March 23, 2008
Adwords Ad Creates Initial Interest Confusion--Storus v. Aroa
By Eric Goldman
Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).
(Sorry for my delay blogging this one).
A federal district court has held that displaying a competitor's trademark in Adwords ad copy constitutes impermissible initial interest confusion, leading to a summary judgment win for the trademark owner. This is one of the first competitor-vs.-competitor search advertising cases where the plaintiff has won the trademark claims. This case also has an interesting and rare discussion about the trademark implications of a retailer’s internal search engine.
Claims Against Aroa
Storus distributes money clips under the trademark "smart money clips." Storus was able to get a federal registration for the mark, which is interesting because I’d love to see the showing of secondary meaning. Given the registration, Aroa instead tries to knock out "smart" as a laudatory phrase, but the court isn't convinced. Thus, the court permits Storus to proceed with a pathetic descriptive mark.
Aroa sells competitive money clips. Through Adwords, it purchased the keyword "smart money clip" to display the following ad:
Smart Money Clip
www.steinhausenonline.com Elegant Steinhausen accessories. Perfect to add to any collection.
Per Google's standard formatting, the trademark shows up bold and underlined, which the court says overshadows Aroa’s display of its own trademarks in the ad copy. The court also invokes initial interest confusion (as part of the Ninth Circuit's inconsistently invoked "Internet trilogy" likelihood of consumer confusion analysis) and notes that "defendants offer no evidence to show a lack of actual initial interest confusion." Summary judgment for plaintiff.
Claims Against Skymall
Skymall is an online retailer of Aroa products. Storus alleges that Skymall included the term "smart money clip" on Aroa product pages, which meant that if a person searched for "smart money clip" in Skymall's internal search engine, Aroa's products would appear in the search results. Storus portrayed this as initial interest confusion, but the court wasn't persuaded enough to grant summary judgment. Instead, the court observes that "a page offering an Aroa money clip will appear as a search result solely because the consumer searches using the phrase “money clip,” irrespective of whether the consumer adds the word “smart” to the search term and irrespective of whether the page contains the word “smart.”" Isn't it amazing that a page containing the phrase "smart money clip" would also appear for a search on "money clip"?!
Implications
On the surface, this case looks problematic for the search advertising industry. Any time a search advertising practice is deemed infringing, it should promptly eliminate all similar ads from other advertisers, taking a chunk of revenues out of search engine pockets. Further, when advertisers are liable for trademark infringement, it increases the risk that search engines will be contributorily liable for those infringing ads.
Yet, Aroa’s practices here (displaying a competitor’s trademark in the ad copy) are already restricted by all of the search engine trademark policies. Therefore, this ruling shouldn’t reduce much ad revenue for search engines.
But that raises the obvious question: why didn't Storus just invoke these search engine policies to shut down Aroa? As Dennis Toeppen might have said, perhaps Storus' lawyer wanted a new boat, because this trademark lawsuit made absolutely no financial sense for Storus. The court determines that over 11 months Aroa got 1,374 clicks on its ads (from 36,164 ad impressions, yielding a 3.7% clickthrough rate--not bad). If we value each click at $1/click (a generous amount given that Aroa sells its money clip for $30), Storus could have acquired the "diverted" clicks for $1,374--an amount that is surely no more than 5% (and perhaps even less than 1%) of what Storus spent in this lawsuit. Smart business decision there, guys.
Doctrinally, this case is a textbook example of how the initial interest confusion doctrine is completely bogus. As I’ve said before, a defendant cannot mount an adequate defense against the initial interest confusion doctrine because the doctrine lacks any rigorous definition or normative support in the first place. The defense challenge is especially problematic where, as here, a court improperly puts the burden on the defendant to disprove that consumers experienced initial interest confusion. Exactly what proof would satisfy the court here? I can’t answer this and I bet the court couldn’t either, and I can go further and assert that evidence to disprove initial interest confusion simply does not exist at all.
This court also unfortunately buys into the tired and outdated syllogism that every click on Aroa’s ad was a “diverted” consumer. As I’ve explained here, this massively overstates the quantum of “diversion” (whatever that means) because we don’t know what consumers expected to find when they entered the search term “smart money clip.” The low general risk of diversion is even lower here because consumers saw Aroa’s trademarks in the ad copy, further reducing the risk that anyone was confused by the time they decided to click on the ad.
Other comments on this case:
* Thomas O'Toole
* Tech LawForum
* IP Law Observer
* Las Vegas Trademark Attorney
Posted by Eric at 10:05 PM | E-Commerce , Search Engines , Trademark | TrackBack
March 13, 2008
eBay Denied 230 Defense for Its Marketing Representations--Mazur v. eBay
By Eric Goldman
Mazur v. eBay Inc., 2008 WL 618988 (N.D. Cal. March 4, 2008)
I declared Monday "47 USC 230 Day" here at the Technology & Marketing Law Blog, but with this new case, I'm declaring it 47 USC 230 Week. This case explores one of the frontiers of 47 USC 230 jurisprudence--when can 230 preempt a claim that a website made false marketing representations? This issue has been lurking in numerous recent 47 USC 230, but it arises squarely here. Unfortunately, the legal analysis isn't clean or easy.
eBay offers its users the ability to engage in "live bidding" (i.e., bidding via the Internet on auctions taking place in physical space) through third party vendors. eBay's marketing materials described these vendors as "safe" and "carefully-screened, reputable international auction houses" and that the bidding was against "floor bidders" (i.e., people bidding on the physical floor of the auction). The plaintiff claims that instead shill bidders at the auctions caused her to overpay. eBay defends against the claims based on 230 because any falsity introduced into its statements was attributable to the actions of third party vendors.
Judge Patel found that 230 helped eBay in a number of respects:
* "to the extent plaintiff seeks to hold eBay liable for information provided by [a third party vendor], eBay is immune from liability".
* "plaintiff’s assertion that eBay knew of the seller’s illegal conduct and failed to prevent it is nevertheless under the ambit of section 230"
* "eBay’s assertion that the auction houses were screened is not actionable" because the screening is an editorial function [note: I'm not sure screening vendors for quality is really an editorial function in the traditional sense. Perhaps this particular issue would have been more appropriately handled under 230(c)(2)?]
At the same time, the court says that three other statements at issue--that live bidding is "safe," is conducted against "floor bidders" and involves "international" auction houses--are not preempted by 230. In doing so, the court distinguishes several cases, including:
* the Gentry case (involving eBay's liability for fake sports memorabilia) because eBay's communications there were distilled from user-supplied feedback
* the SexSearch case (where the site claimed its users were 18+ but a minor lied about her age) because the marketing claims "were merely a regurgitation of its users’ representations" whereas here, apparently eBay made no regurgitations
* the infoUSA case (where infoUSA said that it verified data in its database) and the Barnes case (where Yahoo failed to take down bogus user profiles) because each involved the accuracy of data, while this case involves the promise of safety. [Note: I think the court makes a rather fine distinction here. Clearly the word "safe" means something special to this judge: "eBay’s statement regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion."]
The court doesn't discuss the Accusearch case, which seemed like the most analogous case to me. That case involved a vendor's resale of illicit phone records that were procured by third parties via pretexting, and the court held that 230 didn't protect the vendor even though the underlying asset being sold was information from a third party. The Accusearch opinion doesn't directly hold the vendor responsible for marketing these illicit records as legitimate, but that would be a fair way to read the opinion. The court also could have cited (but didn't) the CafePress opinion, which also involved a 230 denial for a website selling tortious third party goods.
So, what does all of this mean? The bad news is that this case seems to open up a major bypass to 230 for plaintiffs. They don't need to sue a website for a third party-caused tort by asserting the prima facie tort against the website; instead, following the "logic" in this opinion, all a plaintiff needs to do is find that the website made a marketing representation somewhere that says or implies the tort wouldn't occur, and the claim for bad marketing should be outside 230's coverage. [Note: I understand that's not exactly what Patel said because she did reject the claims for eBay's marketing representation about screening. But the claim over "safety" fits this pattern neatly.]
On the other hand, I'm not sure this case reached the wrong result. Assume for a moment that per 230, eBay isn't liable for the marketing claim that its vendors are "safe." This seemingly would mean that eBay could freely make such claims, true or not, reap the economic benefits from consumer choices driven by those claims, and yet completely avoid liability. I don't think 230 should provide a free pass for commercial misrepresentation. eBay picks the words to describe its business; it should own those words.
In any case, as this case illustrates, I think it's fair to say that 230's preemption of marketing representations remains a major open area in 230 jurisprudence. If you're looking for a term paper project, this looks like a good one to me.
Even if 230 doesn't apply, eBay has other defenses against liability for the alleged marketing misrepresentations. The court rejects eBay's defense based on the release in the eBay user agreement, but it does dismiss the fraud claim (with leave to amend) because it lacked the requisite specificity.
The opinion also discusses one of the auction vendor's user agreements, which specified a highly expedited extrajudicial adjudication as the sole dispute resolution option. The court tosses the contractual adjudication procedure as unconscionable due to the contract's formatting and substantive unfairness. Along the way, the court casts some doubt on extrajudicial adjudication clauses that have "no witness" provisions. If you're interested in forming enforceable online user agreements, you should check out this opinion.
Posted by Eric at 09:40 AM | Derivative Liability , E-Commerce , Licensing/Contracts , Marketing | TrackBack
March 11, 2008
Iowa Offers Tax Breaks to "Web Search Portal Businesses"
By Eric Goldman
Iowa, showing its technological savvy, has passed a law providing some tax abatements for "web search portal businesses" that invest $200M in the state in 6 years. See HF 2233, enacted Feb. 28, 2008. Most industry participants would not use the term "web search portal business," but the statute provides a useful definition as an "entity whose business among other businesses is to provide a search portal to organize information; to access, search, and navigate the internet, including research and development to support capabilities to organize information; or to provide internet access, navigation, or search functionalities." Well, that helps narrow down the universe of qualifying companies.
Given the size of investment required, I'll give you three guesses who the Iowa legislature might have been thinking of. Give up? Check out this handy list of lobbyists for the bill and see if you spot any familiar names.
As the fiscal note indicates, they anticipate a whopping TWO buildings to be built pursuant to this abatement. Not that this is special interest legislation or anything... On that note, one of the Iowa senators blogs on the law. Why is he winking at me?
Posted by Eric at 08:13 PM | E-Commerce , Search Engines | TrackBack
March 02, 2008
Feb. 2008 Quick Links
By Eric Goldman
Advertising
* BusinessWeek: Monetizing social networking sites isn't as easy as everyone had hoped, clickthrough rates are through the floor (0.04%!), and ad proliferation on the sites is driving users away.
* Wilbur, Kenneth C. and Zhu, Yi, "Click Fraud" (January 2, 2008). This paper appears to argue that search engines can increase their profits by failing to disclose the true rate of click fraud on their network.
* In re Miva, Inc. Securities Litigation, 2008 WL 450037 (M.D. Fla. Feb. 15, 2008). This lawsuit alleges that Miva and some associated individuals understated or misreported Miva’s reliance on click fraud, spyware and third party distributors in its public statements and thus inflated the company's stock price. Last year, the court dismissed many of the allegations but let a couple survive. In this ruling, the court dismisses a few more defendants from some statements and lets the rest of the case proceed.
* Going-out-of-business sales are often just another scam. (HT ContractsProf). Note this is completely consistent with economists’ theoretical predictions of final-period behavior of trademark owners.
* Google's stock has lost $70B in market cap in 7 weeks. Oh darn. Clickz offers some theories about why Google's clicks are declining. Could lower rates of click fraud be part of it?
* Hal Varian, Google's Chief Economist, argues that Google's marketplace success is solely due to its "secret sauce" (i.e., the advantage of learning by doing) rather than any defects in the marketplace.
Spam
* Jaynes v. Virginia (Va. Sup. Ct. Feb. 29, 2008). By a 4-3 vote, the Virginia Supreme Court upheld Jeremy Jaynes' 9 year sentence for violating Virginia’s spam law.
* Silverstein v. Experienced Internet.com, 2008 U.S. App. LEXIS 3364 (9th Cir. 2008). Ninth Circuit dismissed a CAN-SPAM lawsuit for lack of jurisdiction when the defendants attest that they didn't send the message and aren't local.
Domain Names
* NSI has been sued for its practice of grabbing pre-registration domain names based on WHOIS searches. The complaint. Good luck defending those practices, NSI!
* Two more breathy articles about the economics of domaining from the New York Times and Network World.
47 USC 230
* Johnson v. Barras, 2007 CA 001600 B (DC Superior Ct Feb. 1, 2008). Court dismisses a lawsuit against a website for republishing a defamatory story per 47 USC 230.
* Yet another doomed lawsuit against MySpace for facilitating communications between an adult male and an underage female that led to sex. Sam Bayard's comments.
Pornography
* NY Lawyer (login required): "Defense Bar Sees Growing Practice in Internet Sex Crimes"
* A federal obscenity prosecution for publishing graphic short stories (without pictures) on the Internet? As Tim Wu says, "astonishing."
* The Utah legislature is considering entering the marketplace again, this time through a certification mark program for Internet access providers who are willing to combat porn. See HB407. Of course, the Utah legislature has had terrific success in the past creating successful new business opportunities that the marketplace has overlooked.
User-Generated Content
* Nick Carr: "What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay." Like, I think, Wikipedia.
* Slate on the top-heavy nature of contributions to Wikipedia and Digg.
* Christian Science Monitor: Teachers Strike Back at Students' Online Pranks.
* Sam Bayard on a motion to quash in the AutoAdmit case.
Reputation
* eBay no longer lets sellers leave negative/neutral feedback for buyers. This putatively stops sellers from retaliating against buyers who leave legitimate complaints, but it also skews the database towards only positive reviews, which ultimately undercuts its credibility.
* In India, where courtships remain very brief by US standards and grooms can be paid dowries by the bride's families, there is an emerging trend for brides to hire "wedding detectives" to ferret out the scoop on grooms and whether their representations are correct.
* Funny article on being a secret shopper for Consumer Reports.
* Dan Solove's book, The Future of Reputation, is now available online for free. Ethan's review of the book.
Patents
* Six years later, eBay finally buys it now: eBay v. MercExchange settles with eBay buying out some of MercExchange's patents and licensing others.
* Mike Masnick: "Psst! Patent Examiners Do Not Scale"
Copyright
* Mike Masnick: “Why We Should All Want Politicians Who Plagiarize.”
* Do Not Resuscitate...My Copyrights (funny).
Miscellaneous
* Citizen Media Law Project has a useful discussion on getting insurance for cyberlaw risks.
* People v. Fernino, 2008 WL 382348 (N.Y. City Crim. Ct. Feb. 13, 2008) (woman violated a no-contact order when sending a MySpace message to the person).
* Mike Masnick: "We Need A Broadband Competition Act, Not A Net Neutrality Act"
* A retrospective on some of the leading dot-coms from the 1990s.
Posted by Eric at 05:32 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack
February 14, 2008
Classic Article on "Cybermediaries"
By Eric Goldman
Mitra B. Sarkar et al., Intermediaries and Cybermediaries: A Continuing Role for Mediating Players in the Electronic Marketplace, J. COMPUTER MEDIATED COMMUNICATIONS, 1995
I've been working on my Brand Spillovers paper, which in part addresses the trademark legal principles that govern intermediaries including retailers and search engines. The Sarkar article is one of the most prescient and clear-sighted articles assessing the role of online intermediaries. In particular, it provides a terrific checklist of ways that intermediaries can provide valuable services to consumers and producers, thus continuing to add value to the distribution chain even as transaction costs generally decrease due to electronic mediation. This article is even more remarkable because it was written in the mid-1990s, at the height of cyberspace exceptionalism and at the time when conventional wisdom was that the Internet was going to create widespread disintermediation. A refreshing read, even today.
Posted by Eric at 11:09 AM | Derivative Liability , E-Commerce , Internet History | 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
December 13, 2007
Internet Doctor Gets Extra Jail Time for Using Website--US v. Hanny
By Eric Goldman
U.S. v. Hanny, 2007 WL 4322265 (8th Cir. Dec. 12, 2007)
Given its blatant illegality, I'm a little surprised that we don't hear more about busts of companies and individuals selling prescription drugs over the Internet. I did a quick search in Westlaw and it looks like there have been a few dozen cases, but they don't seem to get much mass-media attention. I also wonder if the enforcement actions have succeeded in actually reducing consumers' ability to order prescription drugs over the Internet. I don't see as many brazen spammed come-ons as I recall getting a few years ago, but I'm not sure how generalizable my experience is.
Today's case involves the criminal prosecution of Dr. Thomas Hanny, a Connecticut-licensed doctor who retired after 30 years as a surgeon. He then hopped on the dot-com bandwagon, writing Internet-mediated prescriptions first for Pharmacon and then, after Pharmacon was shut down by law enforcement, for Jive. Hanny initially had doubts about the propriety of this line of work and even went so far as to hire his own attorney (who also expressed doubts), but Hanny either felt the issue was colorable enough or decided to look the other way, going so far as to ignore a cease-and-desist letter from Missouri prosecutors. Collectively, these proved to be poor decisions that will cost Hanny 33 months of his liberty.
It's a little hard to feel sorry for Hanny renting out his doctor's license, especially given that he doubled down after the Pharmacon flameout by going to another dot-com and double doubled down by persisting after the Missouri C&D. On the other hand, Hanny did get screwed on the issue decided in this opinion by the Eighth Circuit.
The issue is the 2 level sentencing enhancement for "the distribution of any controlled substance 'through mass-marketing by means of an interactive computer service.'" The government did not appear to introduce any evidence that Pharmacon or Jive used spamming or other advertising methods to generate traffic to their websites. Instead, the government contended that the mere existence of an e-commerce website itself constitutes mass marketing. The Eighth Circuit signs off on this interpretation, invoking some moldy-oldy analogies when it says "A public, interactive website reachable by an ordinary web search engine is, at the least, a billboard on the information superhighway." [If it were up to me, any Cyberlaw opinion invoking a tired and misused billboard metaphor would itself be subject to a 2 level enhanced penalty]
My problem with this is that the court conflated retailing with marketing. Simply operating a retail store without marketing to generate traffic cannot qualify as "mass marketing" under any reasonable interpretation of that phrase. As a result of this confused interpretation, every Internet retailer automatically qualifies as engaging in "mass marketing" for purposes of the sentencing enhancement.
Posted by Eric at 10:50 AM | Content Regulation , E-Commerce , Marketing | TrackBack
December 10, 2007
Yale Reputation Economies Symposium Recap
By Eric Goldman
Reputation is a hot topic in Cyberlaw circles, so the Yale ISP conference on Reputation Economies in Cyberspace came at a propitious time. Some of my meta-observations from the talks.
1) We lack a uniformly accepted definition of reputation. During the conference, it was clear that most speakers were working with their own idiosyncratic definitions. Without a standardized definition, people can easily talk past each other.
2) Reputational systems are everywhere--FICO scores, letters of recommendation, Google PageRank, product review sites like Epinions, spam filters, employee evaluations, etc. I plan to catalog them in my next big paper. For now, Jonathan Zittrain gave two interesting examples: (1) British pubs are now taking patrons’ fingerprints and publishing a blacklist of rowdy pubgoers to other pubs, and (2) websites allow angry drivers to criticize bad drivers by license plate number.
3) We often treat reputation as a monolithic assessment (good or bad), but it is granular and contextual. Reputation systems need to reflect these nuances, and we’re seeing movement in that direction. For example, eBay is considering more granular feedback scores, which might entail different scores for product description accuracy and shipping speediness. However, increased granularity is subject to the accuracy/simplicity tradeoff—increased complexity improves accuracy but makes it more costly to participate in the system.
To overcome the accuracy/simplicity tradeoff and reduce collection costs, reputational data can be collected automatically. Bill McGeveran compared Facebook’s automatic collection of recommendations through Beacon with ratemyprofessor.com (a site I’ve critiqued before--1, 2, 3), where the communication costs discourage students from providing feedback unless they hold extreme views (i.e., love it/hate it).
Jonathan Zittrain suggested that people should be able to request that some information should not become part of their reputation. He gave robots.txt as an analogy; it is a voluntary standard that web publishers can use to keep content (that might have reputational implications) out of the search engines, which in turn significantly reduces its visibility. Although robots.txt is voluntary, it is widely followed. Jonathan thinks a similar voluntary system might be helpful for reputational data.
4) As noted by several speakers, reputation has economic value that can be converted into cash. For example, spammers have better delivery success—and thus make more money—if they can work with a high-reputation email address that is less likely to be blocked/filtered, and an seller with high feedback commands premium prices for his/her auctions. These payoffs create incentives for “bad guys” to capitalize on undeserved reputation, leading to the hijacking of high-feedback accounts and feedback-inflating activity (such the serial consummation of penny auctions) that can be used for a short but intense burst of fraud.
Bill McGeveran gave Facebook’s Beacon as another example of reputation’s selling power. In that case, Facebook and marketes are engaged in “reputational piggybacking” to get extra credit from the “recommending” user’s validation.
Because reputation has economic payoffs, we are tempted to provide property-like protections for reputation. Trademark law is an example of this in the commercial context. In contrast, with respect to individuals, damaged reputations can have significant non-economic harms that are not well-handled through property systems. Discussions about legal protection for reputations can get confusing when economic protectionism are conflated with these non-economic harms.
5) No reputational system will be perfectly accurate. Any system will have Type I and Type II errors. So how accurate must a reputational system be for it to be credible? We should assess this question by comparing a reputational system’s errors against the errors from alternative systems (or the absence of the system altogether).
A reputational system might be improved through more robust error correction mechanisms. Jonathan Zittrain gave the example of the Google News feature that allows a quoted individual to add comments right below the article. This reminded me a lot of Frank Pasquale’s asterisk proposal.
6) Reputational information is time-sensitive in that more recent reputational information is more useful to assessing reputation. Jonathan Zittrain proposed a concept of “reputational bankruptcy” where "old" information could be permanently suppressed because it is not useful to make future assessments. He analogized this to the time-based degrading of eBay’s feedback score, which segregates transactional information by date (i.e., 1 month, 6 month, all time).
More resources on this topic:
* notes from my talk
* my article on the intersection between online word of mouth and trademark law
* the collection of position papers from the event
* other recaps: the conference wiki, Jenny Ambrozek, James Grimmelmann, Aldon Hynes, Greg Lastowka, Andy Oram, Frank Pasquale (1, 2), Rebecca Tushnet (1, 2, 3, 4), Michael Zimmer
Posted by Eric at 10:27 PM | E-Commerce , Publicity/Privacy Rights , Spam , Trademark | TrackBack
December 05, 2007
eBay Sued for Failing to Take Down Listings--Hansson v. Brower
By Eric Goldman
Hansson Inc. v. Brower, 4:07-cv-05898-CW (N.D. Cal. complaint filed Nov. 21, 2007)
In my Cyberspace Law course, I teach students that they should not just consider the liability of the person who committed the allegedly tortious behavior, but they must always ask who else is liable for that behavior. We saw that principle illustrated recently in the ISC2 v. Degraphenreed case, where Google and Yahoo got pulled into a trademark lawsuit for hosting some content that allegedly infringed the plaintiff's trademark.
Today's case in point is Hansson v. Brower, a seemingly garden variety trademark enforcement action. Hansson makes dollhouse furniture and claims that Brower is selling competitive items under the Hansson name via eBay, so Hansson is suing Brower for trademark infringement, dilution and related causes of action. But Hansson goes further. Hansson claims it sent 8 takedown notices to eBay and that they were all ignored and that it sent a C&D letter and that too was ignored. So Hansson has added eBay as a defendant for contributory trademark infringement.
Some questions I have:
1) What happened to those 9 communications from Hansson to eBay? Did they all get lost in the mail? Did eBay make a policy choice that they should be rejected? Did eBay just muff them?
2) What is the appropriate legal standard for eBay's liability? This is a big open question mark in Cyberlaw. 230 doesn't apply by its terms to federal trademark claims, and 512 only applies to copyright. eBay might be able to claim the innocent printer/publisher defense in 15 USC 1114(2), although Hansson has alleged that eBay has the requisite scienter to negate "innocence." So at the moment, eBay's risk of contributory liability may be governed by the common law of contributory trademark liability, and we really don't have many good/illustrative precedents for how this applies to a platform like eBay's. We're closely watching the Tiffany v. eBay lawsuit in NY, which is an analogous lawsuit, but we don't have any useful precedent from that yet. So should eBay be liable if they actually received notice of infringement and failed to take down the noticed auctions? Perhaps.
3) Even so, was it wise to drag eBay into this otherwise ordinary enforcement lawsuit? As I explored with the ISC2 lawsuit, suing eBay ensures that a well-funded litigant with good lawyers will be on the defense side. I swapped emails with James Cai, attorney for Hansson, asking him why he named eBay, and he said the goal was to get eBay to intervene. I'm sure he'll get eBay's attention now, but he may get more of it than he wanted.
Posted by Eric at 02:28 PM | Derivative Liability , E-Commerce , Trademark | TrackBack
December 02, 2007
Taxonomies and Commercial Reputations
By Eric Goldman
This coming Saturday, the Information Society Project at Yale Law School is sponsoring a very attractive event entitled "Reputation Economies in Cyberspace." I'm especially excited about this event because I think my next big project will focus on reputation topics, so this should be a fantastic learning experience. I'm on the last panel, which is a precarious time because of the high preemption risk. As a result, I've picked a less-than-mainstream topic with a low preemption risk, although I may move into more mainstream topics depending on what gets discussed earlier in the day. Here's the short summary I provided to the conference organizers:
_____________
Taxonomies and Commercial Reputations
A “taxonomy” is a structure for organizing content. It provides the anchors that allow topically relevant content to be grouped together in a logical fashion. Among other benefits, taxonomies can provide a system for designating unique identifiers for marketplace offerings. These unique identifications are crucial for the development and management of commercial reputations. For reputational mechanisms to work properly, objective and subjective data about offerings need a place to be associated uniquely with the offering. Without this, the data has no place to attach, distorting the reputational mechanism.
Proprietary rights threaten the ability to optimally taxonomize marketplace offerings in at least two ways. First, taxonomy developers can assert a proprietary interest in their taxonomies. Second, trademark owners can use their proprietary rights to distort the taxonomy or content attached to it.
Taxonomy Developers’ Rights
Taxonomy developers may be able to claim copyright in their taxonomies. See American Dental Association v. Delta Dental Plans Association, 126 F.3d 977 (7th Cir. 1997); but see Southco, Inc. v. Kanebridge Corp., 390 F.3d 276 (3d Cir. 2004); ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., 402 F.3d 700 (6th Cir. 2005). Even if they cannot, online taxonomy developers can restrict access to their taxonomies through server protection doctrines (such as trespass to chattels, Computer Fraud & Abuse Act, computer tampering doctrines, etc.).
Excludable taxonomies create two problems. First, competitors need to recreate taxonomies. This leads to duplicative efforts that are socially wasteful, and implicitly it increases barriers to entry by new intermediaries. Second, and perhaps more importantly, it hinders consumers’ abilities to do apples-to-apples comparisons between marketplace offerings, because consumers must do extra research to determine if taxonomical nodes in two different taxonomies are the same offering. As a result, consumers miss valuable reputational information because they cannot find it.
There is a licensing market for taxonomical data in many (but not all) product verticals. These licensing programs can be expensive for new entrants. Some licensors provide unique identifiers that can enable consumers to make apples-to-apples comparisons, but in other cases, catalog standardization/normalization remains a challenge. Furthermore, if there are competitive licensors in a particular vertical and they use different identifiers, then consumers may face a cacophony of identifiers.
This could be solved through a comprehensive and non-excludable product taxonomy with unique identifiers for all marketplace offerings. The exemplar is the ISBN taxonomy, which has done a remarkable job of allowing consumers to find and compare books. Because this economy-wide taxonomy hasn’t developed via private efforts, and because any developer will likely assert proprietary interests in the taxonomy in ways that would hinder its functioning, government sponsorship may be necessary (and appropriate) to develop the uniform taxonomy.
Trademark Owners’ Rights
By definition, trademarks should act as unique identifiers for marketplace offerings. Presently, trademarks provide the main taxonomical structure for marketplace offerings in most industry verticals. However, the proprietary interests of trademark owners limit the utility of trademarks as a taxonomy in at least two ways.
First, trademark owners can use trademark law to limit the use of their trademarks as a taxonomical node. Retailers can generally use trademarks for the products they sell under the trademark exhaustion doctrine. However, other intermediaries (such as product review sites) have no such defense, and their usage may qualify as a trademark use in commerce, meaning that any trademark inquiry becomes messy and unpredictable. Furthermore, search engines provide consumers with access to unstructured databases and use user-initiated search keywords—which may be trademarked—as a type of “dynamic taxonomy,” and this has exposed search engines to potential trademark liability as well.
Second, trademark owners may also use trademark law to strip out content that has been anchored at the trademarked taxonomical node. For example, in a group of product reviews, trademark owners could attack negative reviews as violating their trademarks. Once again, those reviews might satisfy the trademark use in commerce doctrine, leading again to messy and uncertain analysis. Indeed, trademark owners have every incentive to use trademark law to produce “lopsided databases” where favorable opinions remain and unfavorable ones are excised.
Some solutions to address these problems include:
1) We should provide a legislative safe harbor allowing search engines to use trademarks to create dynamic taxonomies for unstructured databases.
2) We should use the innocent printer/publisher safe harbor (15 U.S.C. §1114(2)(A)-(C)) more extensively to curb efforts to produce lopsided databases.
3) We should categorically exclude all referential trademark uses (i.e., uses of a trademark for its referential value), even if made by commercial actors in commercial settings, from trademark scrutiny. I build this argument out here.
Posted by Eric at 08:03 AM | Copyright , Derivative Liability , E-Commerce , Trademark | TrackBack
November 13, 2007
Geolocation and A Bordered Cyberspace
By Eric Goldman
I recently gave a talk on the general theme of the future of e-commerce, and I was allowed to take the topic in any direction. I decided to talk a little about the propagation of geolocation technology and its consequences for a borderless Internet. My notes from the talk:
______
A constant problem in Cyberlaw: the difficulties of authenticating users for age and geography. With respect to geography, in the mid-1990s, there was a strong belief that cyberspace was borderless. Examples:
* John Perry Barlow's 1996 Declaration of the Independence of Cyberspace
* 1997: ALA v. Pataki, where a state anti-Internet porn law (a baby CDA) was struck down as violating the dormant commerce clause. In that case, Judge Preska said: "Geography is a virtually meaningless construct on the Internet."
But there are ways to restore geographic borders to the purportedly borderless Internet:
1) Ask users to self-report. Users may want to self-report geography, especially in the e-commerce context where they want physical goods delivered or need to report their address to authorize a credit card purchase. But the law could force online actors to compel users to self-report geography and then act on the reported information. Examples:
* LICRA v. Yahoo. The French court envisioned that Yahoo could do 90% effective geographic authentication through a combination of IP address analysis and user self-reporting if Yahoo popped up windows asking users to self-report before being allowed to access the website.
* Alaska SB 140, an anti-adware law. To combat pop-up ads, the statute requires software vendors to display pop-up windows asking users to self-report geography.
A world with compelled requests for user self-reporting of geography would be a pop-up filled world constantly asking "where are you now? where are you now?" [see the analogous Verizon ad campaign] This makes user self-reporting undesirable, in addition to being unreliable.
2) IP address analysis. IP addresses are allocated on an International scheme. Yahoo used this scheme to display local ads, a fact noted in the LICRA court. IP address analysis can be more regional; for example, Google does geo-targeting on a more granular basis. Ex: if I search for "mercedes" in Google, I get local Mercedes dealers in the Bay Area. But IP address analysis is incomplete/imperfect.
So if the only geographic authentication tools were IP address analysis or user self-reporting, the Internet would remain more borderless than bordered. However...
3) Geolocation technology. In the future, Internet access devices will be coupled with GPS technology that will automatically report user geography. For example, many mobile phones already have GPS technology in them, and consumers use other mobile devices (e.g., Blackberries) that have geolocation technology. Inevitably, the boundaries between computers and these geolocated mobile access devices will dissolve, meaning that Internet access devices will be geolocated and will automatically self-report user geography as part of interacting with other online actors.
A geolocated Internet will have some benefits. Most obviously, ads can be geographically targeted in ways that can help consumers (i.e., a driver searching for gas can get ads from nearby gas stations). It will also enable other localized content where that matters (weather, directions, location of friends).
But a geolocated Internet will also enable governments to force online actors to "honor" the geographic information. Thus, states could legitimately enact state-specific laws and require online actors to customize their offerings for state residents. Governments could also use the geolocation information to created walled environments, including more highly filtered/screened content. We've already seen this in China and some other countries. In these situations, Internet users will have very different Internet experiences based on their geography. Thus, a geolocated Internet should contribute to the demise the Internet utopianism. Instead of bringing people together over a borderless network, a geolocated world reenables borders that will keep us further apart.
Posted by Eric at 05:44 PM | Content Regulation , E-Commerce , Internet History | TrackBack
November 10, 2007
Google Resists Subpoena for Keyword Ad Purchases--Connor Sport Court v. Google
By Eric Goldman
Connor Sport Court International, Inc. v. Google Inc., CV-06-3066 PHX JAT // CV 07-80252 (N.D. Cal. motion to compel filed Oct. 31, 2007)
This summer, I reported on trademark litigation between Connor Sport Court and Rhino Court. The parties had settled the lawsuit, but then Connor complained that Rhino violated the settlement by buying keyword advertising triggered to Connor's trademarks. Connor then submitted a discovery request to Google seeking records of other people who had bought Connor's trademarks as keywords. As I noted at the time, the requested information had significant competitive value, and Google's delivery of the information could prompt a lot of other similar discovery requests to Google.
Initially, Google seemed inclined to give Connor the data it asked for, but apparently Google changed its mind. Instead, Google has refused to turn over any data related to third party purchases and didn't turn over much related to Rhino. Connor apparently still believes the requested information is worth pursuing, because it has now filed a motion to compel Google to comply with its discovery request.
Google might take the opportunity to clarify its policies regarding the disclosure of keyword ad purchases. Connor's brief claims that Google provided Rhino with information about a third party's ad purchase, including the ad copy, the maximum cost-per-click bid, the number of clicks and impressions, the average ad position and more. Is Google handing out this information merely based on a subpoena, or is Google going to make it harder for litigants to get access to this data? According to the filing, the hearing is scheduled for Dec. 7 at 9 am in San Jose.
Posted by Eric at 12:53 PM | E-Commerce , Marketing , Privacy/Security , Search Engines , Trademark | TrackBack
October 30, 2007
Vendor of Illicit Phone Records Not Protected by 230--FTC v. Accusearch
By Eric Goldman
Federal Trade Commission v. Accusearch, Inc., 06-CV-105-D (D. Wy. Sept. 28, 2007)
Accusearch (a/k/a Abika) offers for sale records of telephone calls made by telephone subscribers. Abika doesn't acquire the records itself directly from the phone companies; third parties do that. Even so, I believe the collection and resale of these phone records was illegal throughout the relevant time period. (Michael Erdman explores this more).
The FTC brings an action against Abika for unfair trade practices. Abika defends on 230. The FTC argued that Abika was the retailer; Abika argues that it is just an intermediary making matches between buyers and sellers of the records. The court rejects the 230 defense for two separate reasons:
* the statutory terms publisher/speaker are ambiguous, at least as applied to this case. Thus, the court turns to 230's legislative history to conclude that Congress didn't mean to protect these types of claims. The court says snarkily "It is ironic that a law intended to reflect a policy aimed at deterring 'stalking and harassment by means of computer' is now being urged as a basis for immunizing the sale of phone records used for exactly those purposes." (Fair enough, but see Zeran!)
* reselling the records meant that Abika "participated in the creation or development of the information" and thus became an information content provider itself.
Both of these arguments are pretty strained. The statutory references to "publisher" and "speaker" aren't entirely clear, but dozens of cases have interpreted them. It would have been nice to see the court consider those precedents before jumping to the legislative history as if the court is reading a 10 year old statute for the first time. As for the interpretation of "creation and development," I don't see how anyone can interpret those words to include retailing a record without any modifications at all.
Despite these analytical deficiencies, I think the court reached the right result. In my opinion, the retailer/intermediary distinction is the critical linchpin. It's pretty well accepted that an intermediary between buyers and sellers is fully eligible for 230 even if the purchase/sale involves illegal goods--see, e.g., Gentry v. eBay (fake sports memorabilia), Stoner v. eBay (bootlegged recordings). In those cases, eBay was the venue to publish the seller's advertisements to buyers. (See also Ramey v. Darkside Productions, another case holding that a publisher of third party ads wasn't liable for the ads, even if the publisher helped prepare the ads).
In contrast, I think a retailer who acts as the merchant of record of third party goods generally should be liable for selling those goods, even if the goods were acquired for resale from third parties. I don't see how 230 protects a retailer selling goods for its own account--I don't think the claim is appropriately styled as either a "publisher" or "speaker" claim at that point. But see Prickett v. infoUSA, where infoUSA resold data it obtained from third parties but was still eligible for 230.
Unfortunately, I think the court's biggest mistake is that it apparently forgot that it was addressing summary judgment motions, because the court made numerous factual inferences (some apparently contested) against Abika. So I think this ruling is best understood not as an SJ motion, but instead as a bench ruling where the court simply disbelieved that Abika was an eBay-like intermediary and instead concluded that a retailer can't claim 230 for reselling illegal goods for its own account. Rephrased this way, I think the court reached the right result.
For more on this case, see Michael Erdman's nice writeup.
Posted by Eric at 11:26 AM | Derivative Liability , E-Commerce , Marketing , Privacy/Security | TrackBack
October 21, 2007
Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?--Ticketmaster v. RMG
By Eric Goldman
Ticketmaster L.L.C. v. RMG Technologies, Inc., 2007 WL 2988403 (C.D. Cal. Oct. 16, 2007)
You may remember Ticketmaster's multi-year battle against Tickets.com over data aggregation and deep linking. Ticketmaster never got a solid win in that case, but here Ticketmaster successfully advances the same legal theories against someone gaming its allocation of tickets. Hannah Montana fans might cheer this ruling, but some of the court’s analysis makes this a troubling Cyberlaw development.
Introduction
This case involves what I'll call "ticket sniping"--the practice of quickly snapping up highly-sought-after tickets when they first go on sale and then reselling them at higher prices. When it comes to hot concerts--such as the upcoming Hannah Montana tour--Ticketmaster's price may be well below the prices people are willing to pay in the secondary market. Why don't event promoters use auctions or other dynamic pricing scheme to capture this upside on the first sale? I'm reminded of the odd pricing systems for IPOs--just like that market, perhaps Ticketmaster (as an intermediary) deliberately underprices below the market-clearing price to increase its profits.
In any case, initial ticket buyers from Ticketmaster can get an economic windfall, which naturally motivates people to game the initial first-come, first-served ticket allocation system. RMS was one such gamer. They developed software that helped its customers beat other buyers in the rush to get hot tickets. Ticketmaster sued RMS to stop their gaming activities; the court issues a preliminary injunction:
Copyright
The court says that RMS directly infringed Ticketmaster's copyright in its web pages by browsing them to test the operation of its software tool. Effectively, then, the court says that web browsing is copyright infringement. This isn't the first time a court intimated as much, but it's troubling every time we see it.
The court overlooks any implied license to browse because Ticketmaster's "browsewrap" on its home page (which says "Use of this website is subject to express Terms of Use which prohibit commercial use of this site. By continuing past this page, you agree to abide by these terms") acts as an express restriction on browsing, so any access in contravention of those terms constitutes copyright infringement.
One of the key Qs is how RMS's software differs from other search engine robots. The court skirts this Q, simply pointing to Perfect 10 v. Amazon as excusing the cache copies made by web users who follow search engine links. Of course, search engine robots make lots of other copies, and we think these copies are excused because the final presentation (the display of search results snippets) doesn’t infringe. The court doesn't address this at all.
The court also says that RMS is indirectly infringing based on a Grokster inducement theory because RMS's marketing said it's offering "stealth technology [that] lets you hide your IP address, so you never get blocked by Ticketmaster." This is a pretty expansive interpretation of copyright inducement because the marketing references IP address blocks, not copyright infringement, but it's very consistent with the court's moral condemnation of RMS's behavior.
Anti-Circumvention
The court says that website pages are protected by copyright, and the website used a CAPTCHA to restrict access to these copyrighted works. Thus, distributing the software tool designed to circumvent the CAPTCHA to access the copyrighted website violates 1201(a)(2) and 1201(b)(1). Not only does this give unexpected copyright protection for CAPTCHAs, this ruling seems inconsistent with several precedents holding that bypassing a password protection system doesn't violate 1201.
Breach of Contract
As indicated above, the court upholds Ticketmaster's browsewrap. Admittedly, Ticketmaster has improved its contract formation processes since it litigated against Tickets.com, but I'm not sure this was as easy as the court treated it.
Computer Fraud & Abuse Act
Surprisingly, the court denies relief for this claim because Ticketmaster couldn't allege $5,000 of loss. I tell my students that if they can't construct $5,000 of loss under the CFAA, then they aren't thinking creatively enough.
Conclusion
It's easy to point at RMS and its customers as the bad guys. After all, they are trying to get an unfair advantage in the first-come, first-served allocation of scarce tickets for their economic benefit, with the result that later comers have to pay more to get the same tickets.
But what about Ticketmaster's role in this situation? They haven't designed a technologically gaming-resistant allocation of tickets, so they need legal help to solve that deficiency. I also remain suspicious about Ticketmaster's incentives here, both in setting prices and in policing against ticket allocation gaming. Their motives may not be nearly so consumer-friendly as they try to portray.
And this opinion is hardly pro-consumer either. This ruling won't be a problem if future courts limit this ruling solely to a company's efforts to legally protect a competently designed anti-gaming strategy. But some of the more dramatic rulings are anything but consumer-friendly, such as the implicit holding that browsing is copyright infringement and the upholding of Ticketmaster's browsewrap. If other courts apply these principles more broadly, Hannah Montana concertgoers may have gotten a benefit at the expense of us all.
Posted by Eric at 03:45 PM | Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Privacy/Security | TrackBack
October 15, 2007
Online Trust Conference Recap
By Eric Goldman
On October 2, Santa Clara University held a half-day conference called "Trust Online." This event was co-sponsored by the Center for Science, Technology and Society, the High Tech Law Institute, the Markkula Center for Applied Ethics and Microsoft. We brought together policymakers, technologists, lawyers and academics to explore the process by which online companies engender trust from their customers. The topic of "trust" is complicated because it cuts across privacy, security and branding issues. In the end, we discussed all that and more.
The day started off with a keynote by Richard Clarke, formerly Bush's chief cybersecurity czar. His talk started out on a disconcerting note as he described cyberspace as a place of "chaos" and "crime" (shades of California CIO Clark Kelso calling the Internet a "sewer"). But he got onto more productive grounds when talking about how consumers develop trust in different entities:
* trust in the government. Americans' trust in government has fallen to an all-time low. This lack of trust in the government undermines trust across-the-board because, for example, consumers may be reluctant to disclose personal data to websites knowing that the government could get access to it.
* trust in the private sector. He echoed the conventional sentiment among privacy advocates that we need to worry more about Little Brother than Big Brother.
* trust in individuals. He blamed the Internet for the "pandemic" of identity theft--especially lax security.
He proposed five solutions:
1) Biometric ID cards--we need 2 factor authentication online
2) We should ask the government to regulate. He thinks the FCC has the authority to regulate the Internet, and the FCC could instruct ISPs to take specific actions that would reduce risks. He acknowledged that when a person suggests the government should regulate the Internet, others want to take the person away in shackles. That pretty much summed up my reaction to this proposal!
3) We should keep critical infrastructure from being Internet-connected.
4) Industry should improve the security of its code.
5) We should form a government entity that people could trust to safeguard their privacy and civil liberties concerns
Next was a panel on Enforcing and Enabling Trust, moderated by Lise Buyer (one of the star Internet analysts from the dot com boom). Panelists: Scott Charney of Microsoft, Mozelle Thompson (a former FTC Commissioner who is doing a lot of consulting work for Facebook) and Jim Ransome from Cisco. Some notes I made during this panel:
* Charney: consumers need just-in-tirme, actionable information to make trust decisions
* Thompson: people are clamoring for context
* Charney: security and privacy are conflated in the concept of "safety." People just want to feel safe.
* Thompson: people don't want anonymity, then want control over their data (Eric's comment: this makes sense in a Facebook context; not sure if it is more broadly extensible)
* Charney: goal should be risk management, not risk elimination
* Charney: we think of security as binary (is it secure or not), but privacy is a continuum
* Charney: we accept the fact that people may die in the name of privacy (examples: anthrax mailed without a return address; disposable cellphone to make bomb threat)
* Charney: we need to marry authentication with reputation
Next was a panel on Branding and Building Trust. Lise also moderated. Panelists: Alessandro Acquisti of Carnegie Mellon, Chris Hoofnagle of UC Berkeley, and Fran Maier of TRUSTe. Some notes I made:
* [not sure who made this point]: there is a positive correlation between good business practices and consumer perceptions that the company has good privacy practices (Eric's comment: this would certainly explain sentiments towards Google)
* Acquisti: a study showed that stock prices drop after companies announce a security breach, but they quickly rebound after a few days
* Q: what is trust worth? Acquisti: according to his study, people will pay extra for privacy in some cases. Maier: TRUSTe has a case study showing that their logos improve consumer willingness to provide data (Eric's comment: I'd need to look through this case study to see how it regresses possible co-variables)
* Hoofnagle: consumers erroneously believe that companies' ability to use their data is regulated
* [not sure who made this point]: we should give kids amnesty for their youthful postings. i.e., we need to forget some information
* Maier: 15-20% of TRUSTe applicants don't get certified.
The day ended with a keynote by Dave Cullinane, eBay's Chief Information Security Officer who recently joined the company from Washington Mutual. A few notes from his talk:
* eBay employs 2,000 people in its trust & safety department
* eBay/PayPal investigators currently assist in over 2 arrests per day
* He implied that the Department of Homeland Security was trying to get a dataset from eBay to see if they can crunch the data to identify patterns that look like terrorism. I'd like to know more about this!
* Rootkitted Linux boxes--not (as commonly believed) Microsoft boxes--are the vast majority of security threats
Other comments on the event:
* SCU Law student Erik Schmidt at TechLawForum on Richard Clarke's talk
* Cade Metz at the Register on Richard Clarke's talk
* Cade Metz at the Register on Dave Cullinane's talk
* Robert McMillan at InfoWorld on Dave Cullinane's talk
UPDATE: Listen to the podcasts!
Posted by Eric at 01:42 PM | E-Commerce , Privacy/Security | TrackBack
September 07, 2007
August 2007 Quick Links, Part II
By Eric Goldman
* e360 Insight v. Spamhaus Project, 2007 U.S. App. LEXIS 20725 (7th Cir. Aug. 30, 2007). An email marketing company was listed on Spamhaus' ROSKO and sued for defamation and other torts in Illinois. Spamhaus took the position that US courts have no authority to render a judgment on a UK-based operation. The district court ultimately awarded $11.7M in damages and various equitable relief. The Seventh Circuit affirmed the default judgment but vacated the damages and equitable relief, sending those back to the district court to reevaluate the appropriate remedies. I understand that Spamhaus wanted to make a philosophical point by not fighting the lawsuit in the US, but had they overlooked their philosophical objections, they should have won a quick victory per 47 USC 230(c)(2).
* Perfect 10 has appealed its Ninth Circuit 230 loss in ccBill to the US Supreme Court.
* Search Engine Land had a good overview/recap article on geolocation technology. It provides a clear and easy-to-read explanation why the folks who think online businesses can just stay out of a state that enacts dumb regulations are full of crud.
* Pisciotta v. Old National Bancorp, No. 06-3817 (7th Cir. Aug. 23, 2007). Another court (this time, the Seventh Circuit) says that consumer fretting about possible future identity theft isn't enough harm to support a lawsuit. See the analogous JetBlue, Acxiom and Key cases.
* Wikipedia Scanner--an automated tool to determine who is editing Wikipedia pages. Katie Hafner's NYT article on the matter. David Hoffman does a little sleuthing on law firm edits.
* NYT: In the 1990s, a lot of people sought to build an infrastructure for micropayments. Consumers resisted them, but today those efforts seem a little silly--AdSense advertising can generate the same financial benefits for a web publisher without the overhead. Meanwhile, the credit card systems are being stretched to cover micro-transactions because merchants are aggregating a consumer's orders and processing them in bulk (rather than processing each one individually) as a way to reduce the transaction costs.
* NYT: "As video games have surged in popularity in recent years, politicians around the country have tried to outlaw the sale of some violent games to children. So far all such efforts have failed."
* AP: Chinese animated cops will be patrolling the Information Superhighway beat.
* Tired of negative reviews on Yelp, a San Francisco restaurant put up a sign saying "no Yelpers." I wonder if a sign like that lessens or exacerbates negative publicity.
* NYT: Book authors obsessively check Amazon sales rankings and try to game them.
* Facebook accidentally posted some of its source code to a public website. Surely an interesting development for ConnectU's discovery team!
* Another Internet company hires its own in-house economist--this time, virtual world Eve Online.
* A nice retrospective on the Cleveland Free-net, which at one point was a prominent component of the Cyberspace community.
* I have one free guest pass to the CLE International New Media Law conference in SF on Oct. 1-2. Free to the first person who sends me an email request. [SORRY--TAKEN!]
Posted by Eric at 09:48 AM | Content Regulation , Derivative Liability , E-Commerce , General , Internet History , Privacy/Security , Virtual Worlds | TrackBack
August 01, 2007
July 2007 Quick Links, Part II
By Eric Goldman
Virtual Worlds
* After a remarkable run as media darlings, Second Life is now experiencing some of the inevitable backlash. Case in point: Wired's "How Madison Avenue Is Wasting Millions on a Deserted Second Life." In this respect, Second Life reminds me a little of Keen.com--both provide fantastic platforms for monetizing user-generated content, but that powerful economic platform is likely to take root primarily in the sin businesses (porn, gambling, etc.). (FWIW, Keen.com appears to have cleaned up the dial-a-porn and is now focused exclusively on dial-a-horoscopes). As a result, it will be interesting to see what happens to Second Life's numbers in response to their anti-gambling crackdown. Meanwhile, lawyers--the classic late adopters--are gushing about Second Life's potential as a business generator--an interesting counter-perspective to the Wired article.
* World Copyright Law Report: "Some residents have been using a rogue version of a program called CopyBot to make a copy of anything in the Second Life world, thus threatening to undermine the whole basis of the Second Life economy."
Wikipedia
* More marketers wake up to the value of inserting links into Wikipedia despite Wikipedia's nofollow tag. See my earlier explanation of this. Meanwhile, a Wikipedia administrator talks about what Wikipedians consider white hat practices for marketers.
* Willing to cite to Wikipedia in your legal briefs? Need some custom-tailored authority to support your argument? Edit Wikipedia to say what you want!
* Mike Godwin has become Wikimedia’s GC. You may recall that Mike and I bet about Wikipedia’s future; it appears he has raised the stakes on that bet substantially!
User Generated Content
* "GC's Client from Hell": Whole Food's CEO John Mackey pseudonymously posted about his company's stock and his competitor's stock on Yahoo Finance. The WSJ article has some of the juiciest postings. The NYT on CEO "sock puppetry."
* A restaurant owner used consumer reviews from Yelp as part of deciding to fire employees.
* Interesting interview with the pseudonymous founder of a pay-for-Diggs business.
Blogs
* The ABA Journal has entered the crowded field of blawg directories with one of their own.
* Blawgworld 2007: 77 blawgers chose their favorite posts, which were compiled into an e-book. The compilation turns out to be a great way to get noisy blawgers to promote their brilliant contributions to the e-book, which generates traffic and link love for the publisher, which in turn creates a nice delivery vehicle for sponsored content/advertising.
Miscellaneous
* Asch Webhosting, Inc. v. Adelphia Business Solutions Investment, LLC, 2007 U.S. Dist. LEXIS 52932 (D. N.J. July 23, 2007). IAP terminates customer based on complaints that customer was a spammer. Court holds that the consequential damages waiver applies, effectively negating customer's alleged damages. Rejecting the customer's argument that the termination was in bad faith, the court says: "Plaintiff’s arguments about the accuracy of the spamming complaints do not change the Court’s determination because regardless of the ultimate accuracy or veracity of the spamming complaints, defendant was entitled to rely on those complaints so long as it did so in good faith, and plaintiff has not demonstrated any bad faith by defendant." HT: Technology Law Update.
* Consumer Law & Policy Blog: "companies in two recently filed federal cases explicitly invoke [the recent Supreme Court decision in] Leegin as a justification for terminating the eBay auctions of competitors that charge lower prices online."
* Declan on whether anti-spyware vendors are screening for "fedware" (government keystroke loggers designed to capture data before it's encrypted).
Fun
* More proof that technology can save lives: During a power outage at a hospital, doctors were able to complete a surgery using the light of open cellphones.
* I’m a new fan of Oddee. Some recent posts (it helps to think about sexual connotations when interpreting the photos):
- "15 Unfortunately Placed Ads."
- "Most Unfortunate Logos Ever"
- "Unfortunate Business Names.”
Posted by Eric at 11:06 AM | Adware/Spyware , E-Commerce , General , Internet History , Marketing , Spam , Virtual Worlds | TrackBack
April 09, 2007
March 2007 Quick Links Part 2
By Eric Goldman
Yesterday I posted the Google edition of my list of interesting items from March. Today I post the remainder of items that caught my eye last month.
Trademarks/Brands
* Bosley Medical Institute v. Kremer, 2007 WL 935708 (S.D. Cal. Mar. 22, 2007). On remand from the Ninth Circuit, the district court denies Kremer's motions to dismiss/for SJ. Michael Atkins recaps the ruling and case's history.
* Milbank Tweed Hadley & McCloy LLP v. Milbank Holding Corp. d/b/a Milbank Real Estate Services, No. CV 06-187-RGK (JTLx), (C.D. Cal. Feb. 23, 2007). After passage of the Trademark Dilution Revision Act, the court rejects the existence of "niche fame" as support for a dilution action. I’m a little surprised that this plaintiff would bring this losing argument.
* ICANN votes down a .XXX TLD. Again.
* NYT on the increasing challenges of creating a unique global brand in very crowded namespaces.
* Trademarked Sentences: A tool that helps you generate poetry by mixing trademarked slogans.
Blogs/UGC
* BidZirk v. Smith, No. 06-1487 (4th Cir. March 6, 2007). The Fourth Circuit, in a non-substantive opinion, denied a company's request for an injunction against a griping blogger's use of its trademarks. My initial write-up of the case. With this loss, the plaintiff's ill-advised decision to appeal the case is now even more clearly a complete waste of the plaintiff's money and our judicial resources.
* Chapman v. Merchandise Mart Properties, 2007 WL 922258 (D. Vt. Mar. 23, 2007). Woman tries to get TRO against physical-space trade show based on trademark interests in the term "GreenStyle," which is her blog’s title. The court rejects the request, but interestingly doesn't seem fazed by the argument that she may have a trademark interest generated from her blog name. Blog names can be trademarkable with sufficient use in commerce, a factor the court ignored completely.
* Sifry: "70 million weblogs. About 120,000 new weblogs each day, or...1.4 new blogs every second."
* A nice retrospective on the history of blogging.
* Wikipedia is requiring some credentialing after getting burned by a pseudonymous contributor who falsely claimed he was a professor.
* Ed Felten has some terrific observations about building distributed reputation systems like Digg (and, for that matter, Epinions). Ed is 100% correct that reputation systems need substantial stabilization; they don't just work deus ex machina.
Contracts
* Dorr v. Yahoo, No 3:07-cv-01428-MJJ (N.D. Cal. complaint filed March 7, 2007). Yahoo offered a premium subscription service allowing users to send email without Yahoo's ads attached. Then, allegedly, they changed the service's terms, and some of the paying customers were unilaterally bumped to a tier where Yahoo's ads were again attached to their email. Steve Bryant has more. In general, if people pay to eliminate ads, during that period of time, Yahoo should not be able to unilaterally amend the terms so that the user is paying but still getting ads.
* Ken Adams blogs on Affinity Internet, Inc. v. Consolidated Credit Counseling Services, Inc., 920 So. 2d 1286 (Fla. Dist. Ct. App. 2006), where the court held that a contract clause saying "This contract is subject to all of SkyNetWEB's terms, conditions, user and acceptable use policies located at http://www.skynetweb.com/company/legal/legal.php" was insufficient to incorporate an arbitration clause contained in the referenced document. Ken's suggested fix: "The SkyNetWEB user agreement located at http://www.skynetweb.com/company/legal/legal.php constitutes part of this agreement."
Government Agencies
* The National Do Not Call Registry: Annual Report to Congress for FY 2006 Pursuant to the Do Not Call Implementation Act On Implementation of the National Do Not Call Registry (April 2007): "The Commission believes that the fundamental goal of the National Do Not Call Registry — to provide consumers with a simple, free, and effective means to limit unwanted telemarketing calls — has been realized." My curmudgeonly take on why the do-not-call registry isn’t great policy.
* Implementing the Children's Online Privacy Protection Act: A Federal Trade Commission Report to Congress (February 2007). The FTC remains pretty pleased with itself about COPPA, but it