* Deleted the Perfect 10 v. ccBill and Perfect 10 v. Visa cases. I have been struggling with how to teach the Ninth Circuit's Perfect 10 troika of cases for the last couple of years. The troika was over 100 pages of reading that nevertheless left students befuddled after all that work. But I felt constrained because the troika is the most definitive statement of Ninth Circuit law, and it is insightful to see the cases evolve. Nevertheless, I decided that the Amazon case was the most doctrinally significant, so I kept that and ditched the other 2.

* Added Io v. Veoh. To make up for taking out the Perfect 10 cases, I've added this case, which I think is a very clear exposition of a DMCA online safe harbor case.

* Added Parker v. Yahoo. I think this will be a good case to tie together some copyright doctrinal threads as well as provide a nice compare/contrast with the Ticketmaster v. RMG case.

Trespass to Chattels

* Replaced the Computer Fraud & Abuse Act statute with the most recently amended version.

* Included a slide that synthesizes the various trespass to chattel doctrines into a summary format.

Contracts

* Added the Harris v. Blockbuster case. It's a short case that efficiently makes several powerful pedagogical points--including perhaps most importantly, the perils of robo-drafting by copying language from other people's agreements.

Blogs and Social Networking Sites

* Replaced my old materials on blog law and social networking sites law with my most recent talk on both from February.

* Added my Third Wave of Internet Exceptionalism article

* Added the Moreno v. Hanford Sentinel case as an end-of-the-semester review case. As I said when I first blogged on the case, I think "this is one of the most interesting cases I've seen in a while," and I'm really excited about teaching it. I think it will be an excellent issue-spotting opportunity for students as well as a powerful reminder of the power of published words (and how those words can unintentionally affect the people we love).

Change to the Grading Options

My other big change this year is that I am giving students the option to write a wiki entry on a cyberlaw topic as part of their grade. This was inspired by my forthcoming paper on Wikipedia (which you'll hear more about soon). In connection with that paper, I was researching alternative labor sources that could power Wikipedia, and students working as part of a class assignment was one option I explore in the paper (with some reservations). As part of "eating my own dog food" (a terrible idiom that seems to be prevalent in the Silicon Valley), I figured I should give it a try myself. As you can see, the wiki-drafting is optional, not mandatory, so I'll be interested to see how many students choose the option. I'll also be interested to see what happens when the students actually try to submit their work to Wikipedia. I have a mental image of a massive buzzsaw, but perhaps I'm being too cynical.

Posted by Eric at 09:36 AM | Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Search Engines , Trademark | TrackBack

August 03, 2009

Google Goes on Offensive in AdWords Trademark Lawsuit--Google v. John Beck Amazing Profits

By Eric Goldman

Google, Inc v. John Beck Amazing Profits, LLC, C09 03459 (N.D. Cal. complaint filed July 27, 2009). [Warning: 1.4MB file] The Justia page.

A couple of interesting developments in John Beck Amazing Profits v. Google, the putative nationwide trademark owner class action lawsuit against Google over AdWords.

First, as of last week, the plaintiff had not served the complaint on Google even though it's been on file for over 2 months. I'm not sure what's the hold-up, but in my limited experience, delays in serving an already-filed complaint are often a leading indicator of a troubled lawsuit.

Second, last week Google sued the individual named plaintiff in that case, John Beck Amazing Profits, for both a declaratory judgment that AdWords doesn't infringe plus a breach of contract claim that the lawsuit filing breached the AdWords contract provision requiring any AdWords-related lawsuit to be brought in California. Going on the offensive against a plaintiff is characteristic of Google's litigation strategy; Google often tries to turn the tables on its litigation opponents. In this case, a major goal for Google surely is to get the case out of the Eastern District of Texas, which has been a dangerous venue for patent defendants.

Although the declaratory judgment and counterclaim is consistent with Google’s standard practices, in this case Google is ripping a page out of Yahoo's playbook in its litigation with American Airlines. American Airlines sued Yahoo over selling trademarked keywords in a Texas federal court; Yahoo shot back with a in a California federal court to try to get the case in a more favorable venue. The “dueling lawsuits” have led to an ongoing jurisdictional tussle that has slowed down progress on the substantive merits of American Airlines' claim.

As I wrote in connection with Yahoo's efforts, it was not clear to me that a defendant can wrest jurisdictional control of a case through the declaratory judgment process. In Google's situation, it's even more complicated because John Beck Amazing Profits is just the named plaintiff in a class action lawsuit. The plaintiffs could easily replace John Beck Amazing Profits with another named plaintiff who isn't an AdWords advertiser and isn't subject to California jurisdiction. At that point, I'm not sure what happens to the class action. (And, even if Google succeeds in moving the nationwide case, it should have no bearing on the Firepond putative class action lawsuit, which only covers a class of Texas trademark owners). Moreover, even if Google wins the declaratory judgment, it would have no binding effect on other class members.

So other than a not-certain-to-work ploy to pull the nationwide class action out of a bad venue, the only other benefit I see from the litigation is to send a warning shot to any named plaintiff who might succeed John Beck Amazing Profits that Google will be coming after them too. Let's see how that message is received.

The current roster of pending AdWords cases:

* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google and now Google v. John Beck Amazing Profits
* Stratton Faxon v. Google (not initially a trademark case)
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google
* Rosetta Stone v. Google

Posted by Eric at 03:51 PM | Derivative Liability , Licensing/Contracts , Search Engines , Trademark | TrackBack

July 31, 2009

Google Not Liable for False Ads--Goddard v. Google

By Eric Goldman

Goddard v. Google, Inc., 5:08-cv-02738-JF (N.D. Cal. July 30, 2009)

I previously blogged on this case in December 2008. The case involves AdWords advertisements for allegedly fraudulent mobile subscription services. In an underappreciated opinion, Judge Fogel wrote the smartest 47 USC 230 opinion of 2008 dismissing the case with leave to amend. In that ruling, he said that plaintiffs could state a valid claim if "Plaintiff could establish Google's involvement in 'creating or developing' the AdWords, either 'in whole or in part.'"

It was pretty clear then that further efforts would be a waste of time. I wrote "the writing is on the wall for this lawsuit. The plaintiff can't win, and it would be a mistake for the plaintiff to refile." But hope springs eternal among many plaintiff's lawyers, so naturally they tried anyway. Not surprisingly, their second attempt was futile, and Judge Fogel shuts the door by dismissing without leave to amend this time. Among other things, he is sensitive to the costs of fruitless litigation undercutting 230’s policy objectives. He writes "this Court’s conclusion that Plaintiff almost certainly will be unable to state a claim compels the additional conclusion that Google must be extricated from this lawsuit now lest the CDA’s ‘robust’ protections be eroded by further litigation." I hope other judges will embrace early ends to 230 cases for the same reason.

The Roommates.com Attack

To plead around 230, the plaintiffs allege that Google's keyword suggestion tool encourages advertisers to buy "free ringtone" as a keyword when advertisers are buying "ringtone." The plaintiffs then argue that Google should know that "free ringtone" is frequently used by shady players, and therefore suggesting the term to other advertisers kicks Google out of 230. This weak argument makes numerous unsupported inferences, and Judge Fogel easily rejects it. He says:

a plaintiff may not establish developer liability merely by alleging that the operator of a website should have known that the availability of certain tools might facilitate the posting of improper content. Substantially greater involvement is required, such as the situation in which the website “elicits the allegedly illegal content and makes aggressive use of it in conducting its business.” [cite to Roommates.com]

I'm not exactly sure what it means to make aggressive use of content, but I'm glad to see the Google's keyword suggestion tool isn't that.

The Barnes Attack

The plaintiffs also attack 230 using the promissory estoppel discussion from Barnes v. Yahoo. The basic argument is a familiar one in 230 jurisprudence. The plaintiffs allege that Google's AdWords contract had negative covenants restricting the advertisers' behavior, and this language in the Google-advertiser contract acted as a promise to consumers that the restricted advertiser behavior would not occur on Google's network. I have repeatedly criticized the illogic of these arguments, and fortunately it doesn't fly here. Judge Fogel guts it when he points out that "there is no allegation that Google ever promised Plaintiff or anyone else, in any form or manner, that it would enforce its Content Policy."

I'm sure we'll see many plaintiffs make this same bogus argument in future cases, and I hope other judges reach the same conclusion. At the same time, I think websites should prune their ever-expanding lists of negative behavioral covenants in their contracts to curb plaintiffs’ misdirected arguments and to avoid unintentionally criminalizing users (see the Lori Drew conviction).

Dismissal on 12(b)(6) Motion

A major gripe about the initial Ninth Circuit Barnes opinion was its loosely worded and poorly researched conclusion that 47 USC 230 was an affirmative defense that could not support a 12(b)(6) motion to dismiss. The plaintiffs argue that Judge Fogel shouldn’t dismiss the case now for that reason, even though the Ninth Circuit withdrew that portion of the opinion. Judge Fogel cites to several cases allowing a 47 USC 230 defense on a 12(b)(6) motion to dismiss before doing the same himself.

Posted by Eric at 10:59 AM | Derivative Liability , Marketing , Search Engines | TrackBack

July 30, 2009

Google Down to 7 AdWords Lawsuits--Ascentive v. Google Voluntarily Dismissed

By Eric Goldman

Ascentive v. Google, Inc., 2:09-cv-02871 (E.D. Pa. voluntary dismissal July 30, 2009)

The litigation count on Google's keyword ad lawsuits has started trending downward. For the second time in a week, a plaintiff has voluntarily dismissed its trademark lawsuit over Google AdWords. Last week Jurin dismissed his lawsuit voluntarily because he had a falling out with his attorney. Today Ascentive voluntarily dismissed its lawsuit, although I don't know why. (As usual, the filing is silent). You may recall that Ascentive's lawsuits raised some interesting issues about organic search in addition to the AdWords issues; apparently those will have to wait.

Ascentive's dismissal leaves 7 pending cases against Google over AdWords:

* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (not initially a trademark case)
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google
* Rosetta Stone v. Google

Posted by Eric at 02:07 PM | Derivative Liability , Search Engines , Trademark | TrackBack

July 29, 2009

Microsoft-Yahoo Alliance Comments

By Eric Goldman

Some comments on the proposed search alliance between Microsoft and Yahoo:

* I remember a time, long ago back in the mid-1990s, when Yahoo was the unquestioned leader in search.

* The beginning of the end is when Yahoo outsourced search to Google almost a decade ago (check out the old 2000 press release). We all know how that turned out. Yahoo lost control over one of its core assets, and Google proved to Yahoo's customers that Google could do a much better job.

* Yahoo is now in its weakened position in the search industry due to this choice from a decade ago. Google has been and will continue to be a formidable competitor, but Yahoo's current search problems are partially its own making.

* Outsourcing its search operations to Microsoft can't possibly work out better for Yahoo than the initial Google outsourcing. I can't conceive of a circumstance where Yahoo will exit the Microsoft deal stronger than it enters it. Obviously Yahoo sees value in being a mass-market media company, but without any proprietary differentiation in search, I wonder how successful that will be. To me, it looks like Yahoo has conceded one of its core assets to others.

* As a result, I assume that Yahoo necessarily is going to exit the search business one way or another. It will exit by outsourcing its search operations to someone else, or it will continue its ongoing slide to irrelevancy. Either way, it is not a viable long-term competitor against Google.

* Yahoo was unbelievably crazy for passing on Microsoft's acquisition proposal from a year-and-a-half ago. It looked like a foolish mistake at the time, and hindsight has definitely not improved that assessment! Danny Sullivan points out how badly Yahoo's assets have depreciated in value, saying "Microsoft is getting a huge bargain courtesy of the US Department Of Justice."

* Assuming that Yahoo is going to exit the search business one way or another, the DOJ has the following options:

- it could let Yahoo hand off the search reins to Google. The DOJ has already voted no on that option
- it could let Yahoo hand off the search reins to Microsoft. This makes Microsoft a much more potent competitor to Google
- it could veto the Microsoft-Yahoo deal and let the Google juggernaut continue to flatten a limp competitor

From a pro-competition standpoint, it seems fairly clear that option #2 is better than the first and the third options. So if the DOJ thinks it can help the search marketplace, then it should approve the deal as fast as possible.

* Despite this, I bet Googlers are wearing a big smile today. Grabbing the business from Yahoo would have been a more definitive win for Google, but this deal should be good news for Google for two reasons. First, it should provide ample fodder for Google to argue to the DOJ to call off the dogs and stop hassling it; after all, the combined Yahoo-Microsoft efforts will have significant marketplace presence of its own, and Microsoft is a well-funded and aggressive competitor. Second, Google should be licking its chops at the prospect of tangling with the alliance in search. I expect Google can steamroller even the combined operations, so getting some breathing room on the antitrust side while still continuing to roll up the competition would be very helpful for Google.

* I could see the DOJ slightly hesitating about the deal solely because the Google alternative will be...Microsoft. I'm sure the DOJ would much prefer a marketplace competitor to Google who didn't have so much antitrust baggage of its own!

* Although I think Google oversimplifies things by arguing that its competition is always a click away, I do think that the competition to Google isn't just Microsoft even if the alliance is completed. It's hard to know exactly who will provide a bona fide competitive offering to Google, but it could come from anywhere. For example, Twitter's real time search has lots of advantages over Google's real-time search (and will improve if Twitter can ever figure out its search algorithms). The search market is simply too big to ignore, and consumers will find and embrace solutions that offer real value.

UPDATE: Lots of folks are writing on this topic today. I liked Jason Calacanis' title: "Yahoo committed seppuku today."

Posted by Eric at 11:02 AM | Search Engines | TrackBack

July 23, 2009

Google Down to 8 AdWords Lawsuits--Jurin v. Google Voluntarily Dismissed

By Eric Goldman

Jurin v. Google, Inc., 2:09-cv-03934-GHK-E (C.D. Cal. voluntarily dismissed July 23, 2009)

Google's AdWords litigation docket has reversed direction, at least temporarily, as Jurin has voluntarily dismissed his lawsuit against Google. This dismissal came shortly after Jurin had a falling-out with his attorneys, which prompted his attorneys to ask to withdraw from the case. The voluntary dismissal means that Jurin is free to pursue his case elsewhere if he chooses, but I am fairly confident that this case won't be coming back.

Jurin's dismissal leaves 8 pending AdWords lawsuits against Google:

* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (not initially a trademark case)
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google
* Rosetta Stone v. Google

Posted by Eric at 07:47 PM | Derivative Liability , Search Engines , Trademark | TrackBack

July 13, 2009

Facebook Sued for Click Fraud--RootZoo v. Facebook

By Eric Goldman

RootZoo, Inc. v. Facebook, Inc., 5:09-cv-03043-HRL (N.D Cal. complaint filed July 7, 2009)

Facebook appears to have run into some trouble with click fraud recently. Last month, TechCrunch had a series of articles about Facebook click fraud. TechCrunch postulates the following story: competitors are clicking on each others' ads to reduce their ROI and drive each other off Facebook. To ensure that the click fraudders can see Facebook's microtargeted ads, the fraudsters are creating thousands of fake accounts with heterogeneous profile information. The fraudster's software eventually finds a target ad and clicks on it like crazy, so fast that the advertiser's page never loads. This is distorting the advertisers' server logs, causing a big discrepancy in reporting and making it impossible for advertisers to track down the click fraud. TechCrunch reports that it spoke with Facebook and Facebook claims the situation has been addressed. Of course, could Facebook say otherwise?

I'm not clear if it's related to the TechCrunch coverage or not, but last week a putative class action against Facebook was filed, alleging click fraud. The plaintiffs allege that they were charged for clicks that never occurred at alarming rates--in RootZoo's case, they claim they were charged for 804 clicks on a single day when their servers recorded about 300 clicks. Now, I'm never sure how much credit to assign to plaintiffs' allegations like this. First, advertisers always want more performance for less cash. Second, advertisers' tracking systems are not always reliable, so RootZoo's undercounting could be due to their system, not Facebook's. However, combined with the TechCrunch reports, it raises some concerns that something could have been amiss at Facebook (and maybe still is?).

That's not to say the plaintiffs will get a check out of Facebook. The plaintiffs face many hurdles, including potential difficulties establishing a class, the many challenges getting competent evidence, and Facebook's contract and all of the various protective provisions contained therein. So the plaintiffs have plenty of work ahead of them. Then again, so may Facebook.

Posted by Eric at 09:43 AM | Licensing/Contracts , Marketing , Search Engines | TrackBack

July 10, 2009

Ninth Lawsuit Against Google Over AdWords--Rosetta Stone v. Google

By Eric Goldman

Rosetta Stone Ltd. v. Google, Inc., 1:09-cv-00736-GBL-JFA (E.D. Va. complaint filed July 10, 2009)

[Note: some of you may wonder how my litigation count reached #9 when my last blog post in this series was at #7. I subsequently realized that I had forgotten to include Ezzo v. Google, a doomed-to-failed pro se lawsuit filed pre-Rescuecom. Indeed, I remain unclear precisely how many lawsuits are pending; the number could be greater than 9].

Kudos to Rosetta Stone for its fine PR work. It was able to get a number of major media outlets to cover its lawsuit against Google alleging trademark infringement and related claims for Google's AdWords practices, even though by my count this is merely the 9th pending lawsuit and these lawsuits are becoming a near-daily routine.

Obviously, I'm suffering a little ennui on this topic. Another trademark owner doesn't like Google's AdWords practices and decided to sue in court. And in other breaking news, the sun rose in the east and set in the west today.

How routine has this become? Rosetta Stone's law firm is Gibson Dunn, which includes Terence Ross on the team. Terence lost some of the early WhenU keyword ad cases including the once-seminal 1-800 Contacts v. WhenU ruling. He also sued and procured a settlement from Google on behalf of American Airlines. Gibson Dunn's team also has a pending lawsuit against Yahoo on behalf of American Airlines. I haven't put all of Gibson Dunn's complaints side-by-side, but I have observed over the years that they have mastered the skill of cloning-and-revising--right down to recycling a stock phrase that might become Terence Ross' signature line (and perhaps his trademark some day?) that the plaintiff "does not bring this lawsuit lightly." (Para. 6 of the complaint; compare Para. 6 of the AA v. Google and AA v. Yahoo complaints). I'm glad Gibson Dunn's clients don't sue lightly. I wish all lawyers could say the same of their clients. Then again, at the lofty fees I suspect their clients are paying for the firm's services, this statement is probably the one assertion in the complaint that no one--not even Google or the judge--could possibly dispute.

As a partially cloned-and-revised complaint, it shouldn't surprise you that this complaint doesn't break much new ground. See my deconstruction of the American Airlines v. Google complaint--because many of the provisions were recycled, my commentary of that complaint applies almost in toto. However, a couple of small points that did jump out at me from this complaint:

* Rosetta Stone has some really, really weak trademarks. "Global Traveler"??? "Language Library"??? "The fastest way to learn a language. Guaranteed"??? Are you serious?

* Among the keyword advertisers that Rosetta Stone complains about are retailers who sell both Rosetta Stone and other language products. Whoa. I'll be interested to see how Rosetta Stone gets around the First Sale doctrine for those advertisers.

Two concluding thoughts

* Is it time for these 9+ lawsuits to be consolidated in a multi-district litigation yet? From my perspective, that seems inevitable, but I'm not much of an expert on the procedural aspects of MDLs.

* Any predictions on whether another trademark lawsuit over AdWords will be filed in the month of July?

The other eight lawsuits I'm tracking:

* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (not initially a trademark case)
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google

Posted by Eric at 01:10 PM | Derivative Liability , Search Engines , Trademark | TrackBack

July 09, 2009

"Keyword Advertising Law" Talk (New and Improved!)

By Eric Goldman

I recently spoke on the state of keyword advertising law, which prompted me to rewrite my PowerPoint slides from scratch in light of the many recent developments. So, now available for your enjoyment:

* my talk slides
* an 80 minute free audio recording of my June presentation of this slide deck (plus Q&A) to the IAB Legal Affairs Committee. You can listen in QuickTime or download from iTunesU (for free; go to item 26)
* the CLE written material, a compilation of recent blog posts on the many lawsuits against Google and Google's two trademark policy changes. I would now add the Ezzo, Ascentive and Jurin cases to the written materials.

If this isn't enough for you, I am participating in two expensive (overpriced?) webinars on keyword advertising law in July:

* On July 10 (tomorrow!), "Keyword Advertising Do's and Don'ts," a 1 hour PLI webinar co-presented with Marty Schwimmer of the Trademark Blog.

* On July 22, "Trademark-Based Keyword Advertising: Potential Liability and Avenues for Relief," a 90 minute Pike & Fischer webinar co-presented with Rose Hagan of Google, Elisabeth Escobar of Marriott and John Slafsky of Wilson Sonsini.

Posted by Eric at 10:37 AM | Derivative Liability , Search Engines , Trademark | TrackBack

July 07, 2009

June 2009 Quick Links, Part 2

By Eric Goldman

State Regulation of the Internet

* iAWFUL, the Internet Advocates Watchlist for Ugly Laws

* Texas HB 2003. Part of the anti-cyber-harassment mania. Very broad statute with lots of room for prosecutorial mischief.

* BNA (BNA subscription required): "State Legislatures Consider Criminal, Civil Restrictions on Ticket Purchasing Software": "At least six state legislative bodies are considering bills this session that would place restrictions on the use of “ticket bots.""

* Because states are embracing the Amazon affiliate tax, the online affiliate industry is shrinking as we speak (1, 2, 3). But in one of his rare good moves, Schwarzenegger has vetoed CA's attempt to impose the Amazon tax.

* Clive Thompson in Wired: "By severing the link between location and geography, the internet turned everything upside down. Now mobile phones are inverting everything again, in the other direction — because your location becomes most important thing about you. So how is the return of geography going to change our lives?" My previous commentary on geolocation and the law.

Blogs/Social Networking Sites

* Yath v. Fairview Clinic, 2009 WL 1751767 (Minn. App. Ct. June 23, 2009). Posting illegitimately obtained health information to a MySpace page qualified as “publicity” for purposes of an invasion of privacy claim. The court says: “Yath's private information was posted on a public MySpace.com webpage for anyone to view. This Internet communication is materially similar in nature to a newspaper publication or a radio broadcast because upon release it is available to the public at large.” As a result, the publication qualified as “publicity” even if the material was posted for less than 48 hours and the plaintiff could only prove that a small number of folks actually saw it. Compare the Moreno v. Hanford Sentinel case, where republication of information the plaintiff voluntarily published on her MySpace page could not support an invasion of privacy claim.

Nevertheless, the defendants were excused because they had not created the MySpace page, even though they had supplied the information republished on the MySpace page.

* Richerson v. Beckon. Ninth Circuit upheld reassignment of teacher-mentor based on negative blog comments. My blog post on the district court opinion.

* Kaufman v. Islamic Soc. of Arlington, -2009 WL 1815641 (Tex. App. Ct. June 25, 2009). An online-only journalist qualified as a "member of the electronic or print media" for purposes of an interlocutory appeal statute.

* After von Brunn committed his hate crime outside the US Holocaust Museum, a bunch of his digital trails went dark as websites newly realized his vitriol was posted there.

* If you're looking for a paper topic, here's one: the use of MySpace, Facebook and other social networking sites in family law disputes, especially over child custody. I'm seeing cases every week where social networking site postings are being introduced to corroborate or contradict testimony about a parent's fitness.

Security

* FTC v. Pricewert. The FTC takes down an allegedly rogue Internet access provider. To the extent that the IAP is engaged in criminal activities, no problem; but it's less clear to me if the FTC can get a civil injunction under its Sec. 5 authority to stop the IAP from serving its putatively illegal customers. Such an action could be preempted by 47 USC 230. The FTC, in its brief, says the IAP fits into a Roommates.com exception, an argument presumably bolstered by their 10th Circuit win in FTC v. Accusearch.

* Johnson v. Microsoft Corp., 2009 WL 1794400 (W.D. Wash. June 23, 2009). This is a putative class action over Microsoft’s use of Windows Genuine Advantage (WGA) to validate copies of Windows XP. In this ruling, Microsoft gets SJ on the claim alleging that the contract prevented Microsoft from doing WGA validation. Especially interesting is the court’s conclusion that IP addresses are not personally identifiable information.

* Microsoft v. Lam. Microsoft brings a lawsuit against alleged click fraudders who caused Microsoft to issue $1.5M in credits to advertisers. The NYT article.

* EFF on the most recent amendments to the Computer Fraud & Abuse Act.

Miscellaneous

* Expedia tagged for $184M in damages for improperly marking up its service fees.

* In re Jamster Mktg. Litig., 2009 U.S. Dist. LEXIS 43592 (S.D. Cal. May 22, 2009). Wireless carriers aren’t liable under RICO and false advertising laws for various deceptive practices by wireless content providers.

* New unmeritorious patent lawsuit trend: lawsuits over patent markings for expired patents.

* NYT: Investing in Lawsuits, for a Share of the Awards

* Oddee: 15 geekiest license plates:

Posted by Eric at 09:18 PM | Content Regulation , Derivative Liability , E-Commerce , Licensing/Contracts , Marketing , Patents , Privacy/Security , Publicity/Privacy Rights , Search Engines | TrackBack

July 06, 2009

June 2009 Quick Links, Part 1

By Eric Goldman

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

Search Engines

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

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

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

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

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

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

Trademark

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

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

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

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

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

* Oddee: 10 of the Worst Restaurant Names ever.

Copyright

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

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

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

User Agreements

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

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

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

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

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

July 01, 2009

Securities Fraud Case Premised on Click Fraud Allegations Dismissed--Brodsky v. Yahoo

By Eric Goldman

Brodsky v. Yahoo, Inc., 2009 WL 1766002 (N.D. Cal. June 18, 2009).

The legal battles over click fraud are pretty much played out, but some legacy cases are still working through the system. This lawsuit was a securities fraud action alleging that Yahoo inflated its stock price by, among other things, deliberately ignoring some click fraud activity to grab quick revenue. The lawsuit was dismissed in October of last year with leave to amend. Having tried again, the plaintiffs still didn't satisfy the judge, so the judge booted the case permanently. However, given the plaintiffs’ investments in this case, it would not surprise me if the plaintiffs appeal.

The actual opinion isn't all that remarkable. For the click fraud allegations, the plaintiffs rely principally on confidential witnesses who are former Yahoo employees. The cloak-and-dagger Deep Throat stuff is mildly interesting, but the court still wasn't convinced that these insiders had enough personal knowledge about Yahoo's revenue recognition practices (except for one witness, who didn't allege malfeasance). As I wrote in October, "it will be interesting to see if the plaintiffs can produce any witnesses who can testify about the rate of Yahoo's click fraud overcharging sufficient to satisfy legal standards." This ruling seems to answer that with a big "negative."

Posted by Eric at 09:53 AM | Licensing/Contracts , Marketing , Search Engines | TrackBack

June 29, 2009

Sixth Lawsuit Filed Over Google AdWords, Plus an Assault on Google's Organic Search Results--Ascentive v. Google

By Eric Goldman

Ascentive, LLC v. Google, Inc., 2:09-cv-02871-JS (E.D. Pa. complaint filed June 25, 2009)

Guess who got sued again? Google now has 6 pending lawsuits challenging its AdWords service. The previous five are:

* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (this wasn't a trademark case last I checked)
* Soaring Helmet v. Bill Me

The latest lawsuit has a different spin than the others. Ascentive makes software that it claims will improve the speed of its users' computers and combat spyware. Earlier this year, Ascentive had a run-in with StopBadware, which initially labeled Ascentive as a scamware-like offering that hyped the threats on users' computers to induce them to pay to upgrade their Ascentive software. (See the initial StopBadware alerts 1, 2). StopBadware has since reached a compromise with Ascentive and repealed its warning, a move that appears to have been fairly unpopular in some segments of the security community. (This post gives a sense of the sentiments towards Ascentive and StopBadware).

Around the same time, the Ascentive-Google relationship deteriorated, which Ascentive speculated was due to StopBadware's classification (Google's correspondence just cryptically cited "multiple policy disapprovals"). After Ascentive had spent over $645k as an AdWords customer in 2008, Google kicked Ascentive out of the AdWords program. A week later, Google completely dropped Ascentive's website from its search index. As a result, Ascentive was frozen out of both Google's organic search results and sponsored links, and not surprisingly, Ascentive suffered a "severe drop in online sales" from this double-whammy. Ascentive's entreaties to Google were rebuffed.

Ascentive makes two broad legal attacks on Google. First, as has become typical, Ascentive alleges that Google commits trademark infringement and related torts by selling competitive ads keyed to its trademark and by suggesting that advertisers buy Ascentive's trademarks in Google's keyword suggestion tool. Among other specific issues, Ascentive complains that Google didn't respond to its trademark appearing as a third-level domain in a competitor's ad copy or the inclusion of "Finally Fast" in ad copy (Ascentive's applicable trademark is "FinallyFast.com"). Overall, these complaints don't break much new ground compared to prior allegations against Google's AdWords program.

Second, Ascentive alleges a variety of legal violations because Google kicked Ascentive out of its organic search results index. This is a bit like KinderStart redux. The allegation that really caught my attention starts in Para. 83, which reads "Google's refusal to list Ascentive's website in its natural search result listings violates the Lanham Act" as a false designation of origin. Whoa! The complaint doesn't explain this allegation thoroughly, but the theory seems to be that consumers expect to see the trademark owner in organic search results for the trademark and therefore consumers will be actionably confused if the trademark owner doesn't appear there.

Framed that way, of course we know such a claim is DOA. Indeed, as exciting as it would be to see some meaty discussion on the topic of Google's liability (or lack thereof) for deciding who gets into its search index, I'm guessing Google will beat this prong of the complaint quickly and completely. One way Google could get there is through 47 USC 230(c)(2) (which I just blogged about last week), which completely protects Google's ranking decisions as a subspecies of filtering choices generally. However, to get there, a court will have to conclude that a false designation of origin claim isn't an "IP claim" which is excluded from 230's coverage. If it doesn't want to reach that doctrinal issue, the court has a wide smörgåsbord of other doctrinal choices to squash this claim.

Posted by Eric at 07:32 AM | Derivative Liability , Search Engines , Trademark | TrackBack

June 11, 2009

Google Sued Again for Trademark Infringement--Soaring Helmet v. Leatherup.com

By Eric Goldman

Soaring Helmet Corp. v. Bill Me Inc., 2:2009cv00789 (W.D. Wash. complaint filed June 9, 2009). The Justia page.

It's clearly open season on trademark infringement lawsuits against Google. The latest is a lawsuit by Soaring Helmet, manufacturers of "Vega" helmets. This case is similar to the recent Hearts on Fire v. Blue Nile case in that the manufacturer (Hearts on Fire/Soaring Helmet) complained that a retailer (Blue Nile/Leatherup.com) purchased the manufacturer's trademark and said/implied in its ad copy that it sold the manufacturer's goods even though it allegedly didn't carry the manufacturer's goods at all.

The main difference between this lawsuit and the Hearts on Fire lawsuit is that the manufacturer also dragged Google into the lawsuit--even though Google treated Soaring Helmet's initial cease-and-desist letter as a trademark opt-out and blocked subsequent references to Vega in Leatherup.com's ad copy. Thus, unless Soaring Helmet seeks to reach back to the ads displayed before its C&D, it appears Soaring Helmet is trying to hold both Google and Leatherup.com liability simply for showing ads triggered by Soaring Helmet's "Vega" trademark.

For those of you keeping score, this is the fourth time in a month that trademark owners have sued Google over its AdWords programs. The other three are:

* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (this wasn't a trademark case last I checked)

A fifth pending AdWords trademark lawsuit is the Rescuecom case. I'm not aware of any others pending beyond these 5, but surely this action is making Google's outside counsel smile.

I note that the John Beck lawsuit is a putative class action covering all US trademark owners. I wonder if Google could consolidate this case with that...?

Posted by Eric at 07:16 AM | Derivative Liability , Search Engines , Trademark | TrackBack

June 08, 2009

May 2009 Quick Links Part 1

By Eric Goldman

Just a reminder that I'm posting some quick links exclusively to my Twitter account.

Trademarks

* Texas International Property Associates v. Hoerbiger Holding AG, 2009 U.S. Dist. LEXIS 40409 (N.D. Tex. May 12, 2009). Domainer loses ACPA claim over typosquatted domain name. The PPC advertising constituted bad faith intent to profit. Ryan Gile recaps the action.

* GunBroker.com LLC v. Heckler & Koch Inc., No. 09-cv-00051 (M.D. Ga. complaint filed May 14, 2009). Interesting lawsuit by an online auction site for guns seeking a declaratory relief action against a trademark owner who deployed an enforcement agency, Continental Enterprises, to send a driftnet takedown letter that apparently targeted used gun resales or compatible goods. Ryan Gile has more.

* Miranda v. Guerroro, 2009 WL 1381250 (S.D. Fla. May 14, 2009). Miranda is “Paola Morena,” a Latin singer. Her former manager convinced her to do some nude photo shoots in an effort to get a Playboy gig. The Playboy gig didn't materialize, and the manager stopped representing Miranda/Morena. After Morena's career took off, the manager then allegedly threatened to publicly post the photos unless she paid him $70k. Morena rebuffed the request, so the manager allegedly followed through with his threats by launching a website paolamorena.com [I got a nasty Google malware warning when I tried to visit the site], calling it her “official” site and posting some of the photos. The court enjoined the manager under trademark law. I'm a little confused how Morena had protectable trademark rights in her name. Did she make any use in commerce in the United States? Did her name achieve secondary meaning? This could be another case where trademark law is being stretched to stop bad behavior.

* Eric Menhart, the self-purported owner of a trademark in the term Cyberlaw, has gotten his very own personal gripe site.

Advertising and Marketing

* How much can Behavioral Targeting Help Online Advertising? HT Greg Linden

* Yingling v. eBay, 5:2009cv01733 (N.D. Cal. complaint filed April 21, 2009). A class action lawsuit alleging that eBay Motors overcharged merchants.

* IAB has issued its Click Measurement Guidelines designed to answer the Q “What is a Click?” See if their 28 page report actually answers the Q.

* A confusingly written LA Times article reports that 4 South Korean dissident bloggers are being criminally prosecuted for artificially inflating impression counts in order to game rankings of most popular pages.

* Perennially funny: unfortunate product names.

Copyright

* Solicitor General recommends against granting cert in Cartoon Network v. CSC.

* AV v. iParadigms, April 16, 2009. The Fourth Circuit says that the Turnitin system is fair use. My initial blog post on the district court ruling.

Security

* News.com: Interview with FBI cybercrime agent working undercover.

* Oddee: problematic CAPTCHAs. Funny.

Google

* Everyone wants to talk about whether Google is a monopolist
- In early May, I heard Susan Athey, Microsoft's Chief Economist, give a lunchtime attack speech on Google at a George Mason event
- Google is circulating a document explaining why it's good for competition
- Google is blanketing DC with lobbyists too.
- And Google says it's actually small potatoes.
- Wired: Will Wolfram Alpha forestall antitrust inquiry into Google? As I've argued before, we continue to see new entrants into the search business all the time—it’s just too big a market to ignore.
- NYT weighs in too. And the Washington Post discusses how Microsoft and others are complaining about how many Google folks are going into the Obama administration.

* Danny Sullivan: State Of Search: Google Will Stay Strong Despite Bing & Yahoo

* Wired: Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

Posted by Eric at 04:03 PM | Copyright , Derivative Liability , E-Commerce , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark | TrackBack

June 03, 2009

An Insider's Look at Utah's Failed HB 450

By Eric Goldman

Perry Clegg is a Utah IP attorney and the 2009 chair of the Utah State Bar's Cyberlaw Section. A few months ago, he wrote an article entitled "Insight on Utah Senate's Sedation of HB 450," which provides his assessment of why HB 450--Utah's latest legislative attack on online advertising--failed to pass the Utah Senate this year.

The article implies that HB 450 failed in part due to in-fighting among various influential folks in Utah, perhaps caused by some bruised feelings/egos. With slicker and more inclusive politicking in the future, these influencers are poised to rally behind a similar future regulation.

As a result, the article provides some support for why I think Utah will attack online advertising a fourth time. Indeed, the article quotes a third party as saying that "the bill’s opponents should either propose a compromise solution or expect some form of this bill to pass next year. Senate leadership apparently believed that there were not enough votes to pass it this year, but that they could gather the votes to pass it by next year."

What I find most amazing is that there appears to be broad insider consensus that some type of Utah regulation of online advertising makes sense. As the article says, "the Utah legislature is generally behind HB 450’s policy but want to make sure they do their homework so the policy is implemented using the right language." In most other places around in the country, most policy-makers recognize the illogic and futility of trying to reshape global online advertising to meet state specifications. The pro-regulatory Utahns seem to see the world differently, and many of us who don't live in Utah simply cannot understand why the Utah legislature keeps picking a fight that it's almost certain to lose in the courts, even if legislation passes. I have no rational explanation for this.

In any case, I will be closely watching the Utah legislature in February 2010 to see what shenanigans they might be trying anew.

Posted by Eric at 02:35 PM | Marketing , Search Engines , Trademark | TrackBack

May 29, 2009

Another Lawsuit Over Google AdWords--Stratton Faxon v. Google

By Eric Goldman

Stratton Faxon v. Google, Inc. (New Haven Superior Ct. complaint filed May 27, 2009)

Today's lawsuit combines two trends:

Trend #1: Lawyers-as-plaintiffs suing Google for their own account. I don’t have a complete inventory of these lawsuits, but other examples include the Field, Feldman, Person and Bradley lawsuits. Ironically, I believe all of these lawsuits were shot down in inglorious flames--lawyers-as-plaintiffs often seem to do even worse than other plaintiffs.

Trend #2: Lawsuits over Google AdWords, Heck, two were filed earlier this month (the Firepond and John Beck lawsuits).

This lawsuit is brought by a Connecticut plaintiff-side law firm that discovered a rival law firm was keying AdWords ads to the law firm name. Trademark owners faced with this situation might normally contact the rival and ask them to stop (which the rival firm claims to have done as soon as it heard of the lawsuit) and take advantage of Google's trademark policy. But, if you're a plaintiff's lawyer, it sure is tempting to sue first and ask questions later…

And this lawsuit does raise a lot of questions, including:

* why didn't the plaintiff sue for trademark infringement? The plaintiff claimed interference with business relations and unfair competition, but both claims fundamentally sound in trademark law and would be preempted if there was a robust trademark preemption doctrine. Perhaps a trademark claim is coming.

* why didn't the plaintiff sue the advertiser instead of Google? Among other things, the plaintiff complains that its rival firm is mimicking other offline marketing efforts. If the problem is with the rival firm, wouldn't they be the more appropriate target?

* why did the plaintiff seek a prejudgment $50,000 lien against Google instead of just filing a complaint? Maybe Connecticut law has some quirks that encourage or require this procedural step. Otherwise, is the firm concerned that Google won't have $50,000 to pay off the plaintiff if it wins?

* did the plaintiff really just discover that its competitors are advertising on its name? The plaintiff was quoted as saying that the Firepond lawsuit prompted him to check the search results for the first time. What is this, 2002?

All of these questions make me wonder if this lawsuit is really intended to get some publicity and maybe prompt some calls from potential plaintiffs to form a new class action suit. Otherwise, Connecticut law may differ from California law, but under CA law this lawsuit would almost certainly be DOA. For example, even without relying on 47 USC 230, under CA law I don't see any possibility that the plaintiff could establish the requisite scienter to make the interference with business relations claim stick. For a good analogous example of a failed misdirected attempt to smack a search engine for unwanted advertising, see the Heartbrand Beef case, where Yahoo was excused (without relying on 230) from a false designation of origin claim for selling trademarked keywords.

Stated differently, lawsuits like this--from lawyers who are clearly new to our community--simultaneously make me feel really smart and really stupid. Their allegations are so unmoored from our normal legal discussions that either the lawyers know something I don't, or they have no idea what they are doing. I'll let you to form your own conclusion about this lawsuit.

Clearly, this lawsuit isn't a clone of the Firepond lawsuit, but I think it's fairly characterized as a spawn of it in that the Firepond lawsuit helped educate another plaintiff lawyer about the desirability of suing Google. I expect other plaintiffs’ lawyers are getting the same message as we speak.

In theory, if the plaintiff firm really wanted to tweak its rival, it might also complain to the bar regulators about impermissible advertising under rules about lawyer advertising. This prompted me to wonder: have any bar association opinions on the permissibility of buying trademarked search keywords? I am not aware of any, but I may be forgetting something. Please let me know if you've seen such an opinion.

Posted by Eric at 10:15 AM | Marketing , Search Engines , Trademark | TrackBack

May 18, 2009

Takedown Notice Sent to Parent Doesn't Affect Subsidiary's 512(c) Defense--Perfect 10 v. Amazon

By Eric Goldman

Perfect 10, Inc. v. Amazon.com, Inc., 2009 WL 1334364 (C.D. Cal. May 12, 2009)

This long-running case is working its way through the district court after the Ninth Circuit's 2007 remand. See my previous blog posts about the May 2007, December 2007 and post-remand July 2008 rulings.

Last week's ruling involves A9, Amazon's search subsidiary, that Perfect 10 sued for republishing allegedly infringing Google syndicated search results. Starting in 2004, Perfect 10 sent at least 8 takedown demands to A9's parent, Amazon, with the apparent intent that the takedowns apply to both Amazon and A9. However, Perfect 10 never actually sent a proper takedown notice to A9 until November 2008--well after its complaint was filed.

Judge Matz gives Perfect 10 no benefit of the doubt. Instead, the judge grants summary judgment to A9 based on the 512(c) safe harbor because Perfect 10 could not show that A9 knew of the copyright infringement (thus, Perfect 10's contributory copyright infringement claim failed; the other copyright claims had already been dismissed). The judge takes a formalistic approach (appropriately so, IMO) to 512(c)(3) takedown notices, concluding that:

1) The 512(c)(3) notices sent to the parent Amazon did not confer knowledge to the subsidiary A9.
2) The November 2008 notice sent to A9 are too late to support the allegations in the already filed complaint. Presumably, the November 2008 notice could now support a new complaint, but only if A9 hasn't expeditiously responded to it.
3) Amazon was not A9's agent for notice. This is complicated because Amazon's site disclosures could have been clearer about the Amazon-A9 relationship. However, A9 had its own 512 designation of an agent for service of process on file with the Copyright Office, and a search of the Copyright Office website would quickly reveal this. This is a good practice pointer for copyright owners: you need to research the 512 filings of every website you are targeting with 512(c)(3) notices. The search is free and super-simple, and a failure to communicate with the website's designated agent can kill a copyright claim when the website invokes the 512(c) defense. This is also a good reminder to websites seeking a 512(c) defense: if you plan to rely on the formalities, make sure your 512 designations are up-to-date and error-free!
4) Even if Amazon hosted the A9 website, it had no responsibility to communicate Perfect 10's 512(c)(3) notices to A9.
5) A9's designation of a web form for complaints, rather than the statutorily required email address, was an immaterial deviation from the statute.

I'm always amazed when copyright owners flub the fairly simple requirements of 512(c)(3). The statutory requirements are so easy to comply with! These omissions are especially perplexing in Perfect 10's case given that they've gone on a litigation frenzy and spent hundreds of thousands of dollars (probably millions) relying on mishandled facts. A little more care and investment upfront could have prevented an avoidable loss like this.

UPDATE: Plagiarism Today explores the meaning of this ruling.

Posted by Eric at 11:21 AM | Copyright , Derivative Liability , Search Engines | TrackBack

May 15, 2009

Google Liberalizes US Trademark Policy: "What, Me Worry?" Part 2

By Eric Goldman

In my Deregulating Relevancy article from a few years ago, I explained how trademark law was having pernicious consequences for online conversations. Among other unwanted effects, trademark law hinders online discussions about trademarks even when both conversationalists found the discussion relevant.

I don't think things have gotten better since I wrote the article in 2005. Perhaps we have a better understanding of trademark law's capacity for harm, but we continue to see misguided lawsuits from trademark owners and mixed results from judges.

While the courts do not automatically support online trademark-mediated discourse, the bigger practical threat to online trademark law comes from extrajudicial privately enforced trademark policies, such as the search engines' "voluntarily" adopted trademark policies. These policies minimize search engines' exposure to trademark liability for their ad sales, but they effectively resolve a huge percentage of trademark owners' "problems," almost always in the trademark owner's favor, without any judicial oversight at all.

Thus, I was delighted to see Google's announcement that it was liberalizing its trademark policy to allow a group of "special" advertisers to reference third party trademarks in the advertisers' ad copy, even if the trademark owner objects. See Google's official announcement. The "special advertisers" includes resellers, review sites, and sellers of compatible/complementary/replacement products.

In practice, this means that these advertisers and consumers can now use the same trademark to speak with each other. In contrast, today, the advertiser can purchase the trademark as the triggering keyword but can't use the trademark to explain why the consumer was seeing the ad. Personally, I had always thought the "blind" nature of the ad copy had the potential to confuse consumers, and Google has taken a big step forward in solving that apparent problem.

Having said that, I wish Google had gone further. There are two obvious groups of advertisers who should be able to reference the trademark in the ad copy but still will not be able to do so: (1) competitors making comparative claims, and (2) gripers who wish to complain about a trademark owner's practices. These two advertiser groups can still buy third party trademarks, but they will still be forced to speak in code in the ad copy to explain why they did so. Nevertheless, we shouldn't let these omissions detract from what is otherwise very good news from Google.

While I think the policy change is good news, I don't expect trademark owners will agree. Trademark owners already are wary of Google due to the widespread perception that Google's trademark policy is less trademark owner friendly than Microsoft or Yahoo. (Google will not disable a trademark as a keyword at the trademark owner's request; while Yahoo and Microsoft will do so in many circumstances). Google's move could antagonize trademark owners further.

Should the battle move into the courtroom, I think Google's move is legally defensible on two fronts: (1) The group of special advertisers generally should be protected by the nominative use doctrine, and (2) to the extent the ads are no longer "blind," there may be less consumer confusion about the ads than there has been in the past.

Even so, I expect trademark owners to be even more aggressive about suing Google. First, some trademark owners will bring trademark lawsuits to control their online channels (see, e.g., the Mary Kay case and the many cases I cite therein), so special advertisers like resellers are an irresistible target for trademark owners trying to reduce competition among their retailers. Second, the Rescuecom decision eliminated Google's ace-in-the-hole to eliminate trademark lawsuits early, so trademark owners may feel like their odds of success have gone up.

Indeed, in what I think is a completely unrelated move, this week a group of plaintiffs' lawyers initiated two class action trademark lawsuits against Google (1, 2). I would not be surprised to see other trademark owners decide they've had it with Google. I could also see trademark owners deciding to push legislative solutions, especially in Google-hating Utah. (Although, some of the special advertiser groups in Google's new policy would not have been able to take advantage of Utah HB 450, Utah's most recent foray in disrupting the online advertising business). It could take years for all of the legal shenanigans to shake out.

I think the biggest question is why Google is making this change now. After all, Google has not had any good news recently on the trademark front. If anything, the Rescuecom decision might have counseled Google to become more restrictive. not less. Further, it's clear from the Firepond lawsuits that trademark owners aren't afraid to sue Google over Google's multi-billion-dollar cash cow. And, although Google is now in line with Microsoft and Yahoo's policies with respect to their trademark policies as applied to the special advertiser groups, none of those voluntary trademark policies are successfully battle tested in court; Google has no precedent to confirm that it will win in court if challenged. Collectively, it's not like a cloud of doubt about the trademark law implications of Google's policy changes has magically lifted.

Indeed, the timing is interesting given last week's announcement that Google was liberalizing its trademark policies for 190 countries. On the surface, it looks like the two liberalized policy announcements may be connected because both could have the same effect of increasing Google's ad revenues. In other words, perhaps Google is feeling the effects of the market downturn and looking for easy sources of new revenues, and what is easier than taking cash from customers who are already asking to buy ads but Google is voluntarily refusing?

Personally, I don't think this is a cash grab by Google. If nothing else, if the policy change also leads to an increase in expensive lawsuits, the change may not be cash-flow positive for Google any time soon. (Though it should be immediately cash-flow positive for Google's outside trademark counsel!) Instead, I'm willing to accept Google's argument that the policy change is actually about allowing advertisers and consumers to speak the same language, which simultaneously improves the consumer experience and should lead to better ad performance for advertisers. And, in my opinion, that's exactly what trademark law should be about.

Other comments on this policy change:
* Danny Sullivan at Search Engine Land
* News.com (1, 2)
* Wendy Davis
* Miguel Helft at NYT
* Reuters
* Sherwin Siy

Posted by Eric at 03:56 PM | Search Engines , Trademark | TrackBack

Firepond "Copycat" Lawsuit Filed Against Google--John Beck Amazing Profits v. Google

By Eric Goldman

John Beck Amazing Profits, LLC v. Google Inc. 2:2009cv00151 (E.D. Tex. complaint filed May 14, 2009). The Justia page.

Earlier this week, a group of lawyers filed a class action lawsuit against Google and its distribution partners (FPX v. Google) alleging that Google's AdWords infringed the rights of Texas trademark owners. The same group of lawyers has now filed a second putative class action lawsuit against Google in the Eastern District of Texas.

I didn't do a word-for-word comparison, but two main differences were obvious. First, a smaller number of Google's distribution partners are targeted. Second, and more importantly, this complaint alleges a class comprised of all US trademark owners, instead of restricting the class just to Texas.

I don't fully understand why the same group of class action lawyers would file two separate class action complaints covering the same basic defendants and issues, but it's not the first time we've seen this tactic (the advertisers suing Yahoo over "syndication fraud" pulled the same stunt). I suspect it has something to do with trying to ensure lead dog position if/when a judge consolidates multiple copycat lawsuits from other plaintiffs' lawyers.

In any case, this lawsuit covering all US trademark owners now squarely offers Google the option to resolve and clean up any past trademark liability for past AdWord sales should it choose to accept this battle. In light of Google's liberalized AdWords trademark policy announced last night (which I'll blog shortly), it doesn't seem like Google is looking for an easy way out.

Posted by Eric at 07:21 AM | Search Engines , Trademark | TrackBack

May 11, 2009

Google Hit With Major Class Action Trademark Lawsuit Over Trademarked Keyword Ad Sales--FPX v. Google

By Eric Goldman

FPX, LLC v. Google, Inc., 2:2009cv00142 (E.D. Tex. complaint filed May 11, 2009)

In retrospect, it seems so obvious. Why were the lawyers for these chickenscratch plaintiffs (Rescuecom? Check 'n' Go?) suing Google over trademarked keyword ad sales on behalf of just one aggrieved trademark owner client when they could sue Google on behalf of thousands of trademark owners? GOBOGH! (Go big or go home). After all, even if Rescuecom wins an injunction on its own behalf, Google will just excise Rescuecom from the database without any real change, so Rescuecom's leverage over Google isn't huge. But if a plaintiff's lawyer could win an injunction on behalf of every trademark owner in the state of Texas, that could bring Google to its knees. Surely Google would be willing to write over a few billion dollars to prevent that from happening....

So a two-bit plaintiff, Firepond (who?), brought a trademark infringement lawsuit against Google and some of its distribution partners in Marshall, Texas (where?) alleging that Google's flagship (and only real) revenue generator, AdWords, infringes the trademark of all Texas trademark owners. (Note: I expect copycat lawsuits of this complaint will be filed by other plaintiffs' lawyers seeking some spoils for themselves, all of which should get consolidated into a single action). This is a well-structured lawsuit that squarely raises the long-contentious debate over the legitimacy of selling trademarked keywords. (I won't recap that debate here, but I still think this article of mine best explains why plaintiffs' whining about competitive diversion from search ads is fundamentally misguided). Should this lawsuit reach a final judgment on the merits, we will have a very important answer about what search engines and other keyword sellers can and can't do.

But, I don't think this lawsuit will give us that answer because the judge is very unlikely to certify the class. As we saw in the Vulcan Golf lawsuit, where the court denied class certification over Google's domain name parking program, trademark issues are just too complicated and individualized for class adjudication. Every trademark is different, the identity of each competitive (or other) advertiser is different, every AdWords ad copy is different, the informational needs of every trademark owner's customers are different (for more on this, see Hearts on Fire's complicated standard for evaluating consumer confusion), trademark defenses are idiosyncratic, etc. Perhaps the reason no one has sought a trademark class action over AdWords before is that it probably can't be done. (Although I realize a prediction like that just fans the flames of a plaintiff class action lawyer).

While on the surface this lawsuit sounds like bad news for Google, Google might look at it as an opportunity, not a threat. Similar to the way it got favorable solutions from the click fraud class action and the Google Book Search settlement, Google could decide it wants to form the class so that it can permanently end all trademark owners' beefs at once. If the class forms, then Google can either (a) make its stand in a single case, fight to the death and try to win the lawsuit outright, effectively eliminating further challenges, or (b) more likely, settle up by paying an amount that represents a pinprick to its financial well-being but makes a few lawyers in Marshall, Texas rich enough to buy more cow pasture than they can shake a rattlesnake at. The settlement would then bind all trademark owners governed by the class, eliminating their right to sue. This could be cheap one-stop shopping for Google.

The Marshall, Texas origins of this lawsuit are interesting for another reason. As most of you know, Marshall has become the patent litigation capital of the United States due to patent owners' perceptions that it has plaintiff-friendly judges and juries. However, I've been reading reports that the pace of new patent lawsuits in Marshall is slowing down. Could it be that the plaintiff's patent bar in Marshall now has a little extra time on their hands and is looking for a new revenue stream? Could Marshall, Texas become the new home of dubious class action trademark litigation by repurposed plaintiff patent lawyers?

UPDATE: Joe Mullin explores the "patent troll" ties to this lawsuit.

Posted by Eric at 09:05 PM | Search Engines , Trademark | TrackBack

May 05, 2009

Google's International Trademark Policy Change: "What, Me Worry?"

By Eric Goldman

I've had a number of discussions with folks about what Google would do in light of its adverse ruling in Rescuecom. Personally, I didn't expect them to do much of anything right now. I still think they have a good shot at winning the Rescuecom case in the end, and if they do, they probably won't feel any reason to change their practices. If they lose the Rescuecom case, then we'll have to see why the loss occurred before evaluating corrective changes.

Meanwhile, in a probably unrelated move that is nevertheless interesting especially due to its timing, Search Engine Land reports that Google has liberalized its trademark policy in 190 countries to conform to its current policy in the US, Canada, Ireland and the UK (the latter two may have been liberalized in response to the favorable UK Mr. Spicy case). Thus, in 190 additional countries, Google will no longer block the sales of trademarked keywords. Notorious litigation hot-spot France remains on the list of places where Google will block trademarked keyword sales.

I'm not sure what, if any, legal developments have changed in these 190 countries to give Google comfort on the trademark front. However, I am sure this move will be unpopular with trademark owners!

Posted by Eric at 09:55 PM | Search Engines , Trademark | TrackBack

April 27, 2009

Catching Up on Three Keyword Advertising Cases--Hearts on Fire, Romeo & Juliette, AAA

By Eric Goldman

Three trademark owner v. advertiser rulings from the past month:

Hearts on Fire Co. v Blue Nile, Inc., 2009 WL 794482 (D. Mass. March 27, 2009). The Justia page.

This is an interesting and potentially very important keyword advertising case.

The plaintiff is a diamond manufacturer which sells its products under the "Hearts on Fire" brand. The plaintiff does not sell its diamonds directly to consumers. The defendant is an Internet retailer that does not sell the "Hearts on Fire" brand of diamonds. The plaintiff alleges that Blue Nile bought the keyword "hearts on fire" at WebCrawler and then displayed an ad that included the words "hearts on fire" in the ad copy.

In this ruling, Blue Nile tries to dismiss the trademark claims for lack of use in commerce. The ruling came out before the Rescuecom case, but it doesn't matter. (The court did not feel bound by the First Circuit's Venture Tape case, which did not address use in commerce in a metatags case). After canvassing the statute and the precedent, the court says "there is little question that the purchase of a trademarked keyword to trigger sponsored links constitutes a "use" within the meaning of the Lanham Act." Post-Rescuecom, this is even more likely to be true.

The court also discussed consumer confusion. Noting that "there is no suggestion that diverted consumers inadvertently believed they were purchasing Hearts on Fire diamonds at Blue Nile's website," the sole possible basis of consumer confusion is initial interest confusion. In an understatement, the court notes that doctrine is a "somewhat ill-defined concept."

Unfortunately, the court proffers its own definition of initial interest confusion (one of dozens of different definitions), and its definition is a regressive throwback to 1990s legal conceptions of search processes:

[a] classic example [of IIC] is where a consumer sets out in search of one trademarked good, but is then sidetracked en route to his or her original destination by a competitor's advertisement or offering. He or she is never confused as to the source or origin of the product he eventually purchases, but he may have arrived there through either misdirection or mere redirection. In effect, initial interest confusion involves the diversion of the consumer's attention from one trademarked good to a competing good, even if he is not confused about the source of the products he ultimately considers or buys

As I've repeatedly explained, this definition (and its emphasis on attention diversion) is analytically corrupt because it overassumes a linear search process. How do we know when a consumer is "sidetracked" or, in fact, discovers more helpful information? And how can a court determine this?

Despite this odd and unfortunate construction of initial interest confusion, the court acknowledges an alternative story that searchers might be able to distinguish between competitive offerings, which would preempt any initial interest confusion. The court hypothesizes that some keyword advertising listings might be akin:

to a menu--one that offers a variety of distinct products, all keyed to the consumer's initial search. Sponsored linking may achieve precisely this result, depending on the specific product search and its context. When a consumer searches for a trademarked item, she receives a search results list that includes links to both the trademarked product's website and a competitor's website. Where the distinction between these vendors is clear, she now has a simple choice between products, each of which is as easily accessible as the next. If the consumer ultimately selects a competitor's product, she has been diverted to a more attractive offer but she has not been confused or misled

So where does Blue Nile fit on this spectrum between attention usurper and menu-option? The court isn't willing to let Blue Nile off the hook because it advertised on a trademark for a product it does not sell, saying a "consumer who had just entered a search for Hearts on Fire diamonds might easily believe that the Defendant was one such authorized retailer when presented with Blue Nile's sponsored link, even if the accompanying text did not contain the trademarked phrase."

As a result, the court reserves this case for a full multi-factor likelihood of consumer confusion analysis—but not the normal multi-factor analysis. Instead, the court plans to look at a bunch of additional factors beyond the normal ones:

under the circumstances here, the likelihood of confusion will ultimately turn on what the consumer saw on the screen and reasonably believed, given the context. This content and context includes: (1) the overall mechanics of web-browsing and internet navigation, in which a consumer can easily reverse course; (2) the mechanics of the specific consumer search at issue; (3) the content of the search results webpage that was displayed, including the content of the sponsored link itself; (4) downstream content on the Defendant's linked website likely to compound any confusion; (5) the web-savvy and sophistication of the Plaintiff's potential customers; (6) the specific context of a consumer who has deliberately searched for trademarked diamonds only to find a sponsored link to a diamond retailer; and, in light of the foregoing factors, (7) the duration of any resulting confusion.

This is a good news/bad news development. The good news is that this is a very productive inquiry for courts to make. It does not matter what judges or plaintiffs intuitively think will confuse consumers; it only matters what consumers think and how they process the information presented to them. The bad news is that I have no idea how the parties will provide credible evidence to support this inquiry, and a new and even more complex multi-factor test is destined to compound the existing judicial difficulties with the multi-factor likelihood of consumer confusion test.

Some implications of this case:

1) In the past, some language in First Circuit cases implied that the First Circuit did not recognize the initial interest confusion doctrine. This case offers more evidence that the initial interest confusion doctrine, like a virulent weed, has taken root (in some form or another) everywhere.

2) A ruling like this shows how courts are analytically tortured by keyword advertising cases.

3) Assuming that Blue Nile falsely advertised that it sold "Hearts on Fire" diamonds, isn't this a paradigmatic bait-&-switch? In other words, do we really need to go through these doctrinal contortions? On the other hand, if the Blue Nile ad copy had a clearer exposition that it sold diamonds but not Hearts on Fire branded diamonds, wouldn't that also be an easy case? Thus, the only difficulty is when Blue Nile keys its ads to Hearts on Fire but doesn't reference the trademark in the ad copy at all (which, for example, would be the result in any Google ads if Hearts on Fire blocks its trademark). Personally, I would love to see some empirical evidence about how consumers evaluate ads without any reference to the triggering brand. Meanwhile, for you SEMs, if you are not already doing so, you should be running your ad copy by your lawyers. Clear ad copy ought to reduce or eliminate the risk of lawsuits like this.

4) I will be interested to see if other courts embrace the court’s addition of new factors to the multi-factor consumer confusion test. If so, this could make these cases much more complicated and expensive, but it could also prevent quick plaintiff wins by trademark owners who have no evidence of consumer confusion/initial interest confusion/whatever.

Other opinions on the case: Wendy Davis, Ryan Gile and David Kelly at Finnegan,

Romeo & Juliette Laser Hair Removal, Inc. v. Assara I LLC, 2009 WL 750195 (S.D.N.Y. March 20, 2009). The Justia page.

The litigants are competing laser hair removal vendors. The plaintiff alleges that the defendant ran the following ad:

Romeo And Juliette Laser
Unlimited Laser Hair Removal
$599/Month. Free Consultations.
www.assaralaser.com
New York, NY

Clicking on the URL took consumers to a website where the second line allegedly read "romeo juliette laser Unlimited Laser Hair Removal-$599/Month. Free Consultations."

The defendant alleges that the offending website was operated by a third party, ReachLocal. The court doesn't describe the Assara-ReachLocal relationship in detail, but it does say that ReachLocal is a "third party that Assara hired to manage its advertisements."

In any case, the defendant also seeks dismissal based on a lack of use in commerce. Although this ruling was also pre-Rescuecom, it doesn't matter because the plaintiff's trademark was referenced in both the ad copy and the linked website, which easily satisfies the use in commerce requirement. See, e.g., the Hamzik case.

Ron Coleman has more to say on this case.

The American Automobile Association v. Darba Enterprises, 2009 WL 1066506 (N.D. Cal. April 21, 2009). The Justia page.

Normally I stay away from jurisdictional rulings. However, occasionally keyword advertising plays a key role in the jurisdictional analysis (see, e.g., the Optihealth Products case), and those cases can be a little more interesting.

The defendants operate "several websites that purport to match consumers seeking auto insurance quotes with third-party insurers." AAA complains that the defendants "displayed the AAA Marks without authorization for the purpose of tricking internet users into believing that the site was affiliated with AAA," bought keyword ads triggered by AAA marks, and displayed AAA marks in the ad copy. Further, AAA complains that consumers submitted the lead generation form expecting AAA to be included but the form did not actually get submitted to AAA for a quote.

The court has little problem establishing jurisdiction over the defendant. The court deems the site "commercial" and "interactive" for purposes of the Zippo jurisdictional test. There were also 2 California consumer complaints against the defendants, and the lead generation form had a zip code field to indicate when consumers were from California. "Moreover, by utilizing pay-per-click advertisements to ensure that its name would come up when internet users searched for "AAA insurance," defendant intended to lure internet users to its website, including California residents."

It’s difficult for advertisers on third party trademarks to avoid jurisdictional responsibility in the trademark owner’s home court, so this ruling is not very surprising. However, as discussed with the Hearts on Fire case, I hope the court rethinks its perceptions about advertisers “luring” consumers.

Posted by Eric at 09:56 AM | E-Commerce , Marketing , Search Engines , Trademark | TrackBack

April 15, 2009

Graeme Dinwoodie on Rescuecom v. Google

By Eric Goldman

[Eric's note: As I mentioned, I'm getting a lot of private emails about Rescuecom v. Google, including the email from Margreth Barrett that I blogged last week. Today, I got the following email from Graeme Dinwoodie, a law professor currently at Chicago-Kent Law and soon to be at Oxford. Like Margreth, Graeme has written on the trademark use in commerce doctrine and search engine liability. I've blogged on a few of Graeme's papers before as well; see his SSRN page. Graeme has graciously permitted me to share his email on the blog:]

I think that your bottom-line take on Rescuecom is largely right, though it will not surprise you that I do not regard the decision as “disappointing.” I think the Second Circuit largely accepted the arguments that Mark Janis and I have made in our articles, and so I am pleased with the outcome. I agree that there are some oddities in the reasoning, though these are in large part a product of (1) having to distinguish the very badly reasoned decision in 1-800 Contacts, and (2) the fact that the trademark use requirement does not map well to the concerns that should drive the scope of trademark protection. In fact, looking at where the court appears to want to go, I have to think that – if the 1-800-Contacts decision was not out there -- they would have concluded that there was no such thing as a trademark use requirement.

I think that the court largely accepts the critique that some of us have offered of the trademark use requirement: the court recognizes that there is no inevitable symmetry between use sufficient to create rights and use that causes likelihood of confusion; the court recognizes that uses by defendants that fall outside the strict scope of the section 45 definition could be “pernicious”; and the court thinks it important to adopt a rule that allows courts to hold defendants liable when confusion is created (footnote 4 clearly reflects the concern that courts should be able to police this activity).

Of course, because of 1-800-Contacts they could not simply say that Section 45’s definition did not apply to defendants’ uses, which would have been much cleaner. If one accepts, as they do, that the definitions only apply “unless the contrary is plainly apparent from the context,” one could simply have said that almost none of the section 45 definition is intended to constrain what type of activities by a defendant might be actionable. Instead, the appendix proffers a reading of the two sentences in the definition that is truly weird. (Indeed, under one reading, you might even say that they were endorsing -- in the last couple of pages -- a trademark use requirement linked to the affixation language in what the court called the second sentence of the definition.) But their having to do all this is simply a function of the fact that the Second Circuit had previously applied the second sentence to sections of the act of defining infringement in 1-800 contacts: see fn 12.

Likewise, some of the factual distinctions seem a bit odd (even though they were to some extent predictable given the dicta in 1-800-Contacts). The URL/mark distinction is inconsistent with typical infringement analysis that permits use of a term similar to the mark to be infringing and is functionally ridiculous given the prevalence of Mark.com URLs. I suppose the distinction between an ad triggered by a “product category” in 1-800 Contacts and one triggered by a mark as in Rescuecom (also a predictable distinction given the dicta in the earlier case) might reflect some vague notion of directness or frequency of harm, but the alleged harm that is experienced when the ad appears is surely pretty similar. (It reminds me of the link-counting analysis to determine commercial use?). See Dinwoodie and Janis, Confusion Over Use at 1635.

What I take from the decision is that they really would like to go back and rethink 1-800 Contacts. I agree though they have effectively undermined 1-800-Contacts. The bad news is that the messy way in which they have done it -- if they take seriously the details of their analysis rather than the message that they are sending -- might generate some silly litigation in the meantime. The good news is that, if courts focus on the message, we might now get greater judicial consideration of the central issues of what types of confusion -- if any -- are created by this type of advertising, and what types of confusion should be actionable (and I hope that those are separate inquiries). That this is the court’s preferred focus is evident from their alternative explanation for the outcome in I-800-Contacts (see p. 17), their analysis of the product placement analogy, and some of the factual distinctions that they draw between 1-800 Contacts and Rescuecom (at least at the 12(b)(6) stage). It does not seem inevitable to me that search engines or advertisers will lose on the confusion analysis in the cases to come (including this one). And at least I hope we will now have some judicial exploration of whether there is any confusion and whether that should be actionable. To be sure, there are some litigation and compliance costs associated with this, but even those may dissipate over time through accretion of case law. And I hope and expect that defendants will begin to explore the types of uses of marks in ads that might be immunized through defenses such as nominative fair use (we've had a couple of lower court cases beginning to move in that direction). The combination of all of this analysis will, I hope, be more helpful to search engines in formulating appropriate policies and responses to trademark owner requests -- something they have already given a tremendous amount of thought to – than debate about “trademark use”

In short, although there are some problems with the opinion, the outcome should at least start us talking about types of issues that I believe we should be talking about in this area. To put it (I hope not too) tendentiously, the Second Circuit has decided to opt for analysis of “confusion” over “use”, and has decided that we should litigate the scope of trademark law, with due regard for “context.” See Graeme B. Dinwoodie and Mark D. Janis, Confusion Over Use: Contextualism in Trademark Law, 92 Iowa L. Rev. 1597 (2007). Alternatively stated, I think the law that will be developed in the next few years in the wake of this decision will be heavily driven by factual particular rather than broad legal rules (though rules of sorts may accrue over time).

Posted by Eric at 07:28 AM | Derivative Liability , Search Engines , Trademark | TrackBack

April 14, 2009

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

By Eric Goldman

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

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

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

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

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

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

April 10, 2009

Q1 2009 Quick Links, Part 2

By Eric Goldman

Trademarks/Domain Names

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

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

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

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

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

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

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

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

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

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

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

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

Advertising/Marketing

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

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

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

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

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

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

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

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

* 10 Creative Bathroom Ads.

Search Engines

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

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

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

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

* Wired: The Plot to Kill Google.

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

April 09, 2009

Margreth Barrett on Rescuecom v. Google

By Eric Goldman

[Eric's note: my email in-box is bulging with emails trying to sort out last Friday's Second Circuit decision in Rescuecom v. Google. I got the email below from Margreth Barrett, a law professor at UC Hastings who has written a number of papers on online trademark issues (several of which I've blogged about before). See her SSRN page for a couple of those papers. With Margreth's permission, I'm reposting her email to me:]

It strikes me as weird to differentiate Google from the 1-800 case on the ground that the WhenU software didn't use the plaintiff's mark to trigger the pop-up--since when does a defendant have to use an exact mark before it can be deemed to have made an actionable use of the mark? Last time I checked, a defendant could infringe with a word or symbol that was confusingly similar to the plaintiff's mark, like, for example, 1-800 Contacts and 1800contacts.com (or whatever it was). I know that the 1-800 contacts court noted that the web address was not the mark, but I can't see why that should matter. At most the distinction says something about the defendant's intent, but the defendant's intent has not been a basis for declining to find infringement (unless it is considered in the context of a fair use defense, to excuse infringement). Does this decision mean that Google could use the mark owner's Mark.com web address to key a competitor's ad every time a search result listed the mark owner in the top two or three search results? If so, what has been accomplished?

And the court's technical application of the language of the section 45 definition of "use in commerce" is painful. It's basically saying that Google's display of the plaintiff's mark to competitors using the keyword suggestion tool brings Google within the definition. But shouldn't the display be to the people who are likely to be confused? Judge Leval is entirely disassociating the definition of use in commerce from the concept of trademark use. The folks who see Google's "display" of the mark are not going to rely on it for information about product or service source. And the folks who might rely on it for information about source never see it.

The opinion strikes me as moving toward the notion in Panavision [Panavision Int'l, LP v. Toeppen, 141 F.3d 1316 (9th Cir. 1998)] that "selling" a mark constitutes trademark use. Boston Professional Hockey strikes again! [Boston Pro. Hockey Assoc., Inc. v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004 (1975)]

1-800 Contacts was a reasonably good decision, and Judge Leval has completely dismantled it. So what constitutes trademark use after this? The real underlying problem that I see here is that the court is trying to use an internal software application of a mark to prohibit an allegedly confusing screen display, which is only tangentially related to the software application, at best. It would be far better to address the screen display issue as a non-trademark-related issue of passing off or "fraudulent marketing," as that term was defined in the Restatement of Torts. Tying to make liability for the screen display rest on the keying use of the mark just further distorts and extends mark owners' control over their words and symbols in digital contexts.

And finally, what was the Appendix on the section 45 definition of use in commerce all about? The court's account of the legislative history is sloppy and shockingly incomplete in a number of ways (for example, the court seems to be unaware that "affixation" and similar "trademark use" limitations were expressly built into the definition of technical trademark infringement both at common law and in all the prior federal trademark acts--language that looked a lot like the sec. 45 definition. And the court totally ignores the sequence in which things happened in the drafting process, which is extremely telling. See my full account of the legislative history of the sec. 45 "use in commerce" definition in my recent article at 43 Wake Forest L. Rev. 893) But aside from all that, what's the point? Is the Appendix simply a performance for the benefit of Congress?

I think it is ironic that Judge Leval wrote an earlier law journal article [Leval, Trademark: Champion of Free Speech, 27 Colum. J.L. & Arts 187 (2004)] in which he touted the trademark use limitation on infringement actions as an important tool in protecting First Amendment interests.

Posted by Eric at 03:36 PM | Search Engines , Trademark | TrackBack

Boring v. Google Reconsideration Motion Denied

By Eric Goldman

Boring v. Google Inc., 2009 WL 931181 (W.D. Pa. April 6, 2009)

[I'm not quite sure why so many people are interested in this lawsuit. Maybe it's because of the oddly (and aptly?) named plaintiffs; or because Google is a defendant; or because Google Street View raises some interesting privacy issues. Whatever the case, this reconsideration ruling isn't all that interesting or significant, but I recap it here for completeness.]

You recall the Borings, a Pennsylvania couple that sued Google because Google's Street View captured and published their private driveway. In an opinion that showed zero sympathy for the plaintiffs, the district court judge dismissed the lawsuit back in February. Undeterred by the adverse ruling, the plaintiff asked the judge for reconsideration. Not surprisingly given the tenor of the initial opinion, the judge said no.

The plaintiffs appear to have abandoned their privacy and negligence claims. They asked the judge to reconsider their trespass to real property claim, arguing that a trespass claim does not require damages. The judge agrees with that proposition but rejects the reconsideration on a technicality (the Borings did not plead nominal damages in their complaint). The plaintiffs also asked for reconsideration of their unjust enrichment claim, but the judge rejected that as well because apparently they didn't point to any errors.

As a result, the case remains dismissed. Nevertheless, I suspect we haven't heard the last of this lawsuit.

Posted by Eric at 09:18 AM | Publicity/Privacy Rights , Search Engines | TrackBack

April 03, 2009

Second Circuit Says Google's Keyword Ad Sales May Be Use in Commerce--Rescuecom v. Google

By Eric Goldman

Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. April 3, 2009)

The Second Circuit has issued its long-anticipated opinion in Rescuecom v. Google over Google's sale of trademarked keywords as ad triggers. In a disappointing but not surprising conclusion, the Second Circuit reversed the lower court and says that Rescuecom properly alleged that Google's keyword ad practices constituted a "use in commerce." This ruling merely reverses the 12b6 dismissal for Google, but it raises some important questions--including whether this ruling effectively eliminates any future "use in commerce" defense in keyword advertising cases and whether Google and other search engines could reform their practices so that they are no longer deemed uses in commerce.

1-800 Contacts v. WhenU Distinguished

The most interesting part of the opinion is how this panel distinguishes its 2005 1-800 Contacts v. WhenU precedent, which held that an adware vendor did not make a use in commerce through its keyword ad triggering processes. The court says that Google is different in two main respects:

"First, in contrast to 1-800, where we emphasized that the defendant made no use whatsoever of the plaintiff’s trademark, here what Google is recommending and selling to its advertisers is Rescuecom’s trademark. Second, in contrast with the facts of 1-800 where the defendant did not “use or display,” much less sell, trademarks as search terms to its advertisers, here Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services. In addition, Google encourages the purchase of Rescuecom’s mark through its Keyword Suggestion Tool."

The court appears to be making two distinctions. First, WhenU didn’t sell trademarked keywords directly but instead rolled up search queries into product categories that didn’t contain the trademark anywhere but in an internal database table, so there was an additional layer of abstraction away from trademarks built into WhenU's matching process. Second, the court clearly doesn't like Google's Keyword Suggestion Tool, which I think has also frustrated trademark owners and been repeatedly cited against Google in pleadings.

In theory, then, Google could eliminate its trademark use in commerce by adding a product category abstraction--although this may not be a good idea, as it would not work with long-tail queries--and by modifying or dropping the Keyword Suggestion Tool.

The case also discusses Google's "sponsored link" label and distinguishes it from WhenU's labeling of its pop-up ads. The court gives credence (as it must on a 12b6) to Rescuecom's allegations that Google's placement of ads above the organic results might confuse consumers into thinking those ads were organic. In contrast, in WhenU, the "pop-up ad appeared in a separate browser window from the website the user accessed, and the defendant’s brand was displayed in the window frame surrounding the ad, so that there was no confusion as to the nature of the pop-up as an advertisement, nor as to the fact that the defendant, not the trademark owner, was responsible for displaying the ad, in response to the particular term searched." Personally, I think Google’s interface is sufficiently clear to consumers, but this is a factual assertion not ready for judicial review in this case yet.

One oddity: the court repeatedly says that WhenU displayed ads "randomly" chosen in response to searcher behavior. I'm not sure what the court was trying to say, but the ads were hardly chosen at random, and this is a pretty significant factual error on the court's part.

Finally, the court discusses the analogies to shelf-space adjacency in the retail context. This is a topic of special interest because I've parsed this issue in gory detail in my Brand Spillovers paper. The court, without any citations, reaches the conclusion that

It is not by reason of absence of a use of a mark in commerce that benign product placement escapes liability; it escapes liability because it is a benign practice which does not cause a likelihood of consumer confusion. In contrast, if a retail seller were to be paid by an off-brand purveyor to arrange product display and delivery in such a way that customers seeking to purchase a famous brand would receive the off-brand, believing they had gotten the brand they were seeking, we see no reason to believe the practice would escape liability merely because it could claim the mantle of “product placement.”

Fair enough—if consumers purchase a passed-off good, that would be actionable. However, the court sidesteps all of the nuance in concluding that shelf-space adjacency is a "benign practice that does not cause...consumer confusion." Retailers are hardly “benign” in their practices; see my Brand Spillovers paper for more on that. Further, and perhaps more importantly, it's unclear how Google's ads misdirect anyone. The court had to accept Rescuecom's allegations of diversion as true, but I think those bear very close scrutiny on remand.

What Is a Use in Commerce?

The opinion also contains a scholarly appendix, expressly labeled as dicta, explaining its statutory analysis of the Lanham Act's use in commerce phrase. Not surprisingly, at the end of the appendix it says "It would be helpful for Congress to study and clear up this ambiguity." Although it is dicta, I expect many other courts will follow and embrace this appendix when discussing use in commerce. I also expect that this will put an end to the cottage industry of law review articles debating what the phrase means in the keyword context.

Implications of this Ruling

1) This opinion narrows the 1-800 Contacts v. WhenU opinion substantially to a very specific set of facts. I'm not sure how many courts will be favorably citing that precedent in the future.

2) This case jeopardizes the half-dozen or so district court cases (in Second Circuit-controlled jurisdictions) that have held that keyword advertising purchases aren't a trademark use in commerce. This case involves Google's sale of keyword advertising, not an advertiser's purchase of keyword advertising, but I think those cases are now very shaky precedent. (The court particularly says that the Merck and S&L Vitamins cases "overread" the 1-800 Contacts precedent). The Second Circuit still could find a way to distinguish ad buys from ad sales, but I would be surprised if it did so.

3) This case also jeopardizes the rulings in those cases that keyword metatags aren't a trademark use in commerce. The court says specifically "We did not imply in 1-800 that an alleged infringer’s use of a trademark in an internal software program insulates the alleged infringer from a charge of infringement, no matter how likely the use is to cause confusion in the marketplace." I'm not sure how this applies to keyword metatags, which can't cause consumer confusion under any circumstance. Nevertheless, if the keyword metatags don't have the layer of abstraction that WhenU used, I don't think the court would regard them favorably.

4) Although this is clearly a loss for Google because Google no longer has a reliable way to kick out cases on a 12b6, Google might still prevail in the case. Google had won on a 12b6, and the court merely said that Rescuecom alleged enough in its complaint to survive the 12b6. Google could still win on summary judgment or trial, or the parties might settle. Either way, Rescuecom merely lives to fight another day. (In theory, Google could also appeal this ruling to the Supreme Court; I would be surprised if they went that route or if the Supreme Court would take it).

5) Accordingly, I don't expect this ruling to do much for cases like American Airlines v. Yahoo. Indeed, perhaps anticipating this loss, Yahoo didn't try to get the case into the Second Circuit. I suspect that's because Yahoo had already decided not to expect the use in commerce defense to go in its favor.

6) I'm interested to see what this ruling will do to state efforts to attack keyword advertising, such as Utah's ill-fated forays in this area. In theory, this ruling might alleviate some of the pressure state legislators feel that they have to do something. However, I suspect state legislators are only mildly interested in legal proceedings elsewhere, so I doubt this will make state legislators second-guess their own brilliance.

7) As the court says, it would make a lot of sense for Congress to clean up the statutory drafting muddle over use in commerce in the Lanham Act. I don't think this is likely because of the political gridlock that would emerge over the topic. As I discuss in my Deregulating Relevancy paper, a more pragmatic approach would be for Congress to expressly provide a safe harbor for search engines selling keywords analogous to the safe harbor for domain name registrars selling domain names, but I doubt Google has the muscle for that either. As a result, I don't anticipate legislative intervention to overturn this ruling.

The case library:

* Commercial Referential Trademark Uses (Rescuecom v. Google Amicus Brief Outtakes)
* Rescuecom reply brief
* Law professors' brief by Stacey Dogan and me
* Electronic Frontier Foundation amicus brief by Jason Schultz, Corynne McSherry and Fred von Lohmann
* Public Citizen amicus brief by Paul Levy
* eBay/Yahoo/AOL amicus brief by Celia Goldwag Barenholtz, Janet Cullum and others of Cooley Godward Kronish [now mooted]
* Google's initial brief
* Rescuecom's initial brief
* District Court's opinion

Posted by Eric at 11:51 AM | Derivative Liability , Search Engines , Trademark | TrackBack

March 30, 2009

CLRB Hanson v. Google Preliminarily Settles for $20M

By Eric Goldman

CLRB Hanson Industries v. Google, 5:05-cv-03649-JW (settlement papers filed March 26, 2009). The new case filings:
* The settlement motion
* The settlement agreement
* The proposed court order granting the settlement

My previous blog coverage of the case:
* my initial post from August 2005
* the August 2007 determination that advertisers were bound by the AdWords contract
* the May 2008 initial refusal to grant summary judgment to Google
* the December 2008 second refusal to grant summary judgment to Google

The long-running CLRB Hanson v. Google case (also referred to as the Howard Stern case because he is a named plaintiff), over Google's alleged mishandling of budget caps set by its advertisers, has reached a proposed settlement. The settlement needs court approval, but I would be surprised if that didn't occur in due course. Individual advertisers could choose to opt out of the settlement and pursue individual claims, but I expect few will find it economically rational to do so. In the extreme case, the deal could unravel if more than 5% of advertisers opt out of the class, but I would be shocked if this happened. As a result, I expect this development to substantially resolve the case.

The stated settlement price tag is $20M of cash. Plaintiffs' counsel are likely to get $5.25M, the named plaintiffs are likely to get $20k each, and the $14.7M balance will go into a bank account. Google will provide AdWord credits for affected advertisers who are still advertising and have a balance due to Google, and Google will get cash back from the pot for any actual credits given to advertisers. It is unclear how much of the $14.7M Google will recoup this way. Or, advertisers can opt to receive cash instead for their putative harms. If less than $200k is left over after all this, the money will go to charity. If more than $200k is left over, the parties will go back to the judge to propose how to reallocate the remaining money to the class.

in my previous post on the case from December 2008, I wrote:

I suspect the case is still around because the parties can't work out a deal on the attorney's fees--which, if this situation is anything like the click fraud cases, almost certainly will dwarf any actual monetary relief received by the putatively injured advertisers. If the parties can work out the plaintiff attorneys' cut of the spoils, I'm confident this lawsuit will settle before trial

Seeing the size of this settlement, I'm not sure I called it right. Given the fairly narrow advertiser harms left open by the judge's prior rulings, I expected the advertiser relief to be nominal (certainly less than $15M). Furthermore, unlike prior advertiser v. search engine lawsuits where advertiser credits were use-it-or-lose-it, Google could be out much of the $20M no matter what. In the end, Google probably will pay a lot more cash than I expected it would have to.

While Google can easily afford the dough, the settlement is a big enough sum to potentially attract further class action lawyers seeking their piece of the Google fortune. Contrast this with Google's stance on patent lawsuits, where it has taken a hard line on settlements with the hope that its refusal to buy out lawsuits will discourage future weak patent claims from being asserted against it. However, the plaintiffs in this case had to work pretty hard--Google fought them for nearly 4 years--so it's possible that the actual economic return for the plaintiffs' lawyers for their four years of labor wasn't especially lucrative.

I have lost track of the many lawsuits against Google, but I believe this settlement ends the 2005-era advertiser v. Google class actions. There may still be some individual click fraud claims, and there are other advertising-related lawsuits still pending (such as the Vulcan Golf and related/copycat lawsuits). Let's hope this means that Google has improved its ability to keep advertisers happy.

Posted by Eric at 06:46 AM | Licensing/Contracts , Marketing , Search Engines | TrackBack

March 24, 2009

"Locate Plastic Surgeon" Trademark Registrant Brings Dubious Enforcement Action--Ezzo v. Google

By Eric Goldman

Ezzo v. Google, 2:09-CV-00159 (M.D. Fla. complaint filed March 17, 2009). The Justia page.

I'm suffering ennui about blogging pro se lawsuits against companies like Google. Most of them are completely unmeritorious and poorly expressed, so they don't warrant the time and legal risk associated with writing them up. Nevertheless, I decided this lawsuit is blog-worthy because it, combined with the Medical Justice no-talk waivers that I hope to blog about soon, appears to be part of a troubling trend of using IP to make it harder for consumers to find appropriate medical services.

Jamil Ezzo has a registered trademark on the Supplemental Register for the phrase "Locate Plastic Surgeon," which he apparently uses in connection with his website locateplasticsurgeon.com. Armed with this registration, in this lawsuit he sues Google and AOL (apparently for selling the trademark as an ad keyword) and a bunch of other folks in the plastic surgery business who apparently advertised on the keyword. (The complaint is so indecipherable that I'm not really sure what he's beefing about; this is my best guess).

Among other dubious aspects, he comes up with a claim for $90M in damages. He says that over 5 years, the competitive keyword advertising cost him 5,000 customers who would have paid $100/mo each. That's pretty powerful keyword advertising and a gravity-defying 100% margin business. Add in treble damages, and that produces $90M in damages. Nevertheless, the good faith in his computations is palpable because he kept the damages claim under 9 figures.

In any case, putting aside the indecipherability of the complaint, this lawsuit will be quickly crunched because (among other defects) I am extremely confident that "Locate Plastic Surgeons" is not a protectable trademark. Registration on the Supplemental Registry only confirms that the phrase could become a protectable trademark some day, but it's not necessarily protectable today. To make progress, he'll need to show secondary meaning in the phrase, and given the highly descriptive phrase plus the apparently low profile of the site, I think the chances of showing secondary meaning are near zero. Given this, I think this lawsuit is a good candidate for the court to award attorneys fees to the defendants (awardable in exceptional cases, which I think this is).

Even if this lawsuit is a little off-kilter, it still depresses me that anyone could think they can own a protectable trademark in the phrase "Locate Plastic Surgeon" for the process of locating plastic surgeons. It's dramatic evidence of the abysmal and overexpansive state of trademark doctrine today.

More on this lawsuit from Tom Seery of RealSelf.com.

Posted by Eric at 11:01 AM | Derivative Liability , Search Engines , Trademark | TrackBack

March 13, 2009

Utah HB 450 Dies in Utah Senate Without a Vote

By Eric Goldman

After barely passing the Utah House, Utah HB 450--Utah's third ill-fated attempt to regulate keyword advertising--died quietly last night when the Utah Senate failed to act on it before the Utah Legislature adjourned for the year. My understanding is that 1-800 Contacts, the bill's principal advocate, stopped pushing the bill in the Senate earlier this week when it became clear that it couldn't muster the votes.

On its face, this bill's failure appears to be good news. While the bill was less ill-conceived than Utah's past two anti-keyword advertising laws, it was still an ill-conceived anti-competitive law designed principally to advance the protectionist interests of a local Utah company. Laws like this should be rejected.

Nevertheless, I feel that there is no real good news here. If the law had died because the Utah Legislature had recognized the folly of thinking that it was uniquely well-positioned to improve keyword advertising, or had abandoned the quest because of its abysmal track record in regulating the Internet, we'd have good reason to celebrate. Unfortunately, I haven't seen any evidence of such an epiphany.

Instead, I *guarantee* that the Utah legislature will revisit the topic of regulating keyword advertising for a fourth time. (I'm reminded of the fable of Ulysses and the Sirens; trying to "fix" keyword advertising appears to be simply irresistible to the Utah Legislature). One reason is that there remains a lot of hostility towards keyword advertising in the Utah Legislature. For example, Rep. S. Clark was quoted last week as opposing HB 450 (indeed, he voted no) because:

"We should be going after the Googles that are creating this problem. They're the villains." .... "If we're going to use the strength and resources of the state to go after businesses, then we ought to go after the business that is causing the harm. … We ought to go after the Googles with the state's resources and reputation."

Nice. In addition to this ill-informed antipathy, companies like 1-800 Contacts and Overstock.com--both Utah-based web retailers with, at best, highly descriptive trademarks--are always interested in ways to reduce their competition. So, Utah's legislative hubris plus local company rent-seeking creates a toxic brew that ensures repeat surfacing of bad policy proposals. Let's reconvene here in February 2010 and see what the Utah bunch is cooking up for the 2010 legislative session. [UPDATE: Kate Kaye has a little more to say about the future.]

Meanwhile, even though 1-800 Contacts didn't get its statutory shortcut to control keyword ads on its trademarks, I expect 1-800 Contacts will keep bringing traditional trademark lawsuits against competitive retailers who buy competitive keyword advertising. 1-800 Contacts has already been busy on this front; I don't have a complete census of these lawsuits, but I pulled the following case list from PACER ()which is usually incomplete for a variety of reasons):

* 1-800 Contacts v. Lensworld.com, 2:2008cv00015 (filed 01/08/2008, closed 09/09/2008)
* 1-800 Contacts v. Drugstore.com, 2:2008cv00157 (filed 02/26/2008, closed 08/12/2008)
* 1-800 Contacts v. Lens.com Inc., 2:2007cv00591 (filed 08/13/2007)
* 1-800 Contacts v. Premier Holdings, 2:2007cv00946 (filed 12/06/2007, closed 05/16/2008)
* 1-800 Contacts v. Memorial Eye, 2:2008cv00983 (filed12/23/2008)
* 1-800 Contacts v. Lensfast, 2:2008cv00984 (filed 12/23/2008)
* 1-800 Contacts Inc v. Manila Industries Inc, 8:2007cv00102 (filed 01/26/2007, closed 04/07/2008) (note: the complaint wasn't on PACER, so I couldn't confirm that this was a keyword suit)

Given this level of activity, I doubt we've seen the last of these lawsuits (unless 1-800 Contacts has exhausted the universe of defendants).

One last point: I remain flabbergasted by the standards of acceptable conduct in the Utah Legislature. For example, as I mentioned before, I got a reliable tip (but I haven't been able to confirm otherwise) that one house representative mistakenly voted yes on HB 450. Whoops! Subsequently, the Salt Lake Tribune reminded us that Rep. Jennifer "Jen" Seelig--who voted yes on HB 450, in case that wasn't obvious--is a lobbyist-employee of 1-800 Contacts, the principal advocate for the bill. (This page describes her title as "Associate Director of Governmental Relations" for 1-800 Contacts). What??? Rep. Seelig explained that she doesn't lobby for 1-800 Contacts in the Utah Legislature, but I would think any representative with such obvious conflicts would necessarily abstain from voting on bills advocated by her employer. (Or perhaps there should be rules against legislators also being employed as lobbyists, but I digress...). Apparently not in the Utah Legislature. Utah residents, I just don't get it--why are you not demanding better practices from your elected representatives???

Posted by Eric at 10:27 AM | Marketing , Search Engines , Trademark | TrackBack

March 12, 2009

Fifth Circuit Denies Yahoo's Jurisdictional Appeal in American Airlines Case

By Eric Goldman

In re: Yahoo! Inc; Overture Services, Inc., No. 09-10098 (5th Cir. March 11, 2009)

In January, the Texas district court denied Yahoo's request to transfer the American Airlines keyword advertising lawsuit out of Texas and into Yahoo's home court in California. Yahoo appealed that ruling to the Fifth Circuit, and yesterday the Fifth Circuit denied the request.

Yahoo's principal argument was that the parties' lawsuit was governed by its Sponsored Search Agreement, which had a mandatory venue clause requiring litigation in Yahoo's home court. The district court judge did not respond well to that argument, calling it "completely nonsensical." The appeals court wasn't as harsh but still concludes that Yahoo didn't make the extraordinary showing required to obtain the relief Yahoo sought--even though American Airlines is seeking disgorgement of its payments under the Sponsored Search Agreement as one of the requested remedies.

This case remains at an early procedural stage, but already I'm struck by how aggressively Yahoo is fighting to get the case out of Texas. There may be good reasons for this--naturally, a litigant prefers to be in its home court and not in its opponent's home court, plus there may be substantive doctrinal benefits in the Ninth Circuit instead of the Fifth Circuit. However, Yahoo is spending a fair amount of money over this procedural point, signaling that it isn't looking for a quick or cheap settlement.

The only remaining jurisdictional question is what, if anything, Judge Fogel in Northern District of California will do with Yahoo's declaratory judgment suit. The most logical thing would be for Judge Fogel to stand down in the face of the continued litigation in Texas, but I don't know if that's the only possible result.

Posted by Eric at 04:01 PM | Search Engines , Trademark | TrackBack

March 06, 2009

Utah House Barely Passes HB 450 (Maybe)--UPDATED

By Eric Goldman

The Utah legislature is continuing its embarrassing third attempt to regulate keyword advertising. Today, after making a ticky-tack amendment, the Utah House passed HB 450 and sent the bill to the Senate. However, the House was sharply divided, voting 38-36-1 to pass it. The law barely made it through due to the fierce last-minute lobbying efforts of 1-800 Contacts; Kate Kaye catches us up on some of 1-800 Contacts' maneuverings.

It's not clear if the Senate will approve the law; or if it will even act on the law before the legislature recesses on March 12. It's also possible that the governor would veto the law. However, for now, it is clear that the Utah legislature is still working hard to retain its status as the reigning jesters of Internet regulators.

UPDATE (12:30 Pacific): Perhaps I should have known better than to rely on the Utah legislative website. I got the following email from a tipster:

"So the bill passed by one vote but one rep realized she voted the wrong way....So she's putting a hold on it and they're going to try to reconsider the action, basically revote the thing, today or Monday."

WHAT??? I realize that mistakes can happen, but I would think that legislators would work really, really hard to vote the right way on bills. After all, isn't that the single most important thing we pay legislators to do? In light of this apparently crucial flub, it seems like the last line of my initial post was even more apropos than I realized.

UPDATE 2: Kate Kaye provides an update.

UPDATE 3 (6 pm Pacific): My latest understanding is that the misvoting representative lifted her hold, and the bill will move to the Senate.

Posted by Eric at 11:26 AM | Marketing , Search Engines , Trademark | TrackBack

March 04, 2009

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

By Eric Goldman

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

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

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

The Proposed Law

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

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

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

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

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

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

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

So What Does This Law Do?

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

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

Conclusion

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

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

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

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

March 03, 2009

Online Resale of Expired Cosmetics May Be Trademark Infringement--Mary Kay v. Weber

By Eric Goldman

Mary Kay, Inc. v. Weber, 2009 WL 426470 (N.D. Tex. Feb. 20, 2009). The Justia page. There are a number of Mary Kay meta-sites tracking this and other Mary Kay lawsuits. For more filings and commentary on this case, see pinklighthouse.com.

Amy Weber is a former Mary Kay Cosmetics independent salesperson (in Mary Kay-speak, "Independent Beauty Consultant," or "IBC"). To retain her IBC status, she was required to buy $200/mo of cosmetics. It sounds like Weber wasn't able to move this much product through traditional Mary Kay sales techniques, so she ultimately lost her IBC status. Meanwhile, apparently stuck with an inventory of unsold goods, Weber started reselling the cosmetics on eBay. Over time, she started buying cheap Mary Kay products on eBay from other folks and flipping them on eBay for more. Eventually she started an e-commerce website, initially called "marykay1stop" but later renamed "touchofpink.com." It sounds like the venture became quite successful.

Not surprisingly, Mary Kay wasn't pleased with the channel conflict that the defendants were causing. A Mary Kay representative first contacted the defendants in 2005, ordering them to change their e-commerce site's name (so that it didn't reference Mary Kay) and remove any copyrighted product shots. The parties dispute this conversation; the defendants say that the representative promised that they would be legally OK if they took these steps, while Mary Kay says that its demands didn't promise safety. Not satisfied with the defendants' responses, Mary Kay sued in 2008 for trademark infringement and a variety of other claims.

Regular blog readers will recognize this fact pattern. We've seen a number of similar lawsuits where a manufacturer/brand owner with restricted distribution channels sues because those channels break down and legitimate original goods hit the Internet. See, e.g., Standard Process. v. Total Health Discount (E.D. Wis. 2008); Australian Gold v. Hatfield (10th Cir 2006); S&L Vitamins v. Australian Gold (EDNY 2007); Standard Process v. Banks (E.D. Wis. 2008); Designer Skin v. S&L Vitamins (D. Ariz. 2008); and Tiffany v. eBay (SDNY 2008). The legal principles developed in these cases are decidedly mixed.

In this case, it sounds like one possible problem is that Mary Kay forced its retailers (i.e., the IBCs) to buy more product (through the minimum monthly orders) than the retailers could sell--which would be a type of channel stuffing that leads to big inventories of unsold goods being held by retailers. If so, then Mary Kay got blitzed by all of this unsold inventory when an Internet sales channel opened up. If anything, the minimum monthly order probably exacerbates the problem because those orders are probably at the reduced distributor prices, which would allow IBCs to flip a portion of the inventory at cost to Weber (keeping the rest for personal consumption at the discounted distributor price or resale through traditional means), enabling Weber to undercut standard retail prices.

Trademark Infringement

From a legal standpoint, the trademark infringement claim looks easy to dispose of. Due to the First Sale doctrine, IBCs and any downstream resellers should be free to resell legitimate goods at whatever price they want; and they should be free to let consumers know of the availability of those goods. However, the First Sale doctrine applies only when the resold goods are not "materially different." Mary Kay argued that the goods were materially different because "(1) they are expired, (2) they do not carry the same product guarantee, and (3) they are old, used, discontinued, or otherwise defective." Some of these arguments are questionable (why are discontinued but unmodified goods "materially different"?), but everyone agreed that Weber was reselling expired goods, and with perishable goods this could matter. Not being a cosmetics consumer, I'm not sure how perishable cosmetics are; I suspect some aren't, even if they are stamped with an expiration date. In any case, the court denies summary judgment, making this a fact question for the jury.

The defendants also claimed nominative use, which allows the defendants to use "Mary Kay" to refer to the vendor/licensor Mary Kay. The nominative use defense is only available if the defendants did not take more of the trademark than necessary and did not imply any sponsorship or affiliation.

In addition to the defendants' website references, the defendants spent $20,000/mo on Google keyword advertising to purchase 79 keywords, of which 75 included the phrase Mary Kay or the name of a Mary Kay product. Further, some of the text ads included Mary Kay in the ad copy. Citing the Total Health case, Mary Kay argued that purchasing keyword ads categorically precluded a nominative use defense because the defendants took more of the trademark than necessary. The court rejects this argument, reading the Total Health case more narrowly. The court goes further to say that it would disagree with a broader reading of the Total Health case because Mary Kay's proposed reading would mean that "second hand sellers could not advertise on search engines such as Google without facing liability for trademark infringement."

Instead, the court cites Tiffany and Designer Skin for the proposition that keyword advertising on third party trademarks does not automatically create an implied sponsorship or affiliation. As the court says:

the law will destroy the valuable resource that search engines have become if it prevents those search engines from doing what they are designed to do: present users with the information they seek as well as related information the user may also find helpful or interesting [cite to Designer Skin]

Yes! However, the court says that a fact issue remains whether the ad copy created an implied sponsorship/affiliation. The ad in question read:

"Mary Kay Sale 50% Off: Free Shipping on Orders over $100 Get up to 50% Off-Fast Shipping www.touchofpinkcosmetics.com."

The court says the language "Mary Kay Sale 50% Off" could be read to imply that the ad was from Mary Kay itself.

As for the Mary Kay references on the touchofpink.com website, the court says that the likelihood of confusion factors point heavily in favor of a plaintiff win, so on that basis summary judgment for the defense is inappropriate. The court's whole discussion of likelihood of confusion is entirely odd; the court seems to miss the point that the likelihood of confusion factors necessarily will point towards infringement when dealing with an unauthorized reseller of legitimate goods.

Other Discussion

* The court dismisses the tortious interference claims because the defendants didn't actively recruit other IBCs to resell goods to them, even if the defendants knew that the IBC contract had a restriction on Internet resales, and because the defendants sale of the "trappings" of being an IBC didn't substitute for becoming an IBC.

* The court also dismisses the unjust enrichment claim because unjust enrichment isn't a standalone cause of action. Why why why do so many plaintiffs waste their time alleging unjust enrichment as a standalone cause of action???

* The court partially tosses Mary Kay's consumer survey putatively showing the consumers assumed an affiliation between Mary Kay and the touchofpink website: "confusion that stems solely from the fact that the Webers are reselling Mary Kay products is not legally relevant and might confuse the jury. As a result, the court cannot allow the jury to hear the bald statement that forty five percent of consumers were confused about touchofpinkcosmetics.com's affiliation with Mary Kay." However, respondents' narratives about why they assumed affiliation are admissible.

Conclusion

Mixed rulings like this often produce a settlement. Frankly, I could see both sides wanting to keep this case out of a jury's hands. In court, defense counsel will hammer on the fact that Mary Kay is trying to suppress legitimate resales because they don't like the competition; plaintiff's counsel will probably argue that the defendants deliberately went too far in pretending to be Mary Kay instead of being clearer that they were an unauthorized reseller. I don't know which argument will appeal more to a Texas jury, and this unpredictability increases the attractiveness of a settlement.

Doctrinally, I suspect the defendants hoped for a better ruling. Their First Sale defense was so palpable that it's frustrating the defendants couldn't get the court to embrace it fully. Then again, unauthorized resales of legitimate goods that have leaked out of a controlled channel have really confounded the courts, so perhaps a mixed ruling is to be expected--especially in light of some questionable (in hindsight) decisions by the defendants, such as their original choice for their website name, the ambiguous references to Mary Kay in their ad copy, and the heavy reliance on reselling expired cosmetics.

While the defendants' failure to get a solid win was a loss of sorts, this case does offer some good news for future defendants--especially the court's clear conclusion that simply buying trademarked keyword ads, without more, does not create an implied sponsorship or affiliation with the trademark owner. It would have been nice for the court to rely on some social science to support this proposition, but let's celebrate the court's wisdom however it got there. This, combined with the recent case saying that keyword advertising isn't a false designation of origin, suggest that we are slowly overcoming past rulings that have treated keyword advertising as having some mystical power to hypnotize and divert consumers.

Finally, while completely irrelevant to the case, I'd be remiss if I didn't link to a Mary Kay pink Cadillac--perhaps the most enduring attribute of the Mary Kay brand for a non-consumer like me. Wow.

Posted by Eric at 12:54 PM | E-Commerce , Search Engines , Trademark | TrackBack

February 19, 2009

TradeComet Sues Google for Antitrust Violations

By Eric Goldman

TradeComet.com LLC v. Google, Inc., 09 CIV 1400 (SDNY complaint filed Feb. 17, 2009). The Justia page.

TradeComet, which operates the SourceTool.com website, has sued Google for a variety of antitrust violations. As is typically the case with lawsuits against Google, this lawsuit turned into a media event, and TradeComet's PR firm did a great job pushing this story into AP, NYT, CNET News.com, BusinessWeek and many others. Maybe SourceTool hoped to get some PageRank bounce from such broad media coverage? (sorry, no link love from me).

The lawsuit was filed by lawyers at Cadwalader Wickersham & Taft, one of the oldest and most prestigious law firms in the country, which is of some note because that firm has represented Microsoft in various dealings that would have some bearing on Google's market position (such as Microsoft's aborted takeover of Yahoo). Further, Cadwalader has had a particularly rough time in this market downturn, so perhaps they had some lawyers with idle hands...?

The complaint itself is the typical grumblings of an unhappy advertiser who wanted more traffic for less money. We've heard these complaints from advertisers many, many times before. Advertisers tend to be a particularly hard-to-please bunch. TradeComet tries to connect the dots that Google's price increase was due to Google's efforts to squelch SourceTool's competition with Google, which would be a more convincing argument if anyone actually believed that the two were bona fide competitors.

In terms of legal precedent, there are three cases of note here:

1) KinderStart v. Google. KinderStart was a vertical portal (in this respect, not dissimilar to SourceTool in marketplace juxtaposition with Google) that had its PageRank slashed and was de-indexed for a time. KinderStart brought a variety of claims against Google, including an antitrust claim alleging that the PageRank drop was designed to punish a competitor, but those claims went nowhere--and, in fact, the plaintiff's lawyer was ultimately sanctioned for making unsupportable claims in the complaint.

2) Person v. Google. This was a pro se lawsuit by a disgruntled Google advertiser who wasn't happy with his treatment by Google, so he brought an antitrust lawsuit against them. It wasn't a meritorious lawsuit from inception, but of particular interest is that in dismissing the case, Judge Fogel defined the relevant market for antitrust purposes as "Internet advertising," not "search advertising." There's no question Google is a dominant player in the search advertising market, but they are only a major player in the much larger Internet advertising market.

3) Langdon v. Google. This wasn't an antitrust case, but it stands for the proposition that search engines have the absolute right to reject ads in their discretion.

The combination of these three precedents shows that (A) most/all of TradeComet's complaints have been advanced before, and (B) they haven't gotten a favorable reception in court. Then again, all three of these rulings are from 2007, so it's possible that Google and the market have changed since then in ways that degrade Google's antitrust posture. Indeed, last year the DOJ said it was hours away from filing an antitrust lawsuit based on the Google-Yahoo deal, although I think it's easy to read too much into that situation. It is not uncommon for government enforcement agencies to take aggressive positions that may not reflect the law, and usually their targets back down rather than test those aggressive positions in court (just like Google did in the Yahoo transaction). So even if the DOJ took the position that the relevant market was search advertising, not Internet advertising, there is no guarantee that a court would have agreed with that position.

There is another troubling aspect of the TradeComet lawsuit. Google and other search engines have been repeatedly criticized for not doing enough to police their ads on a variety of dimensions, including allowing advertisers to hawk bogus products and distribute malware through their ads. We want--and expect--Google to police its advertisers. Google can do so in a variety of ways, including manual review of ads, but its pricing mechanisms and ad sorting algorithms (including its landing page quality score) provide an effective first-line of defense against ads that aren't useful to consumers. Therefore, it would be odd/dichotomous for antitrust law to conclude that Google's ad cleanup mechanisms are anti-competitive.

While I think this lawsuit is much more rehash/ennui than groundbreaking, there was one set of allegations that caught my eye. Check out Paragraphs 100 and 101, where TradeComet alleges that Google "relaxes its Landing Page Quality methodology for certain 'search partners'" such as Business.com. I'd sure like to know more about this allegation and the factual basis for it. If true, I imagine Google's advertiser community would be up in arms about this favoritism. However, I suspect that if Business.com and other search partners get seemingly premium ad placement, it's due to some consistently applied factor that measures an independent attribute that happens to correlate with attributes of Google's search partners.

Posted by Eric at 05:17 PM | Marketing , Search Engines | TrackBack

February 17, 2009

Google Street View Case Dismissed--Boring v. Google

By Eric Goldman

Boring v. Google, Inc., 2:08-cv-00694-ARH (W.D. Pa. Feb. 17, 2009)

You may recall the Boring case from last Spring. A Pennsylvania couple sued because Google's camera car drove up their private driveway and the resulting pictures were posted to Google's Street View. I thought the whole lawsuit was such a silly publicity stunt that I didn't think it was blog-worthy at the time. Apparently I'm not the only person who wasn't impressed with the suit, because the court didn't give the plaintiffs any benefit of the doubt and dismissed the lawsuit handily (without leave to amend).

Some highlights from the discussion:

Intrusion Into Seclusion. The court says that the plaintiffs did not allege facts supporting that the intrusion was substantial and highly offensive. To reinforce the point that perhaps the plaintiffs didn't experience much harm, the court points out that the plaintiffs didn't take advantage of Google's opt out procedure, plus they drew public attention to themselves by suing and by not redacting or suppressing their contact info in the court filings. I was a little troubled by the latter point, which seemed circular to me--plaintiffs bringing intrusion into seclusion lawsuits unavoidably thrust themselves into the public eye, whether they want to do so or not. This is especially true for anyone suing Google. As a result, it's not fair to hold that consequence against plaintiffs. (As an example of the unwanted publicity faced by privacy rights plaintiffs, consider Robert Steinbuch's experience as a plaintiff against Jessica Cutler). The court also skips over the legal nuances regarding why Google should get a free legal pass when it offers an opt out.

Public Disclosure of Private Facts. As with the intrusion into seclusion claim, the court says that the plaintiffs have not shown the disclosures were highly offensive to reasonable people, as evidenced by the fact that other people haven't opted out of Google's Street View. (An interesting argument on a 12b6).

Common Law Negligence. The court says Google didn't have a duty to the Borings, and it isn't willing to manufacture one.

Trespass. The court says that the plaintiffs' emotional damages were not proximately caused by the trespass.

Unjust Enrichment. The court (correctly, IMO) says that this is not an independent cause of action but is just a quasi-contract remedy.

Injunctive Relief. The court says that the plaintiffs failed to plead "a plausible claim for entitlement to injunctive relief." Which, I think, is one way of saying "not interested."

A clean sweep for Google, and the end (absent an appeal) of a silly lawsuit.

Posted by Eric at 04:41 PM | Publicity/Privacy Rights , Search Engines | TrackBack

February 16, 2009

Yahoo/Overture Sued for Search Results Snippets Containing Plaintiff's Name--Stayart v. Yahoo

By Eric Goldman

Stayart v. Yahoo!, 2:2009cv00116 (E.D. Wis. complaint filed Feb. 5, 2009). The Justia page.

Bev Stayart appears to be proud of her accomplishments. As the complaint recounts her credentials, we are informed that she has an MBA in finance, was a VP at an unnamed financial institution, is passionate about animals, participates in an online discussion forum where her "scholarly" posts have generated 17,000 hits in three years, and has written two poems about protecting seals that were published on Danish websites. I'm not quite sure exactly what we are supposed to glean from these facts, but if they are designed to establish that she has had a life-well-lived, then we might extend her some kudos for that. These facts--IMO, much less compellingly--also apparently support her allegation (para. 21) that her name has commercial value because of "her humanitarian endeavors, positive and wholesome image, and the popularity of her scholarly posts on the Internet." If 17,000 hits in three years creates commercial value in the author's name, then the Internet is filled with rock stars!

Perhaps more remarkable is that Bev Stayart claims she is the only "Bev Stayart" and "Beverly Stayart" on the Internet (para. 19), and it appears that she would like to keep it that way. Thus, she is seemingly taking the position that any reference to "Bev Stayart" and "Beverly Stayart" on the Internet must be referring to her and only her. That would be a neat trick if true because it could give her exclusionary power over every Internet reference containing those names, but I would be shocked if there is and has been only one Bev/Beverly Stayart in the entire world.

It's a little unclear from the complaint exactly what's going on to make Bev Stayart unhappy, but it looks like she ran into some cloaked search engine spam pages that referenced her name. For example, she searched for "Beverly Stayart" in Yahoo and got the following search result out of a total of 7 unique search results (surprisingly small number for a person with commercial value in their name):

Pm 10 kb Loading Cialas -- Online Pharmacy

Pm 10kb loading cialas january th, at: pm hi friends i met you

in the tim horton s on bloor st a few Sundays ago I ... on february

bev stayart on march th ...

chitosan-as-a-pharmaceutical-excipient.pills-n-health.cn/...

Incredibly, she then clicked on this search result (whoa!) and was taken to a page on mysharedvideo.com which had her name centered in a darkened movie screen and ultimately played an adult video. Her Norton software went crazy on the page (surprise!), suggesting malware was on the page.

She subsequently tried the same search (in both Yahoo and AltaVista) multiple times and got the same search results each time, which took her to other similar websites that all promoted adult entertainment. She also tried some searches with her name plus an erectile dysfunction drug's brand name and got similar results. Finally, she clicked on the .cn domain name in the search result (bold!) multiple times and was apparently taken to some type of splog pages. The fact that she repeated this search and clicked on the search results many times suggests a rare combination of self-interest and amazing--and undoubtedly unwarranted--confidence in her Norton software.

(Various is a defendant because it showed up as a result in the "related searches" feature of AltaVista and apparently provided spam pages that contain her name in the page title and post-domain URL).

Based on the foregoing, she alleges that Yahoo and Overture's display of the false snippets constituted Lanham Act false endorsement and false designation of origin and violation of Wisconsin's publicity rights statute and common law privacy rights.

There are two obvious problems with the lawsuit against Yahoo and Overture. First, if there is or has been even one other Bev or Beverly Stayart in the world, the plaintiff has a real problem proving that the online references were to her and not the other person. And, with all due respect to Ms. Stayart's lifetime of accomplishments, it would be ridiculous for her to argue that her name is so well-recognized that readers would assume that the references were to her instead of other folks with a common name.

The other major problem is 47 USC 230. Per 230, Yahoo and Overture are not liable for creating snippets of third party content, even if they create a false impression. See, e.g., Maughan v. Google and Murawski v. Pataki. Nevertheless, 230 is not a perfect defense because these claims are close to being "intellectual property claims" that would drop out of 230 coverage in some places. Lanham Act trademark claims are unquestionably IP claims, although I personally think Lanham Act false advertising claims are not. See, e.g., the Kruska case. Even so, irrespective of 230, I think the recent Heartbrand Beef v. Lobel's case suggests that search engines may not be liable for false designation of origin simply by presenting third party content.

Similarly, the WI publicity rights statute might be preempted by 230 even though there is more unanimity that publicity rights are IP; compare ccBill (preempted) and Friendfinder (not preempted). The common law right of privacy claim is almost certainly preempted by 230 in all jurisdictions.

One last tidbit that may help contextualize this case. Bev Stayart appears to be "CFO and Director of Business Development" for Stayart Law Offices, and her co-worker (and family relation?) Gregory A. Stayart is the lawyer in the case. (I had difficulty finding enough info about Gregory or the Stayart Law Offices to clarify the connection; that may have something to do with the fact that Gregory isn't licensed to practice law in Wisconsin). Sorry for the snarkiness, but I guess this is one way for Ms. Stayart to develop a law firm's business, especially in a down market like this.

[A favor: please take a look at the search results for "Stayart Law Offices" and let me know what might explain the widespread redundant distribution of Bev Stayart's resume information at mulitple no-name services. Is this what a typical reputation management campaign produces?]

Posted by Eric at 01:26 PM | Publicity/Privacy Rights , Search Engines | TrackBack

February 13, 2009

Yahoo's Sale of Competitive Keyword Ads Isn't False Designation of Origin--Heartbrand Beef v. Lobel's

By Eric Goldman

Heartbrand Beef, Inc. v. Lobel's of New York, LLC, 2009 WL 311087 (S.D.Tex. Feb. 5, 2009). The Justia page.

Heartbrand sells Akaushi beef, a special and very expensive Japanese variety of beef. Heartbrand brought an enforcement action against several defendants, including Yahoo for selling a retailer, Lobel's, the first ad position for the keyword "Akaushi." Lobel's sells very expensive beef but not Akaushi beef. Heartbrand alleged that Yahoo's display of the ad constituted Lanham Act false designation of origin and common law unfair competition. I suspect that other plaintiffs have alleged that the search engine makes a false designation of origin by presenting keyword ads, but I can't recall an actual ruling on this issue before.

From my perspective, the natural analytical approach would be to assume the advertiser makes the false designation of origin and then consider Yahoo's liability under some kind of "contributory" or "derivative" false designation claim (if such a thing exists). However, stated this way, the claim then should be preempted by 47 USC 230; other cases have concluded that 47 USC 230 preempts non-trademark portions of the Lanham Act. See, e.g., Kruska v. Perverted Justice Foundation Inc. But see Doe v. Friendfinder.

The court sidesteps this direct-v.-contributory issue entirely, even though it acknowledges that Heartbrand's claim doesn't make sense because "Yahoo! obviously does not fit into these classic models [of false designation of origin] because Yahoo! is not in the business of selling beef." Instead, the court rejects the false designation claim because (1) Yahoo doesn't make any "statement" (the advertiser does), and (2) even if Yahoo does make a statement, it's not designating the origin of Yahoo's offerings.

This case reminded me of the Overstock v. SmartBargains opinion from last August, where the Utah Supreme Court said that trademark-triggered competitive pop-up ads do not constitute common law unfair competition or tortious interference. (Note that in that case, the defendant was the ad buyer, not the ad seller, so there is a significant factual difference). In both the Overstock case and this one, the courts rejected plaintiffs' efforts to fit their claims in doctrines that are ancillary to the more traditional trademark infringement claim. In that respect, this case helps channel the lawsuits back to trademark infringement and might help curb claim sprawl.

Ryan Gile has also blogged on the case.

UPDATE: Rebecca weighs in.

Posted by Eric at 12:02 PM | Derivative Liability , E-Commerce , Marketing , Search Engines , Trademark | TrackBack

February 06, 2009

2008 Cyberlaw Year-in-Review

By Eric Goldman

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

Broad Themes

A few broad themes emerged last year:

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

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

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

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

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

Top 11 Cyberlaw Developments of 2008

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

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

#8: AV v. iParadigms. This case was a terrific win for online fair use enthusiasts because the for-profit commercialization of a database of third party copyrighted works was still d