Technology & Marketing Law Blog

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.
______

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

* 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:

"If you're a dog, you get umbrellas and all kinds of good things," notes Wright. "But if you're a cow, you get stuck in an MRI that'll tell you how good your meat is going to taste...."

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)

Posted by Eric at 11:58 AM | Patents