January 27, 2012
Top Internet Law Developments of 2011
By Eric Goldman
As usual, I'm running late with my year-end recap. This post begins with my countdown of the top 5 Internet Law developments of 2011, then it lists other interesting developments and cases. It concludes with some of the most linked posts and then my editor's choice of some posts in 2011 that might have been a little overlooked. As usual, thanks for reading the blog in 2011!
Countdown: My Top 5 List of Developments in 2011
#5: Righthaven Implodes. Since the beginning, I've been skeptical of Righthaven's business model. Seriously, who else thinks it's a good idea to sue small-time mom-and-pop bloggers and non-profits on a one-by-one basis? However, even I had no idea that Righthaven would accelerate their own demise by routinely making basic litigation errors. A sketchy business model + a litigation shop that isn't very good at litigation = one dead start-up. It's always fun (in a bloodsporty way) to watch hubristic bullies get their just desserts, but watching the Randazza firm school the Righthaven litigators in Litigation 101 has been amazing. THAT'S how you litigate.
Righthaven lost often in 2011 (see my August reset). They lost fair use rulings (e.g., CIO, Choudry). They lost on standing grounds (e.g., Democratic Underground, Wolf). They were hit with sanctions. They were hit with hundreds of thousands of dollars of attorney fee shifts (e.g., Leon, Wolf, DiBiase). They even lost their domain name in an auction--a delicious irony given that Righthaven's complaints improperly demanded its defendants' domain names on the theory that it might need the domain name to satisfy a judgment against the defendant, when in fact it was Righthaven's domain name that was used to help satisfy a judgment against it!
Righthaven ended 2011 on death's door, but the trend of newspapers trolling for copyright litigation isn't going away. I'll be watching NewsRight closely in 2012.
#4: Medical Justice Gives Up. Speaking of hubristic bullies... You recall Medical Justice, the organization that helped doctors and other medical service providers take copyright assignments from patients in their as-yet-unwritten reviews so that the doctors could expeditiously remove unwanted reviews by sending 512(c)(3) takedown notices to review sites. It's an interesting legal hack, but it has some bad side-effects, including the fact that patients hated it, the copyright assignments almost certainly were void (for public policy reasons and others), doctors were hurting themselves by discouraging patient reviews (patients prefer to choose doctors when there's a critical mass of patient reviews), and (as our research uncovered) most consumer review sites ignored the doctors' 512(c)(3) takedown notices. Obviously, with those defects, Medical Justice wasn't exactly adding a ton of value to its clients. Medical Justice finally gave up, but too late to prevent a lawsuit against one of its clients and a complaint to the FTC. Chances are Medical Justice will be living with a long-term hangover from this entrepreneurial foray.
Seeing Medical Justice stop peddling anti-patient review tools was slightly satisfying, but that result was always a fait accompli. The reason Medical Justice's change of heart matters is that shady or clueless vendors keep developing new ways to suppress unwanted consumer reviews, and I hope Medical Justice's experiences will discourage other vendors from trying the copyright hack. I talk about these dynamics more in my paper on regulating reputational information.
#3: gTLD Expansion. It remains unclear exactly what ICANN's rollout of unlimited top level domains will do. Due to the expansion of new namespaces, brand owners face a long list of complicated--and potentially expensive--choices to make. Unfortunately, these choices don't really benefit society; instead, the gTLDs tax businesses while the benefits accrue to a small number of service providers (and, of course, ICANN itself). I think many businesses will reserve their name in multiple new gTLDs to prevent squatting--with the net effect that businesses will spend more money just to preserve the status quo. Meanwhile, most consumers are likely to be bewildered by the unlimited number of TLDs, which is just going to increase their tendency to rely on search engines and link directories rather than domain names to navigate to their desired destinations.
#2: Internet Consumer Privacy Lawsuits Tank. 2011 initially looked like the year of the Privacy Plaintiff. A torrent of privacy lawsuits had been filed, plaintiffs had wrested a few important and lucrative settlements, and Internet companies continue to make questionable privacy decisions that create a steady supply of potential new lawsuits.
But the path to riches didn't materialize. Instead, 2011 emerged as the year when privacy class action lawsuits mostly failed miserably. Courts principally rejected the lawsuits on standing grounds for lack of cognizable harm, but plaintiffs failed on other related grounds, such as a lack of damages negating the prima facie case. There were some exceptions where plaintiffs made a little progress (see, e.g., Claridge v. RockYou, Anderson v. Hannaford, Fraley v. Facebook). I'm sure the privacy plaintiffs' bar will be studying those rare successes to formulate a better battle plan--and to better prepare their cases and find strong named plaintiffs, a recurring omission that hasn't gotten a lot better over the year. However, for now, it's clear that the privacy plaintiffs' bar can't just show up in court and hold out their hands for a payday.
#1: Regulators Broke the Internet. We've always known that regulators could combat bad online activity by working "up the chain," i.e., by making upstream service providers liable for the bad acts or obligated to cut off the activity. However, for the most part, we've shared a tacit understanding that systematically going up the chain was a "nuclear" option--it would fix the specific problem but only at significant collateral cost that, on balance, makes the option unattractive.
I think we'll look back at 2011 as the year that tacit understanding broke down. In 2011, regulators around the world showed a seemingly insatiable demand for working up the chain. Although we in the USA like to think we're different from other repressive regimes, the evidence suggests otherwise. Some examples of "up the chain" activity in 2011:
* Arab Spring. Repressive regimes got local Internet access providers to turn off Internet access in the country.
* Operation in Our Sites. The Immigrations and Customs Enforcement (ICE) agency keeps seizing domain names of suspected foreign rogue websites on an ex parte basis, making errors and breaking the law in the process. Mike Masnick blew open the story on Dajaz1.com, which ICE seized on an ex parte basis, conducted secret proceedings for a year, and then gave back the domain name with no explanation.
* Graduated Response. Copyright owners got Internet access providers to voluntarily (?) agree to restrict, and eventually terminate, their users' accounts.
* Secondary liability against intermediaries. Rightowners keep expanding their intermediary targets, including lawsuits against ad networks and SEOs/web designers. To be fair, some of these lawsuits aren't going very far, and expansive secondary liability theories aren't new in 2011.
* Ex Parte Seizures. Rightsowners are asking for the moon against third party service providers in ex parte proceedings, and courts are giving it to them because the third parties aren't there to represent their own interests. We recap this epidemic in this post.
* SOPA and PIPA. These proposed bills were the finest examples of rightsowners pursuing the nuclear option regardless of the collateral damage. The bills' basic architecture was to attack a wide range of intermediaries for third party actions--domain name registrars, search engines, payment service providers, ad networks. By seeking to deputize the intermediaries, the bills sought to instantiate "up the chain" duties across virtually the entire Internet. Putting aside their other policy deficiencies, I think we should resist all laws predicated on that fundamental assumption of intermediary deputization. See my post on the OPEN bill for why I reject the compromise "follow the money" solution. Sadly, I stand virtually alone in my stance.
Other Interesting Developments.
Some other interesting developments this year:
* Patent Reform. The America Invents Act is the most dramatic patent reform bill in years, and it has many provisions that may affect Internet companies, including the joinder standards, the prior user defense, and the novelty/priority standards. The law doesn't fix the overall problems with bad Internet patents or unmeritorious assertions of those patents, but it nevertheless could make some dramatic changes in what Internet companies do.
* Google and Antitrust. Google has become the incumbent in search, and all of its rivals--especially the companies Google is disintermediating--are desperately seeking to knock it off its perch. I believe Google and antitrust was the #1 topic prompting reporter phone calls to me in 2011. We are waiting to see what comes from the FTC investigation into Google's practices, and the list of Google-haters keeps growing daily. At the same time, the anti-Google forces made surprisingly little actual progress in 2011, including suffering a conspicuous (and not even close) loss in the myTriggers case. See my paper on why I am so over the Google antitrust battles.
* DC's Obsession with Busting Silicon Valley Companies. Sometimes, it feels like DC insiders wake up in the morning and wonder, "What Silicon Valley company do I feel like busting today?" Drive down the 101 from San Francisco to San Jose and play the "Spot the FTC/DOJ Bust" bingo game. Some of DC's targets in 2011: Google Buzz, Twitter (finalized in 2011), Facebook, Google pharma ads, Apple and others for no-poaching restrictions, and others. Good times!
* Judges Order Litigants to Hand Over Passwords to Social Networking Sites. This year, several judges ordered litigants to turn over their Facebook passwords to their litigation opponents for discovery purposes. See, e.g., Zimmerman v. Weis (which I added to my Internet Law reader this year). In 10 years, we'll look back at this mini-trend and shake our heads at the judicial cluelessness. Social networking sites contain a mix of public and private information, and letting a litigation opponent root around the account is just as objectionable as making a litigant hand over the keys to his/her house so the opponent can rummage around.
Other Key Court Rulings in 2011
Some other interesting court decisions this year:
* Author's Guild v. Google. The court rejected the Google Book Search settlement agreement for good reasons, but it sent the parties back to square 1. Why the parties haven't been able to broker a legislative compromise is beyond me.
* Barclays v. theflyonthewall. The Second Circuit took a big bite out of the hot news doctrine. Unfortunately, the Second Circuit didn't kill the hot news doctrine outright, but the opinion leaves open very little room for hot news plaintiffs.
* Network Automation v. Advanced System Concepts. The most important keyword advertising ruling to come out in several years. While the ruling itself was a mixed bag for the litigants, the opinion tore down a number of crusty plaintiff-favorable legal doctrines that had cluttered up trademark jurisprudence for years--including virtually mooting the initial interest confusion doctrine and killing the "Internet trinity" bypass to the standard multi-factor likelihood of consumer confusion test. I've noticed that the opinion has already noticeably tilted courts towards more defense-favorable rulings.
* Betty Boop case (Fleischer Studio v. AVELA). For a few months, it looked like the Ninth Circuit had eliminated trademark merchandising rights in characters that were out-of-copyright. Then it changed its mind; but still it liberated Betty Boop to the world.
* PhoneDog v Kravitz. An interesting battle over ownership of a Twitter account.
* Levitt v Yelp/Ascentive v. PissedConsumer. 47 USC 230 still works really, really well as an immunity. In Levitt, Yelp got a 230 dismissal that Yelp had tried to get advertisers to pay to manage consumer reviews. In Ascentive, the court rebuffed a plaintiff's effort to use a trademark infringement claim against a consumer review website to work around 230.
* Habush v Cannon. Buying a person's name as the trigger for keyword advertising doesn't violate their publicity rights.
* UMG v. Shelter Capital. While everyone waits for the Second Circuit's decision in Viacom v. YouTube, the Ninth Circuit stole some of that thunder with a powerful endorsement of the 17 USC 512 safe harbor. Too bad Veoh didn't live long enough to enjoy the win.
* In re Rolando S. Rolando was convicted of felony identity theft for taking a classmate's Facebook page for a joyride. My vote for the most interesting Internet Law case of 2011, and an instant cyberlaw classic. I've already added it to my Internet Law reader, and the students seemed to enjoy discussing the case.
Some of the Most Linked Blog Posts in 2011 (Per Topsy)
* New Advertising & Marketing Law Casebook Available for Review
* Court Orders Plaintiff to Turn Over Facebook and MySpace Passwords in Discovery Dispute -- Zimmerman v. Weis Markets, Inc.
* "App Store" Isn't Generic, But Apple Can't Enforce Its Purported Trademark in the Term--Apple v. Amazon (Apple legal issues are always good link bait)
* Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract -- CX Digital v. Smoking Everywhere (the most popular post of the year by far--a modern Contract Law classic)
* Second Life Ordered to Stop Honoring a Copyright Owner's Takedown Notices--Amaretto Ranch Breedables v. Ozimals
Favorite "Overlooked" Posts
A few posts that maybe got overlooked a little:
* Cyberbullying and Restorative Justice [a Long-Delayed Post on DC v. RR]
* Racy Teen Photos Posted to Facebook Are Constitutionally Protected Speech--TV v. Smith-Green
* Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion
* Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial
* What Would a Government-Operated Search Engine Look Like in the US?
Lists of Yore
Previous top 10 lists from 2010, 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.
Posted by Eric at 09:45 AM | Copyright , Derivative Liability , Domain Names , Evidence/Discovery , Internet History , Patents , Privacy/Security , Search Engines , Trademark | TrackBack
January 03, 2012
Nov.-Dec. 2011 Quick Links, Part 2 (Extended IP Edition)
By Eric Goldman
Copyright
* Costco v. Omega (E.D. Cal. Nov. 9, 2011). On remand after the disappointing non-result from the Supreme Court in this case, the district court gives Costco a decisive win, holding that Omega engaged in copyright misuse:
Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.
The net effect is that Costco violated copyright law's importation clause but Omega's copyright misuse makes the importation not actionable. This is one of the most significant copyright misuse decisions we've seen. Assuming it goes to the Ninth Circuit again, it will be interesting to see what they do with it. If this latest ruling stands, Omega's legal hack will be decisively shut down; and other manufacturers trying to use copyright to control their channels for non-copyrightable articles will want to reevaluate their approach.
* The Righthaven debacle continues to wind towards its messy but inevitable conclusion. Some of the items from the last couple months that caught my attention:
- Every time Righthaven's lawyers whine about opponents' unfair litigation tactics, I'm dumbstruck by the duplicity.
- Stephens Media dropped its efforts to contest that Democratic Underground made a fair use by republishing a newspaper article excerpt.
- Righthaven v. Wolf: "The Court admonishes Mr. Mangano regarding his lack of civility. The motion for reasonable attorney's fees in the amount of $32,147.50 and costs of $1,000.85 is GRANTED."
- Righthaven LLC v. Newsblaze LLC, 2011 WL 5373785 (D. Nev. Nov. 4, 2011). Yet another dismissal for lack of standing.
- the auction for Righthaven.com is going on right now. Current high bid is $1,900.
* C-70/10, Scarlet Extended SA v. Societe Belge des auteurs, compositeurs et editeurs (SABAM) (ECJ Nov. 24, 2011). Some interesting quotes from an ECJ opinion:
- "EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files"
- "The filtering system would also be liable to infringe the fundamental rights of its (Scarlet's) customers, namely their right to protection of their personal data and their right to receive or impart information"
- “E.U. law precludes an injunction made against an Internet service provider requiring it to install a system for filtering all electronic communications passing via its services, which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period”
* Brownmark Films LLC v. Comedy Partners, 2011 WL 6002961 (E.D. Wis. Nov. 30, 2011): In awarding a fee shift to defendants, "the Court finds that Brownmark's legal positions were also objectively unreasonable, and thus their position was frivolous. To this Court, there is little that could justify the plaintiff's stated view that the South Park version was not parody....given the transformative nature of the use and the lampooning Brownmark's original received, there is ample reason to believe that South Park's use would have greater spurred the market for the original. In the internet era, with information freely and quickly accessible, viewers interested in South Park's version could turn to the internet to find a copy of the original. And any confusion over which version was the original could be supplied to online viewers through a statement at the video's web page. For all of these reasons, the Court finds that Brownmark was objectively unreasonable in its position that South Park's use was not fair." Wendy Davis' writeup.
* Carolyn Wright, a/k/a PhotoAttorney, who helps photographers enforce their copyrights, got side-swiped in a misguided enforcement action and had her photo site mistakenly taken offline by a DMCA takedown notice (not surprisingly, GoDaddy was in the middle of this).
* UC Berkeley revamps its policies about student note-taking and recordings of classes. It seems a little odd to encourage faculty members to be sending 512(c)(3) takedown notices freely. James Grimmelmann has more criticisms.
* Gibson v. Amazon (C.D. Cal. Sept. 8, 2011). The court rejected a copyright infringement case against Amazon, Urban Dictionary and others. Gibson is appealing to the Ninth Circuit.
* RIAA is in pre-litigation enforcement mode against ReDigi for reselling digital files.
* The Zynga-Vostu litigation settled.
* Ars Technica: Warner Bros: we issued takedowns for files we never saw, didn't own copyright to
* Megaupload brought a 512(f) suit against UMG for wrongfully taking down a promotional video. The complaint. The contract. James Grimmelmann's comments.
* The economics of the record label-online music site deals look very, very bad for the music sites.
* Techdirt: Congressional Research Service Shows Hollywood Is Thriving
* David v. CBS complaint. Tertiary infringement re-redux: Download.com sued again for secondary copyright infringement for distributing LimeWire and BitTorrent clients.
* A Singapore newspaper sued Yahoo News for copyright infringement.
* An analysis of the Trans Pacific Partnership (TPP).
Trademark
* 1-800 Contacts, Inc. v. Lens.com, Inc., 2011 WL 5403368 (D. Utah Nov. 4, 2011). The court denies 1-800 Contacts' motion for post-judgment relief based on newly discovered evidence. This case could be a textbook case of trademark bullying--remember, 1-800 Contacts has spent well over $650k on this case and Lens.com made $20 (not a typo) of profit directly from its keyword ads based on 1-800 Contacts' trademarks. Prior blog post.
* Speaking of trademark bullying, does an "Eat More Kale" t-shirt infringe any IP rights that Chik-fil-A has in "Eat Mor Chikin"? See the 2011 C&D letter, the 2006 C&D letter and the 2006 C&D response. I assume most kale eaters don't overlap with Chik-fil-A consumers. But, Paul Levy explains why there should be a pox on both parties' houses.
* Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC., 2011 WL 6055489 (D. Neb. Dec. 6, 2011). In a trademark lawsuit, the defendant asked for:
REQUEST NO. 32: All documents referring or relating to purchasing of keywords, “Ad Words,” “sponsored links,” or other advertisements for search engines and any efforts to achieve search prominence on search engines, including but not limited to Your purchase, or consideration to purchase, the name “Lively Skin” or the URL www.livelyskin.com.
REQUEST NO. 37: Documents referring or relating to communications with Google to purchase “lively skin” and “livelyskin.com” as keywords or “Adwords.”
The court says (cites omitted):
In support of its motion to compel, Ishtar states that Lovely Skin's production of documents in response to these requests are “deficient for two reasons.” First, the Google information lacks the dates that the keywords were used, which are necessary to establish “(1) whether Lovely Skin's marks had achieved secondary meaning when Ishtar entered the market; and (2) the extent of Lovely Skin's inequitable use of the term “livelyskin” in its keyword advertising campaigns.” Second, Ishtar claims that as a result of its recent Internet searches, Ishtar has learned that “Lovely Skin possesses additional information regarding keyword purchases made by Lovely Skin through other search engines.” The Court finds that the information sought by Ishtar is relevant to its affirmative defenses of the claims made against it by Lovely Skin.
* Partners for Health and Home, L.P. v. Seung Wee Yang, 2011 WL 5387075 (C.D. Cal. Oct. 28, 2011):
Defendants have infringed Plaintiff's Perma–Life trademark by each of the following acts, taken either individually or as a whole:
a. Registering the domain www.perma-life.co.kr and using it to promote their competing Pearl Life cookware;
b. Applying the metatags “perma life” and “permalife” to the website at www.perma-life.co.kr through which they sold their competing Pearl Life cookware;
c. Applying the term “permalife” as visible video tags (indexes) on videos promoting Pearl Life cookware which they posted on the Internet at video sharing websites YouTube (www.youtube.com) and Tag Story (www.tagstory.com), and on the “blog” site Daum (www .daum.net).
d. Purchasing the term “permalife” as an Internet search engine advertising keyword to direct Internet users to their website at www.pearllife.com at which they advertised their Pearl Life cookware.
* Foreword Magazine Inc. v. Overdrive Inc., No. 10-1144 (W.D. Mich. Oct. 31, 2011). Offering to sell a domain name after getting a C&D can't be introduced as evidence of bad faith in the resulting ACPA suit.
* Weather Underground v. Navigation Catalyst (E.D. Mich. Nov. 9, 2011). Typosquatters' liability for ACPA violations must be evaluated on a domain name-by-domain name basis, not based on the defendant's entire portfolio; and ACPA bad faith cannot be established on a "willful blindness" standard.
* iYogi Holding Pvt. Ltd. v. Secure Remote Support, Inc., 2011 WL 6291793 (N.D.Cal. Oct. 25, 2011). A default judgment against a competitor who created fake reviews bashing the plaintiff.
* Fordham sent a trademark demand letter to Texas Wesleyan for using the acronym "CLIP" to describe its IP center, which garnered derision from many other IP professors. The demand letter (currently set to private; I'm trying to fix that).
* Multi-Time Machine v. Amazon complaint. A watch manufacturer sues Amazon for trademark infringement based on Amazon's internal search engine's results.
* Night Owl Games v. Zynga complaint. Another game developer seeks a declaratory judgment against Zynga over the -ville trademark, this time "Dungeonville."
* Harvard spikes a Yale t-shirt making fun of it.
* Rebecca provides three updates on Southern Snow Manufacturing Co. v. Sno Wizard Holdings, Inc. (see my prior blog post on the case): insurer had duty to defend, a baffling battle over false trademark marking, and a further rejection that metatags matter.
Patents/Trade Secrets
* The Trade Secret Litigator: The America Invents Act: What Will the Impact of the New Patent Law's "Prior Commercial Use" Defense Have on Trade Secret Protection?
* Coca-Cola turns the vault for its secret formula into a tourist attraction.
* The producers of the Bachelor/Bachelorette sued Reality Steve for inducing show participants to leak spoilers. Reality Steve’s response.
* Are strict limits on e-discovery coming for patent cases?
* All Things D reports on Abhyanker v. Benchmark Capital, an idea theft lawsuit against a VC fund involving the entrepreneur who also is behind Trademarkia.
Posted by Eric at 01:05 PM | Copyright , Domain Names , Evidence/Discovery , Patents , Trade Secrets , Trademark | TrackBack
October 31, 2011
Notes from HTLI Conference on Defending Against Patent Risk
By Eric Goldman
A couple weeks ago, the High Tech Law Institute and the Berkeley Center for Law & Technology co-sponsored a major conference on the evolving patent ecosystem, called “Defense 2.0: New Strategies for Reducing Patent Risk.” We had this conference in the works long before Google started spending like a drunken sailor to buy up patent portfolios, but Google’s recent acquisition binge provided dramatic evidence that perhaps we needed to discuss the phenomenon.
Companies in the computers/software space—especially the smartphone industry—face an daunting risk of patent lawsuits, which has prompted them to spend a LOT of money on patent portfolio acquisition for the sole purpose of securing their “freedom to operate.” Companies amortize the cost of buying their freedom to operate by baking it into their prices, so we as consumers effectively pay the incremental amount--which flows as a lump sum acquisition price to a small number of patent portfolio owners. If society is getting commensurate incremental benefits from these patent portfolio owners, then the patent system is working just fine; but if we aren't getting that benefit, and instead this tax is incurred because of the costs of litigating patents, then the system is very deeply broken.
This conference was unusual in that it was focused almost entirely on defense-side considerations (the lunch panel was the main exception). Most academic conferences seek “balance” in the form of intellectual diversity; i.e., for every plaintiff expert, there is a defense expert intended to counterbalance the plaintiff perspective. We take balance very seriously at our conferences, but this time we suspended the rule because of the complexity of the defense-side issues and the import of defensive perspectives to the Silicon Valley community. In fact, very few geographic communities could support a defense-focused patent event, but we had a strong showing of about 200 people attending.
Although I was an enthusiastic supporter of this conference, the real “brains” behind it were Robert Barr of BCLT and especially my colleague Colleen Chien, who is doing important and fresh work in this area. See her SSRN page, and follow her at Twitter.
This post provides my notes from the day. As usual, these are not verbatim transcripts, they are my impressions of the speaker’s remarks. Please confirm any statements before relying on them or attributing them to the speakers. We will be posting a video recording from the conference so you can enjoy the event yourself if you missed it.
Robert Barr (UC Berkeley). To talk about Defense 2.0, we need to define Defense 1.0. Defense 1.0: companies file lots of patents either for cross-licensing or mutually assured destruction. Companies built their portfolios with little supplemental buying of patents. Litigation between operating companies remains a big deal, but NPEs/PAEs have emerged as well.
Laura Sydell (NPR).
She’s not opposed to patents, and she doesn’t want to blow the whole system up. Yet, when she would say “patents” around people in the tech world, people would grimace. Many Silicon Valley people don’t seem to like them.
Intellectual Ventures lab is an amazing company. When it said that best inventors may not be best businessmen, this message resonated with her; it parallels her experiences with artists, who may be gifted artistically but not with business acumen. So she asked IV for an example of success story, and they mentioned Chris Crawford. Her response to investigating him “shocked” her.
Crawford’s patent was messy. NPR had 3 patent attorneys review it (not all of that got mentioned in her story). Their response: this patent wasn’t novel. Then, IV sold the patent to Oasis Research (but retained a cut) and sued lots of cloud companies, and all of the defendants seemed to settle because it was cheaper to license than sue.
Laura and her peer went to visit Oasis Research in Marshall, TX and found an empty office. That didn’t jibe with her thoughts about “innovation.” But it was hard to get anyone to talk due to NDAs. Plus, IV is feared in industry. Inventors feel they don’t pay well.
Laura was struck that the Crawford patent wasn’t a unique story. Instead, there appears to be a whole industry built around similarly weak patents.
Since her story aired, issue has exploded. Companies are spending billions of dollars to defend against lawsuits. The patent reform bill didn’t solve any problems.
Q: how did inventors feel about her piece? A: inventors have been mostly positive. Inventors don’t like IV. Most criticisms about the story came from lawyers instead.
Colleen Chien (Santa Clara University)
Patent litigation by the numbers:
* 250,000: patents covering smartphones
* $12.5B: Google’s purchase for Motorola Mobility
* $2.5B/$29B: $29B = Google’s revenue in 2010. Android revenue = $2.5B.
* 10+: different graphic depictions of the smartphone wars
* 19%/28%: distribution of patent lawsuits. Sport of Kings suits (28%) (big co v. big co).
* 15%: new law jobs requiring patent specialists. Is this a good trend?
Consumer perspective
* 3/20+: 3 different iPhone models available on Amazon. 20+ Android devices.
* 500k+/300k: 500k iPhone apps; 300k Android apps
* Free/$60: Google’s desired price of Android = free. Android handset maker estimate of royalties = $60.
* 0%/26%: Apple makes 0% of iPhone components. Samsung supplies 26% of iPhone components.
Investor perspective
* 380+/14+: 380+ NPEs tracked by Patent Freedom. 14+ NPEs are publicly traded.
* 48: Acacia employees. 300+ lawsuits (many more defendants). 1000+ appreciation since 2008. 38% of Acacia's revenues goes back to inventors; 50% go to lawyers.
* 10 universities invest in IV. 18 tech companies invest in IV.
Panel 1: New Challenges in Defensive Portfolio
Lisa McFall (Ovidian)
We’re experiencing a tectonic shift. We had a patent market and it was growing, but the mobile industry has accelerated the issues. Mobile wars + increasing patent liquidity has encouraged companies to revisit their portfolios. Are the portfolios robust enough? If the portfolios are strong, should they sell or enforce?
Purchasing patents is a quicker way to fill portfolio gap than filing new patent applications. Buyers can use brokers, but brokers have limited selection, buyers can’t trust broker’s motivations (they also dealing with NPEs), and the brokered patents are crappy (making them more valuable to NPEs because of litigation ambiguity). Buying directly from sellers: buyers can take advantage of information asymmetry and find highly useful patents, but it can take more effort.
HP, IBM, AT&T have active patent sales programs, but their patents are encumbered with existing licenses and other restrictions. Some Korean/Japanese companies won’t sell at all.
Jeff Draeger (Intel)
Bah humbug. When it comes to patents, the mobile industry is special compared to other industry niches. We’re not seeing the same activity in other industry sectors. Mobile: has big new winners and losers. Wireless patent mania will be waning—the wireless connection isn’t the biggest value-add to the mobile devices, and big players have already made their key purchases.
No rational valuation based on royalties to justify purchase prices. NPEs were at the Nortel auction, but the price got too high. In contrast, operating companies feel huge pain with an injunction against their products.
There are a lot of portfolios on the market. NPEs will be buying at inflated prices and then hitting up operating companies to get paid. But with trends in damages, injunctions and joinder, NPEs won’t be able to recoup their money.
Industry détentes may get destabilized if the companies have a different revenue position or liquidate their patents to NPEs. Companies can’t assume any more than sleeping dogs will lie.
Eugene Kim (Zynga)
Smaller companies need to be strategic about which organizations to join. Patent prices are going up across the board. Valuations were striking about Nortel/Motorola Mobility. There isn’t a magic formula for valuating patents. Over time, finance/accounting people are going to demand information about ROIs. Patent litigation avoidance is difficult to quantify.
Xiang Wang (Orrick China)
Chinese companies are filing more patent lawsuits, but damages are much less than US. Companies will inevitably face Chinese patent lawsuits.
Panel 2
Paul Roeder (HP)
HP is defending 80 patent cases, almost all by NPEs/trolls.
1) Fed Cir is demanding “sound economic damages”—junk arguments don’t work. Defendants should be proactive about computing damages. There’s no separate damages “team” among defense lawyers—everyone should be on the team. Discovery needs to consider damages. Defendants should be attacking damages on summary judgment.
2) Apportionment of damages. Defendants should focus on incremental value added from the patent. To get around this, the plaintiffs are turning to the ITC because damages are irrelevant there. But he thinks most cases in ITC shouldn't have jurisdiction for lack of domestic activity.
3) Prior licenses as market comps must be analogous.
Karen Boyd (Turner Boyd)
Defendants can consider reverse bifurcation. When a small defendant tried to accelerate its damages calculation, the plaintiff instantly dropped the case against that defendant.
Small defendants shouldn’t just rely on the bigger defendants. There’s value to being a leader in the defense group. Incentive for plaintiff to settle with that defendant because the joint defense group might fall apart. But many small defendants can do some coattailing on the smart lawyers who are part of the joint defense group.
Small defendants can challenge personal jurisdiction.
In ND Cal, take a look at Local Rule 3.2. Corporate disclosure rule. It requires disclosure of all parties that have an interest in the litigants. Small defendant can use this rule to its benefit.
Luftman comment: in media industry (as opposed to tech industry), there’s less of a lone wolf mentality in joint defenses. The media companies tend to stick together.
Michael McCoy (Appsterdam)
European software developers are being approached by patent trolls. Some developers are considering avoiding the US market—it’s only 25% of the market for some of them. Patent trolls are like the Mafia—you get a knock on the door, and they get too involved in the target’s business.
Appsterdam’s goal: open source the prior art research.
There has be a change legislatively, such as exclusions against small business defendants, or limits on damages for patentholders who aren’t practicing. Right now, patents are just a tool to build a business around litigation.
Q: do NPEs ever have a gem patent? McCoy’s answer: Probably not.
Roeder comment: get off the issue of patent quality. Fight the battle on other grounds. We need a system that recognizes that if there are 10k patents on data mirroring, none of them are worth squat.
Q: will open sourcing prior art increase risk of willful infringement rulings? A: that’s a risk.
Q: what effect of AIA joinder requirement? Boyd A: it will provide evidence of just how much NPE litigation is taking place. Luftman A: joint defense collaboration is going to be much harder. Defense lawyers are going to have to step up their game. If competitor gets sued, don’t assume you dodged the bullet; you may need to get involved at that point, even before you get sued.
Lisa Buccino (SAP)
If defendant fights, NPEs sense opportunity to get a win. If defendant loses, NPEs can capitalize on the fear of another loss. Finding ways to reduce litigation costs is an effective response to NPEs—“I don’t mind being sued because it won’t cost me a lot.” Ex: sole-source all patent defense to one firm for fixed fee. Then, each NPE’s suit doesn’t have a marginal cost of defense.
Roeder comments: having large docket makes budgeting easier to manage. They study the data that hourly billing creates—study task codes and compare among firms. It becomes a quality measure for firms. Quality isn’t just having a good argument. Luftman: he appreciates when firms demonstrate their project managing skills, including a dedicated case administrator.
Q: defense contingency arrangements? Buccino A: can set up bonuses for achieving dismissals at certain milestones.
Doug Luftman (CBS)
Settlements with NPEs make matters worse for the tech industry. In other industries, defendants focus more on reducing defense costs than taking easy settlements.
Bring reexaminations before you get sued. This means you need to keep track of what’s coming through the system. Problem: too many patents to track. Solutions: outsource to third party vendors.
Another idea: offer a bounty for busting patents, such as by paying for prior art. (Article One).
Lunch Panel
Joff Wild (IAM Magazine): Acacia’s huge stock price rise reflects their decision to stop partnering with operating companies.
Europe has NPEs, such as IPCon. European courts generally are more willing to give permanent injunction than US courts; it’s automatically given when patent owner wins. If this becomes the EU-wide standard, it will give huge leverage to NPEs—they can wipe out the entire European market for their defendants.
In Asia, Asian countries have companies that buy patents that could be asserted against local companies.
Jim Peacock (NociMed): he can’t remember last time when big companies looked like victims. NPEs need better branding to be treated more charitably.
It takes $25M to get to market, and patents are essential to get return on that investment. Emerging companies may decide to partner with an enforcer such as Acacia. This provides a financing source, and it’s a good alternative to a contingency litigation enforcement.
Wild: Micron bitched about NPEs and then sold 20% of their portfolio to NPEs. It’s overly simplistic to say operating companies = good, NPEs = bad. There are too many linkages between the two communities.
Ewing: proposed the term “privateer” = good guy pirates.
Peacock: he’s OK with getting a reasonable royalty instead of an injunction. 25% rule was too high; he never saw royalties like that in the field.
Wild: Europe isn’t an inventor’s paradise. There are plenty of factors why the innovation environment is better in US. China is on a buying binge to purchase patents.
Q: Does the NPE liquidity market encourage inventors to do more research? Tom Ewing: do inventors think they are getting a fair share? Does it encourage the right innovation? Wild: small inventors aren’t driving patent filings; it’s the big companies doing it. Big companies are flooding the PTO with applications, which has actually hurt the patent quality review. Peter Menell: mutually assured destruction got everyone into patent game; but once folks built expensive defense-oriented patent portfolios, they realized that they needed to monetize. Could we jack up the maintenance fees to clean out junk patents?
Ewing: about 30% of world’s active patents are in US = oversupply of patents? European countries may have relative undersupply.
Peacock: biggest concern as entrepreneur is the maintenance fees he faces in Europe.
Market Solutions Panel
Jason Schultz (Berkeley)
He’s developing a scheme for defensive patent licensing. Companies would make a commitment not to sue if licensees make the same commitment back. This would prevent these patents from being sold to trolls. Analogous to open source licensing programs.
Dan Lang (Cisco)
How to get around prisoner’s dilemma? Industry-wide collective responses better than individual responses. So the industry should try to head off bad patents before they hit the market.
Tom Ewing (Avancept)
We use too many military metaphors in patent discourse! Industry groups can file oppositions to all patents that read on the industry.
Kim Cauthorn (Duff & Phelps)
Patent insurance isn’t magic bullet. The patent insurance industry is taking a while to develop due to a lack of data; insurers can’t build full actuarial tables. NPE settlement experience actually helps quantify the risk. Further, patent insurance isn’t a must-have, unlike car insurance. Ironically, D&O insurance is popular even though D&O lawsuits are far rarer than patent litigation.
Q: how does antitrust apply? Schultz: antitrust challenges to open source provide some guidance. The contract is bilateral even if there are benefits for the industry, so no collusion.
Ewing: valuation problem comes from lack of data. If we could get the data, there are plenty of people who can crunch those numbers.
Becky Eisenberg (University of Michigan)
Maybe the costs in the patent system aren’t inherently bad. They force patent owners to make their choices wisely.
Different patent universes:
Notional: everything that could be patented
Nominal: technology that’s actually covered by patents
Effective: patents that are actually asserted/licensed
Due to costs, nominal < notional and effective < nominal.
But costs imposed on non-patent owners. Perhaps nominal > notional because PTO does a bad job and defers to court.
Technology users: incur costs to research/diligence patents and deal with assertions against them.
Plaintiffs can get economies of scale from enforcement. Surprising that NPEs didn’t arise earlier. Pressures to change cost allocations.
Data-Driven Risk Management Panel
Josh Walker (Lex Machina)
Hypothesis: predictive modeling will transform how finance looks at litigation. Based only on knowing the parties, lawyers, venue, etc., Lex Machina could predict the outcome of a case with 64-85% accuracy.
Mike Mazzeo (Northwestern Business School)
Predicting Patent Infringement Awards: 8 largest damages cases were 47-48% of total damages awarded in 340 cases over 13 years. Top 2 most impactful factors (slide went too fast!):
• case decided in Court of Federal Claims
• Awards decided at jury trials
Colleen Chien (Santa Clara University)
Predicting Patent Litigation. Patents in litigation look different than patents that don’t. Factors more prevalent with litigated patents: transfer, setting change, reexam, maintenance, securitization, forward cites. Lesson: there need to be a sorting mechanism between patents that may be litigated or not.
Mallun Yen (RPX)
RPX looks for patents that may be litigated and buys them up before they’ve been asserted. NPE litigation activity is on the rise: 15% from 2005-10. Expected increase 36% in a year. Total defendants—expected to increase 20% in a year.
Mark Lemley (Stanford Law)
AIA started out to curb litigation abuse, but 9 years later, what resulted does very little towards that. Import of Patent Reform for litigators (see his full article):
* Effectively eliminates patent marking suits
* Tax strategy patents: automatically not novel. Bypass: people will argue they merged a tax strategy with a computer, but that can’t be what Congress meant. So perhaps will this take a bite out of business method claims more generally.
* Effectively eliminates best mode requirement. PTO can reject for lack of best mode, but this is highly unlikely to occur.
* Joinder changes. Parties/courts can’t join multiple defendants or consolidate trials unless the parties have common issues of facts, and violation of the same patent isn’t a common issue of fact. This raises the plaintiffs’ costs. But will courts relate cases together? Only if they’re in the same district, but cases are going to scatter on jurisdictional bases. If the cases aren’t related, then plaintiffs are subject to multiple jeopardy (they have to defend their patent in every case or res judicata will kill the patent for good). Interesting strategic choices for defendants: do I want to go first? If I want, I hope the other defendant wins, in which case I get to free ride. But if first trial isn’t with strongest defendant, I might be disadvantaged by going second. Complicates joint defense agreements—lawyers may be arguing the same case in different jurisdictions, and there may be more conflicts between defendants. [Eric's note: big-scale products liability lawyers have been dealing with these who-goes-first tactical issues for decades. Patent litigators are going to have to learn a thing or two from them.]
* Exclusive federal court jurisdiction even for counterclaims. Reverses Holmes v. Vornado. Some cases in state courts (over, say, license or malpractice) can be brought into federal court.
* Prior user rights. Current provision never has been used. Now it’s expanded. Interesting Qs about exhaustion and the implications for company M&A. Mark thinks it will apply in a small set of cases.
* Can change inventorship at any time; errors in inventorship not a ground for invalidity or inequitable conduct
* Supplemental examination to fix any inequitable conduct during prosecution.
* Advice of counsel/inducement. Failure to obtain advice of counsel can’t be used as evidence of willful infringement or inducement. Effective date for patents filed after September 2012, so this won’t be relevant for many years.
Many thanks to all for a terrific conference!
Posted by Eric at 09:23 AM | Patents | TrackBack
October 15, 2011
Q3 2011 Quick Links, Part 5
By Eric Goldman
See the other quick links posts in this series:
* Q3 2011 Quick Links, Part 4
* Q3 2011 Quick Links, Part 3
* Q3 2011 Quick Links, Part 2 (Trademarks/Domain Names Edition)
* Q3 2011 Quick Links, Part 1 (Copyright Edition)
Trade Secrets
* Congressional proposal to add a private cause of action to the federal Economic Espionage Act. David Almeling supports the general idea. My take from an email list:
I don't understand the incremental value of a federal private cause of action beyond the current state laws for the described situations. I also wonder if this is the beginning of the end for federal deference to state regulation of trade secrets. If the amendment get adopted, it would be entirely logical to see the restrictions relaxed over time to make it into a general-purpose private right of action for any trade secret misappropriation. For an analogous regulation, see the significant expansion of the CFAA over the past quarter-century, and especially the growing number of cases involving CFAA violations because former employees continued to access their former employees' hardware (and, presumably, misappropriate trade secrets).
* Mattel's lawsuit against MGA over the Bratz dolls has gone sour for Mattel in a big way. It was hit with another $225M in damages, bringing the amount it owes MGA to $310M. Oops.
* Probation for two individuals in the first lost iPhone prosecution, but no charges against Gizmodo. Yet, somehow, Apple apparently lost yet another "priceless" iPhone prototype at a bar.
Patents
* Bessen et al, The Private and Social Costs of Patent Trolls:
In the past, non-practicing entities (NPEs) — firms that license patents without producing goods — have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.
* Joe Mullin is blogging again on patent matters, especially NPE issues! From his blog, check out his co-blogger's post on Innovatio, which is sending licensing demands to hundreds of companies who are offering industry-standard wi-fi to consumers.
E-Commerce
* After tossing its CA affiliates aside like rag dolls, Amazon and CA struck a deal on sales taxes that reinstated its CA affiliates (1, 2).
* Businesses using Groupons may be getting lower Yelp reviews.
* Dan Ariely deconstructs online retailers and websites to show how they are using psychological forces to get us to do what they want.
* Earll v. eBay, 5:11-cv-00262-JF (N.D. Cal. Sept. 7, 2011). eBay could be exposed to claims under the Disabled Persons Act and the Unruh Act.
* Foley v. JetBlue Airways (N.D. Cal. Aug. 3, 2011). Federal aviation law preempts California law regarding disability accessibility to airline website.
* Weinstein v. eBay. StubHub wins an anti-scalping case under New York law.
* NYT: Good example of how a properly managed consumer review website can improve marketplaces.
Contracts
* David Stebbins is at it again. He sued Google to enforce his purported $500 billion arbitration win. The magistrate recommended dismissing the case as frivolous. Stebbins sued Microsoft too; see the long interview with him and a link to his video.
* Davis v. Avvo, 8:10-cv-02352-JDW-TBM (M.D. Fla. Sept. 13, 2011). Forum selection clause in Avvo’s user agreement upheld.
* Fusha v. Delta Airlines (D. Md. Aug. 30, 2011). Venue selection clause in check-the-box user agreement upheld.
* TradeComet.com LLC v. Google, Inc., 2011 WL 3100388 (2nd Cir. July 26, 2011): "a district court is not required to enforce a forum selection clause only by transferring a case pursuant to § 1404(a) when that clause specifies that suit may be brought in an alternative federal forum. Rather, in such circumstances, a defendant may seek to enforce a forum selection clause under Rule 12(b)."
A separate summary order upheld the applicability of Google's forum selection clause against TradeComet. The court says Google's clause doesn't overreach because "Google unquestionably holds a ‘special interest’ in making sure that it is not subject to suit in numerous different fora for claims arising from its agreements with over a million advertisers."
* Marso v. United Parcel Service, Inc., No. 09 CVS 2582 (N.C. App. Ct. Sept. 20, 2011). UPS required customers to go through a mandatory clickthrough agreement on computers in its store, but...
plaintiff asserts that defendant's employee entered the information into the computer, and that "[n]o one advised [plaintiff], orally or in writing, about any UPS Tariff, waybill, or service guide," or advised him that he could request a copy of the same….plaintiff suggests by his argument that he did not assent to the terms of service identified in the UPS Tariff, which would limit defendant's liability for the fraudulent cashier's check collected by defendant upon delivery of plaintiff's package to Mr. Thompson, and instead asserts that he formed an oral contract with defendant's employee which obligated defendant to be liable to plaintiff for $12,145.00 without limitation. Thus, there appears to be a genuine issue as to whether plaintiff assented to be bound by the limiting terms of the UPS Tariff, and whether defendant presented plaintiff with actual or constructive notice of the terms set forth by the UPS Tariff.
* Truong v. eBay, Inc., 2011 WL 3716999 (Cal. App. Ct. Aug. 24, 2011). This is a busted eBay Motors transaction where eBay warned the winning buyer not to complete the transaction and the seller sued for tortious interference with contract:
eBay raised the immunity provision of the federal Communications Decency Act (47 U.S.C. § 230). As appellant pointed out to the trial court, and as that court ruled, the pertinent provision of that statute makes the law applicable to an action taken by an internet service provider to restrict access to or availability of material that is obscene, harassing, “or otherwise objectionable.” The conduct alleged against eBay was not editing or policing content of items posted on its marketplace, but interfering with a contract. (See 47 U.S.C. § 230(c)(2)(A).) eBay does not urge this ground in its respondent’s brief.
* Added to my RSS feed: The Tech Contracts Blog by David Tollen.
Miscellaneous
* ABA Journal on electronic service of notice.
* James Grimmelmann's Internet Law casebook.
* On TWiL in late August, I discussed privacy and MP3Tunes with Denise Howell, Evan Brown and David Snead. The recording.
* Top 15 most popular "Damn You Auto Correct" postings of all time. Hilarious.
* Good news: I will receive the 2011 "IP Vanguard Award" (in the Academic/Public Policy category) from the California State Bar's IP Section.
Posted by Eric at 07:02 AM | E-Commerce , Licensing/Contracts , Patents , Trade Secrets | TrackBack
September 12, 2011
Patent Conference Announcement, SCU, Oct. 14 (July-Aug. 2011 Quick Links, Part 3)
By Eric Goldman
Over the past few months, we've seen some dramatic--and expensive--evidence that the patent system is out-of-control. Feeling outgunned in the smartphone space by big players with larger patent portfolios, Google has been on the prowl for bulk patent portfolios to supplement its own. First, Google bid for the Nortel patent portfolio but got aced out after a consortium of competitors bid a breathtaking $4.5B for the portfolio. Then, Google bought a patent portfolio for IBM.
But I think the message really hit home when Google sought to buy Motorola Mobility for $12.5B, in which the prize asset is a portfolio of 17k patents. See the merger agreement.
Investors in Motorola Mobility might be cheered, but there's no good news in this acquisition. The Nortel auction showed that a company can be worth more dead than alive because its death unlocks its patent portfolio without putting at risk a company's ongoing revenue stream. Once the patent portfolio is on the open market, potential buyers include NPEs looking to unleash a wealth-draining litigation frenzy (where the NPEs get rich by pulling cash out of companies actually engaged in productive activities) or operating companies buy the portfolios as a way of deterring competitors from initiating a patent armaggedon. In the latter case, the acquirer pays a steep premium to improve its freedom to operate--it has higher costs to do the same level of innovation, and we as end consumers ultimately pay for this. As a a result, the winners from this developing market for bulk patent portfolios are the high-volume patent prosecutors, the deceased company's creditors (and perhaps stockholders), the plaintiff-side patent litigators, the NPE investors, and any brokers in the system. Everyone else--including consumers--is a big loser from these transactions, which demonstrates that the patent system isn't motivating the kind of social welfare improvements it putatively was designed to facilitate.
Meanwhile, a growing number of persuasive voices are expressing skepticism about the state of the patent industry. Laura Sydell of NPR kicked off the trend with "When Patents Attack," a great investigative story on Intellectual Ventures and its potentially detrimental effect on our economy. This was followed up with a number of stories in leading publications like the Wall Street Journal, the New York Times and the Economist, all questioning the patent industry. Some of the articles that caught my attention:
* NYT: A Bull Market in Tech Patents
* Forbes: my colleague Colleen Chien wrote how to "Turn the Tables on Patent Trolls."
* NY Observer: Anatomy of a Patent Troll
* PC World: It's Clear Why Software Patents Need to Disappear
* Reuters: Apple uses courts to buy time to secure iPad's market share
Unfortunately, the patent reform legislation does not help with this situation. The tweaks aren't terrible, but they leave most NPE-related issues untouched.
Until Congress or the courts fix the problems doctrinally, what are operating companies supposed to do to prevent being undeservedly subverted by third party patents? Get into a bidding war with Google or other incumbents to buy up the remaining bulk patent portfolios? Tell their patent prosecutors to get busy with large numbers of new applications? Cross their fingers and hope they don't get noticed by plaintiffs?
In a stroke of propitious timing, for the past several months the High Tech Law Institute, working with the Berkeley Center for Law & Technology, has been cooking up a major conference entitled "Defense 2.0: New Strategies for Reducing Patent Risk." The event will be on October 14 at SCU, and we have a terrific lineup of experts. The conference will explore cutting-edge and cost-effective strategies for companies to improve their freedom to operate--without fear of innovation-destroying patent litigation. Although there will be an opportunity to hear from the other side, this conference is all about patent defense, a topic of vital importance to the Silicon Valley. The registration fees are a bargain (and free for many categories of attendees). I hope you will consider joining us.
Posted by Eric at 09:20 AM | Patents | TrackBack
March 23, 2011
Judge Rader Talk Recap
By Eric Goldman
Last week, we had Chief Judge Rader of the Federal Circuit on campus for a lunchtime talk to a capacity crowd. Judge Rader is always an entertaining speaker, and he is typically more willing to publicly discuss doctrine and to self-evaluate than most judges. The theme of this particular talk was international issues.
Judge Rader always makes it clear that he is speaking with his "academic" hat on rather than his official judge's hat. Further, as usual, these notes are my impressions, not verbatim transcriptions. We will be posting the video shortly so you can watch the talk first-hand.
He started by saying that we have much to learn from the rest of the world. We're leaders in patents but our patent laws aren't the best. He gave two examples: best mode (which he called a trap for the unwary) and inequitable conduct (which has morphed from a fraud prevention rule into a disclosure requirement).
Regarding patent litigation discovery, he said that we've taken meritorious principles and stretched them out of proportion. Discovery is now an excuse to bombard the other side with discovery requests to increase their costs. He said "I believe in a little injustice," by which he meant that he'd be willing to cut off some discovery even if it may result in some erroneous outcomes at the margins. He's working on model rules for discovery limits. This would be a good deal if we can get a more efficient systems. His guiding philosophy: judges need to facilitate, not frustrate, the international marketplace.
He favors our system to the specialized courts in Germany (where different courts hear infringement and validity claims). However, we're moving closer to that model with re-exams. If re-exams become a full-fledged validity evaluation, we will become a two track system.
He noted that we're the only country in the world that involves juries in patent cases. I think he is wary of juries' contributions to the process, even as he acknowledged they are involved in only a small number of cases. He believes that summary judgment is key to our system. He pointed out that one notorious district court doesn't work because they don't use summary judgment enough--they believe in trying cases, inferentially to the system's detriment.
Prof. Chien asked him about the ITC. Judge Rader said it's not surprising when two Taiwanese companies square off in the ITC because we're a unitary global market. Because the ITC is an administrative procedure, not a court, it's OK if they have a different standard for injunctions than the eBay standard.
Judge Rader spoke about Chinese patent issues. His message to China: you need to act like a leader in IP. Chinese judges have circumscribed independence compared to our judges; they are officers of the state, which means they must carry out state policy and put China first.
He thinks it won't be long before Chinese IP laws dictate terms to the world. We'll be listening.
Regarding NPEs, Judge Rader thinks the court system has addressed a lot of issues. WRT damages, it's harder for NPEs to reap windfalls. The courts have also cut back on willfulness. He had sharp words for patent marking cases. He said it's non-productive litigation and isn't facilitating innovation. It's a burden on the system, and the Federal Circuit is raising the bar. However, he also thinks judges shouldn't make judgments based on the litigant's identity.
Judge Rader is still grousy about eBay. He said its a sad misapplication of an effort to deal with the NPE problem. His biggest disappointment is seeing the Supreme Court move from law to politics. eBay was a policy-oriented result and an overreaction to NPEs. His academic concerns: IP is property, but eBay doesn't treat patents like property. Trial judges have always been able to consider the public interest before granting an inunction, such as health/safety issues.
He gave a big shoutout to Peter Lee's Patent Law and the Two Cultures.
Many thanks to Judge Rader for yet another insightful and enjoyable romp through patent law!
UPDATE: Judith Szepesi's coverage of the talk.
Posted by Eric at 10:51 AM | Patents | TrackBack
March 03, 2011
Jan.-Feb. 2011 Quick Links, Part 4
By Eric Goldman
Internet Freedom
* The EFF points out the inconsistency between Hillary Clinton's speech championing Internet freedom abroad when our own US government has gone rogue on its own citizens, including unlawful domain name seizures and an obsessive vendetta against Wikileaks.
* Fast Company: Why Twitter stood up for its users against the "secret" Wikileaks subpoena when other sites didn't.
47 USC 230
* Fleming v. Duncan: Yahoo wins 47 USC 230 motion to dismiss in Georgia state court.
* Neeley v. NameMedia, Inc., 2010 WL 5677069 (W.D. Ark. Dec. 16, 2010). 47 USC 230 preempts "outrage" claim over displaying nude photos in search results. A complementary follow-up ruling: Neeley v. NameMedia, Inc., 2011 WL 336174 (W.D. Ark. Jan 31, 2011).
* Several professors contributed essays to a book critical of 47 USC 230. Paul Levy takes them on.
* Jonathan I. Ezor, Busting Blocks: Revisiting 47 U.S.C. § 230 To Address The Lack Of Effective Legal Recourse For Wrongful Inclusion In Spam Filters, Richmond Journal of Law and Technology (Fall, 2010).
Spam
* Facebook, Inc. v. Fisher, 2011 WL 250395 (N.D. Cal. Jan. 26, 2011). Facebook gets $360M default judgment against spammers.
History
* Antone Johnson on the dot-com hangover of 2000-2002.
* 25 Best Startup Failure Post-Mortems of All Time.
Miscellaneous
* You can watch video from Next Digital Decade event. More on that event: 1, 2, 3. If you haven’t looked yet, you should check out the book.
* Unique Products Solutions v. Hy-Grade Valve (N.D. Ohio Feb. 24, 2011). Patent false marking qui tam process is unconstitutional.
* Shrader v. Biddinger, 2011 WL 678386 (10th Cir.(Okla.) Feb 28, 2011). In this Internet jurisdiction case, the Tenth Circuit adopts ALS Scan v. DSC as its test rather than Zippo.
* FairSearch.org has a new partial rival, Faretransparency.org, the web front for the Open Allies for Airfare Transparency, "a coalition representing all of the stakeholders in the travel booking industry, works to promote price transparency and full access to airline pricing and fee information." It's chaos in the online travel booking industry right now!
* Very useful table: State Cyberstalking, Cyberharassment and Cyberbullying Laws
* Evony sues its user for automated mapping of its site.
* ABA Journal: "For Federal Plaintiffs, Twombly and Iqbal Still Present a Catch-22"
* Direct Marketing Association v. Huber, No. 10-cv-01546-REB-CBS (D. Colo. Jan. 26, 2011). Judge strikes down Colorado's attempt to impose an "Amazon" tax as unconstitutional. My previous reference to the law.
* In the Silicon Valley, being the "Craigslist Congressman" might be considered a compliment. Unfortunately, that term will now be pejorative.
* Segal v. Amazon, 2:11-cv-00227 (S.D. Fla. Feb. 4, 2011). Amazon's participation agreement's venue selection clause upheld.
* Rep. Matheson wants to require age authentication to access online porn. Been there/done that 13 years ago with COPA. Lest you forget, it was unconstitutional.
Funny Stuff
* French second-graders are shown items like an old Fisher Price record player and 3.5 and 5 inch floppies and are totally baffled by them. Funny video.
* Great Dilbert strip riffing on the old joke of how you know if a lawyer is lying.
Posted by Eric at 11:53 AM | Content Regulation , Derivative Liability , Internet History , Patents , Spam | TrackBack
October 18, 2010
First Sale and Exhaustion Doctrines in IP Conference, Nov. 5, SCU
By Eric Goldman
I've mentioned our First Sale and Exhaustion in IP conference before, but now it's less than 3 weeks away. If you were thinking about coming, now is a good time to confirm your spot.
As regular readers know, first sale issues are swirling around us. On the copyright front, we are working through a troika of Ninth Circuit cases in Vernor v. Autodesk (now subject to an en banc hearing request), UMG v. Augusto and Blizzard v. MDY. I've also blogged about some transborder importation cases involving cheap textbooks (e.g., Pearson v. Liu). On the importation topic, the US Supreme Court granted cert in another Ninth Circuit case, Costco v. Omega, and oral arguments are imminent. [UPDATE: I've been informed the oral arguments will be on Nov. 8, just a few days after the conference!] And many folks continue to lament the absence of a first sale doctrine for digital files.
On the trademark front, we've discussed how manufacturers are battling back against unwanted eBay sales (see Mary Kay v. Weber and Beltronics v. Midwest). Simultaneously, manufacturers are embracing minimum resale prices following the Supreme Court opinion in Leegin. We haven't blogged too much on patent exhaustion, but the recent Quanta v. LGE Supreme Court ruling casts a large shadow over both patent exhaustion as well as other types of exhaustion. Interwoven into all of these topics are questions about whether statutory first sale/exhaustion rights are waivable or conditionable by contract.
As you can see, we have a lot to talk about.
I'm particularly excited about this conference because that we won't look at IP exhaustion principles in doctrinal "silos." Instead, we've taken an holistic approach to the topic, so that we can see how the exhaustion principles might be similar and different across the various IPs. We hope this will yield some powerful insights that otherwise would be lost in a silo-by-silo analysis.
Our agenda for the day:
8:15 – 8:45 Registration
8:45 – 9:00 Welcome Remarks
9:00 – 10:20 Justifications for the First Sale/Exhaustion Doctrines
Moderator: Lee Ann Lockridge, Louisiana State University Law Center
Vince Chiappetta, Willamette University College of Law
Anne Layne‐Farrar, LECG
Rahul Telang, Heinz College, Carnegie Mellon University
Molly Shaffer Van Houweling, UC Berkeley School of Law
10:20 – 10:40 Break
10:40 – 12:00 Channel Management Issues
Moderator: Mark P. McKenna, Notre Dame Law School
Dale D. Achabal, Santa Clara University
Mary Huser, Bingham McCutchen
Ariel Katz, University of Toronto
Catherine Sandoval, Santa Clara University School of Law
12:00 – 1:10 Lunch
12:40 Mark A. Lemley, Stanford Law School
1:20 – 2:40 Transborder and Comparative Issues
Moderator: Colleen Chien, Santa Clara University School of Law
Frederick M. Abbott, Florida State University College of Law
John A. Rothchild, Wayne State University Law School
Irene Calboli, Marquette University Law School
Cynthia Ho, Loyola University Chicago School of Law
2:40 – 3:00 Break
3:00 – 4:20 Copyright Issues
Moderator: Brian Carver, UC Berkeley School of Information
Neel Chatterjee, Orrick, Herrington & Sutcliffe LLP
Raymond T. Nimmer, University of Houston Law Center
Tyler T. Ochoa, Santa Clara University School of Law
Jason Schultz, UC Berkeley School of Law
4:20 – 4:30 Closing Remarks – Eric Goldman, Santa Clara University School of Law
4:30 – 5:30 Reception
Please register at the conference page. Hope you can join us on Nov. 5.
Posted by Eric at 09:15 AM | Copyright , E-Commerce , Licensing/Contracts , Patents , Trademark | TrackBack
March 10, 2010
Utah Passes Nation's First (?) Bioprospecting Regulation
By Eric Goldman
The Utah legislature has passed SB 51, the "Utah Bioprospecting Act," which requires a government-issued license (which presumably will include a royalty cut for the state) before engaging in bioprospecting on government lands not owned by the federal government. The law is awaiting the governor's signature. If enacted, I believe this will be the nation's first state law regulating bioprospecting.
What is Bioprospecting?
Bioprospecting is the process of looking for naturally occurring animals or plants that have commercial utility. The issue is quite hot in many developing countries, which are rich in biodiversity but may be underdeveloped in research and commercialization capabilities. As a result, foreign researchers come to the country to investigate the biodiversity, identify a commercially useful native species, and then commercialize that species elsewhere without any clear compensation to the source country. We might debate the fairness of this situation, but I know that some folks have strong feelings that bioprospecting is illegitimate.
One of the main challenges with regulating bioprospecting is simply defining it. Take a look at this law's messy definition:
(1) (a) "Bioprospecting" means the removal from a natural environment for research or commercial use of: (i) a naturally occurring microorganism, plant, or fungus; or (ii) information concerning a naturally occurring microorganism's, plant's, or fungus' physical or genetic properties.
(b) "Bioprospecting" does not include: (a) horticultural cultivation, except for horticultural genetic engineering conducted in a manner otherwise constituting bioprospecting; (b) an agricultural enterprise; (c) a forest and range management practice; (d) invasive weed management; (e) Christmas tree and related sales; or (f) incidental removal of a microorganism, plant, or fungus while engaged in bona fide research or commercial enterprises.
What??? What does that mean? I think any law that has to say that it's simultaneously trying not to govern weed removal or Christmas tree farming is overly broad by definition. But look at the drafters' failed efforts to draw non-overlapping Venn diagrams. In (b)(a), how can the exclusion cover activity "conducted in a manner otherwise constituting bioprospecting"? Isn't that circular? And doesn't the (b)(f) exception swallow up the whole?
More generally, look at (1)(a)(ii). The law doesn't just regulate the removal of physical specimens, but it regulates any commercial use of information about a specimen. Huh? Does that mean that I can't publish a picture of Utah plants on state lands without the government issued-license? I wonder to what extent the contemplated licensing requirement to disseminate information about plants runs into Constitutional and federal preemption issues.
Why Did Utah Enact a Bioprospecting Law?
In the mid-2000s, Hawaii considered enacting a law about bioprospecting. I can understand this, as Hawaii is a globally leading biodiversity hotspot. Plus, there remains continuing local unrest about Hawaii's status as a state and the fate of native Hawaiians.
But Utah? I don't think of Utah either as a biodiversity leader or a self-perceived victim of colonialism or imperialism. Instead, for me, Utah's main leadership role is as the nation's leader in state legislative incompetence. While this particular law is not per se stupid (in contrast with many of Utah's efforts to regulate the Internet), this law makes some of the systematic errors I've seen from Utah laws.
First, as indicated above, the law is poorly drafted and ambiguous. I have no idea what it covers. I have the same reaction to most of Utah's efforts to regulate the Internet.
Second, I don't understand why this law rose to the top of the legislative priority queue. Part of that is because I have no idea who is bioprospecting in Utah. Are there flinty old bearded codgers, riding burros overburdened with pick axes, steel canteens and blankets, muttering to themselves that "there's biogold in them thar hills"? If not, then who's doing it, and how will this regulation affect them? Note that the Utah legislature only meets a couple of months out of the year, so they have limited space to produce laws. Given all of the other obvious legislative needs, why spend time on this law?
Third, like many other Utah laws, the law reflects an unstated assumption that if outsiders are coming into Utah to make money, the Utah government coffers deserve a little taste of the action. This brought to mind Utah's deplorable "don't spam the kids" registry, which really was just a backdoor way for Utah to try to tax out-of-state email senders. That efforts was a financial failure; I expect this law to be a financially poor decision as well.
On that point, I was shocked to see the fiscal note that this law had no appropriations and "this bill likely will not result in direct, measurable costs and/or benefits for individuals, businesses, or local governments." Really? First, if there's no law enforcement, I imagine most folks will ignore the law. Second, the state will undoubtedly incur some costs to promulgate the statute's contemplated regulations and to negotiate individual licenses with registering bioprospectors. Third, the imposition of the licensing scheme constitutes a transaction cost that discourages some of the regulated activity from occurring in the first place. Some might conclude that outcome is ultimately a good thing, but it almost assuredly has economic consequences. I cannot figure out how this bill got such a clean financial report. Given the Utah legislature's sensitivity to costs, I bet a more thoughtful fiscal report would have slowed (and probably scuttled) the bill's passage.
Posted by Eric at 10:50 AM | General , Patents | TrackBack
October 18, 2009
Q3 2009 Quick Links, Part 4
By Eric Goldman
Spam
* Ars Technica: "a disturbing number of e-mail users respond to spam, and not just because they're dumb—some of them did so because they were actually interested in the product or service." I collected some empirical research establishing this point in 2004.
* SpamFighter: Software Creator Admits to Aiding & Abetting Spam
Fraud
* Reuters: A virtual bank rips off depositors in EVE Online.
* Click fraud concerns at Facebook: TechCrunch; Unified ECM v. Facebook complaint (one of at least three pending).
* There can be legitimate circumstances where it makes sense for a vendor to automatically pass a user's credit card number to another vendor, but the practice seems ripe for regulation.
Contracts
* BNA: End of the Notice Paradigm?: FTC's Proposed Sears Settlement Casts Doubt On the Sufficiency of Disclosures in Privacy Policies and User Agreements (BNA Subscription required)
* In August, the NYT interviewed David Vladeck, who suggests that the FTC v. Sears settlement could signal a changing of the guard at the FTC.
* Jonathan Ezor on common drafting mistakes in privacy policies.
* Hines v. Overstock.com, Inc., 2009 U.S. Dist. LEXIS 81204 (E.D.N.Y. Sept. 4, 2009). Browsewrap terms aren’t enforceable “because the website did not prompt her to review the Terms and Conditions and because the link to the Terms and Conditions was not prominently displayed so as to provide reasonable notice of the Terms and conditions.”
* Timothy D. Cedrone, Morals? Who Cares About Morals? An Examination of Morals Clauses in Talent Contracts and What Talent Needs to Know, Seton Hall Journal of Sports & Entertainment Law. I have given my first year contracts students an exercise involving morals clauses that I think worked pretty well (see the links on this page under the "endorsement contract" bullet).
Miscellaneous
* The USPTO has not renewed the peer-to-patent program.
* ABA Journal: E-Discovery is $4B/yr industry but is experiencing consolidation.
* Paul Ohm's paper on re-identification of putatively anonymous databases. This may be one of the more important privacy law papers in some time, as it indicates that we cannot meaningfully distinguish between personally identifiable and non-personally identifiable information.
Posted by Eric at 02:43 PM | E-Commerce , Licensing/Contracts , Patents , Privacy/Security , Spam , Virtual Worlds | TrackBack
August 19, 2009
"Sources of Uncertainty in Patent Litigation" Conference, SCU, Sept. 25
By Eric Goldman
I'm pleased to announce the upcoming conference, Sources of Uncertainty in Patent Litigation, co-sponsored by the High Tech Law Institute and the Federal Circuit Bar Association. The conference will be September 25, 1:00-6:15, on the SCU campus. This timing should allow you to get a half-day of work done while still enjoying the conference.
As you can see, the speaker list is first rate. Judges Linn and Rader will be joining us from the Federal Circuit, federal district judges Fogel and Whyte are coming (and we hope to add at least one more district court judge) and the other speakers are leaders of the patent bar and academic community. The conference theme (uncertainty in patent litigation) is probably going to reach non-obviousness, claim construction and remedies, but the speakers have a lot of latitude to take the conversation in interesting directions.
We anticipate a full house for this event, so we encourage you to register quickly. Hope to see you there.
Posted by Eric at 02:04 PM | Patents | TrackBack
August 06, 2009
State of the Net West Recap
By Eric Goldman
Yesterday, the High Tech Law Institute and the Advisory Committee to the Congressional Internet Caucus co-sponsored the Third Annual State of the Net West event at Santa Clara University. The featured participants were 3 members of Congress (Boucher, Goodlatte and Lofgren) and the White House CTO Aneesh Chopra, supplemented by 8 distinguished discussants. In a jam-packed morning, we covered a lot of interesting and important ground on broadband, privacy, antitrust, immigration and open government. This blog post recaps some highlights from the discussion.
Boucher on Broadband
Rep. Boucher emphasized the importance of broadband availability to economic activity and expressed concern that the US wasn't keeping up with broadband deployment (he said, "we can do better"). He offered three policy proposals for ways the federal government could help:
* revise the Universal Service Fund to allow dollars to be spent on broadband deployment; and require USF fund recipients 5 years from now to be offering broadband or be cut off from USF
* federally preempt state laws prohibiting municipal broadband offerings (which about 25 states have)
* get the FCC to develop a broadband deployment plan
He expressed disappointment with the guidelines that NTIA and the Department of Agriculture have adopted to give away the $7.2B broadband fund that was part of the stimulus package. It appears he will be encouraging both entities to rethink their guidelines.
My colleague Al Hammond was the broadband discussant. Al made a number of good points, including noting that broadband deployment is both a rural and low-income issue (Boucher appeared to be focusing more on the former) and raising concerns about municipalities not playing fair and the FCC overcounting actual broadband availability.
Boucher on Privacy
Rep. Boucher also gave a preview of the privacy bill he is planning to introduce next month. He started off by saying he likes ad targeting, especially first party targeting (he said he buys items based on customized recommendations). So he wants to encourage "appropriate" ad targeting, not eliminate it. His bill is expected to contain the following elements:
* websites collecting data will be required to post a prominent privacy policy
* users can opt-out of first party targeted ads. This also includes data sharing necessary to enable first party ads
* websites that want to share data with unaffiliated third parties will need opt-in. However, behavioral ad networks can proceed on an opt-out basis if they allow users to see and edit their behavioral profile, except for sensitive information categories that would always be opt-in
* both the FTC and state AGs would have enforcement authority
To the extent that the mandatory privacy policy and opt-out options codifies existing industry practices, this proposal generally seems benign but not worth the effort--the costs of the inevitably poor statutory drafting outweighs any benefit we might get from regulatory codification. Requiring opt-in would likely eliminate third party behavioral ad networks, which (as I've discussed before) is more likely to be a detriment than a win.
I was especially intrigued by the proposal that behavioral networks can flip from opt-in to opt-out by letting users access a user profile. I need to see more details about Boucher's thinking, but doesn't this superficially sound crazy? The most obvious problem is authentication of the user before seeing his or her profile. How would this be done? The networks usually don't know the identity of the specific individuals they are profiling, so they can't authenticate identity. And just tying profile access privileges to a cookie or machine sounds like a recipe for disaster for all shared computers. Plus, a web interface seems to increase the security risks that the bad guys can see profiles they shouldn't be able to see. On first blush, it sounds like this part of Boucher's proposal may need a complete rewrite, with unknown consequences for the entire structure of his proposal.
Mike Hintze of Microsoft was the privacy discussant. He espoused Microsoft's standard line that there should be a comprehensive privacy law.
In the Q&A, Boucher appeared willing to consider concurrent privacy enforcement authority by self-regulatory organizations, so long as they enforced the law's minimum requirements. But any self-regulatory effort wasn't a substitute for other aspects of his bill.
Lofgren on Antitrust
Rep. Lofgren said that if the Bush administration did too little on antitrust enforcement, the Judiciary committee is now concerned that Obama and Varney will do too much. Lofgren is particularly focused on the chilling effects of the mere threat of antitrust scrutiny, not just the actual successful prosecution in court of cases. Thus, an "informal" DOJ expression of interest can deter innovative activity by high tech companies.
She also expressed skepticism that antitrust laws remain effective at protecting technology markets, which are marked by fast innovation and low barriers to entry. (I believe her exact words were "traditional antitrust measures of marketplace behavior might no longer work.") At minimum, any technology-related antitrust enforcement actions should be focused on improving innovation rather than trying to manage current marketplace prices.
Finally, she said that copyright restrictions should be considered in antitrust inquiries. Mike Masnick has more to say on this.
Michael Katz of UC Berkeley was the most colorful respondent. He shared Lofgren's concern that antitrust law may be counterproductively squelching innovation, especially when companies try to capture antitrust enforcers to hassle competitors. He had especially harsh words for the FCC, calling it much less disciplined than the DOJ and observing how the FCC can blackmail companies using its leverage. He also complained that the FCC's review of mergers takes too long, and as an example of their lack of discipline, the FCC will impose merger conditions that have nothing to do with the merger.
Tim Bresnahan of Stanford and my colleague Cathy Sandoval were the other respondents.
At the end of her talk, Lofgren praised the Google Book Search settlement, saying that in some ways it lowers barriers to entry. She also said she was grateful that Google appears to have found a back-door way to liberate orphan works given that she wasn't able to pass an orphan works bill. I'm all in favor of orphan works reform, but a class action settlement seems like a weird way to get there.
Chopra on Open Government
Aneesh Chopra is the new White House CTO, a role that never existed before, which puts Chopra at Obama's elbow on all technology issues. This was Chopra's first Silicon Valley trip since he undertook his new role. His first talk was on Tuesday night at a Churchill Club event; we were his second. Lots of people were very interested in learning more about him. He was the big draw for the press, and we got an unprecedented number of walks-in based in part (we think) on his talk. He was also mobbed before and after his talk--everyone seemed to want a piece of his attention (then again, I'd love to have a chance to kick some stuff around with him one-on-one myself!).
It's easy to see why Chopra sparks such curiosity. My impressions were that he was genuinely affable, smooth without being slick, substantive without being bookish, a big fan of crowdsourcing and an even bigger fan of assessment and measurement of outcomes.
He started off by discussing the importance of technology and how the US's rate of technological performance is lagging against other countries. He then identified three ways to "turn the ship around":
1. invest in innovation building blocks, such as a smart/secure infrastructure, more R&D and improved workforce expertise
2. healthcare reform, especially improvements to the information technology side of healthcare delivery
3. an improved education system, including distance learning and more emphasis on lifelong learning
He then discussed open government issues and gave examples of ways technology can facilitate participatory governance.
Goodlatte and Discussants on Immigration
Rep. Goodlatte laid out the Republican's high tech agenda, which includes:
* skilled workforce, including immigration reform
* patent reform
* trade issues
* taxation, including efforts to define when activity in a state triggers tax obligations
* net neutrality (don't regulate but improve antitrust enforcement)
* privacy (opt-out except for sensitive information)
The panel then drilled down on immigration reform. I was really excited to have this panel because workforce issues are so central to the Silicon Valley's "secret sauce" and yet I couldn't recall a time that the HTLI had sponsored a discussion about them. Obviously immigration issues are age-old and are well-trodden, but I nevertheless found the discussion helpful--with the one caveat that everyone on the panel agreed with everyone else, so there was a lot of preaching to the choir. I learned an interesting factoid that both Reps. Goodlatte and Lofgren were formerly immigration attorneys, so they have some front-line domain expertise in this area.
First discussant was AnnaLee Saxenian of UC Berkeley. She talked about how skilled immigrants have fueled innovation in this country. She gave a number of stats in support of this, including that a majority of Silicon Valley engineers are foreign-born, and a high percentage of technology entrepreneurs and patent applicants are foreign-born individuals. She also noted that foreign-born skilled works create net new jobs and also help build better ties to their home country.
We benefit from the best and the brightest from around the world, who come to the US because of our higher education system and historically have chosen to stay. However, she is concerned about this retention because of bureaucratic barriers. She is also concerned that companies, frustrated by their lack of access to development talent, will offshore their R&D.
Finally, she pointed out that immigration discussions kludge together the issues of skilled and low-skilled workers, even though their issues are very different.
Keith Wolfe of Google reinforced many of AnnaLee's points from Google's specific experiences.
My colleague Deep Gulasekaram was the last discussant. He pointed out that free marketplaces may require free movement of labor, which isn't consistent with our current immigration policy. He raised concerns about state and local anti-immigration policies and the negative consequences of tying foreign workers to specific jobs (by linking their visa to the job).
Rep. Lofgren added a few remarks:
* Obama told her that it's time for comprehensive immigration reform. [This led to a polite back-and-forth between Lofgren, who favors comprehensive reform, and Goodlatte, who would settle for piecemeal immigration reform]
* Immigration reform is not a substitute for educating the US workforce
* We should give permanence to people we want to keep (i.e., not keep them on some treadmill with the possibility of a forced exit, which prevents their long-term life planning)
* We need to address the family of skilled immigrants, not just the immigrants themselves
More Coverage of the Event
* ABC 7 News
* KCBS radio
* Zusha Ellison of the Recorder
* Joyce Cutler of BNA (BNA subscription required)
* Mike Masnick
* Joel West
* Colette Vogele
* Warren's Washington Internet Daily also ran a story (not web-linkable) "Boucher Promises Online Privacy Bill Draft Soon"
* The extensive Twitter discussion at hashtag #sotnw. Twitterers included @ipolicy, @caminick, @persistance, @miss_eli, @techpolicygirl, @cathygellis, @mmasnick, @nextgenweb, @marianmerritt, @larrymagid, @christinela, @mblatkin, @seangarrettnow, @vogelelaw (who didn't always use the hashtag--we will try to publish a standardized hashtag at future events). Whew! Apologies if I missed anyone. I can't recall seeing more Twitterers in an audience--everyone seemed to have their Twitter page up constantly. As usual, I didn't turn on my computer at the conference (I take notes by hand and blog them later), so my comments seem woefully out-of-date already!
We plan to post the event audio soon so you can listen for yourself. I'll announce the audio posting at my Twitter account when it's live.
UPDATE: Audio now available: Download (item 27) or Stream
Posted by Eric at 10:54 AM | Adware/Spyware , Copyright , E-Commerce , General , Internet History , Marketing , Patents , Privacy/Security | TrackBack
July 07, 2009
June 2009 Quick Links, Part 2
By Eric Goldman
State Regulation of the Internet
* iAWFUL, the Internet Advocates Watchlist for Ugly Laws
* Texas HB 2003. Part of the anti-cyber-harassment mania. Very broad statute with lots of room for prosecutorial mischief.
* BNA (BNA subscription required): "State Legislatures Consider Criminal, Civil Restrictions on Ticket Purchasing Software": "At least six state legislative bodies are considering bills this session that would place restrictions on the use of “ticket bots.""
* Because states are embracing the Amazon affiliate tax, the online affiliate industry is shrinking as we speak (1, 2, 3). But in one of his rare good moves, Schwarzenegger has vetoed CA's attempt to impose the Amazon tax.
* Clive Thompson in Wired: "By severing the link between location and geography, the internet turned everything upside down. Now mobile phones are inverting everything again, in the other direction — because your location becomes most important thing about you. So how is the return of geography going to change our lives?" My previous commentary on geolocation and the law.
Blogs/Social Networking Sites
* Yath v. Fairview Clinic, 2009 WL 1751767 (Minn. App. Ct. June 23, 2009). Posting illegitimately obtained health information to a MySpace page qualified as “publicity” for purposes of an invasion of privacy claim. The court says: “Yath's private information was posted on a public MySpace.com webpage for anyone to view. This Internet communication is materially similar in nature to a newspaper publication or a radio broadcast because upon release it is available to the public at large.” As a result, the publication qualified as “publicity” even if the material was posted for less than 48 hours and the plaintiff could only prove that a small number of folks actually saw it. Compare the Moreno v. Hanford Sentinel case, where republication of information the plaintiff voluntarily published on her MySpace page could not support an invasion of privacy claim.
Nevertheless, the defendants were excused because they had not created the MySpace page, even though they had supplied the information republished on the MySpace page.
* Richerson v. Beckon. Ninth Circuit upheld reassignment of teacher-mentor based on negative blog comments. My blog post on the district court opinion.
* Kaufman v. Islamic Soc. of Arlington, -2009 WL 1815641 (Tex. App. Ct. June 25, 2009). An online-only journalist qualified as a "member of the electronic or print media" for purposes of an interlocutory appeal statute.
* After von Brunn committed his hate crime outside the US Holocaust Museum, a bunch of his digital trails went dark as websites newly realized his vitriol was posted there.
* If you're looking for a paper topic, here's one: the use of MySpace, Facebook and other social networking sites in family law disputes, especially over child custody. I'm seeing cases every week where social networking site postings are being introduced to corroborate or contradict testimony about a parent's fitness.
Security
* FTC v. Pricewert. The FTC takes down an allegedly rogue Internet access provider. To the extent that the IAP is engaged in criminal activities, no problem; but it's less clear to me if the FTC can get a civil injunction under its Sec. 5 authority to stop the IAP from serving its putatively illegal customers. Such an action could be preempted by 47 USC 230. The FTC, in its brief, says the IAP fits into a Roommates.com exception, an argument presumably bolstered by their 10th Circuit win in FTC v. Accusearch.
* Johnson v. Microsoft Corp., 2009 WL 1794400 (W.D. Wash. June 23, 2009). This is a putative class action over Microsoft’s use of Windows Genuine Advantage (WGA) to validate copies of Windows XP. In this ruling, Microsoft gets SJ on the claim alleging that the contract prevented Microsoft from doing WGA validation. Especially interesting is the court’s conclusion that IP addresses are not personally identifiable information.
* Microsoft v. Lam. Microsoft brings a lawsuit against alleged click fraudders who caused Microsoft to issue $1.5M in credits to advertisers. The NYT article.
* EFF on the most recent amendments to the Computer Fraud & Abuse Act.
Miscellaneous
* Expedia tagged for $184M in damages for improperly marking up its service fees.
* In re Jamster Mktg. Litig., 2009 U.S. Dist. LEXIS 43592 (S.D. Cal. May 22, 2009). Wireless carriers aren’t liable under RICO and false advertising laws for various deceptive practices by wireless content providers.
* New unmeritorious patent lawsuit trend: lawsuits over patent markings for expired patents.
* NYT: Investing in Lawsuits, for a Share of the Awards
* Oddee: 15 geekiest license plates:
Posted by Eric at 09:18 PM | Content Regulation , Derivative Liability , E-Commerce , Licensing/Contracts , Marketing , Patents , Privacy/Security , Publicity/Privacy Rights , Search Engines | TrackBack
June 09, 2009
May 2009 Quick Links Part 2
By Eric Goldman
Blogs and Boards
* WSJ: Bloggers, Beware: What You Write Can Get You Sued
* j2 Global Communications v. Zilker Ventures, CV 08-07470 SJO (AJWx) (C.D. Cal. April 22, 2009). A consumer review website can putatively qualify for anti-SLAPP protection, but not in this case because the plaintiff established its prima facie case.
* Biggs Cardosa Associates Inc. v. Bradbury, 2009 WL 1508703 (Cal. App. Ct. May 29, 2009). Here's another one for all of you Rip-off Report fans. A former employee lost a jury trial (and was hit with over $100,000 of damages) for breaching a "non-disparagement" clause in his separation agreement by posting negative comments about his former employer and colleagues on a variety of online fora, including numerous posts on the Rip-off Report.
* Houston Chronicle article on a lawsuit against a website operator for a user post saying that a woman has herpes when she, in fact, does have herpes. She is claiming public disclosure of private facts. [Stupid Houston Chronicle expired the article and moved it to its archives, breaking a number of links throughout the web. Here's a short recap of the article.]
* Stengle v. Office of Dispute Resolution, 2009 WL 1138119 (M.D. Pa. April 27, 2009). The contract of an independent contractor government "hearing officer" was non-renewed because she blogged on the topics of her hearings, raising questions about her impartiality. As the court says in dismissing the resulting lawsuit from the hearing officer:
To reiterate, this Court fully recognizes the cherished right of free speech, as well as the commendable goals of the RA. But these cannot wash away the bona fide concerns that arise when a judicial officer elects to disseminate her opinions in cyberspace with little or no restraint. Because of her position, Plaintiff's attempts to qualify her stances as solely her own were entirely ineffectual. With particular jobs come certain precise responsibilities. In Plaintiff's case, one of these included avoiding even the appearance of bias via extra-judicial comments. Plaintiff's deep concerns about the special education issues and the resulting creation of her blog ultimately caused her to face a dilemma that she alone created. The choices she freely made thereafter led to her non-renewal, and as aforestated we do not find any of the Defendants' conduct actionable under the circumstances.
This case reminded me some of Richerson v. Beckon from last year.
* JuicyCampus redux: People's Dirt. Let the angst over anonymous online forums begin anew.
* Doe v. Ciolli, 2009 WL 1204361 (D. Conn. April 30, 2009). In the AutoAdmit lawsuit, the court rejected Matthew Ryan's (aka ":D") motion to dismiss for lack of jurisdiction.
* Facebook v. Power Ventures, Inc., 2009 WL 1299698 (N.D. Cal. May 11, 2009). Largely following the troublesome Ticketmaster v. RMG case, Power Ventures' motion to dismiss Facebook's copyright and DMCA claims was denied. (Other claims survived too). Comments from Jeff Neuburger and Tom O'Toole.
Miscellaneous
* Colleen Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents, North Carolina Law Review, Vol. 87, 2009
* Mazur v. eBay Inc., 2009 WL 1203937 (N.D. Cal. May 5, 2009) Class certification denied. My blog post on this case’s more troubling ruling about 47 USC 230.
* Riggs v. MySpace, Inc., 2009 WL 1203365 (W.D. Pa. May 1, 2009). Venue selection clause in MySpace user agreement upheld.
* Salter v. State, 2009 WL 1409484 (Ind. App. Ct. May 20, 2009). Saving pornographic photos of a minor to a CD does not constitute the "creation" of child porn, even though a new "copy" has been created.
* State v. Bell, 2009 WL 1395857 (Ohio App. Ct. May 18, 2009). MySpace chat sessions aren't MySpace "business records" for hearsay purposes.
* Forbes: the Hidden Costs of Privacy. This article has been written, and written again, many times in the last decade; yet the regulatory dynamics have not improved.
Posted by Eric at 10:35 AM | Content Regulation , Copyright , Derivative Liability , Patents , Privacy/Security , Publicity/Privacy Rights | TrackBack
January 12, 2009
Shifting Strategies in Patent Law Conference Announcement
By Eric Goldman
[Eric's note: this is a popular annual event--last year's symposium drew over 200 attendees. This year should also be popular due to the timely topics and impressive speaker's list. Should be a great event. Hope you can make it.]
Santa Clara Computer & High Technology Law Journal presents:
Shifting Strategies in Patent Law: How the ITC, Non-Practicing Entities, and Inequitable Conduct Are Changing the Patent Arena. The glossy brochure.
January 30, 2009, 9:00 am - 5:00 pm
The Tech Museum of Innovation (San Jose, CA)
Come hear Judge Randall R. Rader, of the United States Court of Appeals for the Federal Circuit, keynote this symposium, and many other distinguished speakers.
In need of Ethics and/or General MCLE Credit? Take advantage of the "Early Registration Special" now! Learn more and register for this event.
Posted by Eric at 09:37 AM | Patents | TrackBack
December 11, 2008
Patent Lawsuit Filed Over Google Reader--Priest v. Google
By Eric Goldman
Priest v. Google, 1:2008cv12056 (D. Mass. complaint filed Dec. 11, 2008). The Justia page.
I normally try to stay away from patent lawsuits, and frankly so many are filed against the major search engines that it would be impossible for me to keep up. However, I got such a good laugh out of this complaint that I had to share it with you.
The lawsuit alleges that Google, and in particular Google Reader, infringes two patents, #5,167,011 and #5,829,002. I have no opinion on the merits of the lawsuit. It appears that the lawsuit was filed pro se, and I can't remember the last time I saw a pro se patent lawsuit. Maybe that explains the strangeness of the complaint.
The complaint tells the story of how the plaintiffs approached Google in 2007 about the patents by emailing Google's bizdev email account. The complaint suggests that in March 2008, Google sent a nice "buzz off" email. The complaint then indicates that the plaintiffs were scared to engage Google in further discussions due to the 2007 SanDisk v. STMicroelectronics Federal Circuit ruling, which held that plaintiffs' stronger assertions of its patent rights might create the basis for Google to file a declaratory judgment--something the plaintiffs apparently really, really wanted to avoid. Therefore, the plaintiffs decided to let their complaint do the talking from there.
But now that the complaint has been filed in their home court and it will be difficult for Google to usurp jurisdiction, the plaintiffs want to keep talking with Google. So, in their complaint, they write (para. 15):
Further, as Priest & Morris, in good faith, only wish that the invention be used to its fullest potential, and have a strong wish that precious court and corporate resources be conserved, the plaintiffs prefer reaching this fair settlement through friendly appreciation and negotiation. In any event, we encourage defendant to not view this complaint as 'litigious behavior' and to view it in respective good faith and action.
I'm not exactly sure what planet these plaintiffs are from, but here on Earth, we tend to view the filing of a lawsuit as "litigious behavior." Further, given that the typical cost to defend a patent lawsuit is around $5M, it's a little hard to see how Google will interpret this lawsuit as a friendly gesture.
Posted by Eric at 02:45 PM | Patents , Search Engines | TrackBack
October 28, 2008
Federal Circuit Comes to Santa Clara University Next Week
By Eric Goldman
Next week, a three judge panel of the Federal Circuit Court of Appeals will be visiting Santa Clara University and hearing oral arguments in four cases. You can read the briefs of the cases to be heard. (I've attached a summary of the non-patent cases at the bottom of this post.) We have three open events that we invite you to attend.
Case Previews
November 3, 2008
Time: 12 p.m. to 1 p.m.
Bannan 127
A preview of the cases to be heard on the 4th will be given by Santa Clara Law faculty as well as attorneys from Blakely Sokoloff Taylor & Zafman; McDermott Will & Emery; Orrick, Herrington & Sutcliffe; and Cooley Godward Kronish. Lunch will be served. Admission is free, and everyone is welcome (RSVPs not required).
Oral Arguments
November 4, 2008
Time: 10 a.m. to 12 p.m.
The Federal Circuit Court of Appeals will sit at Santa Clara Law on November 4, 2008. A panel of three judges will hear cases from 10 a.m. to noon in the Law School's moot court room. Seating in the moot court room is by invitation only. The oral arguments will also be simulcast to the de Saisset Museum on campus. Seating at the Museum is free and open to the public; no RSVPs required. If you do not have a seat reserved in the Moot Court Room, please go directly to the de Saisset Museum. Read the briefs of the cases to be heard.
Lunch with the Judges
November 4, 2008
Time: 12 p.m. to 2 p.m.
Sponsored by the High Tech Law Institute and the Silicon Valley Intellectual Property Law Association.
Following oral arguments, lunch with the judges will be held in the Mission Room of the Benson Center on campus. Towards the end of lunch, there will be short remarks from the presiding judge followed by a 30 minute question and answer period. The cost for this lunch is free to HTLI benefactors and $50 for everyone else. Registration is required; we will not be able to accommodate walk-ins. Register here.
I want to mention a fourth event, although the event is full:
The Federal Circuit Visits the Valley – Discourse and Dinner
November 5, 2008
Four Seasons, Palo Alto
Time: 2 p.m. to 9 p.m.
On November 5, 2008, the Stanford Program in Law, Science and Technology, the High Tech Law Institute, the Berkeley Center for Law & Technology and the Federal Circuit Bar Association will host a program titled "The Federal Circuit Visits the Valley - Discourse and Dinner" at the Four Seasons Hotel in East Palo Alto. This event is now full.
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A short preview of the non-patent cases:
Rancher v. Peake
The Board of Veterans' Appeals denied the appellant's claim to establish an earlier effective date for her 100% rating for her service-connected schizophrenia. The Board also found that she withdrew her claim seeking a total disability rating based upon individual unemployability (TDIU). The case was appealed to the U.S. Court of Appeals for Veterans Appeals, which declined, based upon a lack of jurisdiction, to consider the appellant's earlier effective date argument. The Court also affirmed the board's finding on the withdrawal of the TDIU claim. The decision has now been appealed to the Federal Circuit Court of Appeals on these two issues.
Hooker v. U.S.
This case is appealed from the U.S. Court of Federal Claims. The appellant claims that the U.S. Government is liable for breach of contracts for trapping beavers and hogs at the Department of Energy's Savannah River Site in South Carolina. At trial, the appellant alleged that a contract modification extended the hog contract and that the Government breached the contract by hindering his performance of the contract. He also alleged that work on the beaver contract exposed him to radioactive contamination about which the Government failed to inform him, and that the trial court should reform the beaver contract to reflect what he would have bid had he known of the alleged contamination. Finally, the appellant argued that the Government acted in bad faith by reducing his work orders and attempting to induce him to abandon his contracts. The trial court held that the appellant abandoned the hog contract and did not attempt to perform additional work; that the appellant did not produce any evidence to show he had suffered damages as a result of the Government's alleged failure to inform him of the contamination and, therefore, there would be no remedy available even if his allegations were true; and that the Government did not act in bad faith in its administration of the beaver or hog contracts. This decision has now been appealed to the Federal Circuit.
Hartland v. U.S.
The appellant is a LLC from Virginia. In its complaint, the appellant states that a valid predecessor of the LLC entered into a contract with the U.S. Department of Agriculture for the sale of a hydroelectric power plant in Vermont. The appellant sued for damages under the Tucker Act for breach of contract. At some point, between the date of the contract and the filing of the suit, the appellant sold the company that was party to the contract that the appellant claims the Government breached. The Court of Federal Claims dismissed the complaint holding that the appellant lacked the privity of contract with the Government that was necessary to establish that the court possessed subject matter jurisdiction to entertain the breach of contract claims. This issue is now on appeal to the Federal Circuit.
Posted by Eric at 05:40 PM | Patents | 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
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
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 17, 2007
Patent Contingency Fee Agreements
By Eric Goldman
Patent litigation is hot, but I rarely see much discussion about the fee agreements used by patent litigants. So I was very interested to hear Stephen Susman (from the well-known Susman Godfrey firm) speak at the May UT Austin Technology Law Conference about fee agreements for patent contingency work--a topic he knows well, as he said he spends 70% of his time on such matters.
Plaintiff-side patent contingency cases pose a number of unique challenges to lawyers. Most obviously, the cases represent a major upfront investment by the law firm. Susman said his baseline is $3M of attorney time to complete a trial, plus $2M of out-of-pocket expenses (mostly) for experts. Further, these investments are subject to significant risk by the rapidly evolving patent jurisprudence; any defense-favorable Supreme Court opinions (such as the AT&T v. Microsoft case) mid-stream can eviscerate a case's economic value.
To reduce these risks, Susman Godfrey does the following:
* the firm invests significant money (he estimated $100,000) diligencing a potential case, including getting validity and infringement opinions. During this diligencing phase, Susman Godfrey enters into a “standstill agreement” to freeze the client from going to a different lawyer. Susman didn’t provide a copy of the standstill agreement, but I would love to see it! An agreement getting clients to temporarily restrict their choice of counsel and forebear their litigation rights should raise particularly interesting and complicated professional responsibility issues. (Sounds like an excellent exam question!)
* the firm only takes on cases that receive a majority vote of all of the firm’s lawyers (with every lawyer, from associate to senior partner, receiving an equal vote). This reminds me a little of the Wisdom of Crowds approach to decision-making.
* the firm joins forces with a patent firm for each case. Susman’s view is that it’s better to have 50% interest in two cases than 100% interest in one.
Given the significant dollar values of a patent judgment, there is a higher-than-average risk of litigation between lawyer and client when it comes time for fee payoffs. Plus, it can be difficult to value patent settlements, which might include cross-licenses, running royalties, equity investments or obligations to purchase future widgets. Thus, when negotiating a patent contingency fee agreement, Susman strongly encourages clients to get their own independent counsel to review the agreement as a way of increasing the agreement’s likely enforceability.
Susman Godfrey’s fee agreement includes a provision allowing the firm to unilaterally terminate a representation if the firm decides the case is a loser. The goal of this provision is to address the moral hazard risk in contingency fee cases where clients feel no economic disincentives to pursue a case to trial even if there’s a low chance of victory, but the firm wants to cut its losses. Susman acknowledged that this clause would be difficult to enforce in court, but he said that the firm included the provision after their ethics professor/expert concluded that the provision wasn’t likely to jeopardize the enforcement of the other provisions even if the judge tossed that provision out.
Susman said that his firm never initiates any settlement/licensing talks with defendants before the firm files a case in a favorable forum. This prevents the defendant from initiating a declaratory judgment action in an unfavorable (to the plaintiff) forum, but it also struck me as crummy that no deal is discussed before the case consumes court resources. This may be another good reason to include venue limitations in any patent reform bill.
Susman said that the firm’s malpractice carrier would prefer that the fee agreement’s dispute resolution provision specify a non-jury trial to preserve the ability to appeal, but the firm has chosen to specify mandatory arbitration to help preserve client confidentiality, a particularly important issue when patents (and trade secrets) may be on the line.
Susman didn’t discuss typical contingency fee percentages, but he did say that typically the percentage increases at various milestones. For example, the percentage bumps up 60 days prior to trial because of the major ramp-up in work starting then. He also said that if the firm advances expenses for the client, the percentage is typically 5% higher to compensate for the extra risk (the expenses may be recouped before the remainder is split). The downside is that if the client doesn’t have any skin in the game, they may be unreasonable about settlements. That’s why he said patent trolls make good clients; they are sophisticated players that evaluate settlement offers rationally (he described them as “professional gamblers, not casual gamblers”).
I haven't seen the Susman Godfrey fee agreement form online in total, but you can see the first couple pages here.
Posted by Eric at 09:49 AM | Licensing/Contracts , Patents | TrackBack
April 09, 2007
March 2007 Quick Links Part 2
By Eric Goldman
Yesterday I posted the Google edition of my list of interesting items from March. Today I post the remainder of items that caught my eye last month.
Trademarks/Brands
* Bosley Medical Institute v. Kremer, 2007 WL 935708 (S.D. Cal. Mar. 22, 2007). On remand from the Ninth Circuit, the district court denies Kremer's motions to dismiss/for SJ. Michael Atkins recaps the ruling and case's history.
* Milbank Tweed Hadley & McCloy LLP v. Milbank Holding Corp. d/b/a Milbank Real Estate Services, No. CV 06-187-RGK (JTLx), (C.D. Cal. Feb. 23, 2007). After passage of the Trademark Dilution Revision Act, the court rejects the existence of "niche fame" as support for a dilution action. I’m a little surprised that this plaintiff would bring this losing argument.
* ICANN votes down a .XXX TLD. Again.
* NYT on the increasing challenges of creating a unique global brand in very crowded namespaces.
* Trademarked Sentences: A tool that helps you generate poetry by mixing trademarked slogans.
Blogs/UGC
* BidZirk v. Smith, No. 06-1487 (4th Cir. March 6, 2007). The Fourth Circuit, in a non-substantive opinion, denied a company's request for an injunction against a griping blogger's use of its trademarks. My initial write-up of the case. With this loss, the plaintiff's ill-advised decision to appeal the case is now even more clearly a complete waste of the plaintiff's money and our judicial resources.
* Chapman v. Merchandise Mart Properties, 2007 WL 922258 (D. Vt. Mar. 23, 2007). Woman tries to get TRO against physical-space trade show based on trademark interests in the term "GreenStyle," which is her blog’s title. The court rejects the request, but interestingly doesn't seem fazed by the argument that she may have a trademark interest generated from her blog name. Blog names can be trademarkable with sufficient use in commerce, a factor the court ignored completely.
* Sifry: "70 million weblogs. About 120,000 new weblogs each day, or...1.4 new blogs every second."
* A nice retrospective on the history of blogging.
* Wikipedia is requiring some credentialing after getting burned by a pseudonymous contributor who falsely claimed he was a professor.
* Ed Felten has some terrific observations about building distributed reputation systems like Digg (and, for that matter, Epinions). Ed is 100% correct that reputation systems need substantial stabilization; they don't just work deus ex machina.
Contracts
* Dorr v. Yahoo, No 3:07-cv-01428-MJJ (N.D. Cal. complaint filed March 7, 2007). Yahoo offered a premium subscription service allowing users to send email without Yahoo's ads attached. Then, allegedly, they changed the service's terms, and some of the paying customers were unilaterally bumped to a tier where Yahoo's ads were again attached to their email. Steve Bryant has more. In general, if people pay to eliminate ads, during that period of time, Yahoo should not be able to unilaterally amend the terms so that the user is paying but still getting ads.
* Ken Adams blogs on Affinity Internet, Inc. v. Consolidated Credit Counseling Services, Inc., 920 So. 2d 1286 (Fla. Dist. Ct. App. 2006), where the court held that a contract clause saying "This contract is subject to all of SkyNetWEB's terms, conditions, user and acceptable use policies located at http://www.skynetweb.com/company/legal/legal.php" was insufficient to incorporate an arbitration clause contained in the referenced document. Ken's suggested fix: "The SkyNetWEB user agreement located at http://www.skynetweb.com/company/legal/legal.php constitutes part of this agreement."
Government Agencies
* The National Do Not Call Registry: Annual Report to Congress for FY 2006 Pursuant to the Do Not Call Implementation Act On Implementation of the National Do Not Call Registry (April 2007): "The Commission believes that the fundamental goal of the National Do Not Call Registry — to provide consumers with a simple, free, and effective means to limit unwanted telemarketing calls — has been realized." My curmudgeonly take on why the do-not-call registry isn’t great policy.
* Implementing the Children's Online Privacy Protection Act: A Federal Trade Commission Report to Congress (February 2007). The FTC remains pretty pleased with itself about COPPA, but it's worried about social networking sites and the continuing lack of age verification technology. I'm not as impressed with COPPA as the FTC is; see here and here. In any case, if you're doing COPPA research, this report helpfully recounts the 12 COPPA enforcement actions to date.
* Hard to believe, but payola busts are still being made. The latest: a $12.5M settlement. See the NYT and WaPo .
* Terrific post by the EFF’s Seth Schoen about a misguided report on P2P file sharing by the USPTO and the issues with empowering users to control their computers. A must-read.
Miscellaneous
* ACLU v. Gonzales, No. 98-559 (E.D. Pa. March 22, 2007). On remand from the Supreme Court, the court once again holds that the 1998 Child Online Protection Act is unconstitutional.
* CRS Report for Congress: An Overview of Recent U.S. Supreme Court Jurisprudence in Patent Law, March 16, 2007, discussing the last 8 Supreme Court patent cases.
* We've all heard about the magic of network effects. But as this Mercury News article explains, when an Internet start-up company's network takes root principally overseas, it can leave the company with a large audience of unmonetizable users.
* Jacob Loshin, Property in the Horizon: The Theory and Practice of Sign and Billboard Regulation, 30 Environs 101 (2006). A thoughtful discussion of the history of billboard regulation and some regulatory considerations.
* Coca-Cola's launch campaign for "Coke Zero" is premised on the idea that the executives of Coca-Cola want to sue the executives of Coke Zero (i.e., other executives within the same company) for "taste infringement" because the taste is so similar. Personally, I find commercials about faux lawsuits HILARIOUS. Ha ha ha. Except...if there isn't currently a cause of action for "taste infringement," with the expansion of IP rights, it may only be a matter of time... This turns the joke about how hard it would be to establish taste infringement on its head. Ironically, the commercial features Coke's actual lawyers. Yet more on this sorry story.
Posted by Eric at 09:14 AM | Content Regulation , Copyright , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Trademark | TrackBack
March 07, 2007
University Report on Tech Transfer and the Public Interest
By Eric Goldman
Twelve academic institutions have released a white paper entitled In the Public Interest: Nine Points to Consider in Licensing University Technology. The report purports to articulate "best" practices by universities in the technology transfer business. The report contains pearls of wisdom such as "it reflects poorly on universities to be involved in 'nuisance suits'" (true, but this statement applies to all plaintiffs, not just universities!) and "universities would better serve the public interest by ensuring appropriate use of their technology by requiring their licensees to operate under a business model that encourages commercialization and does not rely primarily on threats of infringement litigation to generate revenue."
Generally draped in high-minded rhetoric (e.g., "Universities have a social compact with society"), the report reads more like the kind of pronouncements that a cartel would issue to conform the behavior of rogue constituents--complete with example licensing provisions that are designed to become industry standards. Nevertheless, it's a implicit admission from universities that they can do serious violence to social innovation when they engage in regressive and rent-seeking licensing practices. But so long as universities view tech transfer as an important revenue source that's not dependent on capricious legislators or government bureaucrats, what incentives will university tech transfer offices have to fold public interests into their licensing or enforcement equations?
Posted by Eric at 09:43 AM | Licensing/Contracts , Patents | TrackBack
March 01, 2007
February 2007 Quick Links
By Eric Goldman
* The California Highway Patrol (which, for reasons unclear to me, has investigatory power here) has concluded that the Angelides campaign did not break any laws when they reverse-guessed URLs on Schwarzenegger's website and found an unrestricted page with a video of the Gov wondering about Assemblywoman Bonnie Garcia's "hot'' temperament because of her mixture of "black blood'' and "Latino blood'' and referring to Assembly Republicans as a "wild bunch." The CHP did recommend that Schwarzenegger's team tighten up their website security. Silly reminder: if you really want keep information a secret, don't put it on a website without password protection.
UPDATE: Greg Haverkamp points me to this document, which explains that the CHP has enforcement power over Penal Code 502 violations involving state computers. Interesting. In my mind, I see Erik Estrada revving up his PowerBook to bust some baddies...
* Voda v. Cordis Corp., 2007 WL 269431 (Fed. Cir. Feb. 1, 2007). Patent owner can't litigate infringement of foreign patent rights in US court as part of supplemental jurisdiction over a US patent infringement claim. Patry's writeup.
* NYT on how YouTube indirectly motivates teens to deliberately do stupid things just for the opportunity to post them and perhaps get notoriety. I had a first-hand observation of this when I trolled through YouTube looking for a Listerine commercial that I might show in class while teaching a case involving Listerine. A search for the word "Listerine" in YouTube produces video after video of people doing stupid things with Listerine, like eating big stacks of their breath film or snorting the breath spray and then writhing in pain. Watching video after video of people repetitively doing stupid stunts, I felt like shouting to these people: "IF YOU'RE GOING TO DO SOMETHING STUPID ON YOUTUBE, AT LEAST BE ORIGINAL!"
* From Steve Bryant at eWeek: Shannon Stovall sues Yahoo for including her photo in Yahoo's welcome email, claiming Yahoo violated her rights of publicity/privacy to the tune of $10M compensatory damages and $10M punitive damages.
* Digg users may mark content they don't agree with as "spam." The most recent example is Danny Sullivan's post on SEO, which got Dugg and then was eliminated when anti-SEO Digg users flagged it as spam. If a website defers content grading to its users, it has to trust that they are reporting their feedback accurately. If they aren't, the whole user grading process breaks down. And speaking of breakdowns, there is an active secondary market for Digg votes--check out how Annalee Newitz bought front page placement on Digg for about $100.
* The always-colorful Chris Hoofnagle has released a new paper, "The Denialists' Deck of Cards: An Illustrated Taxonomy of Rhetoric Used to Frustrate Consumer Protection Efforts." By his standards, I suspect I've dealt a full house with some of my rhetoric! Now, I wonder if he's going to create a complementary deck for bogus rhetorical tactics used by consumer protection "advocates"?
* From the EFF: "Debbie Foster, a single mom who was improperly sued by the RIAA back in 2004 for file sharing, has won back her attorneys' fees." Capitol Records v. Foster, No. 04-1569-W (W.D. Okla. Feb. 6, 2007). Unfortunately, that hasn't stopped the plaintiff from advancing nonsense arguments in the case, including the specious argument that a computer owner is automatically responsible if third parties use the computer to infringe copyrights. Fred at the EFF rightly debunks this argument.
* Wikipedia article: "Wikipedia is Failing." Your perspective about success or failure may be influenced by the impressive traffic gains that Wikipedia is experiencing--Wikipedia is now one of the top 10 most trafficked websites. Most of that traffic is coming from Google.
* Doe v. Josef Silney & Assoc., No 07-04167CA15 (Fla. Cir. Ct. complaint dated Feb., 13, 2007). Golfer Fuzzy Zoeller sues an alleged vandal of his Wikipedia page for defamation and related torts. Fortunately, he left Wikipedia out of the suit. However, he only knows the IP address of the person who modified the page, and that IP address is registered to the defendant. Is owning the IP address enough to establish liability? Or is this like an RIAA blunderbuss sue-first, ask-questions-later approach? It seems like the lawsuit should have been against a Doe, with a subpoena to find out who actually edited the page using that IP address.
* US v. Twombly, 2007 U.S. Dist. Lexis 12664 (S.D. Cal. Feb. 22, 2007). A spammer challenges some criminal provisions of CAN-SPAM as vague and overbroad, but the judge has no problems reading the statute to facilitate sending spammers to the slammer. Venkat's writeup.
* CDT groks (and mostly bashes) a variety of online kid-protection bills proposed in Congress.
* From the NYT: Nancy Pelosi posted some videos from C-SPAN to her blog. The Republicans immediately attack her for "pirating" the videos. Turns out that those videos were actually recorded by the government, so they are in the public domain. Whoops! The Republicans had to issue a mea culpa retraction. However, Nancy did grab a C-SPAN-owned video elsewhere which she had to take down. If our legislative leaders can't figure out what video they can recycle, how in the world can less-trained lay people do so? Patry has more.
* A bearish view on domain name speculation from CircleID. I share the sentiment that domain names don't matter, so domaining and typosquatting strike me as a short-term arbitrage opportunity that inevitably will be mooted by a variety of forces. Thus, the idea of paying 40 or 60 years worth of revenue for a domain name is laugh-out-loud funny to me.
* The Long Tail notes that some brands, trying to build a more esoteric image, try to hide their ownership by mainstream mass-market brands, a phenomenon he calls "brand dis-synergy." Examples: Dagoba Organic Chocolate, Joseph Schmidt, Cacao Reserve and Scharffen Berger chocolates (all owned by Hershey) and Converse (owned by Nike).
* Veritas busted for manufacturing revenues via round-tripping with AOL (Veritas bought AOL ads and AOL bought Veritas software; each at inflated prices).
* What does "or" mean? According to the 8th Circuit, it can mean "and." Ken Adams is on the case.
* Ricky Hoggard Holman, a 18 year old high schooler in Sudbury, Canada, correctly blogged all 24 of the American Idol finalists. How? Online research, such as researching the MySpace pages of contestants and emailing their MySpace friends. He also talked to some of the booted final 40 contestants, a few of whom broke their punitive-laden confidentiality agreement to dish some dirt. Maybe he wasn't studying, but clearly he's learned a few things about the power of good old-fashioned research. (The article says he's a straight A student, so he clearly can balance many things). Nice job, Ricky!
Posted by Eric at 12:03 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , Licensing/Contracts , Marketing , Patents , Privacy/Security , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack
December 22, 2006
Top Cyberlaw Developments for 2006 – Part 2
By John Ottaviani
(Eric Goldman is away until the New Year. He left me the keys to the blog. I warned him that this may be like leaving the teenagers the keys to the house when the parents go away for the weekend!)
As Eric pointed out, our “Top Ten Cyberlaw Developments for 2006” list left out several notable developments. Here are a few more that were “near misses” for the list. In no particular order of importance:
· Electronic Voting – There was a lot of buzz about electronic voting and the perceived failures of the various systems. Given the proliferation of machine-human interfaces that we encounter on a daily basis, it is difficult to comprehend why problems continue to plague this industry.
· Apple v. Does – A California state appeals court held that online journalists had the same right to protect the confidentiality of their sources as offline reporters do under California’s reporters’ shield law. This result is not surprising, but it appears to be the first formal confirmation that courts would apply the same rules to traditional and online reporters. In addition, the court ruled that the federal Stored Communications Act does not permit a civil subpoena of stored e-mail from a service provider, only direct subpoenas from the account holders.
· Snow v. DirecTV – In June, the 11th Circuit held that, in order to be protected by the Stored Communications Act, an Internet website must be configured in some way as to limit ready access by the general public. An anti-DirecTV activist had created a public bulletin board, with a banner containing purported terms of service forbidding DirecTV representatives from entering the site or using its message board. However, the site was configured such that anyone in the public (including the DirecTV representatives) could enter the site, create a profile and use the message board. The court recognized Congress’s intent not to criminalize or create civil liability for acts of individuals who “intercept” or “access” communications or websites that otherwise readily are accessible by the general public. The court suggested that even a statement in the complaint that a plaintiff screens the registrants before granting access may have been sufficient to infer that the site was not configured to be readily accessible to the general public. However, in the absence of any such statements, the court granted DirecTV’s motion to dismiss for failure to state a claim. As a result, website operators who want to take advantage of the provisions of the Stored Communications Act must take some affirmative actions to be able to demonstrate that the website was not configured to be readily accessible to the general public. Relying on those who are not the website’s intended users to voluntarily excuse themselves will not be sufficient.
· eBay v. MercExchange – In May, the U.S. Supreme Court ruled that, once a patent is found valid and infringed, an injunction does not automatically have to be issued. Trial judges are free to weigh competing factors, including the effect of enforcing a patent on the public interest, as the trial judges do in other injunction proceedings. The case revolved around eBay’s “buy it now” feature, which allows customers to purchase items without participating in an auction. In 2003, a jury found that this feature infringed on two of MercExchange’s patents. The Supreme Court’s decision requires the patent owners show “irreparable injury” resulting from defendant’s infringement in order to receive injunctive relief. While this standard should be relatively straightforward for patent owners who practice their technology, the decision may lessen the ability of patent owners who don’t practice their inventions to obtain an injunction (or threaten to obtain one as a negotiating tool).
If anyone else has any Cyberlaw developments that they feel should be on the “Top Ten” list, please feel free to let us know!
Our list of “Top Cyberspace Intellectual Property Cases” for 2006 will be available in January.
Posted by John Ottaviani at 12:18 PM | E-Commerce , Patents , Privacy/Security | TrackBack
November 29, 2006
Nov. 2006 Quick Links
By Eric Goldman
My monthly roundup of noteworthy tidbits:
* Yesmail, an email outsource vendor, was busted by the FTC under CAN-SPAM for failing to honor opt-out requests because Yesmail's incoming email filters blocked those opt-out requests as spam. This strikes me as a particularly messy technological dilemma--even email outsource vendors need spam filters, but if those filters nab opt-out requests, the FTC isn't showing any sympathy. So it looks like email outsource vendors will need to use less vigilant spam filters or find some way to direct opt-out requests to a non-filtered email server.
* Best Western Int'l Inc. v. Doe, No. 06-1537 (D. Ariz. Oct. 24, 2006): griper defeats trademark infringement and dilution claims due to the lack of "use in commerce in connection with goods or services." (HT: BNA's E-Commerce and Tech Law Blog).
* Simmons v. Florida, SC04-2375 (Fla. Sup. Ct. Nov. 16, 2006). Very troubling ruling from Florida upholding the criminal conviction of a defendant for disseminating harmful to minors material online. First, breaking with an unbroken string of cases dating back to 1996, it upholds the state law prohibiting the dissemination of harmful to minor materials over the Internet from a Constitutional challenge. In the past, these laws uniformly have been struck down under the First Amendment or the Dormant Commerce Clause (or both). Second, the statute applies only to email, but it was used to bust someone communicating via instant message. These types of technology-specific statutes create these odd silos that create too much ambiguity. Declan's writeup.
* McDonald's is seeking a patent on using a "sandwich delivery tool" to deliver filling (like ham) to a "bread component." This could be the greatest thing since sliced bread!
* From Greg Linden's blog: Google surveys its users and they say they want more results per page. So Google tests a search results page with 30 results/page. The result? A 20% drop in traffic! Note that a 10-result page takes 0.4 seconds to load, while a 30-result page takes 0.9 seconds, so the working theory is that an extra 0.5 second latency deterred a lot of searching. This may give a little insight into why Google is fighting so hard on net neutrality. If Google does get relegated to a slow lane, it may lose lots of searches.
* A band called Bones registers a MySpace account at http://www.myspace.com/bones and, over the course of 2 years, accrues 2,100 friends. Fox, the owner of MySpace, decides that it would prefer to have that URL for its TV show Bones, so it boots the band and puts up a page for the TV show. Can Fox do this legally? It all depends on the contract (but I'm skeptical that the contract was this broad). For some background on taking virtual assets, see my prior discussion on the sex.com litigation and account ownership in virtual worlds. In any case, Fox relented and gave the URL back to the band. But this is a good reminder that, if you care about your web presence, don't build up goodwill in a URL controlled by someone else.
* FTC busts Guidance Software for inadequate security. According to Internet News: Guidance's privacy policy said it "takes every precaution to protect our users' information," "your information is protected both online and offline" and it protected data "with the best encryption software in the industry – SSL." Yet, Guidance suffered a security breach that resulted in the leak of 4,000 credit card numbers; and the breach wasn't detected for 3 months. I'm not entirely sure what to make of this--was this enforcement action based solely on overstatements in the privacy policy, or was it based on poor security practices regardless of the privacy policy? My vote is that it's the latter based on the BJ's Wholesale Club precedent.
* A consumer group filed a complaint against Zillow for doing a lousy job of providing valuation estimates. While Zillow's estimates may be poor, this complaint raises some troubling concerns about the liability associated with any web-based price estimate service. Could developments in this matter affect Google's PageRank as a valuation of the worth of web pages?
* Ted Leonsis, vice chair of AOL, didn't like the search results when he vanity searched. So he vowed to improve his Google profile, launching a high volume blog that helped drive preferable results to the top of the list. My advice to Ted: enjoy the favorable placement while it lasts; you're only one Googlebomb away from disappointment.
* We are generally conditioned to think that every searcher gets the same search results for the same search. This model is progressively breaking down due to personalized search and other innovations. A catalog of reasons why search results vary for searchers. I eagerly await the time when courts recognize this fact when dealing with search engine cases!
* A DoubleClick study claims that 30% of consumers admitted that they sometimes click on banner ads, but 61% of consumers said that at least sometimes they made a mental note of the advertisers and followed up with them later. If true, this means that banner ads generate a lot more value than is measured by clicks alone. However, I wonder if this result should be chalked up to the "talk is cheap" category?
* It's like a well-worn joke: if you'll believe that, I've got a bridge to sell you. But no joke: they may be selling the Golden Gate Bridge--well, at least, corporate sponsorships for it. Of course, the bridge is so iconic that a brand owner could get significant goodwill from being associated with it. On the other hand, it's the world's leading suicide destination; not exactly the best corporate tie-in for many brands.
* According to one anti-spam vendor, "9 out of 10 emails now spam." At this rate, pretty soon it will be 11 out of 10 emails.
Posted by Eric at 11:47 AM | Content Regulation , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | Comments (4) | TrackBack
October 20, 2006
Patent Policy in the Supreme Court and Congress--October 27, 2006
By Eric Goldman
The High Tech Law Institute at Santa Clara University School of Law is co-sponsoring, with the Berkeley Center for Law and Technology, a conference on Patent Policy in the Supreme Court and Congress. This event will bring together over two dozen of the leading patent thinkers throughout the country to discuss patent reform in Congress and the patent jurisprudence of the Supreme Court and the Federal Circuit. This is a first-rate group of patent scholars discussing the latest cutting-edge issues, so it should be a can't miss event for anyone interested in patent policy. The details:
Date: October 27, 2006, 8:15-5:30
Location: Santa Clara University School of Law, Bannan 127
Registration Fee: Free, but registration is required
I'm sorry for the late notice of this event. It looked like we were going to have a full house, but we've made a last minute switch in venues that has opened up some new seats. I look forward to seeing you there!
Posted by Eric at 09:30 AM | Patents | TrackBack
October 01, 2006
Sept. 2006 Quick Links
By Eric Goldman
Some stories that caught my eye in September:
* Digg users are gaming the Digg algorithm. Greg Linden's take. Naturally, Digg is fighting back by tweaking its algorithm to reduce the effect of gaming and preserve some editorial integrity to its results. Hmm...this sounds familiar. As I've argued, users inevitably will game algorithms, websites will tweak the algorithms, and the cycle will repeat infinitely. It is the Law of Algorithms. For a user revolt/algorithmic assault that I "enjoyed" first hand, see here.
* Rebecca blogs on "mocketing," the process where brand owners pay people to parody their brands, and its potential implications for trademark law.
* Starbucks emails employees a coupon for a free drink and encourages them to forward the email coupons on to friends and family. A few trillion emails later, Starbucks realizes that it made a horrible mistake and dishonors the coupons. Now, they're staring down a $114M class action lawsuit. See the coupon and more details here. Practice pointer for marketers: NEVER EVER encourage email recipients to forward the emails on to friends and families, especially if some benefit putatively will attach. It's a sure-fire way to become an instant urban legend, and some variation of these emails will still be making the forwarding rounds in the year 2525. Tsan offers some more practice pointers.
* BusinessWeek recaps the social science literature on how eBay sellers can maximize revenues. Recommendations based on the literature: set low starting prices; don't use reserves; use photos; don't flood the market; spell check; use hype; hold longer auctions; watch the auction's ending time; don't overcharge for shipping; and avoid negative feedback.
* About 1 of every 2 searches involves "pogo-sticking" (reviewing a search results page, investigating a search result and back-buttoning to the search results page). Yet more social science demonstrating the junkiness of the initial interest confusion doctrine--consumers have figured out how to investigate search results and back out if they are not relevant.
* In a default judgment, an Illinois judge ordered UK-based Spamhaus, one of the email blocklist maintainers, to pay e360 Insight LLC $11.7M in damages for blocklisting them and to post a note acknowledging that they aren't spammers. However, it remains unclear how e360 can enforce this ruling.
* Google lost a Google News copyright case in Belgium. For a critical view of this case, see Ross Dunn's take. Google's official statement.
* Lengthy NYT article on Marshall, TX, with the second-largest patent docket in the country. Why? Fast trials, plaintiff-favorable results (78% pro-plaintiff instead of a national average of 59%), and Texas-sized damages. More on Marshall as patent litigation capital available here.
* AOL has been sued for its release of search data. Danny's take. Two things: (1) I can't see the ECPA claim at all. A search request is a communication between party A (searcher) and party B (search engine). There's no ECPA violation when either A or B discloses the contents of that communication. However, I think search engines make their life harder when they take the position that they make the factually unsupportable argument that they are just passive conduits between searchers and web publishers (see Field v. Google). (2) the complaint takes the position that AOL is continuing to disseminate the search data because it continues to display search results linking to the data. I think this argument has lost all credibility in the copyright arena; it seems equally bogus here.
* A three year old kid knows how to "buy it now."
* NYT on "orphan brands"/"dormant brands" and efforts to license and revive these brands.
* The US officially joined the Council of Europe (COE) Convention on Cybercrime. It becomes effective Jan. 1, 2007.
* My colleague Tyler Ochoa explains the fallacies of Huntington Beach's trademark claims for the phrase "Surf City USA."
Posted by Eric at 11:07 AM | E-Commerce , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack
August 08, 2006
Blackboard Patent Suit Stirs Up Academic and Open Source Hornet's Nests--Blackboard v. Desire2Learn
By John Ottaviani
Blackboard, Inc. v. Desire2Learn Inc., No. 9:06-cv-00155-RHC (complaint filed July 26, 2006)
Although this story does not seem to have hit the mainstream press yet, there has been a firestorm in the academic and open source communities since Blackboard filed a patent infringement lawsuit against one of its competitors, Desire2Learn, in the Eastern District of Texas a couple of weeks ago.
For those who are not familiar with Blackboard, the company is a leading provider of learning management systems for colleges and universities. Blackboard's annual report claims that it has more than 2,200 clients in about 60 countries at the end of 2005. Blackboard's Internet-based systems typically permit instructors to post content and announcements for courses and communicate with students, and allow students to collaborate and communicate with each other and instructors.
On July 26, Blackboard announced that the United States Patent and Trademark Office had issued U.S. Patent No. 6,988,138 for an "Internet-Based Education Support System and Methods." On the same day, Blackboard filed its complaint against Desire2Learn. The complaint simply alleges that Blackboard's patent is valid and that Desire2Learn's products and services infringe the patent. Blackboard has also tossed in a claim that Desire2Learn contributes to and/or induces infringement of Blackboard's patent.
The academic community is outraged at the lawsuit. Most of the venom has been directed at the perceived breadth of the patent, which many feel is so broad as to cover any course-based on-line learning management system, including those in existence since the early 1980's. A number of efforts have already sprung up to identify so-called "prior art" (other learning management systems that were in existence prior to 1999 when Blackboard first filed its patent application), to prove that Blackboard did not invent what it has claimed (see examples here and here).
Blackboard claims simply that it is trying to protect its own innovations, not e-learning or course management systems in general. In a letter to Blackboard's clients, Michael Chasen, BlackBoard's President and CEO, states that "The Blackboard CMS patent covers only specific features and functionality contained in the Blackboard system that were developed by the Blackboard team. We certainly did not invent e-learning or course management systems, and I am personally embarrassed that this is what some people thought Blackboard was claiming."
Desire2 Learn has been circumspect in its response. In an e-mail circulated at its User's Conference in early August, John Baker, Desire2Learn's President and CEO stated "We are disappointed that Blackboard turned to the court system before discussing its claims with us. We intend to defend the action vigorously, but because we just received notice two business days ago, we are unable to comment further at this time."
Certainly, Blackboard must have anticipated the anxiety and resentment that its lawsuit has generated in the academic learning community. What Blackboard may not have anticipated, however, is the very negative reaction that the lawsuit has produced in the open source community. The lawsuit is perceived as threatening open source learning management projects such as Moodle and Sakai. Even if Blackboard does not sue these projects, Blackboard can use the threat of infringement to persuade colleges and universities not to consider these systems as competitive options to Blackboard's systems.
My take
Blackboard's patent is written broadly, but contains 44 claims. We will need to wait for the court to decide how many of those claims are valid, but some of them may very well turn out to be valid. I expect that the valid claims will relate primarily to innovations Blackboard may have brought to existing learning management systems. Blackboard has every right under the patent system to protect its innovations against infringement by its competitors. But Blackboard does not have a right to stifle innovation and competition by trying to enforce invalid patent claims. Whether we ever find out which claims are valid and which are not may depend whether Desire2Learn has sufficient financial resources to defend the litigation. To this end, there appear to be a number of entities that have a stake in helping Desire2Learn defend the lawsuit, and that are willing to provide assistance. Perhaps this will turn into a collaborative defense project in the open source tradition.
More resources:
Blackboard's Patent Page
Desire2Learn's Patent Page
Discussion on Stephen Downes' blog
Moodle discussion board
Posted by John Ottaviani at 08:14 PM | Patents | Comments (1) | TrackBack
April 26, 2006
Employee Blogging Risks
By Eric Goldman
A couple of weeks ago, I spoke at the North Carolina Journal of Law & Technology's symposium called "Attack of the Blog: Legal Horrors in the Workplace." (I definitely did not pick the name!) In the morning, I spoke about the risks that companies face when their employees blog. I see blogging as a subset of Internet communications generally, so I'm not sure these risks are limited to blogging. Nevertheless, the following risks are possible:
Non-Legal Risks
* Employee relations risk. A personal dispute between employees could be taken online, triggering a flame war or exposing the personal dispute to a broad audience within and outside the company.
* Customer relations risk. Employees could make disclosures that undermine customer confidence in the company's products by revealing too much about the company's inner workings or by disparaging the company's products. Employees could also oversell customers by making overstated claims about the products.
* Reputational risk. Employees might make personal disclosures about other employees/stakeholders that degrade the overall public perception of the company.
Legal Risks
* Admissions. Blog posts could be party admissions. Even if not, they could be adverse evidence introduced in litigation.
* Trade Libel. Employees could actionably disparage competitors' products.
* Disclosure of Non-Public Information. There are several ways that employees could convert non-public information into public information in ways that have legal significance.
- If the company is publicly traded, these disclosures may manipulate the stock price or constitute securities fraud
- Employees could undermine the company's position by tipping off competitors about plans in the works. If the employee publishes company trade secrets to the blog, in most cases that information will be irretrievably lost as a trade secret.
- Employees might disclose third party trade secrets, which could lead those third parties to bring a trade secret misappropriation claim.
- Employees might disclose patentable information that jeopardizes the company's ability to obtain a patent using that information. For example, a blog post should start the 1 year clock ticking under 102(b). Similarly, if the foreign patent applications have not yet been filed, the blog post should negate the company's ability to seek foreign patents on the published information. This is a real gotcha that may catch some unsuspecting companies.
Conclusion
Just to be clear, I'm not convinced these risks are all that serious. The emergence of blogs might lower the guard or caution of employees, but all of these risks would exist even without blogs, and most employees will make good choices. Even so, some employees will make poor choices, and thus companies who are concerned about employee blogging might choose to address blogging as part of an overall policy on Internet usage or disclosure of company information. At the same time, employee blogging can be a significant asset to the company, so companies might look at employee blogging as an resource to nurture rather than risky behavior to squelch.
Posted by Eric at 08:05 PM | General , Patents , Trade Secrets
March 28, 2006
Animal-Related Patent Trends
By Eric Goldman
Wired runs an article on Patently Silly, one of the blogs tracking goofy patents. The article notes the implicit contradiction in the trends for patenting pet pampering products and patenting new and more effective ways of producing meat. Basically, inventors are working hard both to make pets lives more cush and make it more profitable to chop up livestock for food. As the article quotes:
For more rants about our inconsistent attitudes towards animals and about vegetarianism generally, see my vegetarian category page on my other blog.
Posted by Eric at 02:18 PM | Patents | Comments (1)
February 21, 2006
Top Cyberspace IP Cases of 2005
By John Ottaviani (with help from Eric)
Cyberspace continues to present fascinating and novel intellectual property issues. What follows is our attempt at identifying some of the more significant “Cyberspace Intellectual Property” decisions of 2005. Once again, it was quite a year, with the Supreme Court’s decision in the Grokster case heading the list. (The Grokster case is the only one to make our “Top 10” list in each of 2003, 2004 and 2005!) Cyberspace intellectual property law is maturing, as evidenced by the fact that among our top ten cases are one U.S. Supreme Court and five U.S. Circuit Court of Appeals cases. And we are also seeing the courts struggling with the boundaries of trademark law, as they recognize that not every use of someone else’s trademark in Cyberspace provides a basis for an infringement claim.
Here are our “top ten” cases (thirteen, actually), followed by other cases which we felt are significant enough to mention. This list is not meant to be exhaustive, nor are the cases presented in any particular order of importance.
1. Supreme Court Finds Grokster Liable For Inducing Copyright Infringement “On A Gigantic Scale”
• Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., ___ U.S. ___, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). Leave it to the U.S. Supreme Court to figure out a way to find Grokster liable for inducing copyright infringement “on a gigantic scale” without overturning or affirming the 1984 Sony decision. The Supreme Court’s unanimous holding is pretty succinct: “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” The Court also limited the Sony decision to situations where a claim of liability is based solely on distributing a product with alternative infringing and non-infringing uses, with knowledge that some users would follow the unlawful course. The concurring opinions analyze the case in terms of Sony, with Justice Ginsberg concluding that ten percent non-infringing use probably would not be enough to avoid liability, while Justice Breyer concludes that ten percent probably would qualify as substantial non-infringing use.
2. Not Seeing Eye-to-Eye – Use of Trademark in Directory That Triggers Pop-Up Ads Is Not Trademark Infringement
• 1-800 Contacts, Inc. v. WhenU. Com, Inc., 414 F.3d 400 (2d Cir.), cert. denied, 126 S.Ct. 749 (2005). The owner of a website and the mark “1-800 Contacts” sued a competitor and WhenU.com, to enjoin them from delivering to computer users competitive “pop-up” Internet advertisements, in violation of federal and state copyright, trademark, and unfair competition laws. As reported in our list of Selected 2003 Cyberspace Intellectual Property Cases, the District Court held that: (1) 1-800 Contacts failed to establish a likelihood of success on its copyright claims, but (2) 1-800 Contacts established a likelihood of success on its trademark infringement claims.
On appeal, the Second Circuit threw out the trademark claims: “We hold that as a matter of law, WhenU does not “use” 1-800’s trademarks within the meaning of the Lanham Act, 15 U.S.C. §1127, when it: (1) includes 1-800’s website address, which is almost identical to 1-800’s trademark, in an unpublished directory of terms that trigger delivery of WhenU’s contextually relevant advertising to [computer users]; or (2) causes separate, branded pop-up ads to appear on a [computer user’s] computer screen either above, below or along the bottom edge of the 1-800 website window.” This brings the Second Circuit law in line with that of other federal courts that have found that WhenU’s use of the trademarks in a database that is not seen by the computer user is not a “trademark use.” See U-Haul International, Inc. v. WhenU.com, Inc., 279 F. Supp. 2d 723 (E.D. Va. 2003); Wells Fargo & Co., Inc. v. WhenU.com, Inc., 293 F. Supp. 2d 734 (E.D. Mich. 2003), (both of which appeared in our list of Selected 2003 Cyberspace Intellectual Property Cases).
Disclosure Note: In the Second Circuit appeal, Eric filed an amicus curiae brief on behalf of the Electronic Frontier Foundation urging reversal of the district court decision.
3. When Will It All End? – Maintaining An Index of Infringing Works, Without More, is Not Distribution of Infringing Works.
• In re Napster, Inc. Copyright Litigation, 377 F. Supp. 2d 796 (N.D. Cal. 2005). After the “old” Napster was shut down for infringing the record companies’ copyrights, the record companies have continued to pursue the entities that invested in Napster before it ceased operations. The record companies have alleged that, by investing in Napster and assuming control of the operation of the Napster file-sharing network, the investors contributorily and vicariously infringed the record companies’ copyrights.
In order to find the investors liable for contributory or vicarious infringement, the record companies first have to prove that there was an act of direct copyright infringement. The record companies have offered three theories of direct infringement as a basis for their secondary claims against the investors: (1) the Napster users who uploaded and made MP-3 files available on the Napster network engaged in the unauthorized distribution of the record companies’ copyrighted works in violation of Section 106(3) of the Copyright Act; (2) the downloading of MP-3 files by Napster users infringed the record companies exclusive rights to reproduce their copyrighted works under Section 106(1) of the Copyright Act; and (3) that Napster itself violated the record companies exclusive distribution rights under Section 106(3) by indexing MP-3 files that its users posted on the Napster network.
In this decision, Judge Patel shot down the third theory. The record companies relied primarily on the Fourth Circuit’s 1997 decision in Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199 (4th Cir. 1997), pointing to language that a copyrighted work is “distributed” within the meaning of Section 106(3) whenever it is “made available” to the public without authorization of the copyright owner. Judge Patel distinguished Hotaling, because the infringing works in this case never resided on the Napster system, while the library in that case had possession of the infringing copies in addition to listing them in its index. Interestingly, she went on to find that, to the extent that the Hotaling decision suggests that a mere offer to distribute a copyrighted work gives rise to liability under Section 106(3), that view is inconsistent with the text and legislative history of the Copyright Act. As a result, maintaining an index of infringing works, without more, is not “distributing” the infringing works. The case proceeds with further discovery on the “uploading” and “downloading” theories, however, so stay tuned next year for updates.
Editorial Note: John has never liked the Hotaling decision so he hopes Judge Patel’s decision stands.
• In re Napster Copyright Litigation, No. M:00-CY-61369-MHP, slip op. (N.D. Cal. May 11, 2005). Prior to deciding the summary judgment motion, Judge Patel denied the record companies’ leave to file a supplemental memorandum in opposition to Napster’s summary judgment motion, arguing that the recently passed Artists’ Rights and Theft Prevention Act of 2005 (“Art Act”) supported their argument that maintaining the index of downloadable files does infringe the distribution right under §106(3) of the Copyright Act. Judge Patel ruled that the record companies could not file the supplemental brief, because she found that the Art Act did not change anything as to how §106(3) should be interpreted.
4. Incredible Hulk Rescues Paragon City! Use Of Comic Book Character Names By Players For Video Game Characters Is Not Trademark Infringement.
• Marvel Enterprises Inc. v. NCSoft Corp., 74 U.S.P.Q. 2d 1303 (C.D. Cal. 2005). NCSoft creates, markets, distributes and hosts “City of Heroes”, a computer video game that allows players to play online and create characters that are virtually identical in name, appearance and characteristics to the comic book characters owned by Marvel. There are a number of procedural motions dealt with in this opinion, but the interesting discussion is the court’s dismissal of the contributory trademark infringement and vicarious trademark infringement claims. Although game users create character names that are the same as Marvel’s registered trademarks, the court concludes that the game users are not using these names in commerce in connection with any “sale or advertising of goods and services.” Thus, there is no “use in commerce” of the marks, so there is no direct trademark infringement on the part of the game users for which NCSoft could be contributorily or vicariously liable, and these claims were dismissed. Marvel was allowed to proceed on its contributory and vicarious copyright infringement claims theories.
• Marvel Enterprises Inc. v. NCSoft Corp., No. CV 04-9253-RGK (C.D. Cal. Aug. 22, 2005). In a later ruling, NCSoft’s claims that Marvel sent bogus takedown notices under the false DMCA notification provisions of 17 U.S.C. §512(f) survived a motion to dismiss. The court also rejected Marvel’s argument that a “service provider” under Section §512(f) has to be “passive” and “innocent.” Among other things, NCSoft alleged that Marvel employees created the infringing knock off characters that Marvel then demanded be removed from NCSoft’s network.
• The case settled in December 2005. The terms of the settlement have not been publicly reported.
5. Making a Mark – Patent Marking Statute Applies To Websites
A pair of patent cases illustrates how the traditional patent concept of “marking” should be applied in Cyberspace. Under 35 U.S.C. §287(a), one who owns a patent is entitled to recover damages from the time when it actually notifies the infringer of its infringement, or when it begins marking its products with a patent notice containing the number of the patent and otherwise complying with §287(a), whichever is earlier. This “marking statute” does not apply to patent claims that are addressed to a method of doing something (as opposed to a tangible article or apparatus), because ordinarily there is nothing to mark. When a patent contains both method and apparatus claims, the patent owner is required to mark “to the extent that there is a tangible item to mark by which notice of the asserted method claims can be given.” Am. Med. Sys., Inc. v. Med. Eng. Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993).
• Soverain Software LLC v. Amazon.com, Inc., 383 F. Supp. 2d 904 (E.D. Tex. 2005). In this case, Soverain alleged that Amazon.com infringed three patents owned by Soverain covering a network based sales system that included a buyer computer, a selling computer, a payment computer and virtual shopping cart. All of the patents contained both method and apparatus claims. Amazon moved for partial summary judgment to limit its damages, claiming that Amazon did not have notice of the alleged infringement until the suit was filed because Soverain did not comply with the marking statute. The court rejected Soverain’s argument that a website is an intangible object for which marking is not required. The court took notice of numerous websites that contain patent notices, and found in favor of Amazon on this issue.
• IMX, Inc. v. Lending Tree, LLC, No. Civ. 03-1067-SLR, 2005 WL 3465555 (D. Del. Dec. 15, 2005). IMX alleged patent infringement against Lending Tree for infringement of a patent owned by IMX for a method and system for trading loans in real time and placing loan applications up for bid by a plurality of potential lenders. The patent was implemented through software that was accessed through an Internet website, but the website itself was not part of the patent claims. Information on the website talked about “patented technology,” but one reached the patent number and a copy of the patent only after a number of obscure links. Lending Tree moved for partial summary judgment limiting damages, due to IMX’s failure to comply with the patent marking statute. IMX tried to distinguish Soverain by arguing that the website itself was not the patented invention, and did not practice the patent, but was just a means through which the public and the brokers accessed the patented technology. The court, however, found that the website is “intrinsic to the patented system and constitutes a tangible item to mark by which notice of the asserted method can be given,” and granted Lending Tree’s motion.
6. GripeSites I – Use of Expressive Domain Names That Are Unlikely to Cause Confusion Is Not Trademark Infringement
• Faegre & Benson, LLP v. Purdy, 367 F. Supp. 2d 1238 (D. Minn. 2005). Yet another chapter in the long-running saga between the Minnesota law firm and an anti-abortion activist, who is of the opinion that Faegre & Benson is supporting abortion and is attempting to silence his speech criticizing his alleged support of abortion. Purdy typically posted his opinions on a webpage that mimics Faegre’s webpage, generally with a disclaimer such as “Official Faegre Website Parody” or similar language. The source code of his counterfeit pages also contained metatags, including the trademarked term “Faegre & Benson” and some meta-descriptions taken from Faegre’s webpage. Faegre & Benson obtained a preliminary injunction in January 2004. After Mr. Purdy continued his behavior, Faegre & Benson filed a motion for contempt. After reviewing the situation, the court found: (1) there is no trade dress infringement because of the overall dissimilarity of the webpages and the clear disclaimer; (2) that Purdy has the right to use “expressive domain names that are unlikely to cause confusion” (such as faegre-law-love-democraticjudgemichaeldavis-judgeanmontgomery.com), even if they include the term “Faegre” or “Faegre & Benson,” because this constitutes a statement of Purdy’s opinion rather than a bad faith intent to profit from Faegre’s protected mark; and (3) that Purdy could legitimately use Faegre’s trademarks in the metatags for his webpages in order to refer to Faegre and to describe the content of his website (but not in order to divert Internet users from Faegre’s website).
7. Yes, Virginia, Unauthorized Downloading Of Copyrighted Music Does Constitute Copyright Infringement
• BMG Music v. Gonzalez, 430 F.3d 888 (7th Cir. 2005). Ms. Gonzalez downloaded more than 1,370 copyrighted songs during a few weeks and kept them on her computer until she was caught. She tried to argue that, despite the assumption in Grokster and Aimster that people who download music are primary infringers, her activities were protected by the “fair use” defense under the terms of 17 U.S.C. §107. With respect to 30 songs in question in this lawsuit that she downloaded, played and retained on her hard drive (and which she did not previously own), the court rejected her fair use argument. In doing so, the court noted that there are various alternative ways for Ms. Gonzalez to have sampled songs for purchase on an authorized basis, including radio, streaming Internet radio, iTunes, and other Internet licensing intermediaries such as Yahoo!, Real Rhapsody and SNOCAP.
8. Avalanche! Software Developers Contracted Away Their Right To Reverse Engineer Blizzard’s Games
• Davidson & Associates d/b/a Blizzard Entertainment, Inc. v Jung, 422 F.3d 630 (8th Cir. 2005). Blizzard creates and sells software games for personal computers, and operates “battle.net”, a 24-hour online gaming service available exclusively for purchasers of its computer games via the Internet or local area networks. In order to play the game contained on a CD-ROM, a user must first install the game onto a computer and agree to the terms of an end-user license agreement and terms of use, both of which prohibit reverse engineering, by clicking on an “I agree” button during the installation process. First time users of battle.net are also shown terms of use which, among other things, prohibit reverse engineering. The outside of the package for the game contains a statement that use of the game is subject to the end user license agreement and that use of battle.net is subject to the terms of use. The defendants are lead developers for a volunteer project that developed a service that emulates the battle.net service and permits users to play on line without use of battle.net. The developers attempted to mirror all of the user visible features of battle.net. In order to make its service compatible with battle.net and Blizzard’s game software, defendants used reversed engineering to learn Blizzard’s protocol language and to make sure the new service worked with Blizzard games.
After the parties settled a number of claims, the district court granted summary judgment for Blizzard and determined that: (1) Blizzard’s software end-user license and terms of usage agreements were enforceable contracts; (2) the defendants waived any “fair use” defense; (3) the agreements did not constitute misuse of copyright; and (4) the defendants violated the anti-circumvention and anti-trafficking provisions of the Digital Millennium Copyright Act.
On appeal, the Seventh Circuit rejected the defendants’ argument, relying upon Vault v. Quaid Software Ltd. 847 F. 2d 255 (5th Cir. 1988), that the state breach of contract claims were preempted by federal copyright law, The Seventh Circuit distinguished the Vault decision because the state contract law in Blizzard neither conflicted with the interoperability exception of the DMCA (17 U.S.C. §1201(f)), nor restricts rights given under federal law. Citing Bowers v. Bay State Technologies, Inc., 320 F. 3d 1317 Fed. Cir. 2003), the Seventh Circuit stated that private parties are free to contractually forego the limited ability to reverse engineer a software product under the exemptions of the Copyright Act. By agreeing to the terms of use under the end user license agreements, the court concluded that the defendants expressly relinquished their rights to reverse engineer.
The Seventh Circuit also affirmed that the defendants’ reverse engineering violated the anti-circumvention and anti-trafficking prohibitions of the DMCA, and were not protected by the “interoperability” exception because the circumvention in this case constitutes infringement.
9. GripeSites II – Another Gripe Site’s Prayers Are Answered
• Lamparello v. Falwell, 420 F.3d 309 (4th Cir. 2005). Lamparello registered the domain name www.fallwell.com after hearing Reverend Jerry Falwell give an interview in which he expressed opinions about gay people and homosexuality that Lamparello considered offensive. The site contained in depth criticism of Reverend Falwell’s views. The home page prominently stated “this website is not affiliated with Jerry Falwell or his ministry” and provided a hyperlink to Reverend Falwell’s website. Lamparello never sold goods or services on his website. After receiving cease and desist letters from Reverend Falwell, and losing a UDRP arbitration proceeding over the domain name, Lamparello filed an action seeking a declaratory judgment of non-infringement in order to avoid losing the domain name. The District Court granted summary judgment to Reverend Falwell on his claims of trademark infringement, false designation of origin, federal and state unfair competition and violations of the Anti-cybersquatting Act.
On appeal, the Fourth Circuit reversed. The Fourth Circuit found that Lamparello’s use of Reverend Farwell’s name was not likely to cause confusion as to the source of the website and found that www.fallwell.com did not infringe. Important factors in the court’s decision were: (1) the websites looked nothing alike; (2) Lamparello clearly created his website intending only to provide a forum to criticize Reverend Falwell’s ideas, not to steal customers; (3) Reverend Falwell and Lamparello offer opposing ideas and commentary, not similar goods and services; and (4) anecdotal evidence indicated that those searching for Reverend Falwell’s site and arriving at Lamparello’s site quickly realized that Reverend Falwell was not the source of the content.
In an interesting discussion, the Fourth Circuit expressly refused to adopt “the “initial interest confusion” doctrine and interpreted the use of that doctrine by the Ninth Circuit as applying only in cases involving one business’s use of another’s mark for its own financial gain, not in cases involving gripe sites. The Fourth Circuit also rejected the ACPA claim because Reverend Falwell could not demonstrate that Lamparello “had a bad faith intent to profit from using the www.fallwell.com domain name, citing TMI, Inc. v. Maxwell, 368 F.3d 433 (5th Cir. 2004) and Lucas Nursery and Landscaping, Inc. v. Grosse, 359 F3d 806 (6th Cir. 2004) [both of which appeared in our list of Selected 2004 Cyberspace Intellectual Property Cases].
10. GripeSites III – Bosley Medical Scalped By Ninth Circuit
• Bosley Medical Institute, Inc. v. Kremer, 403 F.3d 672 (9th Cir. 2005). Mr. Kremer was dissatisfied with the hair restoration services provided to him by Bosley Medical Institute. To get even, Mr. Kremer started a website at www.bosleymedical.com, which was uncomplimentary of Bosley. Shortly after registering the domain name, and before posting its content, Mr. Kremer went to Bosley’s office and offered Bosley an opportunity to discuss the issue but did not mention domain names or make any references to the Internet.
The Ninth Circuit held that Kremer’s use of “Bosley Medical” in the domain name was non-commercial and unlikely to cause confusion, and affirmed the dismissal of Bosley’s trademark infringement and dilution claims. “We hold today that the noncommercial use of a trademark as the domain name of a website---the subject of which is consumer commentary about the products and services represented by the mark---does not constitute infringement under the Lanham Act.” The court found that Congress intended that the Lanham Act and the Federal Trademark Dilution Act apply only to marks used “in connection with the sale, offering for sale, distribution, or advertising of any goods or services”. The court found that Kremer’s website contained no commercial links and at no time offered for sale any products or service, nor contained paid advertisements from any other commercial entity. The Ninth Circuit also rejected an argument that one could reach a discussion group site, which in turn contained advertising, by following links from Kremer’s website as being “too attenuated”. The Ninth Circuit also rejected Bosley’s claims that Kremer used the mark in connection with Bosley’s goods and services, because Kremer’s use of Bosley’s mark was in connection with the expression of his opinion about Bosley’s goods and services, not in connection with the sale or advertising of goods and services. The court also reversed the dismissal of the ACPA claims because the ACPA did not contain a commercial use requirement and remanded this claim to district court.
Here are several other cases that did not make the “top 10” but are also of interest:
American Girl, LLC. v. Nameview, Inc., 301 F. Supp. 2d 876 (E.D. Wis. 2005) (domain name registrar who simply accepts the registration of a domain name generally is not liable for trademark infringement or dilution, unfair competition or ACPA violations) (citing several other cases with consistent holdings).
Egilman v. Keller & Heckman, LLP, 401 F. Supp. 2d 105 (D.D.C. 2005) (accessing a computer system through unauthorized use of validly created user name and password does not “circumvent a technological measure” in violation of anti-circumvention provisions of DMCA).
Century 21 Real Estate Corp. v. Lending Tree, Inc., 425 F.3d 211 (3d Cir. 2005). Third Circuit joins Ninth Circuit in expressly adopting “nominative fair use” defense to trademark infringement claims. See New Kids on the Block v. News America Pub. Inc., 971 F.2d 302 (9th Cir. 1992). Third Circuit adopted a two-part test: (1) first, a plaintiff must prove that confusion is likely due to the defendant’s use of plaintiff’s mark; (2) then the burden shifts to the defendant to show that its use of the plaintiff’s mark is nonetheless “fair.” Relevant factors for the second step are: whether use of the plaintiff’s mark is necessary to describe plaintiff’s and defendant’s products and services; whether only so much of plaintiff’s mark was used as is necessary to describe plaintiff’s products and services; and whether defendant’s conduct or language reflect the true and accurate relationship between plaintiff’s and defendant’s products and services.
SMC Promotions, Inc. v. SMC Promotions, 355 F. Supp. 2d 1127 (C.D. Cal. 2005). License agreement that allows a wholesaler’s retail customers to download wholesaler’s copyrighted product images and descriptions onto the retailers’ websites, was not broad enough to cover the retailers’ practice of engaging a third party vendor to download images on the retailers’ behalf as part of the process of creating websites for the retailers.
Posted by Eric at 07:07 AM | Copyright , Domain Names , Patents , Trademark
November 25, 2005
Wheel PTO Examiner Profiled
By Eric Goldman
Washington Post runs an amusing but surprisingly insightful story about the PTO's chief examiner of wheel and axle patents, Russell Stormer. One would think that after 5,500 years, there would be few new inventions in the world of wheels. However, the article points out that the PTO received about 350 applications in these categories last year, and has approved 30,000 wheel patents in total since 1790. Stormer himself reviews 124 wheel-related patents a year and approves about 90 of them (around 75% approval). At 124 applications a year, Stormer averages about 15 hours of attention on each patent application.
Posted by Eric at 10:18 PM | Patents
September 08, 2005
Madison on Drafting Local Court Rules for Patent Cases
By Eric Goldman
Michael Madison gives an interesting account of his experiences drafting local court rules for patent cases.
While the idea of creating some incentives for parties to engage in forum-shopping may sound good in theory, I wonder how much local court rules can affect that decision--especially in patent cases where the where-to-sue decision is complex, high-stakes and potentially very costly. Michael ultimately suggests that concern by noting the limitations of how much local court rules can affect the case.
For me, the more interesting aspect of his post is his narrative of a rule-making process. Michael's post exposes the complex balancing act:
* how to implement a broad social goal (lure patent litigation into Pittsburgh, and help patent litigants resolve their disputes in a satisfactory manner)
* how to allocate policy benefits/detriments to the players (i.e., the local court rules might be plaintiff-favorable or defendant-favorable...who should we favor, and why?)
* who should participate in the rule-making process (in this case, not the public at large)
Deconstructed in this fashion, Michael's write up is a good narrative of the strengths--and dangers--of our current rule-making systems.
UPDATE: A former student sent Minnesota's effort to develop local patent rules.
Posted by Eric at 06:22 PM | Patents
August 11, 2005
Can Congress Provide Copyright Protection to Software?
Aharonian v. Gonzales, No. 04-05190-MHP (N.D. Ca.).
This case got some press when it was first filed. The plaintiff's basic contention is that it is unconstitutional for Congress to provide copyright protection for software. This is a pretty wacky claim, and I doubt the plaintiff has a very good chance of success.
In any case, I'm resurfacing it because in June, the DOJ filed a motion to dismiss that lays out its basic defense. If you've ever wondered to yourself where Congress gets its authority to protect software under copyright law (I know, not the first thing I think of when I wake up in the morning either!), the DOJ brief lays it out for you.
Posted by Eric at 08:40 PM | Copyright , Patents
July 28, 2005
Patent Reform Act of 2005--July 26 Draft
A new draft of the Patent Reform Act of 2005 (HR 2795) has been circulated. Among other noteworthy aspects, this draft drops the limitations on injunctive relief--perhaps expedient to move the bill forward, but a disappointing omission IMO nonetheless. At the same time, if you missed it, eBay is seeking certiorari in the MercExchange lawsuit regarding the grant of injunctions while cases are on appeal. So we may see this injunctive relief issue pursued simultaneously in the courts and in Congress.
While I still think there's merit to Patent Reform Act, its scope is being progressively narrowed through negotiations. In my opinion, this undercut the overall merit of the amendments.
Posted by Eric at 09:16 AM | Patents
June 13, 2005
Patent Reform Act of 2005 Introduced
The Patent Reform Act of 2005 has been introduced. The bill itself is fairly complicated. Rep. Lamar Smith's press release summarizes the key features:
"· Provides that the right to a patent will be awarded to the first inventor to file for a patent who provides an adequate disclosure for a claimed invention;
· Simplifies the process by which an applicant takes an oath governing the particulars of an invention and the identity of the rightful inventor;
· Deletes the “best mode” requirement from §112 of the Patent Act, which lists certain “specifications” that an inventor must set forth in an application;
· Codifies the law related to inequitable conduct in connection with patent proceedings before the PTO;
· Clarifies the rights of an inventor to damages for patent infringement;
· Authorizes courts with jurisdiction over patent cases to grant injunctions in accordance with the principles of equity to prevent the violation of patent rights;
· Authorizes the PTO to limit by regulation the circumstances in which patent applicants may file a continuation and still be entitled to priority date of the parent application;
· Expands the 18 month publication feature to all applications;
· Creates a new post−grant opposition system;
· Allows third-party submission of prior art within six months after the date of publication of the patent application."
While I don't think this law represents a wholesale reform to patent law (which might not be a bad thing), this law certainly would represent a major tuning of current patent law. I'm still trying to grok the particulars, but everything I've seen suggests that most of these proposals are meritorious and would significantly improve existing law. I think we should give positive strokes when due (especially given how much legislator-bashing I do on this blog!), so I'm hopeful that we can encourage Smith and others to see a version of this reform through adoption.
Posted by Eric at 09:33 AM | Patents | Comments (4)
May 12, 2005
Patent Act of 2005 Proposed Draft
The "Committee print" version of the proposal is available here. Prior comments here.
Posted by Eric at 10:53 AM | Patents
April 24, 2005
Patent Act of 2005
Matthew Buchanan of Promote the Progress has assembled some source material regarding the proposed Patent Act of 2005, a surprisingly broad proposal to reform patent law. Among other significant changes, it proposes to scrap the first to invent standard in favor of a first to file standard. Other notables include imposing a rigorous duty of candor on applicants, limits on damages/injunctions and new standards for anticipating prior art. My initial cursory read suggests that there could be some merit to this proposal. Now, we need to see if it will gather any momentum.
Posted by Eric at 07:43 PM | Patents
April 11, 2005
Slate Exhibit on Breast Enhancement Patents
Slate has a “revealing” (sorry) look at patents related to breast enhancements throughout history. We tend not to think of the patent database as a great porn resource, but there's plenty of titillation for those who know where to look. As the patent database confirms, human ingenuity knows no bounds!
(Thanks to Steve Nelson for passing this along)