a 2007 verdict of $222,000 (which was later thrown out due to a mistrial) into a 2009 verdict of $1.29 Million. Her motion to reduce the award is pending.

Joel Tenenbaum received more favorable treatment and was subjected to only a $675,000 jury verdict after he admitted liability and his fair use defense was rejected by Judge Gertner. His motion to appeal/reduce the award is due to be filed in early January. Judge Gertner wrote a compelling decision urging Congress to modify the strict liability consequences of new technologies such as peer-to -peer file sharing. In her decision rejecting the fair use defense, Judge Gertner implored Congress “to amend the [Copyright Act] to reflect the realities of file sharing. There is something wrong with a law that routinely threatens teenagers and students with astronomical penalties for an activity whose implications they may not have fully understood. The injury to the copyright holder may be real, and even substantial, but, under the statute, the record companies do not even have to prove actual damages.” We’ll see if Congress listens.

2. Rise of Copyright First Sale Doctrine.

There were several decisions that turned on applications of the copyright “first sale” doctrine to new online situations. Section 209(a) of the Copyright Act permits the owner of a lawfully made copy of a work to sell or dispose of that copy without the consent of the copyright owner.

First, the held that resales of the AutoCAD software were permitted under the first sale limitations in Section 109(a). The court found that although the underlying documents were styled as “licenses,” the fact that the licensee was entitled to perpetual possession of the copies was the key fact.

We also had two cases (John Wiley & Sons; Pearson Education v. Liu) dealing with the importation of copyrighted works (mostly textbooks) printed abroad and then imported into the United States for sale. Two courts said these transactions are not protected by the first sale doctrine because of the importation provision in Section 602. The courts so far have been following dicta in the Supreme Court’s 1998 Quality King case that goods manufactured overseas and then imported are not protected by the first sale right, despite their reluctance to do so. We may get a resolution of this issue in 2010. The U.S. Supreme Court has invited the Solicitor General to file a brief in the Costco Wholesale Corporation v. Omega, which is on a petition for certiorari to the Ninth Circuit Court of Appeals.

A third entry is Apple v. Psystar. Psystar specialized in creating copies of Apple’s Macintosh OS-X operating System and loading them onto Mac “clones.” The court rejected the first-sale doctrine defense because Psystar’s copies of the Macintosh OS-X operating system were not “lawfully made” within the meaning of Section 109. The parties subsequently settled all claims except for copyright infringement, and Apple obtained a permanent injunction against Psystar.

3. Demise of “Use in Commerce” Defense in Keyword Cases.

In Rescuecom v. Google, the Second Circuit reversed the district court and said that Google’s sale of trademarked keywords as ad triggers constitute a “use in commerce.” This probably is the end of the “use in commerce” defense in keyword advertising cases, which will now turn more on likelihood of confusion (or initial interest confusion) factors.

4. Internet Gambling.

Internet gambling continues to be regulated by a tangle of federal laws ill-adapted for the purpose. Some of the laws date back to the 1961 adoption of the federal Wire Act. This is an areas where Congress should really clean things up, especially with criminal liability sometimes at stake.

Proponents of online gambling took a couple of hits in 2009. In Interactive Media Entertainment and Gaming Association v. Holder, the Third Circuit upheld challenges to the Unlawful Intent Gambling Enforcement Act (UIGEA) on Constitutional grounds. The UIGEA does not prohibit Internet gambling, but does prohibit gambling businesses from accepting financial payments in connection with bets that are illegal under any federal or state law. (This Act has effectively forced legitimate offshore gambling sites to stop taking bets from the United States). The Third Circuit held that the phrase “unlawful Internet gambling” is not vague, and that there is no Constitutionally protected privacy right to gamble in one’s home.

Earlier in the year, the Department of Justice ordered four banks to freeze over $34 million in payments owed to about 27,000 poker players. Although the legality of online poker in the United States is a gray area, the DOJ takes the position that online poker games are prohibited by the federal Wire Act. The DOJ position runs counter to several court decisions that have refused to apply the Wire Act to non-sports related Internet gambling. After the funds were seized, the affected poker sites reportedly reimbursed the players the money that was seized.

5. State Attempts to Regulate the Internet.

This trend, a favorite target of Eric’s ire, continued in 2009. Some more notable attempts include Maine’s passage of a little COPPA Act, banning the use of personal information about minors for marketing purposes (which the Maine Attorney General then refused to enforce), Kentucky’s seizing of domain names associated with alleged gambling websites (the legality of which is pending before the Kentucky Supreme Court), and Utah and other state’s attempts to put sex offender information online or require sex offenders to register websites to which they belong and their passwords.

6. Attempts to Criminalize Breaches of Terms of Use.

Lori Drew created a fake MySpace profile to humiliate a 13-year-old neighbor girl and was subsequently blamed for the girl’s suicide death. Drew was convicted of three misdemeanor counts of unauthorized access to computers under the federal Computer Fraud and Abuse Act for violating MySpace’s terms of service. In United States v. Drew, the court dismissed Lori Drew’s conviction, concluding that MySpace’s terms of service were Constitutionally vague. The result is not surprising, because terms of service are not generally written with criminal prosecution in mind. The MySpace terms at issue prohibited a wide variety of conduct but did not explain what activities would make a user’s access “unauthorized”. The user’s conduct was reprehensible, but not criminal.

7. Online Endorsements.

In October, for the first time since 1980, the Federal Trade commission updated its guidelines for advertisers on how to keep their endorsements and testimonial advertisements in line with the FTC laws. The new guidelines explicitly target online endorsements by bloggers and others who receive cash or in-kind payments to review a product. Bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. While the new guidelines caused a stir among bloggers, they seem to be a reasonable extension of the FTC’s disclosure guidelines in other contexts

8. DMCA Take-Down Notices.

In UMG Recordings v. Veoh Networks, we received some further guidance on what constitutes a proper take-down notice. Here, the court said the copyright owner has the burden of identifying “potentially infringing materials.” A letter merely listing recording artists whose works were allegedly infringing did not give the Internet Service Provider actual knowledge of infringement because the letter does not comply with the DMCA requirements. The court also said that the ISP was not on general notice of copyright infringement just because the website allows users to post music files, which are frequently infringing content.

9. Section 230 of the Communications Decency Act.

There are too many cases to list here, and I am sure Eric has done (or will do) his own exhaustive compilation. The courts clearly expanded the scope of the Section 230 defense in various Craigslist cases (no liability for advertisements for guns or prostitution).

Barnes v. Yahoo showed us that service providers should not make statements and then not follow though. In that case, the plaintiff’s ex-boyfirend created fake personal ads for her on Yahoo and impersonated her in various online forums. She asked Yahoo to take the information down,. A Yahoo employee told her that Yahoo would take the profile down, but Yahoo did not do so until after the complaint was filed.. The Ninth Circuit upheld Yahoo’s Section 230 defenses for claims that Yahoo had an obligation to take the fake profiles down, and that Yahoo did not try to remove some objectionable material. But the court did permit the plaintiff’s claim to go forward that Yahoo had breached its oral contract with her to take the material down, which the Court held amounted to a modification of the “baseline” Section 230 rule.

10. Right to Privacy.

When someone publishes something on a MySpace website without her full name, and then deletes the post, does she have an expectation of privacy? In Moreno v. Hanford Sentinel, Inc., the California Court of Appeals said no. Here, the plaintiff posted an essay that was derogatory of her home town on her MySpace page and then deleted it six days later. In the meantime, the principal at the local high school saw the posting and submitted the poem to a local paper, where the editor (a friend of the principal) published the poem in the Letters to the Editor column and signed the plaintiff’s full name to it. The author and her family received death threats and her father had to close a 20-year old family business. However, the California Court of Appeals ruled that the principal did not invade the author’s privacy by handing the posting to the editor, and further held that the editor did not violate the author’s rights when it published her full name. (The case was remanded in order to address a claim of intentional infliction of emotional stress.)

Let’s hope 2010 brings even more exciting Cyberlaw developments. We have the potential for two Supreme Court rulings, in the Costco case (discussed above) and the Bilski case, which may address the validity of business method patents.

Posted by John Ottaviani at 07:04 AM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Licensing/Contracts , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

December 14, 2009

Another Cautionary Tale of Joint Website Ownership--TEG v. Phelps [UPDATED]

By Eric Goldman

Third Education Group, Inc. v. Phelps, 675 F. Supp. 2d 916 (E.D. Wis. Nov. 25, 2009). Motion to amend denied January 19, 2010.

[UPDATE: In the initial version of this post, Richard Phelps’ story was part of a broader narrative about the potential problems of website co-ownership. However, his behavior in response to my post warrants its own discussion. Seeking to redress his perceived problems with my initial post, he has done all of the following:

* he emailed me multiple times
* he emailed my boss (the Dean) multiple times
* he emailed my colleagues multiple times
* he emailed an unrelated blogger at least two times
* he had his attorney call me to request changes to my post
* most recently, he has promised/threatened that he “will be filing a complaint about your behavior with California authorities and, for that matter, any others that might be available.”

All of this in response to a relatively obscure blog post that currently sees de minimis traffic. The stress of being uncertain about Phelps’ next moves to pressure me has literally kept me up at nights. As a result, I have decided to make changes to this post to respond to a detailed email that Phelps sent me on May 16. Normally I would post or extensively quote his May 16 email so you could read his words verbatim and form your own conclusions, but he asked me not to post it; nor can I characterize his views of the post’s deficiencies in my own words for fear of introducing new ambiguity that might generate further grist. Nevertheless, my hope is that the modifications below resolve Phelps’ concerns so that he will leave me alone. To facilitate that result, I sent him the following email:

“I am sorry for any aggravation my blog post has caused you. I have modified my blog post to acknowledge every point you raised in your May 16, 2010 email. Having done so, please do not contact me directly in the future by email, phone, letter, in person or otherwise. If, for some reason, you believe there is still something we need to discuss, please have your attorney or other representative contact me; I am willing to speak with him or her. Although my colleagues have not mentioned your emails to me (other than the Dean, who believes this is an academic freedom issue), I am sure they would be grateful if you did not contact them either.”

Most of Phelps’ concerns were based on my recap of the court’s opinion. I encourage you to read the opinion yourself so that you can decide if I mischaracterized the opinion or if Phelps seeks to relitigate factual points that the judge decided against him.]

Corporate divorces are ugly. They may lack the high-stakes drama associated with child custody disputes, but in all other respects they can be just as emotional and messy as spousal divorces. Fortunately, parties to a corporate marriage can avoid some heartache by forming proper "prenuptial agreements." Unfortunately, the courts are filled with examples of cases where this wasn't done (or wasn't done properly).

A year ago, I blogged on one such case, Mikhlyn v. Bove, a fine example of a web empire literally and perhaps irreparably split in two by a falling out of the principals. Today's case, Third Education Group v. Phelps, offers up another cautionary tale of corporate divorce along those lines. If you are jointly running a website or blog and you haven't properly documented your relationship with your compatriots, this post is for you.

In 2002, Phelps and Thompson decided to start an online publication focused on education policy called "Third Education Group." They effectively formed a "voluntary association" (I believe the Wisconsin equivalent of an implied partnership) to implement the journal. [UPDATE: Phelps disputes the italicized language. I was partially referring to the court’s factual finding: “In early 2002, after recognizing that they shared mutual interests and were concerned that current educational policy publications were generally devoted to the ideology of one of the two major political parties, Phelps and Thompson began discussing creating an online educational policy journal that would offer a different, middle perspective. Efforts were made, largely by Phelps, to first see if their idea for a journal could be affiliated with an existing entity, or to obtain sponsors or funding for their project.”]

In 2004, on behalf of the voluntary association, Phelps registered two domain names and applied for a trademark registration, both listing only himself as the owner. [UPDATE: Phelps disputes the italicized language. Regarding the domain names, I was partially referring to the court’s opinion: “The undisputed evidence demonstrates that the domain names thirdeducationgroup.org and thirdeducationgroup.net were registered for TEG and were not simply Phelps' personal website….Although registered in Phelps' name, at the time he registered these domain names, the evidence clearly established that he was doing so on behalf of TEG.” The court’s discussion about the trademark registration is a little more complicated but was implicit in the court’s finding that the corporation automatically obtained all of the assets (including the trademark registration) generated by the voluntary association. The court says: “The evidence demonstrates that Phelps and Thompson intended TEG, Inc. to succeed the unincorporated association; there is absolutely no evidence to permit the court to conclude that Phelps and Thompson intended the unincorporated association to coexist alongside the corporation and to retain control of the trademark or any other property. The evidence demonstrates that in every way, the parties intended TEG, Inc. to be the successor to the unincorporated association.”]

In 2005, Phelps and Thompson formed a 501(c)(3) non-profit corporation to succeed the voluntary association. Phelps was president and a director of the corporation. Phelps and Thompson did not sign any type of assignment agreement to move the voluntary association's assets into the corporation. [UPDATE: Phelps disputes the italicized language, pointing to an IRS Form 1023 that the relevant players signed. I was partially referring to the opinion’s language that: “the property of the association passed to the corporation, and the absence of an assignment does not affect TEG, Inc.'s right to the trademark.”]

In 2006, after an editorial dispute, the parties' relationship turned sour. In response, Phelps locked off the corporation's websites from further changes, and the corporation stripped him of his officer and director status. [UPDATE: Phelps disputes the italicized language. I was partially referring to the court’s language that: “The evidence demonstrates that by at least March 12, 2006, two days before the resolution and thus a time when it is undisputed that Phelps was both a director and president of TEG, Inc., he blocked Thompson (and anyone else associated with the corporation) from making changes to the corporation's website.”]

Phelps pointed the domain names to his new venture, also called "Third Educational Group, Inc." Meanwhile, locked out of its websites, the corporation registered new domain names, copied its old articles from the old website and then reposted them on its new website. [UPDATE: Phelps disputes the italicized language. I was partially referring to the court’s findings of fact: “After being locked out of its own websites, the Wisconsin corporation copied much of its website content from the sites now controlled by Phelps, and reposted it under the domain name tegr.org.”] Phelps then sent 512(c)(3) takedown notices to the new website host, which successfully put the new website offline. Cross-lawsuits ensued.

[UPDATE: In my prior post, I included a reference and link to a litigation recap from Thompson’s perspective. When Phelps’ attorney contacted me, his only request was that I remove the link. The attorney did not mention any concerns about other factual characterizations. If you would like to see Thompson’s perspectives about the litigation, you can find them through a search. Meanwhile, with the hopes that the link was, in fact, Phelps’ main irritant, and given its relatively inconsequential contribution to the post’s narrative, I have removed it.]

For aficionados of disputes over jointly developed online properties, you may recognize some common elements:

* the person who controls the domain name registrations has de facto control over the empire. [UPDATE: Phelps disputes the italicized inference for reasons I did not understand.] Yet another reminder to keep domain name registration contacts up to date.

* when a business relationship turns sour, it's not unusual for one aggrieved participant to fight the other participant in every Internet venue where the other tries to resurrect the joint effort.

* it is almost impossible to imagine that the venture produces enough cash to economically justify the type of death spiral litigation it spawned. Instead, the litigation is usually about settling personal scores--typically the most expensive litigation around.

* courts often issue a "split the baby" ruling in these cases, rarely giving one side a clean victory over the other.

This case has a classic split-the-baby result. The court concludes:

* the corporation succeeded to the legal rights in the trademark "Third Education Group." Phelps had argued that the trademark rights remained with the voluntary association, which would have given Phelps joint rights to the trademark.

* Phelps violated his fiduciary duties as an officer and director when he locked everyone else out of the company's website. [UPDATE: Phelps disputes the italicized language. I was partially referring to the opinion’s language that: “it is the conclusion of this court that Phelps breached a fiduciary duty owed to TEG, Inc. by asserting and retaining personal control over the corporation's domain names.”]

* Phelps' 512(c)(3) takedown notices did not give rise to a 512(f) claim for misrepresented takedown notices because, for several reasons, Phelps had a subjective good faith belief in their legitimacy.

* although Phelps infringed the corporation's trademark rights in "Third Education Group" and violated his fiduciary duties, the corporation could not show any damages from Phelps' behavior and therefore did not get any damage awards. The court specifically rejected any claim under the Lanham Act's fee-shifting clause for exceptional cases.

* the court also rejected the corporation's emotionally punitive injunction requests and will take a closer look at the appropriate scope of injunctive relief.

So who won this ruling? Nominally, Third Education Group did because it won on the trademark and fiduciary duty claims, but it's not that satisfying of a victory without any damages or a punitive injunction. As usual, then, the only possible winner in messy litigation is the lawyers, and even then only if they get paid.

For another recent example of a well-meaning but under-documented collaboration that devolved into bitter litigation, see LunaTrex v. Cafasso, 2009 WL 4506321 (S.D. Ind. Dec. 1, 2009), involving a team that came together chasing the $20M Google Lunar X prize but didn't dot the is and cross the ts well enough to avoid a messy battle. As the court says:

After a lengthy discussion of numerous ideas that evolved, the group eventually chose the name LunaTrex. (As will be seen, with the benefit of hindsight it is clear that the group also should have spent some more time talking about organization, structure, ownership, and other legal formalities.)

I've written more about messy online divorces in my 2006 Co-Blogging Law article. I think the Third Education Group court did a good job being sensitive to the unintended consequences of a voluntary relationship going south. For example, the court says

Phelps had much more than a mere good faith belief that he was entitled to use the mark. This was not a case of an individual, for example, mistakenly believing he had a license. Rather, in the present case, the objective evidence was on Phelps' side. He was the one who undisputedly came up with the mark. He was the one who paid to register the mark. He was the one in whose name the mark was registered. And he was the one primarily responsible for establishing the use of the mark. He did this, not as one person in a large organization, but rather as an individual who had joined with another collaborator and in doing so, likely without an understanding of the legal ramifications, formed an unincorporated association. (emphasis added)

This is consistent with the hope I expressed in my Co-Blogging article:

the common law typically can handle the idiosyncrasies of blogging in a sensible and contextually sensitive manner. In that respect, judges evaluating blogs should recognize that unexpected or counterintuitive rulings could significantly destabilize the blogging community. Fortunately, many of the legal doctrines discussed in this essay, including partnership and employment law, are naturally flexible. Judges should use that flexibility to balance the many considerations around blogging

[UPDATE: In Third Education Group, Inc. v. Phelps, 2009 WL 5216988 (E.D. Wis.
December 30, 2009), the court had more to say about this litigation. I quote a portion of the court’s opinion (rather than provide a summary that might prompt a further response from Phelps):

“Phelps should not derive any benefit from the use of the thirdeducationgroup domain names. To do so would run afoul of this court's order. Phelps acknowledges as much and agrees to be enjoined from use, but contends that he should be permitted to retain possession of the domain names, leaving them inactive. Phelps contends that he should be permitted to retain possession because he was the one who undertook and financed the initial registration; he paid for the registration and it is his name alone on the registration. Cynically, but based on the history between the parties, one might suspect that Phelps is motivated less by notions of principle and maybe seeks to retain the domain efforts as one last ditch effort to frustrate TEG, Inc.

On the other hand, perhaps there is a good reason why the relevant domain names should be left blank. When Phelps split with TEG, Inc., TEG, Inc. went on to establish itself at tegr.org while Phelps continued to operate the thirdeducationgroup websites (at least until the court determined that the trademark did not belong to him, at which point the websites appear to have gone blank). If TEG, Inc. were to suddenly reappear on the thirdeducationgroup websites, individuals who may have previously understood that these websites were under the control of Phelps might be confused and believe that it is Phelps behind the sites rather than TEG, Inc. A primary purpose of federal trademark law is to prevent consumer confusion and ordering Phelps to surrender the domain names to TEG, Inc. might only exacerbate these problems. But this is only speculation by the court.

Principles of equity warrant that TEG, Inc. control the domain names. Thereafter, it will be the decision of TEG, Inc. as to what action to take, if any, in regard to these names. It is the conclusion of the court that the thirdeducationgroup domain names are the lawful property of TEG, Inc. As the court previously noted,

The undisputed evidence demonstrates that the domain names thirdeducationgroup.org and thirdeducationgroup.net were registered for TEG and were not simply Phelps' personal website. Although registered in Phelps' name, at the time he registered these domain names, the evidence clearly established that he was doing so on behalf of TEG. As such, the domain names belonged to TEG.

(Docket No. 138 at 13 (citations omitted).)

In failing to provide access to these websites to TEG, Inc., Phelps breached the fiduciary duty he owed to TEG, Inc. Returning these domain names to the control of TEG, Inc. is required to remedy Phelps' breach of fiduciary duty. Accordingly, the court shall order Phelps to take all necessary actions to transfer or assign any interest in and control over the thirdeducationgroup domain names to TEG, Inc.

IT IS HEREBY ORDERED that for the reasons stated herein and stated in the court's prior decision, (Docket No. 138), the court enters a permanent injunction, which is affixed hereto, containing the following provisions:

1. Richard Phelps is permanently enjoined and restrained from using “Third Education Group” or any confusingly similar term as a name or mark for any goods, services, internet domain names, websites, or organization or other entity regarding education research, policy, or theory.

2. Richard Phelps is permanently enjoined and restrained from diluting the distinctive quality of the name and mark “Third Education Group.”

3. Richard Phelps is permanently enjoined and restrained from representing that he retains or has had any affiliation with Third Education Group, Inc. during the period of this injunction.

4. Richard Phelps shall take all necessary steps to transfer all rights and interest he has in any domain name containing the terms Third Education Group acquired prior to March 14, 2006 to Third Education Group, Inc.

5. In accordance with 15 U.S.C. § 1119, the Director of the Patent and Trademark Office shall rectify the register with respect to the registration of any party to this action so as to identify Third Education Group, Inc. as the Owner / Registrant of the mark “Third Education Group.””]

Posted by Eric at 07:33 AM | Copyright , Domain Names , Internet History , Trademark | TrackBack

December 02, 2009

Case Western “Signifiers in Cyberspace” Conference Recap

By Eric Goldman

In mid-November, I attended a conference at Case Western Reserve University School of Law in Cleveland, Ohio entitled “Signifiers in Cyberspace: Domain Names & Online Trademarks.” My notes:

David Fewer spoke about Canada’s WHOIS policy. The old Canadian registry policy published registrant information without restriction. Then, the registry proposed a new policy not to publish personal information in the WHOIS database for individual registrants and for organizations that can show harm from publication. To reveal registrant information in those situations, a warrant would be required. That policy got amended to allow warrantless access for cybercrime enforcement, registered IP infringement and ID theft. Fewer argued that the amended policy violates Canadian privacy laws (PIPEDA) because consumers are not given adequate disclosures, the exclusions from the privacy policy are arbitrary, and consumers aren’t given the required option not to participate.

Corynne McSherry of EFF discussed how TM owners are bypassing direct challenges against gripers and instead putting pressure on domain name registrars. She focused on the Yes Man spoof website of the New York Times, which included a parody ad of the De Beers diamond manufacturer. Humorless De Beers sought relief from Joker.com, the parodist’s registrar. EFF has responded to De Beers that the parody is legitimate because it has no commercial aspect, it’s nominative use, and the First Amendment applies. The EFF is also encouraging Joker.com to ignore De Beers because it (as the registrar) can’t be liable for the registered domain name. So why is Joker.com even entertaining De Beers’ complaint? Corynne notes the registrar’s revenue from any single domain name registration is less than legal cost of investigating and responding. Corynne discussed how parodists and gripers can minimize their legal risk (I blogged on these recommendations in May).

I remain very interested in situations where domain name registrars apply their own takedown policies to their customers. For example, I’ve previously mentioned GoDaddy’s “itchy trigger finger” when it comes to intervening with its registrants. I suspect there is significant heterogeneity among registrars’ interventionist tendencies. I think this is an area worth exploring. If you have other examples of domain name registrar intervention in its customers' content, please share them.

Stacey Dogan spoke about the aftermath of the Rescuecom ruling. Stacey is disappointed that courts aren't adopting her arguments to use the “trademark use in commerce” doctrine to insulate intermediaries (she calls it her “biggest failure in life”). She described three post-Rescuecom uncertainties: (1) what acts by intermediaries constitute TM infringement? (2) on what doctrinal basis? (direct v. contributory), and (3) what remedies do the intermediaries face?

Stacey thinks courts need to be more precise about the nexus between defendant behavior and TM owner harm. This should lead to better distinctions between direct and contributory infringement.

She offered a taxonomy of claims against intermediaries:

* General confusion = when the intermediary creates confusion through the blurring of ads and editorial content. Stacey thinks these aren’t TM issues. But if commingling is the problem, then the remedy should be an injunction requiring the intermediary to label the ads.

* Strict liability = when the search engine is automatically on the hook for its involvement with the ads. Stacey says courts should reject this approach due to the search engines' lack of proximate causation for consumer confusion. If a search engine faces any liability, it should be solely on the basis of contributory infringement (with its higher scienter bar).

* Failure to act = when the search engine fails to respond to TM owner’s takedown notice. She said we don’t see this in search engine cases [a point I disagree with given that the TM owner vs. search engine lawsuits all represent a failing of the search engines’ voluntary TM policies]; instead, she was thinking of the Tiffany case. Stacey thinks the failure of act prong is where the legal action should be. She wants courts to map out appropriate scienter levels. General knowledge of infringement isn’t enough, and courts should let defendants make reasonable judgments about whether the advertiser will qualify for any trademark defenses. If the advertiser is obviously infringing, and intermediary gets notice and fails to act, she thinks contributory liability could be appropriate.

Graeme Dinwoodie believes the ECJ will not follow the Advocate General’s opinion in the Google case. He explored two parallels between the AG’s opinion and Rescuecom: Both get away from trademark use of commerce, and both consider underlying policy values. Graeme thinks search engine defendants should move away from disputing the lack of harm to the trademark owner; instead, he thinks they will get more traction by showing the countervailing benefits of their advertising. For example, he thinks they should be showing how keyword advertising can facilitate investment and innovation.

Jeffrey Samuels shared his perspectives as a panelist in 200 UDRP proceedings. Since the UDRP’s implementation, there have been about 25,000 UDRP decisions. 40% are US registrations. 75% involve .com. 75% are defaults.

The UDRP isn’t designed to solve all domain name disputes. He gave an example of a domain name registration containing a celebrity child’s name. The UDRP isn't helpful because a 2 week old kid doesn’t have protectable trademark rights.

“The UDRP is hardly a model of clarity.” All cases are fact-dependent. If a UDRP proceeding has unusual facts, he recommends requesting a 3 member panel--these proceedings get more carefully evaluated opinions and minimize the effects of any one panelist’s idiosyncratic views.

Some issues that regularly arise in UDRP proceedings:

* What the TM owner has to do to establish its rights. The majority view is that a registration anywhere in the world suffices. Common law rights generally require presenting sufficient evidence validating the rights.
* There remains a split of authority on “sucks” sites.
* In the early days, panelists used to run through the multi-factor likelihood of confusion factors. That’s rarely done today. Now, most panelists just make sight and sound comparison.

Karl Auerbach discussed two interrelated issues: (1) ICANN lacks any political authority for its “Internet governance” role, and (2) technology does not require that ICANN monopolize DNS root services. He argues that we would benefit from competition among DNS root services. His argument reminds me a bit of the net neutrality debate. We can hypothesize many possible net neutrality problems, but most of them go away with vigorous competition. Similarly, ICANN’s often-ridiculous shenanigans would be less vexing in the face of bona fide competition for DNS root services.

Dan Hunter spoke about a new paper he’s writing with Mark McKenna. Their target is the fundamental trademark principle that trademark law protects against consumer confusion. They think consumer confusion is an imperfect proxy for our normative goal of protecting consumers. Some confusion is endemic in a complex society; and some methods of communication, like humor, require confusion to work. Therefore, they want to move away from trying to block consumer confusion and instead refocus trademark law on reducing errors in consumer decision-making. This seems like a fruitful endeavor, but they are also taking a swipe against the consumer search cost justification for trademark law, a move I didn't follow.

Bill McGeveran recapped his recent work on social networking sites and gave a preview of his next article. His target is fake online profiles such as the Tony La Russa fake Twitter account. He expects to see more pressure to create IP rights in personal identities.

I spoke about trademarks and behavioral targeting, and in particular the competition among marketers for consumer preference information. For example, I believe the anti-deep packet inspection pushback wasn’t based solely on privacy concerns. Instead, destination websites fear that an IAP will disintermediate them and use its prime access to consumer preference information to steer customers to competitors. (See this blog post for more on that point). My (very brief) slides.

Posted by Eric at 07:16 AM | Derivative Liability , Domain Names , Internet History , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

October 30, 2009

Internet Obscenity Conviction Requires Assessment of National Community Standards--US v. Kilbride

By Eric Goldman

U.S. v. Kilbride, 2009 WL 3448360 (9th Cir. Oct. 28, 2009)

Jeffrey Kilbride and James Schaffer were porn spammers, operating through Ganymede Marketing, a Mauritian company. I previously blogged on their case in 2007. Their spam failed to comply with CAN-SPAM in several respects, including forged headers, fake email addresses and bogus contact info. The FTC claimed that it had received over 662,000 complaints about their spam. After a 3 week trial, a jury convicted them of criminal CAN-SPAM violations, criminal obscenity for 2 spammed images and other charges. Kilbride was sentenced to 6 1/2 years and Schaffer got over 5 years. Both appealed their convictions.

In the resulting Ninth Circuit opinion, the most important discussion relates to their obscenity convictions. The Supreme Court defined obscene material in the Miller case as:

(a) whether the average person, applying contemporary community standards would find that the work, taken as a whole, appeals to the prurient interest; (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable ... law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value [emphasis added]

On the Internet, the question arises: whose community standards? The Miller test anticipates that geographically dispersed communities could have different norms, and in theory an Internet content publisher needs to conform to all of them or at least the most restrictive ones. For an early example of this, see United States v. Thomas, 74 F.3d 701 (6th Cir. 1996) (involving a dial-in BBS). However, the cost and limitations of geographic authentication technology means that many Internet content publishers can't steer their content into or away from a particular geography. Personally, I think this is especially true for publishing content by email because I know of no effective way to accurately authenticate the geography of most email recipients.

The US Supreme Court squarely wrestled with the issue of disparate geographic communities being collapsed on the Internet in 2002 in its first Ashcroft v. ACLU ruling (this should be distinguished with the more influential second Ashcroft v. ACLU opinion from 2004, which I still teach today in Cyberlaw). That case involved a challenge to the 1998 Child Online Protection Act (COPA), and the Third Circuit had affirmed a preliminary injunction against COPA on the grounds that the application of a "contemporary community standards" clause to Internet publication was constitutionally infirm due to disparate community standards. In 2002, the US Supreme Court reversed the Third Circuit in a massively fractured way, with 5 different opinions and no clear consensus on anything.

To resolve this appeal, the Ninth Circuit had to divine a single rule of law from this mess-o-opinions. After parsing the inscrutable Supreme Court opinions, the Ninth Circuit concluded that "a national community standard must be applied in regulating obscene speech on the Internet, including obscenity disseminated via email." Whether or not the Ninth Circuit read the Ashcroft v. ACLU precedent correctly, it reached the only logical outcome for a communication medium without clear geographic authentication. Nevertheless, this is hardly an unquestionable conclusion; the Miller case expressly rejected a national standard (whatever that means): "obscenity is to be determined by applying 'contemporary community standards'...not 'national standards.'" Presumably, the 2002 Ashcroft v. ACLU opinion overwrote this statement from Miller (and similar statements in earlier obscenity cases), but no one really understands what the Supreme Court said in 2002.

While the Ninth Circuit reached a sound result, its ruling doesn't help these appellants. Even though the district court provided different jury instructions, the Ninth Circuit concluded that the district court's instructions were not "plain error" (the applicable review standard), so the convictions stand. Harsh.

Even if appellants wrested a reversal, I'm not sure it would matter because I have never fully understood the import of regionally disparate "contemporary community standards." The phrase only explicitly modifies the Miller test’s determination of whether a work "appeals to the prurient interests"--basically, whether the work appeals to content consumers' interest in sex. Community standards can also implicitly come into play with the determination of what is "patently offensive" or the perceived value of the work, but these are not explicitly referenced in the Miller test.

With respect to the prurient interest reference, I could imagine regional differences about some borderline cases (say, a sex education tutorial) or with respect to niche sexual interests, where the niche audience would find that the work appeals to their esoteric interests and the remainder of a region's population might find the work so unappealing that it’s not viewed as sexually interesting at all. But for a lot of "mainstream" pornography, my guess is that there are not meaningful regional differences about the work's sexual appeal. I haven't seen the 2 images at issue in this case, so maybe they fall into the borderline cases. Otherwise, I wonder if a new trial using national community standards would actually change the result. (Another reason for skepticism: our rage towards spam frequently causes us to ignore the rule of law when we have a chance to punish spammers).

In the ruling, the Ninth Circuit also rejected the defendants' facial and as-applied challenges to the criminal CAN-SPAM provisions. The defendants focused their attack on CAN-SPAM restrictions on falsifying information in a way that would "impair" spam blocking. The court concludes that none of the provisions are constitutionally too vague. This wasn't really a close case for the as-applied challenge because of the defendants' egregious handling of their email campaigns. In contrast, I would like to think the facial challenge has not been resolved permanently; these were clearly not the right defendants to raise or litigate the facial issues.

Along the way, the Ninth Circuit takes a swipe at domain name proxy registrations. Pulling a quote only slightly out of context, the court says "Based on the plain meaning of the relevant terms discussed above, private registration for the purpose of concealing the actual registrant's identity would constitute 'material falsification'" (one of the elements of a CAN-SPAM crime). You may also recall the recent Solid Host v. NameCheap case suggesting that proxy service providers could face contributory ACPA liability. Collectively, these two opinions indicate legally disadvantageous treatment for proxy service usage. Given this disconcerting trend, I don't see the domain name proxy business as a growth industry.

Thomas O'Toole also discusses the ruling.

Posted by Eric at 03:00 PM | Content Regulation , Domain Names , Spam | TrackBack

October 25, 2009

Tucows Not Liable for Spam Judgment Against 3rd Party Based on Private Registration Services -- Balsam v. Tucows

[Post by Venkat]

Judge Breyer (N.D. Cal.) rejected an attempt by a spam plaintiff to hold a registrar liable for a judgment against a third party based on private registration services provided by the registrar. (Balsam v. Tucows Inc., et al., CV 09-03585 CRB (N.D. Cal. Oct. 23, 2009). Access a copy of the order at Scribd here.) Incidentally, the plaintiff - Dan Balsam - is a recent law school grad who catalogues his extensive anti-spam efforts at his website: "danhatesspam.com."

Facts: As recounted by the court, Balsam received 1,125 pieces of spam advertising an adult-oriented website over a seven month period. Balsam performed a WHOIS lookup and found that the website was registered to Angeles Technology Inc. Some time later, Angeles started utilizing private registration services provided by Tucows. Balsam sued Angeles, and obtained a default judgment for $1,125,000. After Balsam brought suit but before he obtained judgment, Balsam requested the registrant’s identity from Tucows. Tucows refused to provide the name without a court order.

Balsam tried unsuccessfully to collect against Angeles and have garnished revenues from the website's payment processor. He even tried to have the underlying domain name seized. Understandably miffed, he brought suit against Tucows, arguing that Tucows was liable for the judgment due to its failure to disclose the identity of the person who held the beneficial interest in the domain name.

The Court's Ruling: Balsam sought to hold Tucows liable based on a variety of claims, but they were all premised on Balsam being a third party beneficiary to the "Registrar Accreditation Agreement" which registrars are required to sign with ICANN. Specifically, the RAA contains a clause which requires all registrars to enter into agreements which obligates registrants to provide accurate information and also for each registrar (referred to as a "Registered Name Holder") who provides private (or nominee) registration services to "accept liability for harm caused by wrongful use of the [domain name], unless [the registrar] promptly discloses the identity of the licensee to a party providing [the nominee registrar] reasonable evidence of actionable harm." I've reproduced the actual clause below at the end of this post. (Arguably, the reference in section 3.7.7.3 to the "registered name holder" should not necessarily be seen as a reference to the registrar. Registrars often wear multiple hats, and this results in some confusion. But to me it doesn't seem like the fact that registrars often provide private registration services through subsidiaries or related entities should be a determining factor. At the end of the day, the clause speaks to the person or entity in whose name the domain name is registered, which in the case of private registration services is the registrar or its subsidiary.)

Judge Breyer held that Balsam was not a third party beneficiary under the RAA and thus all of Balsam's claims failed.

Thoughts: To begin with, Balsam was fighting against the weight of precedent in arguing third party beneficiary claims under the RAA. Courts have refused to find that the RAA creates obligations enforceable by third parties. (See, e.g., Register.com v. Verio, 356 F.3d 393 (2d Cir. 2004).) Also, this isn't the first time a court has looked specifically at whether section 3.7.7.3 of the RAA creates a class of third party beneficiaries. As Professor Goldman previously noted, in Solid Host NL v. NameCheap, Inc. (No. 08-5414) (C.D. Cal. May 19, 2009), a judge in the Central District of California denied a registrar's motion to dismiss where a plaintiff sought to hold a registrar liable for cybersquatting under theories of direct and contributory liability (among other theories). That case also involved a registrar's failure to disclose the identity of the person or entity using the private registration services. Oddly, the court in Balsam cites NameCheap for the proposition that section 3.7.7.3 does not create an intended class of third party beneficiaries. I actually read NameCheap to say that third party beneficiary status was possible, depended on the facts as to intent and construction of the agreement, and thus could not be resolved on a motion to dismiss. (See pp. 39-49 of the NameCheap order.)

Balsam's case is somewhat tougher to make than Solid Host's, in that Balsam obtained a default judgment of over a million dollars. No judge is going to put the registrar on the hook for this type of a damage award absent some serious facts showing misconduct (i.e., the type of evidence the jury found persuasive in the Louis Vuitton case mentioned below). And that's where Balsam falls short in my opinion. It's tough to see where the real harm is to Balsam from the use by Angeles of private registration services. Balsam already knew the identity of the registrant, since the registrant he proceeded against started using the privacy protection services after Balsam after discovered its identity. (Stepping back, it's tough to see how a thousand emails should result in a million dollar damage award, but that's a separate issue.) Balsam only alleges that the failure by Tucows to reveal the identity of the beneficial registrant 'complicated' Balsam's ability to collect against Angeles Technology Inc. Regardless of how the third party beneficiary status discussion plays out, to me this casts a shadow over Balsam's claim.

As a side note, I agree with Professor Goldman that the court's reasoning in NameCheap isn't crystal clear, but I think it's a closer question as to whether - based on section 3.7.7.3 - a registrar should be held liable for harm flowing from a delay in disclosure. Regardless of whether the parties intended to create a class of third party beneficiaries, the thrust of section 3.7.7.3 is that if a registrant offers privacy protection services (i.e., register the domain name in your own legal name and allow someone else to be the beneficial owner), it seems to have a contractual obligation to disclose the identity of the beneficial owner upon request by an injured party. The fact that the RAA is an agreement registrars enter into with ICANN (which is a quasi-public entity) as a condition of being accredited and being allowed to offer domain name registration services also weighs in favor of the third party beneficiary argument. On the other hand, accepting that the RAA creates third party beneficiaries would result in a variety of problems and create unintended classes of plaintiffs and causes of action. Ultimately I don't think it's a very good idea, and courts have not been very receptive in general to third party beneficiary claims under the RAA.

To the extent the third party beneficiary argument flies, Solid Host had a stronger argument for why it should be treated as a third party beneficiary. Solid Host involved wrangling over a domain name that was originally registered in the name of Solid Host. Solid Host arguably relied on the provisions in the RAA in registering its domain name in the first place. (Note: to the extent a court accepts the third party beneficiary argument this leaves registrars in an arguably tricky spot. Section 3.7.7.3 does not limit itself to harm caused by the failure to disclose. It seems to cover harm "caused by wrongful use of [the domain name] . . .")

In any event, trying to hold a registrar (or someone else in the chain) liable for ACPA or trademark claims raises a host of thorny issues that courts struggle with. To the extent they can be unpacked, I'll admit I'm incapable of unpacking these issues in a blog post, or even a series of blog posts. I'll leave that to Professor Goldman. (See posts from Professor Goldman on the Solid Host case here and on the recent jury verdict for contributory liability for trademark infringement ($32MM!) obtained by Louis Vuitton here.) Suffice it to say that facts often dictate the result, and here, it just didn't pass the gut test to hold Tucows liable for a significant default judgment based on failure to disclose by Tucows. Particularly when in the court's view Balsam's evidence connecting the failure to disclose by Tucows with the underlying harm wasn't particularly strong.

As I read Balsam v. Tucows, I wondered whether Tucows had a Section 230 argument lurking in the background. My tentative thought is that it could have a viable 230 argument, since Balsam is seeking to hold Tucows liable based on third party content. Although Balsam could argue that under Barnes v. Yahoo Tucows could be viewed as having a contractual obligation which it didn't fulfill, this could be a tough argument to make, given that Tucows did not make any promises to Balsam directly. (See the two rulings in Goddard v. Google, Inc. (rejecting attempts to bring claims against Google based on third party beneficiary status under Google's advertising terms); see also Morrison v. America Online, Inc., 153 F. Supp. 2d 930, 934 (N.D. Ind. 2001) (rejecting attempt to evade § 230 immunity by claiming to be third-party beneficiary of AOL’s member agreement with chat-room users).) Given his interest in Section 230, I'll leave this issue to Professor Goldman as well.
__

ICANN Registrar Accreditation Agreement (pre-May 21, 2009):

3.7.7 Registrar shall require all Registered Name Holders to enter into an electronic or paper registration agreement with Registrar including at least the following provisions:

3.7.7.3 Any Registered Name Holder that intends to license use of a domain name to a third party is nonetheless the Registered Name Holder of record and is responsible for providing its own full contact information and for providing and updating accurate technical and administrative contact information adequate to facilitate timely resolution of any problems that arise in connection with the Registered Name. 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.

Posted by Venkat at 10:45 PM | Domain Names , Spam

October 21, 2009

Domain Names as Property Subject to Creditor Claims--Bosh v. Zavala

[Post by Venkat]

Most people take it for granted that domain names are property. As such, there shouldn't be much dispute that domain names are subject to the claims of judgment creditors. But I've seen enough resistance to this position that I thought a recent case was worth a quick mention. This recent case (Bosh v. Zavala (08-CV-04851-FMC-MANx) (C.D. Cal. Sept. 24, 2009)) also raises some interesting questions about the mechanics of trying to use a domain name to satisfy a judgment. For more perspectives, see Marc Randazza's post on this case here; see also NYT; Domain Name News; Deadspin.

Background: One of the early and often-cited cases for the proposition that a judgment creditor cannot get a domain name is Network Solutions, Inc. v. Umbro Int’l, Inc., 259 Va. 759, 770 (Va. 2000). In Umbro, the Virginia Supreme Court held that "a domain name registrant acquires the contractual right to use a unique domain name for a specified period of time...[but this] contractual right is inextricably bound to the domain name services that [Network Solutions] provides." Umbro concluded that the domain name registration agreement was a "contract for services" (which was not subject to "garnishment") rather than property. (Umbro was preceded by the Eastern District of Virginia's decision in Dorel v. Arel where the court punted on the "issue of whether a domain name is personal property subject to [a lien]" because the judgment creditor could take advantage of an easier, practical solution: "the registrar's policies.")

Kremen v. Cohen: Enter Kremen v. Cohen, decided by the Ninth Circuit in 2003. Kremen cast a shadow over Umbro. Kremen involved an action for conversion where the underlying property was a domain name. One of the big questions in front of the court was whether a domain name was property which could support a claim for conversion. The court pretty definitively answered that a domain name was property and therefore could support a claim for conversion. Following Kremen, courts started to realize that since domain names are property, they should be subject to the claims of judgment creditors. (See Office Depot, Inc. v. Zuccarini, 621 F. Supp. 2d 773 (N.D. Cal. 2007).) More recently, in Bosh, Judge Florence Marie-Cooper of the Central District of California allowed Toronto Raptors basketball player Christopher Bosh to seize a slew of domain names held by Luis Zavala, based on a cybersquatting judgment obtained by Bosh.

The key conceptual question to resolve is whether domain names are freely transferable, or whether domain name registration services are contracts personal to the registrant. Given the emergence of the flourishing secondary domain name market, you would think there would be no dispute as a practical matter as to whether domain names are freely transferrable. But it's not as hard you may think to encounter people who argue that domain names are just personal contract rights. For example, in 2009, Network Solutions took this position in the Kentucky domain name case where the Kentucky AG tried to seize numerous domain names based on the fact that they were "gambling devices" used in contravention of Kentucky law. (See pages 7 through 11 of their amicus brief filed in Kentucky: [pdf].) The Kentucky AG's decision was on questionable legal grounds for a variety of reasons, but I was surprised to see Network Solutions' reliance in its amicus brief on Umbro.

From a practical standpoint, the big question is whether a judgment debtor has assets that can be sold to satisfy a judgment. If there are such assets (whether in the form of domain names or otherwise), most courts are going to find a way to let the judgment creditor get at them. There may be tweaks around whether the particular statute in question covers a certain type of property (see, e.g., Palacio Del Mar Homeowner's Association, Inc. v. McMahon, 174 Cal. App. 4th 1386 (2009) (domain names are not subject to "turnover order," coincidentally, the same type of order Bosh obtained)), but it's a mistake to see these cases as somehow rejecting the theory domain names are properly subject to the claims of creditors. One caveat: even if domain name registration services are not contracts personal to the registrant, not every domain name can be easily bought and sold. As discussed in a moment, certain types of domain names - including potentially those involved in Bosh - are tougher to monetize without stepping on the toes of third parties.

Process Questions: In Bosh, the domain names all related to the names of famous athletes and celebrities and were ordered "turned over" to Bosh. Bosh plans on distributing them to other athletes whose names the defendant was squatting on. (Bosh plays for the Toronto Raptors and the defendant squatted on the names of Bosh and many other athletes.) Bosh is somewhat atypical since Bosh didn't really care about satisfying the judgment he obtained and probably will not undertake further efforts to collect. But one of the problems with Bosh is that it doesn't set any sort of process to value the domain names. Is the defendant's judgment satisfied based on the turnover? Who is to say? A turnover to Bosh is sort of an awkward result, and seemingly precluded by the statute (see McMahon), but Zavala was not around to contest the issues, so it is what it is.

A related problem is that Bosh would have a tough time selling the domain names, given that there would be little guarantee that any purchaser would steer clear of engaging in the same conduct that the defendant did in Bosh. The court in Zuccarini alludes to this. (See Zuccarini, 621 F. Supp. 2d at 778, fn. 7.) It's unlikely a court would ever conclude this, but if Bosh decided to auction off the names that were turned over, would he be treading close to the cybersquatting line?

Back to the typical case. Some would argue there's some sort of non-infringing use for all domain names, and that it's up to the purchaser to figure out non-infringing uses. There are plenty of established auction houses that regularly deal in domain names (e.g., Moniker; Sedo). The best bet is to sell a domain name through a court-blessed third party auction. Theoretically, the market price at an auction will accurately reflect the assessment of purchasers as to how the domain name can be used. I guess a very rough analogy is that real property is freely exchangeable, but you can only use it without injuring the rights of your neighbors. No one argues based on the hypothetical nuisance claims of neighbors that real property is not freely exchangeable and therefore not subject to the rights of creditors.

At the end of the day, there are plenty of issues around the fringes, but domain names are likely not off limits for judgment debtors based on the theory that domain names are not "property". Most courts will find a way to let judgment creditors get at domain names. That's not to say that the process of seizing the names and disposing of them does not raise thorny issues.

Posted by Venkat at 10:02 AM | Domain Names , Licensing/Contracts , Publicity/Privacy Rights , Trademark

October 15, 2009

Q3 2009 Quick Links, Part 2

By Eric Goldman

Trademark

* Venkat: Twitter makes the dictionary.

* Federal Circuit says Hotels.com is generic.

* Steve Madden sues eBay for trademark infringement. Marty's coverage. Justia page. I found the fifth cause of action, "trademark delusion," a surprisingly apt malapropism.

* Yahoo! Inc. v. Ashantiplc Limited. Yahoo is suing over Flicker.com.

* Lots of action involving Mary Kay.

- Mary Kay sued Yahoo for its shortcuts being triggered by the Mary Kay trademark. The Justia page.

- Mary Kay brought another lawsuit to shut down aftermarket resales.

- The Mary Kay v. Weber case has reached a conclusion. See my initial blog post on the case. In March, Mary Kay won a jury verdict against Weber. In August, the district court judge denied Weber post-trial relief. Mary Kay v. Weber, 2009 WL 2569070 (N.D. Tex. Aug. 14, 2009). On Sept. 29, the judge awarded Mary Kay $1.1M, computed as “the defendants' pre-tax net profit for the years 2005 through 2008.”

* I hate greeting card IP cases...especially when they involve Paris Hilton. See the Ninth Circuit opinion.

* Rebecca on a complicated trademark and false advertising case involving cell phone reflashing.

* Third Educ. Group, Inc. v. Phelps, 2009 WL 2029758 (E.D. Wis. July 10, 2009). An oblique nod to a co-blogging situation:

It is possible to have a situation in which a voluntary association develops out of a preexisting creation of an individual (take, for example, a blog created, named, and operated entirely by a single individual that then expands into a voluntary association as it includes more collaborative members but continues to utilize the original name). Under such circumstances, the founding individual might register the name of the voluntary association as a trademark solely in his own name and then license it to the voluntary association because he has used the trademark separate from the voluntary association. However, that did not occur here.

* CollegeSource, Inc. v. AcademyOne, Inc., 2009 WL 2705426 (S.D. Cal. Aug. 24, 2009): "Plaintiff argues for personal jurisdiction on the grounds that Defendant purchased two of Plaintiff's trademarks from internet search engines, so that those engines would display Defendant's advertisements when Plaintiff's word marks were searched….Defendant's uncontroverted affidavit avers that its Adwords were selected by the search engines and were purchased before Defendant knew Plaintiff was located in California.…Accordingly, even if Defendant intentionally infringed Plaintiff's marks, there is no showing that act was “expressly aimed at the forum state” or that it caused “harm that the defendant knows is likely to be suffered in the forum state.”"

* GMA Accessories, Inc. v. BOP, 2009 WL 2634771 (S.D.N.Y. Aug. 25, 2009). A really interesting and confusing lawsuit that says (I think) that electronic usage of third party trademarks does not qualify as a use in commerce and may not constitute contributory trademark infringement, with obvious implications for the search engine keyword advertising cases:

Electric Wonderland's second alleged meritorious defense is that it did not use the CHARLOTTE or CHARLOTTE SOLNICKI marks....Electric Wonderland's President described its business as follows:

Electric Wonderland brokers and/or processes orders from wholesale purchasers for fulfillment by clients of Electric Wonderland. Electric Wonderland does not directly sell its clients [sic] products, does not fulfill orders, does not acquire or maintain any inventory for sale, and does not purchase products from its clients for resale. Electric Wonderland does receive commissions on sales it brokers....

According to the Flack Declaration, these were the services Electric Wonderland provided to Charlotte Solnicki. (Flack Decl. P 3.) "Electric Wonderland did not directly sell Charlotte Solnicki products, did not fulfill orders, did not acquire or maintain any inventory of such products for sale, and did not purchase such products from Charlotte Solnicki for resale." (Flack Decl. P 3.) If this were the extent of Electric Wonderland's role, a fact-finder could find that Electric Wonderland did not "use" the CHARLOTTE or CHARLOTTE SOLNICKI marks, because it did not place the marks on any goods. Likewise, a reasonable fact-finder could determine that Electric Wonderland never used the marks to sell or advertise any of the services Electric Wonderland rendered. Thus, Electric Wonderland would not be liable for direct trademark infringement.

...Electric Wonderland's president claims that "[a]t no time while Charlotte Solnicki was a client of Electric Wonderland was Electric Wonderland aware of GMA's 'Charlotte' products nor of any possibility that the Charlotte Solnicki products were potentially infringing any third party's trademark rights." (Flack Decl. P 5.) If true, a reasonable fact-finder could find that Electric Wonderland neither knew, nor had reason to know of the alleged infringement during the period in question.

In addition, the Second Circuit has not decided whether contributory infringement applies to entities like Electric Wonderland, which provide services instead of products....Thus, Electric Wonderland, as a matter of law, may have a complete defense to contributory infringement liability, a matter which this Court need not decide at this juncture.

* Dan Burk and Brett McDonnell, Trademarks and the Boundaries of the Firm. Interesting discussion (among other things) on how an entrepreneur's/employee's personal reputation and corporate reputation can be interlinked.

Domain Names

* The Eleventh Circuit affirmed the defense win in the domain name case of Southern Grouts & Mortars v. 3M, 2009 WL 2182605 (11th Cir. July 23, 2009). See my initial blog post on the case.

* John Levine: What are TLDs Good For? Bringing to mind the famous Edwin Starr song (I think the answer is the same!).

* ICANN claims it has killed domain name tasting.

Posted by Eric at 09:53 AM | Derivative Liability , Domain Names , E-Commerce , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

July 06, 2009

June 2009 Quick Links, Part 1

By Eric Goldman

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

Search Engines

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

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

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

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

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

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

Trademark

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

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

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

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

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

* Oddee: 10 of the Worst Restaurant Names ever.

Copyright

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

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

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

User Agreements

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

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

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

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

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

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