Technology & Marketing Law Blog

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 deemed fair use. The upholding of the contract against the minors forced to enter into it was also significant. Before this ruling, my assumption is that any plaintiff trying to form a class action lawsuit in the face of an adverse user agreement could always form the class on behalf of any minors who had the right to void the contract. This case seems to shut down that loophole in user agreement protection.

#7: Io v. Veoh. The 17 USC 512(c) safe harbor has been law for over a decade and has produced a couple dozen rulings, but few are cleaner and more decisive for the defense than this one. It was a textbook example of a court rejecting the many different arguments plaintiffs make to kick a defendant out of the safe harbor, and as mentioned before, it was a great validation for Veoh's decision to do more than 512 required.

#6: Jacobsen v. Katzer. From a doctrinal standpoint, this case raises really difficult questions about how a copyright consumer can be bound to terms that he/she never "assented" to. Even so, this case had huge implications because it effectively validated that open source licenses can be binding on licensees, giving much more legal credibility to the entire multi-billion open source software industry. However, an odd footnote: on remand, the district court denied an injunction for the plaintiff, raising more issues about what exactly the plaintiff won at the Federal Circuit.

#5: Tiffany v. eBay. A fantastic validation of eBay's practices against a very serious and sympathetic challenger who had plenty of evidence that counterfeit goods were being sold on eBay's site. The case also shows that courts can grow tired of IP owners simply making up their own rules about how online sites should protect them and then suing the sites for breaching these artificial rules.

#4: Mazur v. eBay. A more scary case to 47 USC 230 defense enthusiasts than the Roommates.com opinion. The court says that eBay isn't protected by 230 for some of the marketing representations it makes, even if those representations are rendered untrue by third parties. While this makes a lot of doctrinal sense, it is also a green light for plaintiffs to mine a website's marketing representations as a way to bypass the otherwise-fatal consequences of 230 on a lawsuit triggered by user behavior or content.

#3: Google Book Search settlement. This makes the list for two independent reasons. First, many folks were hoping the case would establish solid precedent on online fair use, and the settlement ended that hope. Second, the proposed Book Rights Registry has the potential to reshape a number of major industries, including the book publishing business, the book retailing industry and the library industry.

#2: the Lori Drew prosecution. I think this may have been the most polarizing Cyberlaw development of 2008, exposing deep divides in people's appetite for punishing bad conduct online. It's hard to assess the overall implications of her conviction because no one rallied to praise Lori Drew's choices, and her case is still a ways from a final legal outcome. However, the possible implications of the case were so complex that it took a special three part series for me to explore its nuances (1, 2, 3).

#1: Cartoon Network v. CSC (the "Cablevision" case). Boy, the more I think about this case, the more important it becomes. The case upends our assumption that if we see it online, it's fixed, creating a new class of unfixed electronic works. Also, the court treats the users, not the service, as making the requisite copies, which reinforces the possibility that online providers can be just "dumb technology providers" for copyright law purposes and reinvigorates the possible defense that a service provider's copying is just done as a proxy for its users. However, the Supreme Court's ambiguous response to the cert petition--not yes, not no, but a request to the Solicitor General for comments--leaves this decision in a precarious position.

Other Developments of Special Note

47 USC 230

* Doe v. MySpace. The Fifth Circuit soundly rejects the argument that MySpace had an obligation to police its “premises.”

* Craigslist. Judge Easterbrook's language in Doe v. GTE had given plaintiffs some hope that the Seventh Circuit would provide a friendly venue to plaintiffs trying to overcome 47 USC 230. Judge Easterbrook may still love his language (which he quoted extensively in the Craigslist ruling), but his practical and no-nonsense ruling for the defense squelches the hope that the Seventh Circuit will become a plaintiff's haven.

* New Jersey's enforcement action against JuicyCampus. State AG offices HATE 47 USC 230.

Affiliate Liability

* Impulse Media. A jury thumped the FTC's overly expansive views of affiliate liability for spam.

* NY v. Direct Revenue. A state judge emphatically rejected the NY AG's office's expansive views of affiliate liability for adware.

Trademarks/Domain Names

* American Airlines' lawsuits against Google and Yahoo. No one I know fully understands why American Airlines sued Google for selling its trademarks for keyword ads. No one I know understands what concessions Google gave to American Airlines to settle the case. And no one I know understands why American Airlines decided to sue Yahoo after procuring the Google settlement. It's all a big mystery.

* NSI's grabbing of domain names in response to WHOIS queries. Is there any better example of ICANN's failings to police domain name retailers than to have one retailer selling a scarce good grabbing the good exclusively (blocking attempted sales by all other retailers) when a customer merely inquires about it?

* Kentucky's attempted seizure of 141 gambling-related domain names. As I wrote before, "Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name."

* Eric Menhart, a lawyer who claims to practice Cyberlaw, doesn't know that Cyberlaw is a generic term.

* New gTLDs. Maybe I should reserve this development for 2009...if it happens.

Others

* McCain complains about 512(c)(3) notices taking down his YouTube videos. Surprise! 512(c)(3) notices are unforgiving. Sen. McCain, now that you've had a first-hand taste of their power, maybe you'd like to revisit the statute to see if it's producing the right incentives?

* FCC's bust of Comcast. The pro-regulatory forces were queued up to pounce on any examples where an IAP violated Net Neutrality principles, and Comcast's chicanery in forging reset packets was impossible for anyone to defend.

* NebuAd's flameout. Behavioral ad targeting is in our future unless regulators stop it. NebuAd won't be the winning provider of targeting services, but legislators will keep trying to regulate it further out of existence nonetheless.

Posted by Eric at 05:50 PM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack

January 22, 2009

Brand Spillovers Article Now Available

By Eric Goldman

I have finally posted my article, Brand Spillovers, to SSRN. It will be published in the Harvard Journal of Law & Technology later this year. I have blogged about this project several times over the past 4 years, but for most of you, this is your first public opportunity to read the article in full. Please take a look!

This article has been in the works nearly 5 years, so a few words about this project. It started with my Deregulating Relevancy article. While writing that in 2004, I had a few paragraphs regarding the analogies between retailer shelf adjacency and keyword triggering--a popular meme then, and one that still gets used a lot. I ultimately removed most of that discussion from the draft and set it aside to explore in a separate paper. I initially conceptualized the paper about the role of physical and temporal adjacencies in trademark law, and I presented on that topic at Law & Society Association in May 2005. (See my slides from 2005).

After several drafts, many presentations and lots of very helpful comments, the paper has evolved substantially. The paper now explores the analogy between shelf adjacencies and keyword triggering in careful detail, explaining why the analogy is legally and factually complicated but also useful. My hope is that the paper will become the key reference any time anyone in the future wants to make that analogy.

Also, the paper is one of the few articles that analyzes the unique role of retailers in trademark infringement lawsuits. My research suggests that retailers are universally ignored by trademark lawyers, judges and regulators, even though retailers do a lot of things with third party trademarks that look actionable. I've thought a lot about this over the past 5 years, and I keep coming back to the unavoidable conclusion that trademark plaintiffs seem to be erring by not suing more retailers even in manufacturer-vs-manufacturer lawsuits. The paper tries to explain why retailers get a free pass nonetheless, but if you have alternative explanations after reading my attempts, I would be extremely grateful.

Finally, this paper is noteworthy because it is the last stop in a multi-year project on how trademark law can damage the Internet. Other papers in the series include Deregulating Relevancy, Online Word of Mouth (which also was a branch-off of the Deregulating Relevancy article) and, to a lesser extent, a Coasean Analysis of Marketing. I'm still interested in Internet trademark law, but next few projects are going to focus on other topics. The next article in queue is a short essay detailing why Wikipedia will fail. After that, I will be focusing on my Economics of Reputational Information project, which I expect to be working on over the next couple of years, and a big stealth project.

In any case, the Brand Spillovers paper remains a draft, and I have limited opportunities to make changes. Accordingly, I gratefully welcome any comments you have.

The abstract:

This Article considers the spillover effects of trademarks—in particular, “brand spillovers,” which occur when consumer interest in a trademark increases the profits of third parties who do not own the trademark. Using techniques such as loss leaders and shelf space adjacency, retailers routinely create brand spillovers for their profit, and trademark law generally has not restricted these activities. Online intermediaries, such as search engines, also create and profit from brand spillovers by selling manufacturers’ trademarks for advertising purposes (“keyword triggering”). However, in contrast to retailer practices, keyword triggering has sparked a heated and irresolute battle over its legitimacy under trademark law. By drawing lessons from retailers’ experiences with brand spillovers and through an analysis of the ways intermediaries can add value to consumers, this Article offers a new way to resolve the keyword triggering debate. The Article proposes that all intermediaries—including both retailers and online intermediaries—should be permitted to use brand spillovers as part of their effort to reduce consumer search costs, even if the intermediaries profit from the brand spillovers along the way.

Posted by Eric at 09:57 AM | Derivative Liability , E-Commerce , Marketing , Search Engines , Trademark | TrackBack

January 21, 2009

American Airlines v. Yahoo Venue Transfer Denied

By Eric Goldman

American Airlines, Inc. v. Yahoo!, Inc., 4:08-CV-626-A (N.D. Tex. Jan. 16, 2009)

The procedural battles over American Airlines' lawsuit against Yahoo for selling trademarked keywords continue. You may recall that American Airlines sued Yahoo in its home court in Fort Worth, Texas. This venue has several advantages, including a hometown judge, higher costs for Yahoo to litigate 1500 miles from its HQ, and a location in the Fifth Circuit, which doesn't have much jurisprudence on keyword advertising cases but is unlikely to adopt the current defense-favorable approaches of the Second Circuit.

In response, Yahoo initiated a declaratory judgment against American Airlines in its home court of Northern District of California. [note: Yahoo is based in the Silicon Valley but the former Overture operations are principally in Los Angeles, so Yahoo appears to consider both NDCal and CDCal as acceptable.] I was pretty surprised by this venue choice, largely because the Ninth Circuit has the adverse Playboy v. Netscape keyword advertising precedent and the Second Circuit seemed so much more defense-favorable. However, my suspicion is that Yahoo hopes to take advantage of the Ninth Circuit's favorable nominative use defense.

In its DJ complaint, Yahoo also intimated that American Airlines had contractually agreed to the NDCal venue in AA"s advertising contract with Yahoo. This is an interesting argument because a contractual venue stipulation would almost assuredly trump all other venue considerations, but American Airlines' beefs with Yahoo relate to AA's advertising via the Yahoo network only tangentially at best.

Yahoo floated this contract-based venue argument in front of the Fort Worth judge, and that didn't go so well. In a short but pointed ruling, the judge dismisses the argument emphatically, calling it "completely nonsensical." OUCH. Oddly, the judge declined to explain his reasoning, but the limited explanation he offers makes me wonder if he misread the actual contract language. (Compare the quoted language with the footnote language--both have the word "exclusive" in them).

In any case, the Fort Worth judge has thrown down the gauntlet to the NDCal judge, saying, in effect, "this case isn't leaving my courtroom." This sets up a showdown with the NDCal judge, who will either dismiss the DJ action or pick up the gauntlet and keep the case. What happens at that point is unclear to me; maybe a civil proceduralist can help me understand what happens if neither judge backs down.

Posted by Eric at 09:14 AM | Search Engines , Trademark | TrackBack

January 08, 2009

December 2008 Quick Links, Part 2

By Eric Goldman

Social Networking Sites/Cyber-Bullying/Sexual Predation

* More on the Lori Drew conviction:
- Wired has a tough behind-the-scenes look at the Lori Drew jury deliberations.
- The jury instructions
- In case you missed it, my special three part series on implications of the Lori Drew conviction: Part 1, Part 2, and Part 3.

* Yet more fallout from the Lori Drew prosecution and conviction. Wired has a story on the cyberbullying litigation frenzy. The Washington Post has a recap on the proliferation of state anti-cyberbullying laws.

* U.S. v. Morris, 2008 WL 5101636 (7th Cir Dec. 5, 2008). Judge Posner talks about the difference between entrapment (not OK) and vigilantism (OK) in the context of a mom who created a fake MySpace persona to chat with an alleged sexual predator who had contacted her underage daughter.

* Facebook's policy on breast-feeding photos has sparked protests both online and off (1, 2, 3). It reminds me a bit of one of my first challenges as Epinions' general counsel. (search for Epinions).

Google

* Barry Schwartz: is Google getting desperate for ad revenue?

* The Register: "Google this week admitted that its staff will pick and choose what appears in its search results." However, I don't think the article supports this aggressive statement. Instead, it appears the article is getting excited about the fact that Google manually tweaks the algorithms when they produce goofy results--something we've known for years.

* Updates on Axact v. Student Network Resources, the case involving alleged copyright infringement of term papers. Axact allegedly has been trying to get its domain name registrars to release its domain names for transfer, and SNR is trying to cut them off. Apparently Google also balked at the instructions to kick the subject domain names out of its index, but SNR and Google resolved their differences enough to reach a stipulation. Finally, I've received numerous threats and requests from Axact to modify my original post, which has prompted me to make some minor changes.

Marketing

* IMS Health v. Ayotte. New Hampshire passed a law restricting the use of a doctor's past prescribing practices (i.e., behavioral information) for personalized/targeted sales calls. This opinion upholds the NH law against a First Amendment and dormant Commerce Clause challenge.

* Australian advertisers are cookie-ing users at high CPM sites so that they can show the users targeted ads when those users appear at lower CPM sites.

* Sony busted for COPPA violations.

* New advertising medium: school exams.

Miscellaneous

* Good article on the Sprint v. Cogent peering fight.

* And a good article showing limits to the Long Tail theory.

* U.S. v. Grober, 2008 WL 5395768 (D. N.J. Dec. 22, 2008). Grober pleaded guilty to uploading and downloading child porn over the Internet. The judge rejects the 19 1/2 year minimum sentence specified by the Sentencing Guidelines and instead sentences Grober to the 5 year statutory minimum. This opinion poignantly explains why this judge, like several others, rejects the Sentencing Guidelines in Internet child porn cases because the dictated sentences are too severe.

* BusinessWeek is still amazed that people actually--get this--provide their time and efforts over the Internet without getting paid!

* Lior Strahilevitz, Reputation Nation: Law in an Era of Ubiquitous Personal Information, 102 Nw. U. L. Rev. 1667 (2008). Lior explores the cross-elasticities of demand for types of reputational information and shows that if some information isn't available (due to, say, privacy laws), decision-makers will consult less credible or pernicious sources. For example, if a landlord can't get good credit information about a prospective tenant, the landlord may resort to discriminatory considerations (like race) to decide whether or not to rent to the tenant. Good article.

* I have previously written about New York v. Synergy6, Inc., 404027/03 (N.Y. Sup. Ct. Jan. 6, 2006), where the court soundly rejected the New York Attorney General's office regarding a marketer's liability for allegedly illegal emails sent by downstream affiilates (i.e., not in direct privity). I have not been able to find a copy of the opinion electronically, but over the holidays I found my hard copy and scanned it to a PDF. Check it out, especially in combination with the 2008 New York v. DirectRevenue opinion, which soundly rejected the NYAG's affiliate liability arguments in the adware context.

Posted by Eric at 07:44 AM | Content Regulation , Copyright , Domain Names , Marketing , Privacy/Security , Search Engines | TrackBack

January 07, 2009

December 2008 Quick Links, Part 1

By Eric Goldman

Copyright

* Stockwire Research Group, Inc. v. Lebed, 577 F .Supp. 2d 1262 (S.D. Fla. Sept. 18, 2008). $2.5M default judgment for violation of anti-circumvention provisions.

* The RIAA announced that it is shifting away from suing its customers to putting more pressure on Internet access providers to do their dirty work. Fred at EFF and Mike Masnick weigh in. But Mike wonders if the RIAA is really changing its practices?

* Capitol Records v. Thomas, No. 06-1497 (MJD/RLE) (D. Minn. Dec. 23, 2008). In the Jammie Thomas case, the judge refused to certify the "making available" theory for an interlocutory appeal.

Trademarks/Domain Names

* Nerds on Call (Indiana) v. Nerds on Call (California), 1:07-cv-00535-DFH-TAB (S.D. Ind. Dec. 22, 2008):

The court realizes that a simple internet search for "nerds on call" could return the Nerds/California site. If a person has lived in Indiana and used Nerds/Indiana's services before, the person might be confused momentarily. Given trademark law's explicit approval of concurrent uses of marks in different geographic areas or product markets, see 15 U.S.C.A. §1052(d), this momentary confusion on the internet is not a sign of intentional targeting. The internet is available worldwide. Use of a locally established trademark on a website may cause momentary confusion among consumers. The solution to that problem is not to require that all trademarks be given worldwide effect even if their non-web use is limited to a narrow geographic area. Instead, users of the web simply need to understand that a worldwide web search may turn up results from distant businesses.

* Saint Louis University v. Meyer, 2008 WL 5412263 (E.D. Mo. Dec. 24, 2008). SLU allegedly threatened to close the student newspaper, so the paper's faculty advisor registered a new non-profit organization with the secretary of state under the name "The University News, a Student Voice Serving Saint Louis University Since 1921" in case the students wanted to go independent. The university and the students worked out a deal, and the faculty advisor promptly dissolved the organization without ever having done anything with it. Still, the university sued the advisor for trademark infringement, dilution and other claims. In this ruling, the court rejects most of the claims because the advisor never made a "trademark use in commerce." Why was the university suing its own tenured faculty member for forming and then promptly dissolving a non-profit organization without ever using it? Makes no sense to me.

* 1-800 Contracts, Inc. v. Lens.com, Inc., 2008 WL 5191705 (D. Utah Dec. 10, 2008). In a trademark lawsuit over keyword purchases, Lens.com is hit with sanctions for discovery abuses.

* The EFF has collected amicus briefs in the Tiffany v. eBay appeal to the Second Circuit.

* WSJ on the growth in numerical SLDs.

* Paul Levy shines the spotlight on yet more questionable marketing practices by Lifestyle Lift.

Linking

* GateHouse v. New York Time. The CMLP page. Another silly anti-deep linking and headlines-as-copyright infringement lawsuit, this time between two media companies. Some of the claims are clearly off-base, like the trademark claims. Note to dilution plaintiffs: it is almost impossible by definition to be both a hyper-local business and a famous trademark. Also oxymoronic is the allegation that the sites are competitors when a competitor is prominently promoting the website and apparently passing PageRank. If you are my competitor and would like to pass me some PageRank, I would be happy to chat. The most novel part is the plaintiff's attempt to use the Creative Commons license as an affirmative contract to claim breach of contract. I can't recall a similar allegation in the past where the Creative Commons license was used as a sword instead of a shield. Finally, the complaint doesn't mention anywhere that the plaintiff's website apparently offers RSS feeds, which raises a bunch of problems for its arguments.

* McVey v. Day, 2008 WL 5395214 (Cal. App. Ct. Dec. 23, 2008). This is a dispute between rival members of the teacher's union. Among other activities, the defendant sent an email linking to a website that had allegedly defamatory statements about the plaintiff, but the website's statements were authored by third parties. In this ruling, the court grants the defendant's anti-SLAPP motion, saying that the defendant wasn't liable for the emailed links per 47 USC 230. This is another nice anti-SLAPP win for Internet content, following on December's Higher Balance case.

Some Personal Notes

* I'll be at AALS and plan to attend the blogger's get-together Thursday night. If you're going to be around, hope to see you there!

* If you're in the Sacramento area on January 13, come to this free event!

* Most of you know that I maintain my personal blog for posts that don’t really belong on this blog. But you may not know that I’ve also been Twittering with some regularity. Check it out!

* Good news: this blog is a finalist for Best Law Blog from Weblog Awards.

Posted by Eric at 09:48 AM | Copyright , Derivative Liability , Domain Names , Marketing , Search Engines , Trademark | TrackBack

January 02, 2009

OnlineNIC Loses One Lawsuit and Gets Sued in Another

By Eric Goldman

Two anti-domainer developments involving OnlineNIC occurred over the holidays.

Yahoo! Inc. v. OnlineNIC, Inc., 5:08-cv-05698-PVT (N.D. Cal. complaint filed Dec. 19, 2008)

Yahoo has sued domain name registrar OnlineNIC and some Does for cybersquatting, trademark infringement, trademark dilution and related causes of action. This lawsuit caught my eye because OnlineNIC is a registrar, and normally lawsuits against registrars are barred by 15 USC 1114(2)(d)(iii). However, that immunization does not apply if the registrar has a "bad faith intent to profit from such registration or maintenance of the domain name." Here, Yahoo alleges that OnlineNIC registered the domain names for itself (i.e., it was both the registrar and the registrant--see Para. 47) and used a variety of covers and fronts to mask that it was the true registrant. I also think many of Yahoo's allegations of "abusive" domain name tasting and domain name kiting support a bad faith argument if Yahoo chooses to go that route.

Verizon California, Inc. v. OnlineNIC Inc., 5:08-cv-02832-JF (N.D. Cal. Dec. 19, 2008)

The same day Yahoo sued OnlineNIC, Verizon won a "record" $33+M default judgment against OnlineNIC. The Verizon press release. It was a slow news week before Christmas, so Verizon got a lot of press coverage (see, e.g., WSJ, NYT, News.com) for its victory.

Although it's hard to divine much insight into future jurisprudential developments from a default judgment order, Judge Fogel's brief opinion does conclude that OnlineNIC violated the Anti-Cybersquatting Consumer Protection Act:

Defendant’s actions with respect to Verizon’s trademarks undoubtedly violated the ACPA. Defendant has registered hundreds of domain names that are designed to attract web users seeking to access Verizon’s legitimate websites. Moreover, Defendant has refused to alter its behavior, and its bad faith is further evidenced by its machinations to avoid detection through the use of fictitious business entities, shell corporations, and kiting of its domain names.

This builds on Verizon's early win against Navigation Catalyst that certain domaining practices can constitute impermissible cybersquatting.

Three Brief Observations

FIrst, Verizon's sizable award against OnlineNIC is a pretty empty public gesture. Good luck collecting that, Verizon. (InternetNews has more on the likelihood of collection). It's a little like Facebook's recent $873M default judgment against spammers using its private messaging system. As we used to say in the old days, these multi-million judgments plus a nickel will buy you a cup of coffee. (I recognize Starbucks is more like $5/cup, but you get the point). Yahoo shouldn't bank on any big paydays either, even if it wins.

Second, earlier this year, I suggested the Verizon v. Navigation Catalyst case could be a turning point in the legal battles over domaining, and the latest ruling might reinforce that. Even though Verizon's latest win has no real financial implication, it does help accrete the anti-domaining legal precedent. I expect to see nothing but bad legal news for abusive domaining in 2009.

Third, I can't avoid observing how interesting it is to see Yahoo and Verizon bringing plaintiff-side lawsuits over domaining. After all, Verizon sells ads on mis-typed domain names when its consumers use its browser (i.e., on its mobile devices), and Yahoo is still fighting a lawsuit over having placed ads on domaining sites.

Posted by Eric at 12:02 PM | Domain Names , Marketing , Search Engines | TrackBack

December 29, 2008

MySpace Defeats Sherman Antitrust Claim for Blocking Links to Competitor--LiveUniverse v. MySpace

By Eric Goldman

LiveUniverse, Inc. v. MySpace, Inc., 2008 WL 5341843 (9th Cir. Dec. 22, 2008). The June 2007 district court ruling in MySpace's favor. LiveUniverse's Nov. 2006 press release upon filing the lawsuit.

LiveUniverse runs VidiLife.com, which it characterizes as a social networking site that competes with MySpace. There is also some personal drama here: LiveUniverse's CEO is Brad Greenspan, the former CEO of eUniverse/Intermix--the company that sold MySpace to News Corp in 2005 for a half-billion dollars, although Greenspan opposed the deal at the time and remains disgruntled to this day.

In October 2006, MySpace allegedly redesigned its site to block VidiLife.com, including allegedly preventing MySpace users from embedding LiveUniverse-hosted videos into their MySpace pages or even mentioning VidiLife on MySpace. LiveUniverse sued MySpace for a Sherman antitrust violation and 17200 unfair competition.

In an opinion unfortunately designed as non-precedential, the Ninth Circuit dismissed the Sherman Act and 17200 claims, saying that MySpace could break links to competitive sites if it wanted and that such behavior did not constitute an actionable "refusal to deal." While the opinion itself is brief and unremarkable, the implications of this ruling are potentially significant:

First, I see this case as an interesting and useful counterpart to the KinderStart v. Google case (and, to a lesser extent, the Person v. Google and Langdon v. Google lawsuits). In KinderStart, the court said that Google wasn't liable for its editorial decisions about indexing and ranking third party sites, including sites that compete with Google. This case extends those principles to kibosh a possible Sherman Act "refusal to deal" bypass to the KinderStart ruling.

Second, I remain intrigued that my limited review of materials never revealed a good explanation for exactly what changes MySpace made in October 2006 and why it did so. Perhaps the explanation is somewhere, but it certainly wasn't front and center. Could MySpace be systematically interfering with user outlinks not for putatively legitimate reasons (such as to reduce the risks of drive-by downloads or the in-line linking of unwanted porn) but instead for questionable motivations, such as reducing its users' awareness of competitors or a personal vendetta against a former CEO? Greenspan's initial press release indicated that in 2005 and 2006 MySpace also tried to block outlinks to similarly competitive YouTube and Revver before MySpace users revolted against those blocks. I'm glad the marketplace mechanisms worked there, but I'd still like to know more about MySpace's practices and motivations. Public scrutiny and monitoring can be a reasonably good substitute for legally compelled disclosures, but I wonder if MySpace's choices are getting enough attention. I can't vouch for its authenticity, but I thought this was a fascinating and disturbing chart. Not that I was in the target audience anyway, but if this chart is anywhere close to correct, MySpace sure doesn't look like the right community for me.

Third, the case didn't discuss 47 USC 230(c)(2), the statutory immunization for filtering decisions. It seems fairly obvious to me that the statute should protect MySpace's filtering choices--even from an antitrust challenge so long as the challenge is civil, not criminal. We should learn a lot more about 230(c)(2) from the Ninth Circuit's ruling in the Zango v. Kaspersky case, which is still pending on appeal.

Fourth, I try to stay away from net neutrality topics, but this case may have some implications for that debate. My understanding is that some anti-net neutrality advocates argue that antitrust law, including the Sherman Act, will regulate discriminatory decisions made by the carriers sufficient to deter bad practices. That may be true, but here the court rejects a refusal-to-deal challenge when one online competitor freezes out another online competitor. This might portend poorly for a refusal-to-deal challenge to non-neutral practices by carriers, which in turn might eliminate a safety valve that the anti-net neutrality folks have pointed to as an alternative to regulation. Don't get me wrong, I'm very suspicious of net neutrality regulation, but this case might indicate that existing regulations won't prohibit discriminatory carrier practices as well as some people hope.

Posted by Eric at 11:59 AM | Content Regulation , Derivative Liability , Search Engines | TrackBack

December 22, 2008

Lawsuit Over Google Ads for Mobile Services Dismissed Per 230--Goddard v. Google

By Eric Goldman

Goddard v. Google, Inc., 2008 WL 5245490 (N.D. Cal. Dec. 17, 2008). My initial post when the complaint was filed. The Justia page.

Goddard sued Google because Google displayed third party AdWords ads for allegedly fraudulent mobile subscription services. On its face, this lawsuit appeared preempted by 47 USC 230 (consistent with other opinions granting 230 for third party ads, such as the recent Cisneros case), although the plaintiff included some allegations to try to get around 230. No such luck for them. This ruling kicks the lawsuit out on 230(c)(1) grounds with leave to amend (more on that in a moment).

I'm a big fan of Judge Fogel's opinions. He's a meticulous and thoughtful judge, and his opinions are always carefully constructed. In particular, this opinion is a terrific read for anyone who would like to see a cutting-edge 230 opinion. It discusses many of the major recent 230 cases (Roommates.com, Mazur, Doe v. MySpace, Craigslist, National Numismatic) and contextualizes them nicely. It's like a 230 year-in-review opinion. If you want a one-stop resource to see what's happened in 47 USC 230 jurisprudence in 2008, read this opinion.

Among other interesting aspects, this is the first opinion by a Ninth Circuit-bound district court judge that has a robust analysis of how Roommates.com applies to the case. (Roommates.com has been cited in a few other opinions, but usually in a very cursory fashion). Judge Fogel deftly wrestles with the multiple contradictory provisions of Roommates.com, noting that it is principally is a defendant-favorable ruling with only a thin layer of plaintiff-side opportunity. For example, Fogel reads the Roommates.com opinion very narrowly when he says "The [Roommates.com] court emphasized repeatedly that the website lost immunity only by forcing its users to provide the allegedly discriminatory information as a condition of access." The opinion did say that, but I'm not sure about the "only," and it said lots of other contradictory things as well.

The Unfair Competition Claim

The plaintiff argued that Google engaged in 17200 unfair competition by receiving funds from fraudulent ads. Though this may be a novel way of framing Google's involvement, it doesn't adequately mask the underlying argument that the defendant should lose 230 coverage because it received an economic benefit from third party tortious conduct--an argument that has been rejected many, many times before and doesn't fare any better here. The court reframes the argument as a premises liability argument and rejects it per Gentry and Doe v. MySpace.

Along the way, the court addresses the plaintiff's allegation in the complaint that Google helped draft the impermissible ad copy. The plaintiff didn't press this point after the complaint, and the court says (referencing its reading of Roommates.com) that "there is no suggestion in the current record that Google “encouraged” the [advertisers] to create the allegedly fraudulent content, or that the creation of such content was anything less than voluntary."

The court also addressed the plaintiff's argument that the claim was anchored in the federal anti-money laundering criminal statute and therefore should drop out of 230 per the exclusion for federal criminal law (230(e)(1)). The court correctly rejects this but doesn't cite precedent on this point, missing Doe v. Bates.

Breach of Contract/Negligence

The plaintiff's other main attack vector is that Google should be liable because it failed to enforce a provision in Google's AdWords contract with advertisers restricting fraudulent conduct. I've complained repeatedly about arguments trying to treat a vendor's contractual negative behavioral restriction as an affirmative representation by the vendor that such behavior won't occur on the website (my latest rant on this point). Fortunately, Judge Fogel has little difficulty rejecting this argument, correctly pointing to the Green v. AOL precedent involving the distribution of third party viruses in an AOL chatroom (the Noah v. AOL precedent would have been an appropriate additional citation).

To try to get around this, the plaintiff cites to the Mazur case, which said that eBay can be liable for its affirmative marketing representations even if they are rendered untrue by third party conduct. I've repeatedly expressed my concern that the Mazur case is a more scary ruling to defendants than Roommates.com, but this opinion slightly calms my fears. Judge Fogel correctly notes that Google never made affirmative marketing representations on this point and the negative behavioral restrictions in the AdWords contract weren't an affirmative marketing representation.

Google also argued that this line of claims are barred by 230(c)(2), the immunization for filtering decisions. Citing to National Numismatic v. eBay, Judge Fogel rejects the argument based on the statutory list of immunized harmful content, saying "the relevant portions of Google's Content Policy require that [advertisers] provide pricing and cancellation information regarding their services. These requirements relate to business norms of fair play and transparency and are beyond the scope of § 230(c)(2)." I'm not sure the 230(c)(2) argument was Google's strongest, but I would have loved to see Judge Fogel unpack this discussion and the implicit assumptions a little more.

Aiding and Abetting

Finally, the court rejects the attempted 230 pleadaround that Google aided and abetted the advertisers, saying "there are no allegations here that Google “developed” the offending ads in any respect." (Cite to Roommates.com).

Leave to Amend

Given that this case was filed after the Roommates.com en banc opinion, and therefore the plaintiff had the chance to structure the complaint based on a reading of the latest Ninth Circuit standard, it would have made sense to dismiss this complaint without leave to amend. Instead, Judge Fogel gives the plaintiff another chance and articulates his reading of allegations that should survive 230 preemption:

there may be instances in which an internet content provider will be considered “ ‘responsible’ at least ‘in part’ for [posted third-party content] because every [posting] is a collaborative effort” between the internet provider and the third-party content provider. Fair Housing Council, 521 F.3d at 1167. If Plaintiff could establish Google's involvement in “creating or developing” the AdWords, either “in whole or in part,” she might avoid the statutory immunity created by § 230. In light of that possibility, Plaintiff will be given an opportunity to amend her complaint in order to allege such involvement.

Reading between the lines, 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. The judge even says as much in a footnote to this quote, saying "at present it appears unlikely that Plaintiff can" make the requisite allegations. Nonetheless, I'd be shocked if the plaintiff didn't refile. If they do, I hope Judge Fogel vigilantly polices the boundaries of Rule 11 for any allegations the plaintiffs make but can't back up--just like he did in the KinderStart v. Google case.

A Final Point

By my count, this is the third post-Roommates.com case where Roommates.com has been cited in favor of the defendant in kicking the case out of court. (The other two are Best Western v. Furber and GW Equity). In contrast, I am not aware of any case yet citing Roommates.com in favor of a plaintiff. It's obviously early, but at this point the limited evidence suggests that Roommates.com was not a watershed change to 230 jurisprudence. On that basis, Roommates.com may not be as bad a substantive ruling as we had initially feared.

Posted by Eric at 07:48 AM | Derivative Liability , Marketing , Search Engines | TrackBack

December 19, 2008

Vulcan Golf v. Google Class Certification Denied

By Eric Goldman

Vulcan Golf, LLC v. Google Inc., 1:07-cv-03371 (N.D. Ill. Dec. 18, 2008). Previous blog posts: initial complaint filed, ruling on motion to dismiss

This is a complex lawsuit by trademark owners attacking domaining and the role of the Google AdSense for Domains program in funding domaining activity. When I first blogged on the case in 2007, I wrote:

the lawsuit could effectively fall apart if the judge rejects formation of a class. Trademark class action lawsuits are rare for good reason-- trademark owners must establish the validity of their marks, the famousness of their marks (for dilution) and the similarity between their marks and the defendants' usage. These are all intensely fact-specific questions; none of which seem susceptible to class adjudication

Yesterday, the court ruled on class certification, and perhaps not surprisingly, the court denied certification--giving Google and the other defendants an early Christmas gift. Happy holidays! This ruling doesn't completely squelch the lawsuit, but without class certification, the case becomes a whole lot less interesting to the plaintiff's lawyers. For that reason, it also wouldn't surprise me to see them appeal the class certification denial.

The ACPA and Trademark Infringement Claims

The court rejects class certification for the trademark infringement and Anti-Cybersquatting Consumer Protection Act claims because the individual questions of fact predominate over the common questions of law.

The court blanches at the thought of trying to determine the owners of the applicable trademarks. The plaintiffs said that TESS could answer any ownership questions, but the court rightly realizes that TESS is not a definitive and comprehensive source of trademark ownership information. As a result, the court says "Even if the court has to conduct hearings regarding ownership on even a tiny fraction of the potentially millions of registered and unregistered marks or personal names of the putative class members, such an undertaking would render proceeding as a class unmanageable."

The court also rejects the verifiability of trademark "distinctiveness." The plaintiffs argued that a trademark registration could suffice as evidence of distinctiveness, but the court rightly points out that registration only provides rebuttable evidence of distinctiveness. The court also points to problems with unregistered trademarks and personal name marks. The court thus concludes "were the class to be certified, the court would be required to engage in thousands (or more) of individual inquiries as to whether a class members’ mark is distinctive," which would be a "staggering" undertaking with respect to the unregistered and personal name marks.

The court also assesses the prospects for adjudicating various affirmative defenses, such as abandonment or fair use. The court says "the affirmative defenses related to the putative class members’ marks simply add another layer to an already fact-specific inquiry that the court must delve into with respect the putative class members’ marks or names."

The Unjust Enrichment Claim

The court bounces the unjust enrichment claim because unjust enrichment laws vary by state. The plaintiffs tried to say California law applies categorically due to Google's involvement, but the court correctly points out that there are plaintiffs and defendants who have nothing to do with California and therefore would not be appropriately governed by CA law. Once CA law is out of the picture, the court confronts the state-by-state variations in unjust enrichment law and concludes that those variations are enough to deny class certification.

Whether Class Action Relief is Superior to Other Methods

In addition to these legal problems, the court has some interesting discussion about the plaintiffs' desired remedy. The court expresses some frustration that the plaintiffs seem to vacillate between saying they want damages and saying they only want injunctive relief. If the plaintiffs only want injunctive relief, the court says that a class action lawsuit is inferior to the extrajudicial options to plaintiffs of pursuing a UDRP action and opting-out of Google's and the domainers' program (which the plaintiffs have already done to some degree). This is the first time I can recall a court favorably citing either the UDRP or a search engine trademark policy as a substitute for judicial action such that it curtails legal recourse. The court also notes the availability of direct non-consolidated actions against the defendants, including large statutory damages plus attorneys fees under ACPA, as another substitute for the class action.

Some Further Implications

First, this case reinforces the difficulty of establishing class action lawsuits to enforce trademark rights. They are possible, but so often the idiosyncrasies of each trademark preclude summary adjudication.

Second, this case might have some utility for the multitudinous other class action lawsuits against Google and the other search engines over their advertising practices, such as the CLRB Hanson case and the string of advertiser lawsuits against Google over AdSense placement on domainer sites. Although this ruling principally turns on the vagaries of trademark law and the other lawsuits typically involve contract interpretations, this court signaled some clear discomfort with class litigation where there are meaningful factual differences between the plaintiffs. To that extent, this case does not suggest favorable outcomes for class certification in those cases either.

Posted by Eric at 02:30 PM | Domain Names , Marketing , Search Engines , Trademark | TrackBack

December 17, 2008

Google's Latest Attempt to Kill the CLRB Hanson Lawsuit Fails

By Eric Goldman

CLRB Hanson Industries, LLC v. Google, Inc., NO. C 05-03649 JW (N.D. Cal. Dec. 16, 2008)

CLRB v. Google is the long-running lawsuit (3 1/2 years and counting) over Google's adherence to advertising limits that advertisers set in Google AdWords. I have blogged on the case several times, including:

* 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

Over the course of the litigation, the court has substantially narrowed the scope of claimants who have a potentially viable claim against Google to just three groups: advertisers of less than 1 month, advertisers who ended their campaign in a partial month, and advertisers who paused their campaign. Seemingly undaunted by the May 2008 ruling denying summary judgment to squash these three groups, Google again sought summary judgment on narrower grounds. Maybe Google thought it had a real chance of winning this second attempt at summary judgment, but it smelled a little "hail mary" to me. Thus, perhaps not surprisingly, Judge Ware rejected the motion and reiterated that summary judgment isn't appropriate (at one point saying, with a hint of frustration, "Defendant appears to be attempting to re-litigate an issue decided in the May 14 Order").

As a result, it appears that at least some aspects of the case appear destined for a trial--which, as far as I can recall, would be the first US trial on Google's AdWords practices. Fortunately for Google, the class is so limited that Google's damages exposure should not break the bank even if it loses badly at trial. Normally cases with light damages would settle, but 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.

Posted by Eric at 05:38 PM | Licensing/Contracts , Marketing , Search Engines | TrackBack

December 11, 2008

Patent Lawsuit Filed Over Google Reader--Priest v. Google

By Eric Goldman

Priest v. Google, 1:2008cv12056 (D. Mass. complaint filed Dec. 11, 2008). The Justia page.

I normally try to stay away from patent lawsuits, and frankly so many are filed against the major search engines that it would be impossible for me to keep up. However, I got such a good laugh out of this complaint that I had to share it with you.

The lawsuit alleges that Google, and in particular Google Reader, infringes two patents, #5,167,011 and #5,829,002. I have no opinion on the merits of the lawsuit. It appears that the lawsuit was filed pro se, and I can't remember the last time I saw a pro se patent lawsuit. Maybe that explains the strangeness of the complaint.

The complaint tells the story of how the plaintiffs approached Google in 2007 about the patents by emailing Google's bizdev email account. The complaint suggests that in March 2008, Google sent a nice "buzz off" email. The complaint then indicates that the plaintiffs were scared to engage Google in further discussions due to the 2007 SanDisk v. STMicroelectronics Federal Circuit ruling, which held that plaintiffs' stronger assertions of its patent rights might create the basis for Google to file a declaratory judgment--something the plaintiffs apparently really, really wanted to avoid. Therefore, the plaintiffs decided to let their complaint do the talking from there.

But now that the complaint has been filed in their home court and it will be difficult for Google to usurp jurisdiction, the plaintiffs want to keep talking with Google. So, in their complaint, they write (para. 15):

Further, as Priest & Morris, in good faith, only wish that the invention be used to its fullest potential, and have a strong wish that precious court and corporate resources be conserved, the plaintiffs prefer reaching this fair settlement through friendly appreciation and negotiation. In any event, we encourage defendant to not view this complaint as 'litigious behavior' and to view it in respective good faith and action.

I'm not exactly sure what planet these plaintiffs are from, but here on Earth, we tend to view the filing of a lawsuit as "litigious behavior." Further, given that the typical cost to defend a patent lawsuit is around $5M, it's a little hard to see how Google will interpret this lawsuit as a friendly gesture.

Posted by Eric at 02:45 PM | Patents , Search Engines | TrackBack

December 08, 2008

Keyword Ads and Other Marketing Supports Remote Jurisdiction--Market America v. Optihealth

By Eric Goldman

Market America v. Optihealth Products, Inc., 2008 WL 5069802 (M.D.N.C. Nov. 21, 2008)

This lawsuit involves the trademark "OPC-3." "OPC" is the generic term for "group of antioxidant bioflavonoids" that companies sell as dietary supplements. The plaintiff has obtained a trademark registration for "OPC-3." Numbers can become trademarks with enough marketing to educate consumers that they have secondary meaning, but I'm pretty suspicious of trademarks that consist of generic term + number. It's like "Bread 7" for bread.

The defendants sell OPCXtra, a competitive dietary supplement to OPC-3. The defendants deployed some aggressive marketing approaches (which reminded me of the Nowcom case), including registering the domain name opc3.com, purchasing keyword ads that apparently included opc3 and other plaintiff trademarks as keyword triggers, and including OPC-3 in the metatags (as usual, the court was imprecise about which type of metatag, but I infer it was a keyword metatag). In response, the plaintiff sued for trademark infringement, cybersquatting and other claims.

In this ruling, the court held that the NY-based defendant was subject to jurisdiction in the plaintiff's home court of North Carolina. That ruling, on its own, isn't all that interesting. The court found jurisdiction using the standard "minimum contacts" test, but even if it hadn't, trademark infringement lawsuits support jurisdiction based on the "Effects tests" and this circumstance (with its aggressive marketing) seems particularly well-suited to do so. Unfortunately, the court plotzed in excitement because the case involved the Internet and the analytical rigor suffered accordingly, but it got to the logical result.

More interesting is that to attack jurisdiction, the defendants argued that their metatags didn't constitute a trademark use in commerce. This is an odd attack on jurisdiction, though it would have been more logical for a 12b6 motion to dismiss. Consistent with courts outside the Second Circuit, the court rejects the defense because metatag usage qualifies as a trademark use in commerce. Frankly, even if the metatags didn't qualify as a trademark use in commerce, the keyword advertising is probably a use in commerce in all jurisdictions outside the Second Circuit, and the domain name registration presumably qualified as a use in commerce in every court (the domain resolved on comparative reference material with prominent ads for defendants' products). As a result, the no-use-in-commerce defense to jurisdiction seemed doomed from the get-go..

While I still don't understand why the defendants tried this substantive doctrinal attack on jurisdiction, the defendants did get some valuable information. The judge clearly signaled no interest in supporting the defendants' choices, so the defendants got a strong hint to settle up before things get worse.

Posted by Eric at 12:28 PM | Marketing , Search Engines , Trademark | TrackBack

December 02, 2008

November 2008 Quick Links

By Eric Goldman

Trademark

* NYT: "A handful of new Web sites with names like Typo Bay and Typo Buddy are out to help shoppers save money by searching eBay for misspelled brand names." In 2005, I blogged that typographical errors are a significant issue for eBay's search engine.

* It's a bull market for Obama-related trademark filings and Obama merchandise.

* Domain name tasting down 84%?

* Wired: "Think Godzilla's Scary? Meet His Lawyers"

Copyright

* Reuters: "Instead of triggering the usual take-down notices, copyright-infringing footage of select MTV Networks programing uploaded by MySpace subscribers would be automatically redistributed with advertisements that would generate revenue for the companies." I'm interested to see how this system applies to fair uses of the works!

* Arista Records LLC v. Usenet.com, Inc., 2008 WL 4974823 (S.D.N.Y. Nov. 24, 2008). The court dismisses USENET.com's counterclaims for declaratory relief that it doesn't violate 17 USC 512 because the claims duplicate its affirmative defenses.

* James Grimmelmann does an excellent job parsing the Google Book Search settlement agreement and makes some sage recommendations for how it should be modified before court approval.

Advertising/Marketing

* The Google-Yahoo ad syndication deal is dead. Some behind-the-scenes discussions.

* I'm not sure about the implications of this, but Google is expanding its efforts to allow website and ad targeting based on automatic geographic detection. See my prior post about the future of geolocation and a bordered Internet.

* Good news: entrepreneurs want to authenticate children's ages to keep them out of online trouble. Bad news: entrepreneurs might use age authentication to hit the kids with targeted marketing.

* Classmates.com sued for misrepresenting that former school chums were actually looking to reconnect. Yet more pushback on bogus "X is looking for you!" ads.

47 USC 230

* The Supreme Court denied cert in Doe v. MySpace, 2008 WL 4218722. According to Tom O'Toole, this is the seventh time that the Supreme Court has denied cert in a 47 USC 230 case.

* It appears that Children of America v. Magedson has settled.

* The Santa Clara University community is having a catharsis about Juicy Campus.

* Dan Solove and I chatted with Doug Lichtman about social networking sites (asynchronously--I spoke with Doug after Dan had), with most of my conversation focusing on 47 USC 230. Doug edited the conversations together into a one-hour podcast entitled "Privacy in the Networked World." An added bonus for listening--you may be able to earn one hour of CLE FREE!

Spam

* Facebook v. Guerbuez. Facebook wins $873M default judgment under CAN-SPAM. Now, if Facebook could only collect any of this, they would have finally figured out a way to make money!

* Gordon v. SubscriberBASE Holdings, Inc., 2008 WL 4809833 (E.D. Wash. Oct. 31, 2008). Serial anti-spam plaintiff lost again on whether he has standing under CAN-SPAM.

* Evan Brown: Government spam filters do not deprive citizen of right to petition the government.

* Venkat: Unsolicited Marketing Extravaganza in the Ninth Circuit.

Miscellaneous

* eHarmony settles claim that it discriminates against gay singles.

* NYT: "almost five years into its expansion into Europe...Google is getting caught in a web of privacy laws that threaten its growth and the positive image it has cultivated as a company dedicated to doing good."

Posted by Eric at 09:47 AM | Copyright , Derivative Liability , Domain Names , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

December 01, 2008

Yahoo Countersues American Airlines for Declaratory Judgment

By Eric Goldman

Yahoo, Inc. v. American Airlines, Inc., C08-05308 (N.D. Cal. complaint filed Nov. 21, 2008). The Justia page.

As you recall, American Airlines recently followed its July settlement with Google by bringing a clone-and-revise trademark infringement lawsuit against Yahoo in Fort Worth, Texas. I thought that this lawsuit might go away quickly because the parties should be able to iron out their differences. Instead, Yahoo apparently has decided to fight back by bringing a declaratory judgment action against American Airlines in the presumably more friendly confines of the Northern District of California.

I'm not enough of a civil procedure expert to handicap the odds that Yahoo can strongarm the case out of Texas and into California. I've seen a few such ploys in Internet cases fail recently, but I'm not sure if those were aberrational. Regardless of the likelihood of success, I'm fascinated by the fact that Yahoo wants to move the battle to a Ninth Circuit jurisdiction. After all, until the Rescuecom oral argument train wreck, most of us thought that the Second Circuit was the most defendant-favorable jurisdiction for keyword advertising lawsuits because courts have regularly dismissed those cases on trademark use in commerce grounds. In contrast, I highly doubt that a Ninth Circuit court will kick out American Airlines' lawsuit on that basis. See, e.g., the American Blinds and Picture It Sold cases.

Meanwhile, the Ninth Circuit has issued some awful Internet trademark opinions, such as the horrendous 1999 Brookfield case that opened the floodgates of bogus initial interest confusion Internet cases. Worse, fairly directly on point is the Ninth Circuit's 2004 Playboy v. Netscape case, where (among many other analytical defects) the court couldn't even decide if search engines should be analyzed under direct or contributory trademark infringement doctrines--but kept going and trashed Netscape anyway. I realize that the Fifth Circuit Internet trademark jurisprudence is thin, so Yahoo might want to opt out of the unknown, but opting into Ninth Circuit Internet trademark jurisprudence seems...well...counterintuitive....

Of course, Yahoo may be trying to benefit from home court jurisdiction just like American Airlines is, but Yahoo's complaint gives another clue why it might be seeking out Ninth Circuit law. The declaratory judgment complaint references "nominative fair use" repeatedly, suggesting that Yahoo's trademark policy only allows advertisers to bid on American Airline trademarks when doing so would qualify as a nominative fair use. The Ninth Circuit has a more well-developed nominative use doctrine than other circuits and has issued several favorable nominative fair use cases, including the seminal New Kids on the Block case. In contrast, the nominative use doctrine is not as well accepted elsewhere; for example, the Sixth Circuit expressly disclaimed it in the PACCAR case. Therefore, Yahoo may be hoping that the Ninth Circuit's favorable and well-established nominative fair use doctrine may provide it with the strongest chance of success, even if Yahoo has to abandon any chance of a quick victory based on the use in commerce defense (not that such a defense was probable in Fifth Circuit courts).

(FWIW, I personally think that keyword sales are more accurately characterized as a commercial referential trademark use than a nominative use, but I haven't found many folks buying into this theory).

One other reason why Yahoo might be able to pull the jurisdictional switcheroo. The complaint brielfy notes that American Airlines has entered into a contract with Yahoo containing a venue selection clause. Even if true, Yahoo should have been able to raise the contract clause as a defense to the Texas litigation. The declaratory judgment may be a way to try to prevent a Texas judge from disregarding the venue selection clause. Or Yahoo's move might just be a show of strength that Yahoo is going to defend its turf aggressively.

Posted by Eric at 09:37 AM | Search Engines , Trademark | TrackBack

November 27, 2008

Google Book Search Settlement Comments (A Little Late)

By Eric Goldman

The Google Book Search settlement sparked plenty of discussion, but the coverage was suppressed by the high entry barriers to commenting--specifically, 300 pages of dense slow-reading legalese in the settlement agreement. Some of you may be faster readers than I am, but it would take me at least a full day to read everything. As a result, I still haven't made my way through the thick stack, and I'm not sure if/when I will actually do so.

In light of that, I will make only three high level points about the settlement:

1) Did Google make a good business decision to enter this market? If the settlement gets final approval, Google will get a clear path to republishing book content. However, this was an expensive market to enter. To get this result, Google will pay the $125M settlement fee, plus all of the litigation costs (which were undoubtedly enormous), the costs to construct the technology and scan the books to date, and the future construction and scanning costs. Further, Google's future book-related revenues will be taxed 63% (which may sound like a high percentage, but I'm sure Google has done higher splits in other context).

So how long will it take for Google, earning 37 cents on the dollar, to recoup its investment of well over $125M? More to the point, what is the implicit ROI on this investment, and how does that compare to other investment choices that Google could have made with the money? My guess is that if, at the beginning, Google knew that it would cost so much to enter the business, the rational decision would have been for Google to put the investment dollars in higher yielding investments.

(Note: I know that Google is awash in cash and doesn't need to maximize its return on every investment, so Google can afford to make lower-yield investments to make other socially important points. I'm glad they can, and I'm glad they do. Even so, I'm still struck by the size of their investment to enter this market.)

2) This deal has the potential to reengineer a number of industries. Part of the settlement agreement's length is due to the fact that the agreement creates a new collective rights organization, the Book Rights Registry, and articulates a command-and-control approach to govern how Google will interact with the Book Rights Registry. Personally, I think this overall architecture has a high risk of failure--no matter how long the contract, it's impossible to anticipate everything by contract to ensure successful competition over time. In fact, I suspect that anyone who picks up the contract 20 years from now will think the agreement is filled with anachronisms that reflect current assumptions about the technology and the book industry that won't make sense then.

I am especially interested in the potential effects of this deal on the library market--a huge market that drives a number of publishing industry sectors. Harvard Library's reversal notwithstanding, my initial assumption is that many/most libraries will be very desirous of obtaining a license to the electronic book database for two reasons. First, the database will have a lot of good stuff, and this may be a cost-effective way of expanding their collections. Second, libraries are literally running out of physical space, so an electronic database of books may solve a problematic and expensive facilities problem. But the dollars libraries spend on the database are going to come from somewhere, presumably either from money spent on print publications or from existing electronic licensees. Either way, this will create some winners and losers.

Creating a collective rights organization by contract has other major risk factors, most obviously antitrust concerns. There are a number of reasons to question the competitive effects of this deal, but the agreement waves the red flag in front of antitrust regulators by containing some provisions where Google and the Book Rights Registry are supposed to agree on downstream prices to customers. Sure looked like vertical price restraints to me. It may be no accident that collective rights organizations typically operate under Congressional authorization or an antitrust consent decree.

Because of these problems, it will be interesting to see who objects to the deal. Among the candidates:

- the DOJ, who might be still spoiling for a fight over Google's market power after successfully tanking the Google/Yahoo ad syndication deal.
- entrenched interests in the library supplier market, such as Baker & Taylor or existing electronic database licensees
- individual authors or publishers who feel screwed by the opt-out system
- other major players in the book industry whose market niche could be reengineered. Amazon is an obvious candidate.

3) If the deal goes through, this arrangement could represent a discontinuous step up in the overall knowledge that benefits our society. One of the most problematic aspects of book publication is that the content isn't searchable (one of the reasons I much prefer writing law review articles that get into Westlaw/Lexis than book chapters that become effectively unsearchable). If this database makes book content globally and easily searchable, massive quantities of human knowledge become newly findable and more usable. What a huge win for all of us! It remains to be seen if we'll realize this theoretical promise, but I remain hopeful we will.

The deal needs approval from the judge (it has already received preliminary approval sufficient to solicit opposition), and it will be interesting to see who lines up in opposition. The deal also could be attacked by the antitrust regulators and others. So I may try to defer investing the time to read the agreement in total until we see what happens.

There were a lot of articles on the settlement. Some of the ones that caught my attention:

* Mike Masnick: Will Others Now Line Up To Get Paid From Google?
* Fred von Lohmann: Google Book Search Settlement: A Reader's Guide
* Mike Masnick: Short Term Profits Over Long Term Principles; Google's Caving On Book Scanning Is Bad News
* David Drummond's official Google blog post

My 2005 comments on Google's efforts.

UPDATE: I've since learned that James Grimmelmann did a lot of the hard work that I've been trying to avoid. His analysis and list of recommendations is excellent.

Posted by Eric at 07:42 AM | Copyright , Search Engines | TrackBack

November 25, 2008

Search Engines Aren't Liable for Gambling Ads Per 230--Cisneros v. Yahoo

By Eric Goldman

Cisneros v. Yahoo, CGC-04-433518 (Cal. Superior Ct. "Tentative Trial Decision" Nov. 6, 2008)

I am frequently asked if 47 USC 230 protects websites for claims based on the ads they run. My answer is emphatically "yes" unless the claim relates to IP, federal criminal law or the ECPA. The fact that the third party content is advertising is irrelevant to the immunization, and so is the fact that the website is being paid to display the allegedly tortious material. I have never organized the 230 jurisprudence to identify all of the cases that confirm immunization for third party ads, but two examples come to mind: (1) the eBay cases over listings, such as the Stoner and Gentry cases, and (2) Ramey v. Darkside Productions. Because it reinforces the lack of liability for third party ads, I should add that 230 protects websites for their own ads in some cases--see here.

However, Internet gambling can violate federal criminal law, and sites associated with third party Internet gambling could drop out of 47 USC 230 coverage accordingly. However, this exclusion only applies when it's a federal criminal agency bringing the enforcement action. Furthermore, when it relates to gambling ads, the criminal claim can be trickier, and the First Amendment can provide some protection for the ads. Nevertheless, I understood why the search engines settled up with the DOJ over gambling ads. They may have had powerful defenses, but 230 wasn't one of them, and it may have been cheaper/smarter to settle up than continue to fight.

In contrast, when a state agency or a private plaintiff complains about a website running third party gambling ads online, the law clearly says that the plaintiff should buzz off. A recent ruling in a long-running lawsuit (filed Aug. 2004; see John O's post from 2005) confirms that, proposing to dismiss a private plaintiffs' lawsuit against Google and Yahoo because it's preempted by 47 USC 230 (among other reasons).

The plaintiffs' 17200 unfair competition lawsuit had already taken some hits along the way, including a ruling that damages weren't available. This left only injunctive and declaratory relief on the table, but the injunctive relief claim was effectively mooted by the search engines' settlement with the DOJ (which, interestingly, the court does not directly discuss).

The plaintiffs persisted, alleging that some gambling ads slip past Google's and Yahoo's efforts to suppress the ads. The court expresses some sympathy for the filtering challenge, noting that "much like bacteria that mutate in order to survive antibiotics, would be on-line gambling operators change their tactics to escape detection, necessitating different enforcement techniques by the defendants." (This sounds like a good basis for a 47 USC 230(c)(2) dismissal, also not discussed by the court). The court gives props to the defendants' suppression efforts and refuses to promulgate a technology-based injunction telling the search engines how to run their business, saying "the defendants are doing as good a job as possible at removing on-line gambling links, and that job is far better than anything this court could come up with in an injunction."

The 230 discussion is pretty straightforward. One nice touch: the court explicitly talks about the plaintiffs' allegations that Google and Yahoo were "aiding and abetting" the illicit gambling. Citing the 7th Cir. Doe v. GTE ruling from 2003, the court correctly says that 230 trumps aiding and abetting claims, even if Google and Yahoo made money from the advertising. This is a good reminder that "aiding and abetting" or similar claims (like conspiracy) should not be a viable plead-around to 47 USC 230.

Posted by Eric at 01:49 PM | Content Regulation , Derivative Liability , Marketing , Search Engines | TrackBack

November 19, 2008

October 2008 Quick Links, Part 3

By Eric Goldman

Pornography

* Can you believe this? A 15 year old girl took nude photos of herself using her cellphone and sent the photos to her peers. She is now being prosecuted on child pornography charges. The girl's behavior sounds more like a cry for help than a criminal act.

* Judges are pushing back against online child porn downloading cases.

* PROTECT Our Children Act (S.1738). If I were a legislator, I would name all of my bills (regardless of substantive topic) “Protect Our Children Act” to ensure passage. Among other things, the law creates a new crime of “child pornography that is an adapted or modified depiction of an identifiable minor” (assuming this survives First Amendment scrutiny, no more photoshopping Miley Cyrus’ face onto a naked woman’s body). The law also modifies existing law to require that websites and Internet access providers who find child porn on their network to forward it and other information to the CyberTipline operated by the National Center for Missing and Exploited Children.

Online Crimes

* Sarah Palin email hack indictment. Orin's comments.

* HR 5938. Congress amended the Computer Fraud & Abuse Act again to increase the penalties and criminalize conspiracies to violate the law.

* S 431, Keeping the Internet Devoid of Sexual Predators Act of 2008 or the `KIDS Act of 2008'. Wired's critique. This law requires sex offenders to register their email addresses with a central database and then permits social networking sites to access the database and block registrations from the sex offenders. The most interesting aspect of the law is that it tries to define a social networking site as: “an Internet website (i) that allows users, through the creation of web pages or profiles or by other means, to provide information about themselves that is available to the public or to other users; and (ii) that offers a mechanism for communication with other users where such users are likely to include a substantial number of minors; and (iii) whose primary purpose is to facilitate online social interactions.” Is there any Web 2.0 site that does not qualify? Any wagers about how long it will take Congress to change this law to require social networking sites to block sex offenders’ email addresses rather than making it optional as this law states?

* State v. Ellison, 2008 WL 4531860 (Ohio App. Ct. Oct. 10, 2008). Two childhood friends have a falling out. One posts an allegation on her MySpace page that the other is a child molester. After the district court convicted her of harassment via a telecommunications device, the appellate court overturned the conviction because she lacked sufficient intent to harass.

Miscellaneous

* Ryan Haight Online Pharmacy Consumer Protection Act of 2008, HR 6353. “No controlled substance that is a prescription drug as determined under the Federal Food, Drug, and Cosmetic Act may be delivered, distributed, or dispensed by means of the Internet without a valid prescription.”

* Gotbaum ex rel. Gotbaum v. City of Phoenix, 2008 WL 4628675 (D. Ariz. Oct. 17, 2008). Malicious blog posts in local Phoenix blogs about a lawsuit aren't enough pre-trial publicity to warrant a change in venue.

* Bursac v. Suozzi, 2008 WL 4830541 (N.Y. Sup. Ct. Oct. 21, 2008). Online shaming of DWI suspects before conviction violates due process. Are you listening, FTC?

* Canadian court: linking to defamatory material is not defamation.

* In an attempt to forestall further movement on the Global Online Freedom Act, the search engines released a high concept statement on how they won’t help repressive regimes.

Posted by Eric at 10:03 AM | Content Regulation , Privacy/Security , Search Engines | TrackBack

November 18, 2008

October 2008 Quick Links, Part 2

By Eric Goldman

Spam

* Kramer v. Perez. An Iowa court awards $236M in damages in a spam case. Venkat's comments.

* After the government lost its jury trial against Impulse Media, the court denied Impulse Media attorneys fees.

Contracts

* AT&T put its own emailed notice of amended contract terms into its spam folder. Whoops! Due to spam filters and other automated blocks, it is becoming almost impossible for websites to communicate with their users by email.

* An estimate of the massive "tax" imposed on consumers by reading privacy policies. Of course the financial drain is overstated because many people make a rational decision not to read every privacy policy, plus not every person has to read a privacy policy for marketplace responses to be effective.

* The Blizzard v. MDY WOWGlider case has reached a stipulated damages amount of $6M.

* Pulaski & Middleman, LLC v. Google Inc., 5:2008cv03888 (N.D. Cal. complaint filed August 14, 2008). The Justia page. Yet another me-too lawsuit against Google over serving ads to parked domains and error pages.

* An Israeli GPL enforcement action settled.

Trademarks/Domain Names

* Kentucky v. 141 Domain Names. Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name. More recently, the seizure was stayed.

* Speaking of inappropriate seizures, the Feds are trying to seize the trademarks of the Mongols motorcycle group. DOJ press release. LA Times article.

* Best Western Intern., Inc. v. Doe, 2008 WL 4630313 (D. Ariz. Oct. 20, 2008). Prior blog post in this case. The judge is losing patience: "These filings are wasteful in the extreme. The Court is not a forum for the parties to expend every possible dollar seeking to litigate every conceivable issue, no matter how insubstantial. The Court will no longer tolerate the excesses of this case."

* The Verizon v. Navigation Catalyst Systems domainer lawsuit settled.

* 50 Cent brings yet another questionable lawsuit. (1, 2).

Advertising

* Goddard v. Google Inc., 2008 WL 4542792 (N.D. Cal. Oct. 10, 2008). The case against Google for deceptive mobile phone ads will stay in federal court.

* Eyeblaster, Inc. v. Federal Insurance Co., 2008 WL 4539497 (D. Minn. Oct. 7, 2008). This is a collateral lawsuit to Sefton v. Eyeblaster alleging that Eyeblaster distributed spyware. Eyeblaster tendered the claim to its insurer. This court holds that the CGL policy doesn't apply because the claim relates to software problems, not physical damage to the users' computers. Further the E&O policy doesn't apply because Sefton alleges that Eyeblaster intentionally installed the spyware, bumping Eyeblaster into one of the policy's exclusions.

* Are consumers becoming more tolerant of pop-up ads? For more on consumer acceptance of new advertising formats, see here.

* A big damages award in NetQuote v. Byrd.

Posted by Eric at 06:42 AM | Adware/Spyware , Domain Names , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Spam , Trademark | TrackBack

November 13, 2008

October 2008 Quick Links, Part 1 (Copyright Edition)

By Eric Goldman

* Happy (?) 10th birthday, DMCA. The EFF birthday cards (1, 2).

* Speaking of the DMCA, Sen. McCain got a first-hand experience with it when his lawyer complained to YouTube that YouTube was taking down campaign videos in response to 512(c)(3) notices too quickly. Really…what a shock. We’ve documented problems with 512(c)(3) notices and 512(f) lawsuits repeatedly on this blog (see, e.g., 1, 2, 3, 4, 5, 6, 7), and yet it only becomes a problem when the legislators personally experience the consequences of the laws they passed. Ironically, Sen. McCain’s response wasn’t to seek legislative solutions that ameliorate the incentives that service providers have to take down content on notice. Instead, Sen. McCain looked for favoritism treatment just for politicians, perhaps hoping that his candidacy for the position as leader of the free world might intimidate YouTube into doing his biding. No such luck (1,2). Maybe YouTube decided McCain was too far behind in the polls. Now that Sen. McCain has a little more time on his hands, maybe he will draw upon his first-hand experience with the tyranny of 512(c)(3) notices to seek out legislative solutions. Paul Levy made some good suggestions.

* Google is having legal problems with Image Search in Germany.

* Universities are bearing the cost of fighting copyright infringement, and it’s not cheap (1, 2).

* Redbox v. USHE. Redbox is an in-store kiosk for renting DVDs. According to Redbox, Universal Studios ordered Redbox to give it a cut of its action or Universal would cut off its wholesale supply of DVDs. See EFF story. Universal Studios may simply be trying to clear the DVD kiosk market of competitors so that it can enter the market itself.

* Mygazines was a website that enabled users to post magazine articles to share them with their peers. It was sued for copyright infringement, settled the lawsuit (1, 2), And then promptly went out of business.

* A recap of the latest in Oracle v. SAP. Separately, the judge has asked Oracle to name its price.

* H.R. 6531: Vessel Hull Design Protection Amendments of 2008. After a few years of trying, Congress amended the vessel hull protections to include copying of boat decks.

* S. 3325, the "Prioritizing Resources and Organization for Intellectual Property Act of 2008." Congress keeps ratcheting up the penalties for civil and criminal infringement, a process I describe more here. The statute also creates an “Intellectual Property Enforcement Coordinator.” It will be very interesting to see who Obama appoints for this position. The position cries out for an IP maximalist, but wouldn’t it be wild if Obama appointed one of his law prof supporters instead?

* Lenz v. Universal Music Corp., 2008 WL 4790669 (N.D. Cal. Oct. 28, 2008). Judge Fogel denied a motion to certify an interlocutory appeal in the Lenz case.

* There is a CRS report on the Cablevision case. Is this a leading indicator of potential Congressional action?

* Due to a copyright dispute with the artist, California will be getting a new "whale tail" design for its custom license plates. Did California really put the whale tail design on 175,000 license plates on a handshake?

Posted by Eric at 08:52 AM | Copyright , Derivative Liability , Search Engines | TrackBack

November 11, 2008

Lambotte's Click Fraud Lawsuit Against IAC Survives Motion to Dismiss

By Eric Goldman

Lambotte v. IAC/InterActiveCorp, 2008 WL 4829882 (C.D. Cal. Nov. 4, 2008). Initial blog post on the filing of the first complaint.

Lambotte filed this putative class action lawsuit against IAC in May based on alleged click fraud. In July, the court granted summary judgment to dismiss portions of the lawsuit. Lambotte and two new named plaintiffs then filed an amended complaint in September. IAC moved to dismiss. This ruling largely rejects that motion.

The plaintiffs argued that the contract says that IAC would charge for clicks by "users," and reasonable advertisers would assume that "users" are "potential clients" for the advertiser, not bogus clickers. The judge is rightly skeptical of this argument, saying that the plaintiffs' definitions "may not be the most reasonable interpretations." At the same time, California law has a liberal parol evidence rule, so the judge gives the plaintiffs a chance to introduce evidence to support their aggressive definitions. I would be surprised if this claim ultimately prevails, but the plaintiffs can try.

The plaintiffs also argue that the implied covenant of good faith and fair dealing effectively requires IAC to prevent click fraud, and thus IAC breached that obligation. The court, citing In re Yahoo, says that this allegation survives a motion to dismiss.

As with In re Yahoo, this ruling is a win for the plaintiffs because they get to keep litigating the case. However, there remains some basic problems with the plaintiffs' allegations that should ultimately doom the lawsuit. If in fact the plaintiffs do lose the lawsuit, it's unfortunate that everyone had to incur the extra adjudication costs. More likely, if the lawsuit can survive another few rounds, IAC probably cuts a check to end the threat regardless of substantive legal merit.

Posted by Eric at 02:24 PM | Licensing/Contracts , Marketing , Search Engines | TrackBack

October 23, 2008

Stockholder Derivative Action Against Yahoo Based on Click Fraud Rebuffed--Brodsky v. Yahoo

By Eric Goldman

Brodsky v. Yahoo! Inc., 2008 WL 4531815 (N.D. Cal. Oct. 7, 2008). The Justia page. Previous blog coverage.

You may recall this stockholder derivative lawsuit against Yahoo alleging that Yahoo hyped its stock prices by overstating its ad business' progress and by inflating revenues through artifices like relaxed anti-click fraud standards. The court has dismissed the complaint with leave to amend, principally on the basis that the plaintiffs have not been specific enough with their allegations. Most of the opinion is rather technical legalese, but I thought the discussion about the click fraud allegations were interesting enough that I've quoted them in their entirety:

Plaintiffs also assert that Defendants made false statements about Yahoo!'s revenues over the Class Period. Plaintiffs allege that Defendants manipulated their click fraud filters and delayed refunds fraudulently to boost revenues. As a result, Defendants' financial statements were overstated by $387 million over the Class Period.

Plaintiffs arrive at the $387 million figure by citing three magazine articles and two press releases. CAC ¶¶ 204-208. Some of these sources estimate that click fraud accounted for ten percent of all pay-per-click revenue in the search industry while other sources estimate the fraud rate as high as thirty-five percent. Plaintiffs adopt the ten percent rate and allege that $387 million of Yahoo!'s $3.878 billion in sponsored search revenue was attributable to click fraud.

Plaintiffs point to the statements by CW 3, CW 6, CW 8, CW 9, CW 10, CW 11 and CW 12 to support the click fraud allegations. For the complaint to survive the pleadings stage, Plaintiffs must describe these CWs' roles in Yahoo!'s revenue recognition process, or whether these CWs had any first-hand knowledge of Defendants' accounting decisions. See In re U.S. Aggregates, Inc. Sec. Litig., 235 F.Supp.2d 1063, 1074 (N.D.Cal.2002) (accounting fraud claim not corroborated by CW statements where “none of the confidential witnesses have any first-hand knowledge of [defendant's] accounting decisions”).

CW 3 worked as an Engineering Manager for Overture until Yahoo! acquired Overture in 2003. After the acquisition, CW 3 worked in the Business Information Systems group at the Overture facility until October, 2004. CAC ¶ 22. CW 3 claims that “Yahoo! decided in late 2004 to ‘relax’ the business rules and filters in the click-fraud detection system.” CAC ¶ 22(d). “CW 3 estimates revenues generated from the relaxation in rules represented approximately 25% of Overture's operating revenue.” CAC ¶ 22(f). CW 3 learned of this rule relaxation from Yahoo!'s Loss Prevention manager. CAC ¶ 22(d). CW 6 was a sales representative for Yahoo! and had regular communication with customers who complained about click fraud. Id. CW 6 noted that “15% of the revenues generated in his/her group was created via click fraud and irrelevant clicks from poor content match.” CAC ¶ 25.

The Court has no basis to determine whether CW 5's or 6's estimates of Yahoo!' s revenues satisfy the pleading requirement under the PSLRA. For CW 5's or 6's statements to carry any weight at the pleadings stage in this action, Plaintiffs must describe their roles in Yahoo!'s revenue recognition process, or whether they had any first-hand knowledge of Defendants' accounting decisions. Also, because CW 3 was not a Yahoo! employee for most of the Class Period, the Court cannot rely on his statements to support claims of false revenue reporting for the entire Class Period.

CW 8 was a Manager of the Overture Loss Prevention organization until February, 2006. CW 8 noted that “there was an effort inside Yahoo! to relax the click-fraud detection standards.” CAC ¶ 27. CW 8 met with Defendant Decker some time after Yahoo! was sued in 2005 for click fraud, and the two discussed click fraud. Id. Through CW 8's statement, Plaintiffs successfully allege that Defendant Decker had general knowledge of the click fraud problem, but Plaintiffs have not shown how CW 8 knows about an effort to relax Yahoo!'s click fraud detection standards, or how CW 8 knows that this effort translated into misstated revenues. Similarly, Plaintiffs have not shown whether CW 8 had any firsthand knowledge of Defendants' accounting decisions. Therefore, CW 8's statements do not support Plaintiffs' allegations of revenue fraud.

*8 CW 9 worked for Yahoo! in the Customer Solutions group from December, 2003 to February, 2007. CAC ¶ 28. Defendant Decker fired CW 9 in 2007, after the Class Period, for mishandling a customer complaint that might have been related to click fraud. Id. CW 10, Engineering Director for Yahoo! until January, 2005, gave Defendant Decker access to the revenue reporting system at the Overture Pasadena facility. CAC ¶ 29. CW 10 observed that Yahoo!'s ability to filter out non-billable clicks was impacted by not having adequate resources, such as enough computer servers. Id . CW 11 worked for Overture and then Yahoo! as an advertising account manager until December, 2004. CAC ¶ 30. CW 11 described “click tsunamis” at Yahoo!, when a search brought up results that led to thousands of unwanted clicks. Id. Advertisers were charged for these clicks, but rarely realized sales from them. Id . Plaintiffs have not shown whether CW 9, CW 10 or CW 11 had a role in Yahoo!'s revenue recognition process, or whether they had any first-hand knowledge of Defendants' accounting decisions. Therefore, their statements do not support revenue fraud allegations either.

CW 12 worked for Yahoo! as an Operations Sales Manager until October, 2006. CAC ¶ 31. At weekly customer service meetings, CW 12 learned that “Yahoo!'s revenues began to decline ‘month by month’ beginning in 4Q 05.” CAC ¶ 31(g). CW 12 attended weekly Customer Service meetings where she learned that “because Yahoo! was not meeting its traffic forecasts, the Company was not attaining its revenue forecasts associated with those clicks in 4Q 05.” Id . CW 12 also recounted that the “running joke at Yahoo! Search Marketing was that there was a ‘dial’ on the click-fraud detection system which Yahoo! turned down at the end of the quarter to allow more billable click activity to be passed on to customers.” CAC ¶ 31(l). Hearing at a meeting that revenue forecasts will not be reached is not equivalent to knowing that Yahoo! misstated its revenues. Similarly, recounting jokes about altering the click fraud dial does not satisfy PSLRA's pleading requirements. See Limantour v. Cray, Inc., 432 F.Supp.3d 1129, 1141 (W.D.Wash.2006) (rejecting confidential witness statements based on “gossip and innuendo”). Therefore, CW 12's statements do not meet the PSLRA's heightened standards to prove revenue fraud either. In sum, Plaintiffs fail to plead with particularity their allegations that Yahoo! issued false financial statements.

It's nice to see the judge recognized there's a difference between click fraud rates in the abstract (whatever those mean) and the rate of actual overcharging experienced by advertisers, which is almost certainly lower. It's also good to see that the judge isn't blindly accepting the scuttlebutt from former employees, many of whom probably have worthless options or a down stock portfolio. In any case, 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.

Posted by Eric at 11:30 AM | Licensing/Contracts , Search Engines | TrackBack

October 20, 2008

American Airlines Sues Yahoo for Selling Keyword Advertising

By Eric Goldman

American Airlines, Inc. v. Yahoo! Inc., 4:2008cv00626 (N.D. Tex. complaint filed Oct. 17, 2008). The Justia page.

Here's a lawsuit I never expected. Fresh off their settlement with Google, American Airlines is suing Yahoo for selling keyword advertising triggered by American Airlines-owned trademarks. I didn't run a redline comparison, but the complaint clearly borrows liberally from the Google complaint, right down to the heavy-hearted declaration that American Airlines doesn't bring this lawsuit lightly (paragraph 6) and the completely meritless vicarious trademark infringement claim (which erroneously uses the language of vicarious copyright infringement).

I'm surprised by this lawsuit for three reasons. First, most SEMs I've spoken with think that Yahoo has a much more trademark owner-favorable trademark policy than Google. Thus, I would have thought that Yahoo would be better positioned and willing to address American Airlines' concerns than Google was, and it's surprising to see that Yahoo couldn't resolve the dispute outside of court.

Second, it wasn't clear that American Airlines "won" its settlement with Google. The settlement was confidential, but after the settlement I could still easily find triggered ads that the lawsuit targeted. So exactly what did Google concede to, and how were those concessions appealing enough to motivate American Airlines to tango again?

By the way, this afternoon I replicated the searches I ran after the Google settlement. American Airlines, aa.com and AADVANTAGE now have no advertisers at all--which is different than in July. Did Google made some systematic changes after the settlement? (Maybe the settlement had a delayed effectiveness, such as to give Google time to build a new tool). Or has American Airlines chased individual advertisers off the search terms? Hmmm.

Third, and most importantly, I just don't see the business case for any trademark owner to sue a search engine. Maybe Google paid off the lawsuit sufficiently to make the effort financially attractive, but as I explained with the Google lawsuit, otherwise I just don't see how American Airlines could possibly be losing enough in "diverted consumers" to justify the litigation expense.

(On that point, paragraph 83(E) of the complaint was particularly laughable, saying that airline purchasers exercise a minimal degree of care when selecting air transportation services online. Really...? I'm sure people are pretty careless about making many-hundred-dollar non-refundable travel plans, just like they pick the wrong pack of gum in the checkout line.)

I'd be surprised if this lawsuit didn't settle like Google's did. If it doesn't, then it could be interesting.

Posted by Eric at 03:35 PM | Search Engines , Trademark | TrackBack

October 16, 2008

Search Engine "Cache" Function Covered by Implied License--Parker v. Yahoo

By Eric Goldman

Parker v. Yahoo, Inc., 2008 WL 4410095 (E.D. Pa. Sept. 25, 2008).

Gordon Roy Parker is a serial pro se Internet law plaintiff and putative owner of copyrights in seemingly misogynistic works such as "Outfoxing the Foxes" and "Why Hotties Choose Losers." A quick review of Parker's website reminded me a little of the cute date-movie Hitch, but without any of Will Smith's charm.

Last year, the Third Circuit dismissed Parker's copyright infringement lawsuit against Google over Google Groups. In this ruling, the district court rejects most of his copyright infringement claim against Yahoo and Microsoft over the "cache" option in search results.

[Side rant: I once again protest that calling these copies "cached" copies is a serious bastardization of the term. Despite the mislabeling, the search engines present archival copies, not cached copies, and treating them as equivalent creates significant legal doctrinal tension.]

This lawsuit squarely revisits the ground covered in the Field v. Google case, which Google won for 5 different reasons--including that anyone who posts content to the web knowing that search engines display cached copies impliedly licenses the search engines to do so. Here, the search engines apparently obtained the copyrighted works from Parker's site (instead of from some third party infringing site), and Parker admits he knew of the cache function. As a result, Yahoo and Microsoft can claim an implied license for their cached copies.

However, implied licenses are a weak defense because they can be trumped by express restrictions (see, e.g., Ticketmaster v. RMG). As a result, Parker's claim survives to the extent that Microsoft and Yahoo retained their cached copies after learning of his objection through the complaint filing.

Along the way, the court also says that Parker cannot complain about the search engines' initial robotic collection of the copyrighted works for index inclusion because the Third Circuit's ruling in Parker v. Google implicitly rejected the claim, leading to claim preclusion here. That struck me as a pretty liberal reading of the breezy and brief Third Circuit opinion.

Parker also claimed that individual web users downloading the cached copies are direct infringers. However, the court extends the implied license to them as well. The court offhandedly says that the search engines lack both direct financial benefit from the cached copies and knowledge of the infringement, thus giving further reason to dismiss the secondary infringement claims.

Finally, the court breezily dismisses a breach of contract and negligence claim as being preempted by copyright law. I think the preemption of the breach of contract claim is plainly wrong and should be reversed if the case is appealed.

While Parker's lawsuit (barely) lives to fight another day, overall this is another great opinion for search engines. Once again, courts are finding broad legal protection for basic search engine operations. This lawsuit also reiterated how pro se plaintiffs can be very helpful to an Internet defendant seeking to establish favorable low-cost legal precedent.

More on this case from Jeff Neuburger.

Posted by Eric at 10:31 AM | Copyright , Derivative Liability , Search Engines | TrackBack

October 14, 2008

September 2008 Quick Links, Part 3

By Eric Goldman

eBay

* Universal Grading Service v. eBay, Inc. More fallout from the National Numismatic v. eBay case--another lawsuit alleging antitrust and defamation because eBay designated some coin rating services as preferred and impliedly devalued others.

* Windsor Auctions v. eBay has been refiled in a new jurisdiction.

* Mehmet v. Paypal, Inc., 2008 WL 3495541 (N.D. Cal. Aug. 12, 2008). Upholding the consequential damages waiver in PayPal’s user agreement.

* A company's failure in the marketplace can drive up the value of its collectibles on eBay.

Google

* Stelor Productions, Inc. v. Google, Inc., 2008 WL 4218107 (S.D. Fla. Sept. 15, 2008). In the lawsuit alleging that Google causes reverse confusion of Googles.com [warning: annoying music ahead], the plaintiff doesn't get to depose Sergey or Larry yet. Rose Hagan, Google’s long-time chief trademark counsel, is the lucky substitute.

* Lots of rhetoric in the Google/Yahoo ad syndication deal. Google’s advocacy website. Google Chief Economist Hal Varian explains why the deal won’t raise ad prices in the auction. Randall Stross weighs in.

* Google has changed course and now allows religious groups to advertise on the keyword “abortion.”

* Kubit v. Google Groups, 2:2008cv00738 (M.D. Fla. complaint filed Sept. 29, 2008):

I then would like to sue Google Groups for not removing the posts when I repeatedly asked them to for 2 years. I believe I am entitled to at least a small amount of compensation for the emotional distress and lost business income that has resulted from them allowing these posts to remain on their Google Groups, even though I offered them VERY solid proof that I do not have HIV. If they had stopped the posts when they first occurred, they would not have proliferated to hundreds of websites. I became suicidal for a period of time after the posts started. I incurred a lot of emotional pain and fear because of the posts and had to seek psychiatric and psychological help to get my life back together. I still suffer from fears of dating, living a public business life and trusting others.

Yes, this is a pro se complaint. Yes, it is preempted by 47 USC 230.

Marketing/Advertising

* NebuAd is dead (1, 2). Even so, the lure of intermediaries aggregating deep data about consumers for commercial purposes will never die.

* Is Gator/Claria dead?

* The EU passed a non-binding resolution against sexual stereotypes in advertising.

* Celebrity branded merchandise run amok.

Miscellaneous

* Valleywag: "The 5 most laughable terms of service on the Net." For more laughs, see Mark Lemley’s Terms of Use paper.

* Murakowski v. University of Delaware, 2008 WL 4104087 (D. Del. Sept. 4, 2008). This reminded me a lot of the Jake Baker case from the mid-1990s.

* The Virginia Supreme Court reversed itself on the Jaynes anti-spam prosecution, and Jaynes walks. Does Virginia routinely pass unconstitutional laws?

* Becker v. Toca, 2008 WL 4443050 (E.D. La. Sept. 26, 2008). Ex-wife's alleged delivery of "Infostealer" program to grab passwords from ex-husband could violate the ECPA, SCA and CFAA.

* Interesting article on ESPN’s exclusive distribution and bundling agreements with Internet access providers.

* Funniest law firm names.

* Silly? Horrifying? A sign of the apocalypse?

Posted by Eric at 06:17 PM | Adware/Spyware , Content Regulation , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Spam | TrackBack

September 29, 2008

Delayed Enforcement Blocks Domain Name Lawsuit--Southern Grouts v. 3M

By Eric Goldman

Southern Grouts & Mortars, Inc. v. 3M Co., 2008 WL 4346798 (S.D. Fla. Sept. 17, 2008)

I'm often baffled by lawsuits over domain names and keywords because they just don't seem to make any economic sense. This lawsuit is especially perplexing given the plaintiff's delays and the seeming impossibility of the plaintiff reaching a profitable outcome, even if it won in court. What was the plaintiff thinking?

Background

3M and SGM compete in the field of "quartz aggregate products for surface finishes." SGM has a federal trademark registration for "Diamond Brite." In 2000, 3M bought an unrelated business whose assets included a trademark in "Diamond Brite" and the domain name "diamondbrite.com." For a while, 3M redirected the domain name to the home page of the other business unit it owned. No later than July 2002, the domain name stopped resolving, but 3M continuously renewed its domain name registration. Ultimately, 3M migrated the new unit to its existing trademarks and let its acquired trademark in "Diamond Brite" lapse.

Meanwhile, in 2005, 3M did a 3 week trial buying "diamond brite" in Google AdWords, but the lawsuit only involves the domain name, not the AdWords purchase.

SGM contacted 3M three times about the diamondbrite.com domain name. No later than July 2002, SGM emailed 3M asking if it could acquire the domain name. In Feb. 2005, SGM sent a cease-and-desist letter, which 3M rejected. Then, in July 2007, SGM wrote to 3M again proposing an amicable solution, and 3M continued to resist. SGM then sued 3M in Sept. 2007.

Laches

From my perspective, this is an easy laches case. Taking 5 years to pursue the matter, with nothing resembling an ongoing dialogue, is simply too long. 3M wound down use of the domain name, so its economic expectations aren't disturbed like a typical laches case, but there is still the increased litigation costs due to the 5 year delay. The court rejects that either the AdWords purchase and the domain name renewals resetted the laches analysis.

Unfair Competition on the Merits

The court says that the mere possession of the diamondbrite.com domain name without any further use does not constitute a "use in commerce" sufficient to support Lanham Act violations. Along the way, the court distinguishes a veritable who's-who list of junky domain name cases from the turn of the century, including PACCAR, Brookfield, PETA v. Doughney, OBH and Planned Parenthood v. Bucci. The court distinguishes most on the fact that 3M didn't have an active website resolving to the domain name, but it goes further with the OBH and Bucci cases:

OBH and Planned Parenthood[] are both nearly a decade old. As with any widespread change in technology, there is a learning curve. Even if those cases were correct when decided, I decline to adopt the position today that internet users of any significant number would be frustrated or hindered by merely not arriving at the expected site the first time a web address (domain name) was typed in... With the advent of multiple, and increasingly powerful search engines, it is unlikely that a potential consumer of SGM's products would be turned away by not finding a website at diamondbrite.com. In any event, SGM has presented not a scintilla of evidence to show that consumers have been prevented from accessing SGM's own website, or prevented from obtaining any of SGM's goods or services. (emphasis added)

The bolded language, of course, is true and has been for a number of years, but it's nice to see a court expressly acknowledge that "technological facts" embedded in the precedent are now out-of-date. It's also nice to see the court clearly recognize the substitutability of the domain name system and search engines and to realize that consumers prefer search engines.

The court also rejects the precedent by pointing out that there cannot be likelihood of consumer confusion when the domain name owner doesn't resolve at all. As the court says, "The seven factors use to determine whether a likelihood of confusion exists become irrelevant if there is no “use” to compare the mark to." There is plenty of stupid precedent to the contrary (including those predicated on initial interest confusion, which the court expressly rejects), but this court nails it.

ACPA on the Merits

In my opinion, the ACPA claim is an easy defense win because 3M (and the predecessor company) had legitimate trademark interests in "Diamond Brite" prior to the domain name's registration. The court still courteously goes through the "bad faith" ACPA analysis before concluding that 3M had none. Along the way, the court soundly rejects a pretty silly argument that the domain name registration pointing to an unresolved domain name would divert consumers because frustrated consumers would do a Whois lookup query for the defunct domain, learn that 3M was the registrant and seek out 3M to transact with. Some arguments are better left unmade.

In the end, the court grants summary judgment to 3M and dismisses the lawsuit.

Lawsuit Futility

I understand how matters like this can sit on an in-house counsel's desk for years, only resurfacing every couple of years and prompting a "ping" to the other side. But I simply can't understand how, in 2007, after 5 years of irresolute progress, SGM thought the economic upside justified the expense of a lawsuit.

On the benefit side, a domain name like "diamondbrite.com" has some value, especially when it's associated with a product line bearing that name. But how much value? Assuming a lawsuit like this costs at least six figures, I can't imagine that the domain name is worth anywhere close to that. Indeed, any incremental selling power from the domain name could be cost-effectively replicated through a combination of SEO and SEM on the term "diamond brite." Better yet, SGM could have poured the money into product sales and marketing, which I'm confident has a substantially higher ROI than suing or gaming the search engines.

As further evidence of the weak value of the domain name, SGM did not cite any harm from not owning the domain name, and the matter only rose to the top of SGM's in-house personnel's desk 3 times in 5 years. Clearly, this is not a "must have" domain name,

On the expense side, these types of lawsuits are costly. In addition to the normal attorney's fees, SGM obtained at least one expert witness (and, to add insult to injury, the court bounced the expert's report), did some expensive discovery (including obtaining and reviewing 3M's portfolio of 13,000 domain name registrations) and tied up key internal personnel on the lawsuit (including testimony from the "head of information technology and the executive vice-president of SGM"). The cost of a lawsuit isn't measured just by out-of-pocket attorney expenses but by overall opportunity cost, and on that basis, this lawsuit tied up valuable resources.

Finally, the rational decision-maker multiplies the cost-benefit amount by the probability of winning, and it seemed clear to me that this lawsuit had bad odds from the get-go. The ACPA claim was destined to lose because on the high "bad faith" standards (it also makes me wonder why SGM didn't try the UDRP first) and the fact that 3M had clear legitimate rights at the beginning. The potential success of the unfair competition claim is naturally less clear, but even if SGM won this claim, they had almost no chance of recovering meaningful damages or attorney's fees. As a result, I can't see a scenario where this was a breakeven lawsuit from the beginning. Given the low odds of success, this just seems like a clearly futile waste of money from day 1.

[A personal note: I'm out for the rest of the week for the Jewish holiday and a trip to the heartland. I'll probably next see you again next week. L'shanah tovah tikatev v'taihatem!]

Posted by Eric at 09:53 AM | Domain Names , Marketing , Search Engines , Trademark | TrackBack

September 10, 2008

DMV.org Hit With SEO-Degrading Injunction--TrafficSchool.com v. eDriver

By Eric Goldman

TrafficSchool.com, Inc. v. eDriver, Inc., 2008 WL 4000805 (C.D. Cal. June 4, 2008). Permanent injunction entered Aug. 28, 2008.

[Note: I missed this case when it first came out. I recently learned about the case from Rebecca, and it's such an interesting case that it's worth blogging about at this comparatively late date. Also, just today the defendants signaled their intent to appeal, so the case is still very much alive and active.]

This case involves websites referring consumers to traffic schools and driver's education courses, a business that appears to be both lucrative and cutthroat. The plaintiffs allege that the operators of DMV.org, a referral site, engage in false advertising. The gist of the plaintiff's argument is that DMV.org falsely implies an affiliation with government DMVs, and therefore consumers believe that linked-to vendors are being recommended by a government agency. Naturally, the implicit government imprimatur on a traffic school or driver's ed course should significantly bolster consumer demand, so the plaintiffs feel disadvantaged in the marketplace. Oddly, both parties agreed that the plaintiffs' websites had better conversion than DMV.org.

70-80% of DMV.org's traffic comes from search engines due to favorable search engine indexing (in 2006, the site was the #2 organic Google link for "DMV") and aggressive search engine advertising. Consumers who reached DMV.org were shown text and graphics designed to enhance the site's credibility/authority and perhaps exacerbate visitors' perceptions that a government agency operated the site, although there was a small footer disclaimer. After the lawsuit, DMV.org was redesigned to reduce the possibility of consumer confusion about any government affiliation, but the court recounts anecdotes that consumers were confused both before and after the redesign. As a result, the court finds that the plaintiffs established a prima facie case of 43(a) false advertising.

However, the court determines that the plaintiffs have "unclean hands" because they too had registered and used various domain names containing "DMV" and had explored advertising on DMV.org. Due to their unclean hands, the court denies the plaintiffs any damages or attorney's fees.

The court does grant an injunction requiring DMV.org to display a mandatory "acknowledgement page" (we might call it an interstitial or landing page) telling consumers that the site is unrelated to any government agency and requiring them to affirmatively click through. See the page here. My hypothesis is that such an acknowledgement page wrecks DMV.org's search engine indexing by preventing the robots from seeing the page content (unless DMV.org uses grey hat/black hat techniques to present a different page to search engine robots). In partial support of that argument, when I searched today for "DMV" at Google, the site was 4th in the organic results--still excellent for such a popular term, but down from their #2 ranking in 2006. (Their continued good placement may be due to their PR7--which has been juiced by links from state government agencies that mistakenly thought it was an official site). Thus, an injunction requiring a mandatory acknowledgment page effectively will dramatically reduce the traffic--and the value--of an SEO-driven site. The defendants have also made post-injunction filings saying that a lot of visitors are backing away due to the acknowledgement page. Accordingly, the defendants are claiming that the injunction could be fatal to their business.

This suggests a possible lesson to learn from this case. The defendants had a great domain name (DMV.org) that they managed to build nicely, but they may have too aggressive about stoking consumer expectations about their affiliation with the government. The consequence of that aggressiveness is a potentially business-ending injunction, rendering the domain name nearly worthless. If the defendants hadn't played so close to the line, perhaps they would have lost some revenue but might have been able to maintain the domain name's value in the long run.

Today, the defendants filed a variety of motions indicating that they plan to appeal the ruling and asking the court to stay the injunction during the appeal. If the defendants can get the traffic-killing injunction lifted on appeal, I suspect they will consider it a win even if they have to write a check for damages.

Rebecca has more on the case.

Posted by Eric at 10:01 PM | Domain Names , Marketing , Search Engines | TrackBack

September 09, 2008

August 2008 Quick Links, Part 2

By Eric Goldman

Net Neutrality

* The FCC gets on Comcast’s case for deceptively blocking BitTorrent connections without disclosure. While I don’t know anyone who has defended Comcast’s behavior here, at the same time there is an undercurrent of concern about the FCC’s authority to regulate Internet activities. Could this be the FCC camel's nose in the Internet's tent? We will learn more about the FCC's authority because Comcast has appealed the FCC's decision.

* A topic I haven't seen discussed very much: how the doctrine of trespass to chattels intersects with net neutrality principles. The only article I found in a 60 second search on the topic was a couple of paragraphs in J. Gregory Sidak, A Consumer-Welfare Approach to Network Neutrality Regulation of the Internet, 2 J. Competition L. & Econ. 349 (2006).

Contracts

* Jacobsen v. Katzer (Fed. Cir. Aug. 13, 2008). This ruling has been hailed as a validation of open source licenses, but I’m not sure what to make of this opinion. If the opinion merely says that breach of a copyright license can support copyright infringement, that’s no big deal. However, among other conspicuous omissions, the court does not discuss how the licensor formed a contract in this case. Thus, if the court’s conclusion is that copyright owners can impose conditions on licensees’ enjoyment of their copyright without properly forming a contract, then this opinion could undo the entire scheme of online contract formation. For example, it could support a conclusion that browsewrap-style “contracts”/terms of use should be enforceable as conditions on the accessing of copyrighted web pages. See, e.g., Ticketmaster v. RMG.

* Interactive Retail Management, Inc. v. Microsoft Online, L.P., 2008 WL 3851691 (Fla. App. Ct. Aug. 20, 2008). This is a click fraud case I hadn't heard about previously. Microsoft won at the trial court on jurisdiction grounds. This court revives the lawsuit for more jurisdictional investigation.

* Jeff Neuburger on a Wisconsin case saying that the UCC governs contract formation via email instead of UETA.

* Request for your guidance. Wikipedia has some photos that simultaneously say they are released under both a Creative Commons license and the GFDL. See, e.g., this photo. The license terms are irreconcilably inconsistent. If someone wants to use such a photo, now what?

Competition Restrictions

* Edwards v. Arthur Andersen (CA Sup. Ct. Aug. 6, 2008). The Ninth Circuit was wrong to create a narrow restraint exception to B&P 16600, the California statute voiding non-compete clauses.

* XPEL Technologies Corp. v. American Filter Film Distributors, 2008 WL 3540345 (W.D. Tex. Aug. 11, 2008). Rebecca on an odd case involving (once again) the DMCA anti-circumvention provisions as an anti-competition tool.

Miscellaneous

* Two interesting studies recently about people’s response to spam. Despite the animosity, a quarter of consumers have responded to cellphone spam and 30% say they have made purchases in response to spam. For more complementary statistics and my attempt to explain this seeming dichotomy, see here.

* The First Circuit issued an interesting DMCA 1201 case that I haven’t seen discussed. The BNA summary: “District court properly granted summary judgment to plaintiff cable television service provider on claim that defendants violated Digital Millennium Copyright Act by selling low-frequency signal filters, within plaintiff's service area, that were capable of bypassing plaintiff's pay-per-view billing mechanism, since plaintiff's pay-per-view delivery and billing system is technological measure that effectively controls access to copyrighted works, and digital cable filter allows subscribers to "avoid" or "bypass" that technological measure (CoxCom Inc. v. Chaffee, 1st Cir., 8/4/08)”

* AP v. Moreover settles. My initial post on the lawsuit.

* Funny YouTube video: "Here Comes Another Bubble," set to the tune of Billy Joel's "We Didn't Start the Fire"

Posted by Eric at 08:49 AM | Content Regulation , Copyright , Licensing/Contracts , Marketing , Search Engines , Spam | TrackBack

September 08, 2008

August 2008 Quick Links, Part 1

By Eric Goldman

eBay

* Mazur v. eBay Inc., 2008 WL 2951351 (N.D. Cal. July 25, 2008). See my previous blog post on the case. Some commentators are excited about this ruling because it rejects eBay's motion to dismiss a RICO claim.

* Missing Link, Inc. v. eBay, Inc., 2008 WL 3496865 (N.D. Cal. Aug. 12, 2008). This is a lawsuit by eBay sellers complaining that eBay didn’t immediately index their listings in its search engine and eBay raised the price on “Good Until Cancelled” listings. This is the second time the court has dismissed some claims, but even so some claims have also survived the motion to dismiss process.

* As expected, Tiffany appealed the eBay ruling. My initial post.

Google

* Vulcan Golf, LLC v. Google Inc., 2008 WL 2959951 (N.D. Ill. July 31, 2008). The court dismisses a few claims made in the plaintiff's third amended complaint. My post on the initial complaint.

* JIT Packaging v. Google (E.D. Ill. complaint filed Aug. 11, 2008) A third lawsuit against Google over the placement of AdWords ads on parked domains and other putatively undesirable pages.

* A heavily redacted version of the Google/Yahoo agreement. The SEC examiner who let the agreement go through with this many redactions was asleep at the wheel!

47 USC 230

* Bauer v. Glatzer (N.J Superior Ct. July 21, 2008). Wikimedia easily wins a lawsuit against it alleging that a Wikipedia entry was defamatory.

* Capital Corp. Merchant Banking, Inc. v. Corporate Colocation, Inc., 2008 WL 4058014 (M.D. Fla. Aug 27, 2008). 47 USC 230 defense denied against allegations that "Leonard Norwich posted defamatory statements about [the plaintiff] on three websites and Francesca Norwich allowed Leonard to use “a computer registered in her name” to make the defamatory statements." The denial makes sense for Leonard but seems clearly erroneous with respect to Francesca.

* Vanginderen v. Cornell (S.D. Cal. June 3, 2008). CMLP page. This isn't specifically a 230 case but it's still relevant. Interesting lawsuit against Cornell and related entities for electronically posting a school newspaper story from 1983 that was allegedly defamatory. The court dismisses the lawsuit on an anti-SLAPP motion.

Blogging

* A Las Vegas nightclub loses its cool and sues a blogger for, among other things, including its logo in the blog post.

* As part of the fallout from the Troll Tracker blog, Dennis Crouch, of PatentlyO fame, has received a subpoena for communications related to his blog. Dennis' comments and LegalWatch. In a related lawsuit, Frenkel (a/k/a Mr. Troll Tracker) was dismissed from a lawsuit again. Ward v. Cisco Systems, Inc., 2008 WL 4079286 (W.D. Ark. Aug 28, 2008)

Content Restrictions

* Kings English, Inc. v. Shurtleff, 2008 WL 3285898 (D. Utah Aug. 8, 2008). The judge denied the plaintiffs’ motion to reconsider its highly unfavorable prior ruling. My initial post on the lawsuit.

* Reisinger v. Perez (E.D. Wis. complaint filed Aug. 18, 2008), First amendment lawsuit against the City of Sheboygan for intimidating a woman into removing a website link to the city's police department.

* National Federation for the Blind v. Target has settled, with Target paying $6M and redesigning its site.

Posted by Eric at 09:47 PM | Content Regulation , Derivative Liability , Licensing/Contracts , Search Engines , Trademark | TrackBack

September 05, 2008

426,487 Reasons Why Metatags Still Matter (In Court)--Venture Tape v. McGills

By Eric Goldman

Venture Tape Corp. v. McGills Glass Warehouse, 2008 WL 3959997 (1st Cir. Aug. 28, 2008). For more on the case, see the initial 2003 ruling denying a motion to dismiss for lack of jurisdiction and a 2006 district court ruling on damages.

Regular blog readers know that metatags don't matter from a technological standpoint and haven't mattered for years. But because they once might have mattered, courts are still treating them as the uber-SEO technique. In this ruling, the First Circuit joins the 11th Circuit as the latest appellate courts this year to experience a judicial freakout about metatags. The price tag to the defendant for using ineffectual metatags: $426,487 in damages, costs and attorney's fees.

The story is all too familiar. McGills sells competitive products to Venture Tape and in 2000 put Venture Tape's trademarks ("Venture Tape" and "Venture Foil") into its metatags and in white-on-white text with the hope of getting some search engine traffic. (As usual, the judge doesn't know or seem to care that there are multiple flavors of metatags, but the opinion treats them as keyword metatags). In 2003, Venture Tape realized this and sued. The district court found for the plaintiff and awarded $230k in damages for the period 2000-2003, $188k in attorney's fees and over $7k in costs. McGills appealed to the First Circuit.

With respect to trademark infringement, the First Circuit's test omits any requirement of trademark use in commerce (a seeming doctrinal problem in its own right), so the only issue was likelihood of consumer confusion. On that front, because the parties are direct competitors and the defense admitted that they referenced the trademarks to generate search engine traffic, the court says "By the conduct of its case below, McGills effectively admitted seven of the eight elements of" the likelihood of consumer confusion test.

The only disputed point is evidence of actual confusion, and the defendant points out that there's no evidence that any consumers were lured to its site due to the trademark references. The court says it doesn't care about this evidence one way or another because this is only 1 of 8 factors, so the 7 other factors are damning enough. In other words, this court says it doesn't matter if any consumers actually changed their behavior because the other proxies to measure the efficacy of the defendant's actions (i.e., the other elements of the likelihood of consumer confusion test) should matter more. Hmm.

The court has no problem declaring the defendant's conduct "willful" (the white-on-white text is really tough to defend, even if it's not efficacious), opening the path to an award of damages. The calculation starts with the defendant's entire revenues during the period of time the plaintiff's trademark was on the website (2000-2003), or $1.9M. The defendant is able to show that its gross profits during that time were only $230k, but it further argued that the competitive products were only 1% of its business. The district court wasn't satisfied with the evidence to bolster that argument, so the court awards 100% of the gross profits (instead of 1%). The consequence is that the defendant's entire business ran at zero profit for over three years solely because of its competitive metatagging--even if the metatagging didn't divert a single consumer. To make it worse, the court awards $188k of attorney's fees for the willful infringement plus $7k of costs. And, of course, the defendant paid for its own attorney for 5 years of litigation. All told, ouch.

I won't now belabor the point that both the district court and the appellate court are wrong in their analysis of metatagging. See here for my previous belaboring of that point. Instead, let me reinforce two practice pointers that I've made before:

1) Don't put third party trademarks in keyword metatags. It's just not worth it. The marketing payoff is trivial at best, and too many courts are overreacting to the presence of metatags. Here, it cost the defendant 3+ years of profits for their entire business plus another nearly $200k for some SEO tactics that had little chance of helping anyway. That's a bad business call.

2) If you are defending a lawsuit involving metatags or other technology-mediated uses of trademarks like keyword advertising, you MUST hire an attorney who already understands search engine technologies. As a good acid test, ask your attorney if they know how search engines index keyword metatags. If they don't know that keyword metatags are irrelevant technologically, drop them immediately. The point is that your attorney will need to explain to the judge why keyword metatags don't matter from a technological standpoint (like the attorneys apparently did in this case), and if your attorney doesn't understand the technology, the judge won't either.

Posted by Eric at 02:29 PM | Search Engines , Trademark | TrackBack

August 26, 2008

Court Slams Competitive Metatagging and Keyword Advertising--Soilworks v. Midwest Industrial Supply

By Eric Goldman

Soilworks, LLC v. Midwest Indus. Supply, Inc., 2008 WL 3286975 (D. Ariz. Aug. 7, 2008)

All too frequently, we get an opinion where the judge clearly didn't grasp current implementations of keyword advertising and metatagging. Often, it's simply a bad luck of the draw; in other cases, the defense lawyers may have failed to educate the judge properly (IMO, the Axiom case is an example of the latter).

This opinion, an outgrowth of patent litigation involving two competitors in the soil anti-erosion business, is a good example of a judge who just doesn't get it. The advertiser's misdeed is that it "uses the [trademarked] phrase 'soil sement' in keyword advertising on an Internet search engine and uses variations of the phrase in metatags for its websites." The opinion doesn't specify if the advertiser triggered ads on the term "soil sement" or displayed the trademark in the ad copy, nor does the opinion specify which metatags (keyword, description, others) contained the "soil sement" references.

Those "details" don't matter to this judge, though, because the initial interest confusion doctrine provides a cure-all for any factual or analytical deficiencies. Even though there was zero evidence that the advertiser's behavior actually or might have confused consumers one bit, the court says that the potential for attention diversion from keyword advertising and metatagging was sufficient to constitute initial interest confusion ("the wrong in a metatag initial interest confusion case is ... the diversion of the consumer's initial attention to the defendant's website using the plaintiff's trademark and goodwill"). Unfortunately for the analytical rigor of the judge's discussion, it's already well-established that (1) keyword metatags have no meaningful diversionary power, and (2) as I've explained here, it is impossible to conclude that consumers were diverted until we can confirm where the consumers were trying to go in the first place (and a simple keyword search can't tell us that). (There are plenty more bases to attack the "logic" here; I'm trying to be selective). As a result, this court's reliance on attention diversion concerns is anachronistic at best and pernicious at worst.

This opinion is too inscrutable to draw many useful lessons from it. However, it reinforces a broader lesson that there remains significant legal downside, and minimal marketing upside, to including competitive trademarks in keyword metatags. Therefore, I continue to strongly suggest that advertisers should avoid this practice.

For more, see Rebecca's commentary, where she says she's "depressed" by rulings like this.

Posted by Eric at 09:57 AM | Search Engines , Trademark | TrackBack

August 11, 2008

Minnesota Court Says Keyword Advertising is TM Use in Commerce--Hysitron v. MTS

By Eric Goldman

Hysitron Inc. v. MTS Systems Corp., 2008 WL 3161969 (D. Minn. Aug. 1, 2008)

In a brief and pedestrian opinion, another court outside the Second Circuit said that buying a trademarked keyword is "use in commerce" under the Lanham Act even if the trademark doesn't appear in the ad copy. The court says:

This Court adopts the majority view that using a trademark to generate advertising constitutes a “use in commerce” under the Lanham Act. This approach adheres to the plain meaning of the Lanham Act's definition of “use in commerce.” The language used in the definition suggests that a “use in commerce” is not limited to affixing another's mark to one's own goods but also encompasses any use of another's mark to advertise or sell one's own goods and services.

The court is right about the majority vote, but it's hardly a strong majority. According to my count, the vote was 7-to-6 before this ruling. However, all 6 no votes are in the 2d Circuit, so geographically there is a stronger basis to characterize the rule as the majority rule.

The court also denied the defense SJ motion because more discovery is required to determine consumer confusion.

Posted by Eric at 11:01 PM | Search Engines , Trademark | TrackBack

August 07, 2008

July 2008 Quick Links, Part II (Non-IP Edition)

By Eric Goldman

Search Engines

* Google explains all of the ways that it reinterprets the actual search query provided by a consumer to deliver results for words the searcher didn't use. As I've said before, Google's intermediation makes it impossible for a judge to assume that a defendant's website was ranked based on the search terms selected by the searcher.

* In the vein of In re Yahoo, Google was hit with two class action lawsuits alleging that Google failed to disclose that AdWords ads were going to be placed on undesirable pages liked parked pages. See Levitte v. Google (complaint and Justia page) and RK West v. Google (complaint and Justia page).

* Google was denied attorneys fees in the long-running Parker v. Google case. Parker v. Google, Inc., 2008 WL 2600299 (E.D. Pa. June 30, 2008).

Wikipedia

* Defamation lawsuit against Wikimedia tossed per 230. I've been waiting for the actual ruling to do a complete writeup. If you see it, please pass it along.

* NYT: "Wikipedia Tries Approval System to Reduce Vandalism on Pages." Surprised?

Trespass to Chattels

* In the latest development in Oracle v. SAP/TomorrowNow, SAP has shut down TomorrowNow, the subsidiary that prompted the lawsuit from Oracle. The Second Amended Complaint expands the finger-pointing at SAP for supervising its subsidiary. Still unresolved: the size of SAP's check to Oracle, and possible jailtime for TomorrowNow folk.

* Thomas O'Toole: Illinois adds anti-scraping provision to its attorney discipline website to block Avvo's crawlers.

Marketing

* 50 Cent is back in court on another questionable legal theory (see our first deconstruction of his litigation tactics). This time, Taco Bell tried a quasi-ambush marketing stunt to get something for free that he thinks they should have paid for.

* Rebecca on the latest ruling in NetQuote v. Byrd, the "lead fraud" case. Also, the ruling has some interesting discussion about whether a competitor who clicks on a competitor's ads in AdSense is guilty of a tort of "click fraud." The court says not in this case.

* TRUSTe is converting from a non-profit to a for-profit company.

Porn

* ACLU v. Mukasey (I've lost track of the number of AGs who have been the named defendant in this lawsuit). The Third Circuit struck down COPA for the third time.

* PC Magazine: RIP Usenet, killed by the New York AG office's campaign against child porn traded on USENET.

Miscellaneous

* A bizarre article on "Internet trolling" in NYT Magazine. With its rambling and scattered discussion, I have no idea what the author defines as trolling. However, the article did bring to mind a much better 1994 article from Wired, The War Between alt.tasteless and rec.pets.cats.

* Steinbuch v. Cutler, 2008 WL 2622853 (E.D. Ark. July 1, 2008). The court denied a motion to transfer the long-running case to DC.

* If a caffeine-addicted blogger goes off about your business, it's risky to fight back.

* Mike Masnick: Keeping The Benevolent Dictators of Silicon Valley Honest

* Wed, Aug. 13, 1-2 Eastern time, David Donoghue, Evan Brown and I will be doing an ALI-ABA teleseminar about the latest developments in 47 USC 230. Details. Mention coupon code TSPV02EG and save $30.

Posted by Eric at 06:57 AM | Content Regulation , Internet History , Marketing , Search Engines | TrackBack

July 05, 2008

Two Regressive Search Engine Advertising Rulings--Standard Process v. Total Health and Finance Express v. Nowcom

By Eric Goldman

It's not uncommon for courts to make judgments based on outdated understandings of precedent and technology, especially when dealing with dynamically evolving areas like Internet trademark law. Nevertheless, it can be a little dispiriting to read opinions that ignore modern sensibilities and look like they could have been written years ago. Two such cases came out in June:

Standard Process, Inc. v. Total Health Discount, Inc., 2008 WL 2337279 (E.D. Wis. June 6, 2008)

This is yet another case involving channel leakage leading to unauthorized Internet sales of legitimate goods. I've blogged about this issue several times, including:

* Australian Gold v. Hatfield (10th Cir 2006)
* S&L Vitamins v. Australian Gold (EDNY 2007)
* Standard Process v. Banks (E.D. Wis. 2008) [yes, same court and same plaintiff]
* Designer Skin v. S&L Vitamins (D. Ariz. 2008)

The last two cases were largely favorable for the Internet retailer. Unfortunately, this latest ruling barely acknowledges the S&L case (and ignores the Standard Process case altogether) and jumps back to the pro-plaintiff (and doctrinally corrupt) Australian Gold precedent as if it were the only relevant ruling. What happened?

The court says that the Internet retailer may be communicating implied sponsorship/favoritism of the trademark owner by (1) using the "we" and "our" pronouns to describe the product on its website, apparently creating an overly familiar discourse, and (2) buying keyword advertising triggered by the trademark and ranking well for it. This implied sponsorship/favoritism costs the Internet retailer both a first sale defense and a nominative use defense. No SJ for the Internet retailer on trademark infringement.

The court's emphasis on first-person pronouns is ticky-tack at best. I'd sure love to see some consumer survey evidence to show that the usage actually led consumers to make some association between the retailer and the manufacturer. I'd be really surprised if consumers drew any of the inferences made by the courts.

Similarly, thinking that consumers assume that high ad placement for the trademark implies sponsorship by the trademark owner is SO five years ago. Though this issue has come up in a few prior cases (for example, an analogous issue was central to the Playboy v. Netscape case from 2004), I've never seen any empirical evidence validating this assumption, and I am fairly confident that a reliable survey conducted today would thoroughly destroy this line of thinking.

In any case, the breezy way that the court tossed aside the nominative use defense highlights that the defense isn't all that useful to Internet trademark defendants. For this reason, I continue to believe that we need the trademark use doctrine (which, I understand, wasn't at issue here) to screen out cases before defendants have to rely on such a flimsy doctrine like nominative use.

The case also discusses whether the Internet retailer committed false advertising by saying that it bought from authorized sources. Rebecca parses this issue.

Finance Express LLC v. Nowcom Corp., 2008 WL 2477430 (C.D. Cal. June 18, 2008)

Finance Express and Nowcom are competitive providers of "software to automate and facilitate credit relationships between used automobile dealers and lenders." Finance Express acquired some software and tried to migrate users of that software to its standard platform. This transition appeared to trigger a scramble for customers in transition, and Nowcom launched a self-acknowledged "aggressive" marketing campaign for those customers that included the following features:

* registering several domain names containing Finance Express trademarks
* posting a self-laudatory press release at those domain names urging customers to transition to it. Oddly, this press release contained an "About Finance Express" section that the court said made it look like a joint press release between Nowcom and Finance Express.
* including Finance Express' trademarks in the metatags, which the court describes using the archaic term "keyword stuffing."
* "keying" (another archaic term) by buying Finance Express' trademarks as keyword triggers at the search engines to trigger banner ads. The court expressly refers to banner ads, but in the discussion it's clear that Newcom bought typical text ads.

If Nowcom's marketing campaign had only 1 of these features, a court might have been more willing to give it a free pass. But the overall package of competitive features was clearly overwhelming to the court. It was easy for the court to see competitive trademark references plus a perceived injury (Finance Express had transitioned only 250 dealers when it projected it would transfer 850) and blame the technology.

The court goes through numerous gyrations to find potential trademark liability here. For example, Finance Express has a number of weak descriptive trademarks, but the court circularly uses the fact that Nowcom targeted the trademarks as evidence that the descriptive trademarks had derived secondary meaning. The court also struggles with the Ninth Circuit's ambiguous caselaw on whether metatags and "keying" constitutes a use in commerce, but the court says that it sees lots of commercial activity on Nowcom's part, so it must qualify. (Cite to two 2006 cases Edina Realty and Humble Abode--hey judge, there have been just a few use in commerce cases since 2006!). And finally on the likelihood of consumer confusion question, the court uses the initial interest confusion doctrine as a crutch (extensive cites to Brookfield). Overall, this analysis reads more like a ruling from 1999 than 2008. Preliminary injunction for Finance Express.

Unfortunately, I'm not sure how many practical lessons we can learn from this case.

* The domain names. I don't know many trademark lawyers who would greenlight one competitor's purchase of domain names containing the trademarks of a competitor, and it's a little unsettling to see Nowcom use the technique in 2007. Indeed, the court finds the practice completely meritless, concluding "the only purpose Nowcom could have had in registering Finance Express' domain name was to direct potential consumers of Finance Express' products to Nowcom's website."

* Metatags/Keyword Stuffing. I have argued against including competitive trademarks in keyword metatags on a straight cost-benefit basis because they are relatively ineffectual from an SEO standpoint but courts--like this one--are easily spooked by them and exaggerate their technological power.

* Keying. The court reflects the overall confusion about "keying" in the Ninth Circuit, but the fact that the court doesn't even understand the difference between banner ads and text ads undercuts this ruling's credibility.

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

July 01, 2008

June 2008 Quick Links

By Eric Goldman

Trademarks/Domain Names

* Utah Lighthouse Ministry v. Foundation for Apologetic Information and Research, 2008 WL 22043807 (10th Cir. May 29, 2008). CMLP writeup. Nice 10th Circuit win for a gripe site against trademark infringement and cybersquatting. This case, plus the SKI VAIL case, indicate that the 10th circuit is making progress undoing the harm it created in the Australian Gold v. Hatfield case.

* Georgia has a new anti-phishing law (16-9-109.1) that acts as a para-trademark law. See my comments on the analogous California anti-phishing law.

* After initiating a trademark lawsuit against a consumer review site and soundly losing in court, Lifestyle Lift paid $17,500 to settle its own lawsuit and avoid claims for legal fees under Rule 11 and the Lanham Act.

* Marty reports on a German case saying that white-text-on-a-white-background is a trademark use.

* Update on the battle over the trademark registration for "SEO."

* Will TLD proliferation lead to a new open era in domain name administration, or will the resulting anarchy just reinforce that top search engine placement is the really important online real estate? It seems like the currently limited number of TLDs has some benefits from a bounded rationality standpoint, and those benefits will be lost in a cacophony of unknown TLDs.

Patents

* My colleague Colleen Chien has posted "Patently Protectionist? An Empirical Analysis of Patent Cases at the International Trade Commission" (forthcoming William & Mary Law Review). She empirically demonstrates that the ITC mostly involves disputes between two domestic litigants, making it a redundant battleground with federal district court but nevertheless an attractive venue for plaintiffs due to a number of procedural advantages. She makes a number of recommendations to eliminate the litigation gamesmanship offered by having parallel venues. Check it out.

Search Engines

* Udi Manber, chief algorithm keeper for Google, reiterates why it's silly for lawyers and judges to put too much legal emphasis on the relative placement of search engine results, saying "it's definitely the case that if you do the same search on a different cluster, you may get slightly different results at a given time. It's also the case that if you do the same search on different days you may get different results, because some of the results are things we indexed five minutes ago."

(Over)Regulation

* In response to an enforcement effort by the NY AG's office, several Internet access providers have blocked access to newsgroups that are putatively sources of child pornography. See the NYT story and the NY AG press release. In practice, this means wholesale takedowns of newsgroups that may have nothing to do with child porn. For example, Verizon is killing all USENET hierarchies except comp.*, misc.*, news.*, rec.*, sci.*, soc.*, and talk.*. Wired suggests this is the death of online intermediary freedom as conceptualized in 47 USC 230. Of course, 230 never protected intermediaries from criminal exposure for child porn, and this isn't the first time that an access provider has knuckled under to the NY AG's office. See the BuffNet enforcement action from 2001.

* Ohm, Paul. The myth of the superuser: fear, risk, and harm online. 41 UC Davis L. Rev. 1327-1402 (2008). A neat article on how regulators manufacture a fake bogeyman, the unbeatable "superuser," as a justification for expansive regulatory power.

* No evidence that data breach disclosure laws actually help reduce identity theft. Surprised?

* The FTC wants civil enforcement authority for spyware actions. Haven't they heard that the adware battle is already over...and they won?

Contracts

* Mark Radcliffe expresses concern about the ALI's proposed software licensing project on open source licenses.

* Sarah Bird on a messy contract lawsuit involving an SEO contractor.

Anonymity

* Tendler v. www.jewishsurvivors.blogspot.com, 2008 WL 2352497 (Cal. App. Ct. June 10, 2008). A subpoena request to identify a blogger doesn't support an anti-SLAPP cause of action.

* In the AutoAdmit lawsuit, Doe 21's motions to squash the subpoena and proceed anonymously were both denied. David Hoffman provides an update on the case.

Event Tickets

* Chicago has moved against eBay for reselling tickets in violation of its amusement tax law.

* The Ticketmaster v. RMG case ended with a default judgment granting a permanent injunction and $18.2M in damages.

General

* Vanity Fair: How the Web Was Won.

* Paul Levy blogs about a plaintiff's effort to bypass 230 by suing the authors of complaints about the vendor and then joining the consumer complaint site as a necessary party as a cost-increasing tactic.

* BusinessWeek on emerging technological tools to protect workers' attention against unwanted/untimely interruptions.

* Text message-savvy kids educate the North Carolina DMV about the meaning of the term "WTF," which was used on a license plate example on the DMV's website.

* I have one free pass to OMMA Behavioral in San Francisco July 21. First person to send me an email asking for the pass gets it.

Posted by Eric at 12:32 PM | Adware/Spyware , Content Regulation , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Patents , Privacy/Security , Search Engines , Trademark | TrackBack

June 05, 2008

Keyword Metatags and Keyword-Triggered Ads Don't Create Initial Interest Confusion--Designer Skin v. S&L Vitamins

By Eric Goldman

Designer Skin, LLC v. S & L Vitamins, Inc., 2008 WL 2116646 (D. Ariz. May 20, 2008)

An Arizona district court has ruled that the surreptitious use of trademarks doesn't create a likelihood of initial interest confusion, granting summary judgment on the trademark claims to the defendant.

This case is another enforcement action brought by a manufacturer trying to keep its goods from leaking out of its restricted channel and being sold on the Internet. For other lawsuits along this line, see Australian Gold v. Hatfield, S&L Vitamins v. Australian Gold (yes, the same S&L...and the same lawyer) and Standard Process v. Banks. The plaintiff tries the typical arsenal of claims to control the independent online retailer, including trademark infringement and dilution, copyright infringement for displaying product shots, interference with contract and other related claims.

Trademark Infringement

With respect to trademark infringement, the plaintiff only complained about the surreptitious trademark uses in the keyword metatags and in keyword advertising, not any uses visible to consumers. The plaintiffs argued that these surreptitious uses created initial interest confusion (the discussion skips over the trademark use in commerce question). As I've said repeatedly, no one really knows what initial interest confusion means or how to develop a doctrinally rigorous test for measuring it, so every court makes up its own definition. This court's manufactured definition anchors initial interest confusion in "deception." This is consistent with the general Seventh Circuit articulation of initial interest confusion (although the 7th Circuit doesn't understand initial interest confusion any better than the other circuits), and the court cites to the 7th Circuit Dorr-Oliver case. However, the court partially breaks with some of the controlling Ninth Circuit jurisprudence, which in Brookfield rooted the doctrine in attention diversion, not deception.

By grounding initial interest confusion in deception, it makes the doctrine easy to apply in this case. S&L Vitamins didn't deceive consumers--it was selling legitimate goods and accurately describing this fact. The case has some odd discussion about the possible inherent deception if S&L Vitamins ranked well in the organic search results, but the court rejects this line of thinking, saying anyone confused by good search engine placement on a competitor's trademark will be the "naive few" because S&L operated under a distinguishable domain name. This is the right result but the wrong reasoning--for the right reasoning, see here.

Instead of thinking that keyword metatags and ads creates deception, the court sees them as information-enhancing, thus getting the point that the goal is to match interested consumers with willing vendors:

In contrast to the deceptive conduct that forms the basis of a finding of initial interest confusion, S & L Vitamins uses Designer Skin’s marks to truthfully inform internet searchers where they can find Designer Skin’s products. Rather than deceive customers into visiting their websites, this use truthfully informs customers of the contents of those sites. Indeed, in practical effect S & L Vitamins invites Designer Skin’s customers to purchase Designer Skin’s products. The fact that these customers will have the opportunity to purchase competing products when they arrive at S & L Vitamins’ sites is irrelevant. The customers searching for Designer Skin’s products find exactly what they are looking for when they arrive at these sites. S & L Vitamins is not deceiving consumers in any way.

Bingo! Summary judgment for S&L Vitamins.

Even though this IIC-qua-deception meme is generally consistent with 7th Circuit law, this result appears to be directly contrary to the uncited 7th Circuit Promatek v. Equitrac case, where the court waffled on whether keyword metatags were inherently deceptive, even when used by a legitimate provider of services for the trademarked good.

More importantly, this result also runs directly contrary to the 2006 10th Circuit Australian Gold case, which found that keyword metatags in a virtually identical situation (unauthorized seller of leaked legitimate goods) constituted initial interest confusion. The court acknowledges this conflict but dismisses the 10th Circuit case as "unpersuasive" because the mark usage is designed to attract consumers to the trademark owner's actual goods. From my perspective, this is more evidence that courts are not following the Australian Gold v. Hatfield precedent--the most obvious example being the 10th Circuit's own Ski Vail case, which took a big chunk out of the Hatfield precedent. I know plaintiffs love citing the Hatfield precedent, but it's becoming increasingly less credible to do so.

Trademark Dilution

Given the more rigorous requirements for fame post-TDRA, it seems like many manufacturers who tightly control their channel and restrict Internet sales may inherently have a problem establishing fame. Perhaps I'm not part of the target audience, but I had never heard of Designer Skin products before.

The court doesn't get into the fame issue, instead granting summary judgment to S&L based on the nominative use defense because all of S&L's trademark uses refer to the plaintiff's trademark. I'd have to do some research to confirm this, but I believe this is one of the first (if not the first) post-TDRA cases dismissing a dilution claim on nominative use grounds. Personally, I think S&L's usage neatly fits my characterization as a "commercial referential trademark use," but it's great to see a court get the point, whatever terms it uses to describe the behavior. The court also (correctly, IMO) says that a commercial referential trademark use effectively can't cause a likelihood of dilution because it's neither blurring (there's no new definition) nor tarnishing (it's an accurate reference).

Copyright Infringement

Designer Skin complained that S&L copied the photos posted to its website. S&L claims that it simply recreated the product shots independently. This factual dispute is enough to prevent SJ. Patry believes that 17 USC 113(c) should have protected S&L here, but as Rebecca explains very well, 113(c) may not be germane--Designer Skin admitted that S&L could recreate its own shots if it wants to (see FN9 of the opinion), so the only question is whether the photos actually displayed on S&L's site were independently created.

If S&L snatched the photos from Designer Skin's website, then the court says republishing those would not be a fair use. I think this is probably right, although it's rather silly from a social welfare perspective to make people recreate product shots when invariably they will look effectively the same, and certainly the manufacturer isn't going to stop producing product shots simply because legitimate downstream retailers "free ride" on that investment. Rebecca has more to say about the fair use discussion.

Other Claims

The court dismisses the interference with contract claim and S&L's unfair competition claim, but it preserved Designer Skin's unfair competition claim (which, as Rebecca rightly points out, should be preempted by copyright's preemption clause).

Conclusion

As I've said before, I don't understand why plaintiffs try to control their channel so tightly to preclude Internet sales. I mean, I get the fact that they are trying to increase profits by reducing retailer competition, but those efforts will pay off only in the short run at best. Time to develop a new business model! Meanwhile, courts are realizing that they are being asked to facilitate anti-competitive practices, and wisely they are balking. Thus, a case like this illustrates that a judge will find limits to the initial interest confusion doctrine (a doctrine that otherwise has no natural doctrinal limits) and interpose pro-competitive defenses to trademark dilution.

Posted by Eric at 10:49 AM | E-Commerce , Search Engines , Trademark | TrackBack

June 04, 2008

Google Sued for Running Ads for "Fraudulent Mobile Subscription Services"--Goddard v. Google

By Eric Goldman

Goddard v. Google, Inc., Case No. 108CV111658 (Cal. Super. Ct. complaint dated April 30, 2008). Google's notice of removal to federal court C08 02738 (N.D. Cal. removal notice dated May 30, 2008). [warning: 1.5MB file. Google's notice contains a copy of the original complaint.]

Cyberlaw is filled with examples of plaintiffs suing the wrong defendant for perceived transgressions committed by someone else. Today's misdirected lawsuit involves "fraudulent mobile subscription services," which are optional third party services for cellphones (such as ringtones) that are charged on a periodic basis. The plaintiffs in this putative class action lawsuit feel like they got fleeced by providers of these subscription services. If they did, I hope they get appropriate redress from the wrongdoing vendors. But instead of suing the allegedly fraudulent vendors, the plaintiffs think Google should cover the losses for the sole reason that Google ran ads for the services. The argument goes as follows:

* Google has an express policy requiring mobile service providers to disclose certain info to consumers about their practices
* Google deliberately does not enforce this policy (or inadequately enforces it) to enjoy undeserved cash
* As a result, Google should stand behind all of the losses committed by its advertisers

There are some obvious problems with this argument. First, it's a gross example of cyberspace exceptionalism. An analogy might be that dead-trees newspapers should stand behind any losses suffered by readers who transact with newspaper advertisers. Sounds ridiculous? It does to me, whether the publisher is online or off.

Second, this argument ought to be clearly, squarely and soundly trumped by 47 USC 230. eBay has won on this exact point when plaintiffs have tried to hold it liable for accepting advertising (in the form of listings) for fraudulent products (at minimum, the Gentry case involving fake sports memorabilia seems apropos). The recent Doe v. MySpace case is also analogous, because the plaintiffs were trying to hold MySpace liable under a "premises liability" theory for tortious activity that took place outside of its premises. Either way, if Google's sole role in the process was publishing third party ads, it's not liable per 230.

It's not clear if the plaintiffs know about 230 or think it applies to this case, but they made two arguments that could be used to argue around 230. First, they allege that Google helped write the ad copy. I'm still not sure if this allegation actually is enough to hold Google liable for downstream fraud, but unless Google actually wrote the copy itself, it's not liable for third party ads even if it helped edit them or prescreened them (see Ramey v. Darkside Productions).

Second, they try to argue that Google's contract with its advertisers describing minimum standards for mobile service vendors running Google ads is an express marketing representation that binds Google for any breaches by the advertiser. By anchoring the claim in false advertising, the allegation might be designed to take advantage of the Mazur v. eBay exclusion to 230. However, treating contractual restrictions with a third party as affirmative representations to consumers is the exact same analytical error made by the New Jersey Attorney General's office in the JuicyCampus investigation, and the error is no less baffling here. I remain surprised that bright lawyers so fundamentally misunderstand the interaction between contract and false advertising law.

There's one more twist to this lawsuit that merits discussion. As a predicate harm for some of its claims, the plaintiffs argue that their cellphones are computers under the Computer Fraud & Abuse Act (CFAA) and the vendor's confirmatory text messages (required to authorize the service) are unauthorized accesses of a protected computer under the CFAA. I'm not really sure what to make of this theory, but I'm pretty sure it's novel (not necessarily in a good way). I'm OK with treating at least some cellphones as computers under the statutory definition, although this would expand the CFAA's reach quite a bit, but I think it would be highly problematic to treat text messages to a cellphone as an unauthorized access. And even if we did that, I still don't see how Google is responsible for the violation.

(For kicks, there is an analogous claim that Google aided and abetted the vendors' trespass to chattel of the cellphones).

One more thing: this interpretation of the CFAA follows the DOJ's recent attempt to treat breaches of a website's user agreement as a criminal CFAA violation in the Lori Drew prosecution. Given these crazy expansive CFAA claims, it may be time to rethink that statute.

Posted by Eric at 08:20 AM | Derivative Liability , Marketing , Privacy/Security , Search Engines | TrackBack

June 02, 2008

May 2008 Quick Links, Part 1 (Trademarks/Domain Names Edition)

By Eric Goldman

* Syncsort Inc. v. Innovative Routines Intern., Inc., 2008 WL 1925304 (D.N.J. April 30, 2008). Including a third party trademark in a keyword metatag qualified as nominative use. (Along the same lines, see the Designer Skin case that I will blog about later this week).

* Punch Clock, Inc. v. Smart Software Development, 2008 WL 936889 (S.D. Fla. April 7, 2008). In a default judgment, a judge awarded the trademark owner the right to obtain 7 years of corrective advertising (a total of over $1M), calculated by what it would take for the trademark owner to buy the top spot in Google AdWords. Tom O'Toole sorts through this mess.

* A new ruling in the V Secret v. Moseley case. Rebecca puts it in context.

* Matthew Nelson, Comment, Utah's Trademark Protection Act: Over-Reaching Unconstitutional Protectionism or Decisive Clarifying Legislation?, 2007 Utah L. Rev. 1199. A couple of months after the Utah legislature repealed the Utah Trademark Protection Act, a Utah law student says the law is unconstitutional. His conclusion:

The Utah Trademark Protection Act places an undue burden on interstate commerce and the courts should find it unconstitutional under the dormant Commerce Clause using the Pike balancing test. Apart from the constitutional problems, the Act is bad policy for Utah businesses and Utah consumers. Although the unpredictability that currently exists in the courts makes it difficult for Internet advertisers and advertising sellers to mitigate risks and set efficient policy, these risks are far outweighed by costs to consumers and business. The Act sacrifices fair use, comparative advertising, and noncommercial use to gain certainty. These trademark functions are more important than the additional protections afforded mark holders under the law, protections that go too far and encourage anticonsumer policy rather than furthering the competitive environment trademark policy seeks to create.

Uses of keywords to trigger advertising that are unfair, deceptive, and contrary to trademark policy can still be pursued under the current common law. Trademark law is effectively evolving to handle these new challenges. If there should be legislation, it should be at the federal level because this issue so profoundly affects interstate commerce. The refining process that is occurring in the courts will provide Congress, should it choose to act, with valuable insight into how to handle all the competing interests in the rapidly growing area of Internet advertising.

* Tdata Inc. v. Aircraft Technical Publishers, 2008 WL 2169353 (S.D. Ohio May 21, 2008). Initial interest confusion does not substitute for actual confusion when considering if damages are appropriate under the Lanham Act. See my prior post on this case. See also the related Gibson Guitar case.

* I'm not exactly sure what's going on in France, but a French court has asked the European Court of Justice to opine on the legitimacy of keyword advertising.

* Verisign has obtained a patent for its defunct SiteFinder tool. Domain name wildcarding was taking place for years before VeriSign tried it, so I wonder about the prior art to this patent.

* NYT: Can a Dead Brand Live Again? This article discusses the development of a secondary market for well-recognized but defunct brands. Says the market maker: "We're taking consumers' memories and starting entire businesses."

* Todd Davies, A Behavioral Perspective on Technology Evolution and Domain Name Regulation, PAC. MCGEORGE GLOBAL BUS. & DEV. L.J. 21, 1-25 (2008). See my previous blog post about this paper.

Posted by Eric at 10:36 AM | Domain Names , Patents , Search Engines , Trademark | TrackBack

May 26, 2008

Search Engine Advertiser Litigation Updates

By Eric Goldman

Recently, there were intermediate rulings in two long-standing cases by search engine advertisers against search engines.

CLRB Hanson Industries, LLC v. Google Inc., 2008 WL 2079200 (N.D. Cal. May 14, 2008)

This lawsuit involves the Google AdWords feature that allows advertisers to set "daily budgets." Google doesn't enforce the daily budgets strictly; instead, it gives itself the permission to deliver up to 20% overage in any day and credit the overage against future performance. The lawsuit was initially filed in August 2005. In August 2007, the judge issued an important preliminary ruling that had three main holdings:

1) Google's AdWords contract was a binding contract.
2) Much of the breach of contract claim was dismissed, but the judge left open claims by advertisers of less than 1 month, advertisers who ended their campaign in a partial month, and advertisers who paused their campaign.
3) The false advertising claim was left open.

Because the August 2007 substantially limited the remedies available to advertisers, I expected that ruling to prompt the parties to settle. But here we are in May 2008, and the parties are still going at it. This month's ruling was largely procedural in that it attempted to clean up any lingering confusion over the August 2007 ruling. As a result, it really doesn't break much new ground; instead, the opinion largely reiterates the main rulings from the August 2007 opinion. Rebecca has more thoughts on the false advertising aspects.

In re Yahoo! Litigation, 2008 WL 1882786 (C.D. Cal. April 21, 2008)

This lawsuit got a lot of press when it was first filed in May 2006 as an example of "syndication fraud." See my initial post. It relates to Yahoo's display of ads on pages promoted by adware and on typosquatted and domain name parking pages. The advertisers believed these pages had lower quality traffic than other pages, and this disrupted their expectations.

In the past two years, the case has gone through various procedural shenanigans. This ruling addresses Yahoo's motion to dismiss the second amended complaint on a number of grounds.

Yahoo invoked a clause in its advertising agreement barring class litigation against it. Under prevailing California law, these clauses are probably unenforceable in consumer contracts; but there hasn't been a lot of litigation over these clauses in business-to-business contexts, especially because it's hard to argue unconscionability in B2B contexts. The court punts the issue on Yahoo's motion to dismiss, saying that it needs more facts about the parties' respective positions, which makes this issue more appropriate for resolution on summary judgment. Tom O'Toole has more to say about this issue.

Yahoo also tries to dismiss the breach of contract claim over its alleged promise of targeted ad placement, but the court refuses to dismiss because California law freely allows extrinsic evidence to explain unambiguous contractual terms. However, though the court didn't dismiss the claim, I think the plaintiffs will have difficulty prevailing on this contract breach claim because, as the court implicitly concludes, the plain language of the contract weighs heavily against their arguments.

Yahoo made several other efforts to dismiss clams, and the court rejects all but one of them (it dismissed the claim of civil conspiracy). Because so much of the lawsuit survived, this motion to dismiss ruling appears to be largely a win for the plaintiffs. However, I still think this remains a low-merit lawsuit because it's disingenuous for advertisers to complain when they got everything they paid for. Further, two years later, this lawsuit now seems strangely anachronistic given that the Great Adware Wars of the mid-2000s are over.

Posted by Eric at 08:57 PM | Licensing/Contracts , Marketing , Search Engines | TrackBack

May 07, 2008

April 2008 Quick Links

By Eric Goldman

Anti-Gaming

* Even though Ticketmaster won its lawsuit, Minnesota overreacted to the Hannah Montana ticket crush by banning software to circumvent an online ticket allocation process. See Sec. 609.806. Check out the hyperbole in this press release! What's next? Are legislators going to make SEO a crime?

* Google modified its relevancy algorithm 450 times in 2007. And yet courts still cite to Brookfield for how search engines operate!

* The UK cracks down on shill marketing online. ClickZ: "Under the new [UK] Consumer Protection from Unfair Trading regulations, it will be illegal to "Falsely claim or create the impression that the trader is not acting for purposes relating to his/her trade, business, craft or profession," or to "falsely represent oneself as a consumer."" See also AdAge.

IP

* Speaking of SEO....the latest pathetic attempt to grab a generic term and trademark it? "SEO." Sarah Bird is on the job.

* Do student notes of a professor's lecture constitute copyright infringement? We may find out.

* Atlantic v. Howell. More on the "making available" theory of copyright infringement.

* Sarah Bird on registering copyrights in websites and blogs.

* A for-profit T-shirt listing the names of deceased Iraq soldiers sparks a publicity rights lawsuit.

General

* Bowen v. YouTube, Inc., 2008 WL 1757578 (W.D. Wash. April 15, 2008). The court upheld the forum selection clause in YouTube's user agreement.

* eBay is ending its promotion of third party live auctions. Maybe because of this loss?

* Rebecca blogs on SuccessFactors, Inc. v. Softscape, Inc., 2008 WL 906420 (N.D. Cal.), an odd case involving the Computer Fraud & Abuse Act and an "attack PowerPoint" allegedly sent by a competitor to its prospective customers.

* Kate Kaye writes about the new Internet industry lobby group, the "State Privacy and Security Coalition," designed to fight laws like the Utah Trademark Protection Act.

* Kevin Werbach, The Centripetal Network: How the Internet Holds Itself Together, and the Forces Tearing it Apart, UC Davis Law Review, Forthcoming. An interesting paper applying "network formation" theory to show how the Internet came together as a unified network and how those unifying forces are under constant stress.

Posted by Eric at 08:52 PM | Content Regulation , Copyright , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack

April 26, 2008

Injunction Requires Negative Keywords in Future Adwords Campaigns

By Eric Goldman

Orion Bancorp Inc. v. Orion Residential Finance LLC, 2008 WL 816794 (M.D. Fla. March 25, 2008).

It looks like courts/lawyers are finally getting savvier about broad matching (see my previous blogging on the legal understanding of broad matching in the Rhino Sports, Hamzik and Picture It Sold cases). In a default judgment over trademark infringement using the term "Orion," the plaintiff's lawyer got the judge to order a restriction on the defendant:

from purchasing or using any form of advertising including keywords or “adwords” in internet advertising containing any mark incorporating Plaintiff’s Mark, or any confusingly similar mark, and shall, when purchasing internet advertising using keywords, adwords or the like, require the activation of the term “ORION” as negative keywords or negative adwords1 in any internet advertising purchased or used.

(emphasis added)

According to this injunction, then, if the defendant buys the keyword 'bank" and broad matches it, the ads still should not show up for a search on the term "Orion Bank." Perhaps there have been other injunctions with similar requirements to use negative keywords, but this is the first I've seen. (I did a search in Westlaw on the term "negative keyword" and this was the only injunction I found). Going forward, I think it's a logical addition to any injunctive relief request in a trademark infringement case.

HT: Tom O'Toole

UPDATE: Sarah Bird provides some helpful context for the injunction.

Posted by Eric at 03:42 PM | Search Engines , Trademark | TrackBack

April 24, 2008

Court Says Keyword Metatags Don't Matter--Standard Process v. Banks

By Eric Goldman

Standard Process, Inc. v. Banks, 2008 WL 1805374 (E.D. Wis. April 18, 2008)

SEOs and SEMs have known for years that most search engines ignore or give minimal acknowledgement to keyword metatags. Lawyers, on the other hand, have been living in a parallel fantasy universe where keyword metatags single-handedly divert unwaveringly brand-loyal customers to piratical competitors. Even today, many courts still rely on the 1999 Brookfield case and its dreadful keyword metatags-as-a-false-billboard analogy as an accurate and definitive statement of how search engines operate today. Prime offender #1: the recent 11th Circuit hairball in National American Medical v. Axiom, where the court may not have even understood the difference between keyword metatags and description metatags.

Despite this, defendants have occasionally defeated trademark claims over their inclusion of third party trademarks in the keyword metatags based on a variety of theories, including a lack of a use in commerce (ex: Site Pro-1, S&L Vitamins), insufficient likelihood of consumer confusion (ex: JG Wentworth), nominative use (ex: Welles) and others. But as far as I can recall, no court had rejected a keyword metatag for the right reason, which is that they are technologically ineffective.

That's why this new opinion appears to break important new ground. The court, citing this paper and Prof. McCarthy's treatise, rejects the argument that keyword metatags create initial interest confusion, in part because keyword metatags are immaterial. Hooray! Hey all of you lawyers still citing to Brookfield for its description of search engine operations, I think you need to acknowledge this case now too.

The rest of the case is really interesting too, with facts highly similar to the Australian Gold cases (see S&L Vitamins v. Australian Gold; Australian Gold v. Hatfield). The plaintiff makes dietary supplements. Through its distribution agreements, it tightly controls its channels to limit retailing to healthcare providers and, not incidentally, preserve high margins; thus, all authorized distributors are prohibited from making Internet sales. The defendant once was an authorized distributor but was kicked out of the chain for selling over the Internet. In response, the defendant bought supplies from other authorized distributors (who were contractually barred from reselling to distributors selling via the Internet) and continued offering the products via his website. The manufacturer is now suing the website for selling these legitimate goods that leaked out of the authorized channel.

As I've mentioned before, efforts to preserve high margins through anti-Internet channel control are doomed. Some of the lawsuits might succeed in controlling the channel in the short run, but Internet competition will prevail, like it or not, and supra-competitive margins will be a relic of the past.

In any case, under the trademark exhaustion/first sale doctrine, the defendant may resell the legitimate goods so long as consumers are not confused about a sponsorship relationship between the manufacturer and distributor.

(That's not to say that the defendant has the right to buy the goods. If the plaintiff really cares about the channel conflict, the plaintiff can clamp down on the authorized distributors who are leaking the goods to the defendant and therefore dry up the defendant's supply. But it may have to do so without the aid of trademark infringement claims.)

So, the main issue in this case is whether consumers will be confused about a sponsorship relationship between the manufacturer and the website. The court says no with respect to website sales where the defendant didn't show any product shots and included a prominent disclaimer. In contrast, consumers may be confused by the defendant's emails touting the products when the emails included product shots but didn't have a prominent disclaimer. On that basis, the defendant accepted, and the court ordered, an injunction against further promotion of the product without the disclaimer.

This relatively narrow injunction makes some sense, but I'm still confused why the court discussed the product shots. (The plaintiff is also confused why the defendant wasn't enjoined from using product shots, and yesterday it filed a motion to amend the injunction to include a restriction on product shots). I don't see how the inclusion of product shots can communicate some actual/implied sponsorship between manufacturer and retailer. If the takeaway from this case is that a retailer of legitimate goods that leak out of the channel can't display product shots, it seems like this would hurt consumer decision-making, not help it.

Posted by Eric at 01:49 PM | Search Engines , Trademark | TrackBack

April 21, 2008

March 2008 Quick Links, Part I

By Eric Goldman

It's a sign of my busy March/April that I am just now posting these...

Reputation/47 USC 230

* I have a lot to say about the JuicyCampus story (AP, MSNBC, Chronicle of Higher Education). Unfortunately, I ran out of time to write a full blog post on the subject. For now, some quick thoughts about this interesting and complex situation:
- Taken to its logical conclusion, 47 USC 230 naturally enables sites to do absolutely nothing to restrict harmful speech. (I'm not saying that accurately describes JuicyCampus--I don't have enough facts to make that claim). However, that's not an unexpected failure of the statute--it's the natural consequence of the statute's design. Any concerns about the costs of unrestricted speech fora need to compared with the costs of more regulated systems. It's not clear that one result is automatically better than the other, and certainly there are costs implicit in all solutions. Sam Bayard explores this issue more.
- Sites that lack credible information will face marketplace responses regardless of any legal rules. In JuicyCampus' case, the marketplace responses include consumers deeming the site not credible, plus intermediaries (in this case, universities) may simply block access by its core users.
- Any possible legal action by the New Jersey Attorney General over JuicyCampus' facilitation of harmful speech should be unambiguously preempted by 47 USC 230--even after Roommates.com.
- The attempted legal bypass to 47 USC 230--trying to convert a negative covenant from the users in the user agreement into an actionable affirmative marketing representation by JuicyCampus--is analytically corrupt. It's also not the law, and it's been rejected in several 230 cases (Noah v. AOL comes immediately to mind). Rebecca has more to say on this issue.
- If negative behavioral covenants by users in a user agreement are actionable affirmative marketing representations that such behavior isn't occurring, then the Internet is a target-rich ecosystem because I imagine that just about every Internet company is eligible for enforcement actions.
- Isn't it typical of an enforcement action to go after the target's vendors (in this case, JuicyCampus' ad networks) and watch them instantly fold?
- This issue reminds us that a website can't promise its users anonymity if it allows anyone else (such as an ad server) to serve up portions of its page and thereby have the ability to collect the same server log data.

* Ciolli v. Iravani: The AutoAdmit lawsuits spill over into a new battleground. As I said when I first blogged on the case, this is a "very messy situation" that has only gotten messier.

* Nemet v. ConsumerAffairs.com. Another lawsuit against an online consumer review site for publishing allegedly defamatory negative critiques.

* Steinbuch v. Cutler, 2008 WL 596747 (8th Cir. Mar. 6, 2008). Steinbuch's lawsuit against Hyperion, the publisher of the Washingtonienne book, can continue in Arkansas. His other claims must proceed in Washington DC if at all.

* Washington Post: Due to the speed at which gossip moves over the Internet, "compared with the pre-Internet era, politicians are less likely than ever to survive a sex scandal with their careers intact."

* H. Brian Holland, In Defense of Online Intermediary Immunity: Facilitating Communities of Modified Exceptionalism, 56 U. Kan. L. Rev. 369 (2008). Prof. Holland wrote a paper I had been meaning to write! He explains how 47 USC 230 enables online communities to use a variety of self-governance structures, while a different liability regime would give communities fewer choices and thereby inhibit community formation and management.

Search Engines

* A Canadian web network called Geosign received $160M of VC money but the company was rendered worthless overnight when Google changed its policies and cut off traffic. Domainers beware!

* New book worth checking out: WEB SEARCH: MULTIDISCIPLINARY PERSPECTIVES (Amanda Spink & Michael Zimmer, eds.) (Springer 2008). A nice cross-section of essays on search engine issues from multiple disciplines.

* Need some original content to improve your SEO? You can automatically generate it through splogging, or you can pay actual humans a small amount of money to write short articles. If the cost is low enough and the SEO credit for truly original content is high enough, the latter may end up being a better economic deal.

Spam

* The FTC has lost a jury trial against Impulse Media on its theory that Impulse Media is liable for the spam sent by its affiliates. This is a pretty important decision because (1) the FTC/DOJ rarely lose at trial, (2) their expansive theories about liability for affiliate behavior may be legally incorrect, and (3) the FTC has strong-armed numerous defendants into settlements based on its theory, and future defendants now be willing to fight back.

* On that topic, Cyberheat won an early round in litigation with the FTC over its affiliate practices but has now settled up with the FTC. The settlement gives some guidance about the FTC's thoughts of how marketers should police affiliates, but the Impulse Media jury loss may undermine the teaching of this settlement.

Posted by Eric at 08:32 AM | Derivative Liability , Licensing/Contracts , Marketing , Search Engines , Spam | TrackBack

April 08, 2008

11th Circuit Freaks Out About Metatags--North American Medical v. Axiom

By Eric Goldman

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Oh man, what a bizarre and frustrating ruling from the 11th Circuit on metatags. The parties compete in the "spinal decompression" device market. Defendant Axiom included the plaintiff NAM's trademarks “Accu-Spina” and “IDD Therapy" in the metatags but did not otherwise use the terms. The district court concluded that this constituted trademark infringement, a determination that the 11th Circuit upholds here.

Unfortunately, it's hard to parse this case because the court is imprecise about which metatags were used. I've looked through the defendant's appellate brief and they don't clarify the technology for the court at all--I'm wondering if any of the attorneys involved in this case know that there are multiple types of metatags. We only have the following three facts to work with:

* Axiom included competitive trademarks in the metatags
* Axiom appeared as the second organic search result in Google for the trademarked terms (following the plaintiff, which was #1 in the search results)
* The trademarked terms appeared in the search results descriptions

The court assumes causality here between the metatag inclusion and the search engine displays. This might be possible if Axiom put its competitor trademarks in the description metatags. Doing so isn't automatically problematic; for example, a description metatag that has comparative statements with competitive products should be permissible. However, description metatags--just like any other marketing copy--could be written in a way designed to deceive consumers. If that's what happened here, then I understand the court's anger (even if I might disagree with its analysis).

But another hypothesis fits these facts. The court does not exhibit any understanding of anchor text or the fact that Google sometimes automatically assembles search result descriptions using third party content (such as DMOZ). So it's entirely possible for these three salient facts to occur (i.e., Axiom's site to show up for searches on the competitive trademarks with the trademarks in the site description) even if Axiom only included the trademarks in the keyword metatags (which we know Google ignores). If the latter hypothesis is true, the 11th Circuit completely misattributed responsibility to Axiom for doing things it didn't do.

Predicated on its poorly articulated and possibly erroneous assumptions about Axiom's role in appearing in the search results, the court has little difficulty slamming down Axiom. On the use in commerce question, the court concludes that, pursuant to the "plain meaning" of the statute, metatags are clearly a use in commerce in connection with goods or services because they support advertising objectives. I don't think the statutory language is the least bit clear, especially if search engines ignore keyword metatags and thus the trademark references have no chance of being perceived.

Along the way, the 11th Circuit distinguishes (and denigrates) the Second Circuit's 1-800 Contacts v. WhenU case on two grounds: (1) this involves metatags, not URLs, and (2) "unlike in 1-800 Contacts, the defendant-Axiom in this case did cause plaintiff's trademark to be displayed to the consumer in the search results' description of defendant's site." The court takes an affirmative swipe at the Second Circuit, saying that the analysis in the 1-800 Contacts case is "questionable" and unpersuasive.

On the consumer confusion question, because the plaintiff's trademarks appeared in the search results, the court assumes that "Consumers viewing these search results would be led to believe that Axiom's products have the same source as the products of the owner of the “IDD Therapy” and “Accu-Spina” trademarks, or at least that Axiom distributed or sold all of the products to which the brief description referred, or that Axiom was otherwise related to NAM....Thus, the factual situation in the instant case is that Axiom's use of the meta tags caused a likelihood of actual consumer confusion as to source."

Fortunately, the court does try to limit the collateral damage of its ruling by narrowing the facts at issue:

This is not a case like Brookfield or Promatek where a defendant's use of the plaintiff's trademark as a meta tag causes in the search result merely a listing of the defendant's website along with other legitimate websites, without any misleading descriptions. This is also not a case where the defendant's website includes an explicit comparative advertisement (e.g., our product uses a technology similar to that of a trademarked product of our competitor, accomplishes similar results, but costs approximately half as much as the competitor's product). Although we express no opinion thereon, such a defendant may have a legitimate reason to use the competitor's trademark as a meta tag and, in any event, when the defendant's website is actually accessed, it will be clear to the consumer that there is no relationship between the defendant and the competitor beyond the competitive relationship.

But despite this disclaimer, there's plenty of sloppy and broad language to keep plaintiffs going for some time.

From my perspective, there are two obvious lessons to learn from this case. First, the text of description metatags needs to be reviewed just like any other ad copy. This may seem obvious, but I suspect that many SEMs do not run their metatag scripts by the lawyers. When I was in practice, I would proactively ask our SEM folks to provide a copy.

Second, if you are going to use keyword metatags, you must ensure that competitive trademarks do not appear in your keyword metatags, period. It's just not worth it. They don't buy you much juice with the search engines anyway, and it will leave you exposed to irrational judicial freakouts about keyword metatags if ever tested in court.

Posted by Eric at 12:00 PM | Search Engines , Trademark | TrackBack

April 04, 2008

Rescuecom v. Google Second Circuit Oral Arguments

By Eric Goldman

Yesterday the Second Circuit heard oral arguments in Rescuecom v. Google, and reports from the oral arguments are trickling out.

James Grimmelmann provides a comprehensive report. Many thanks to James for taking the time to write this up. I know how long it takes to write a blog post like his, so we're all the beneficiaries of his work. He concludes with a provocative prediction (thoroughly caveated in his post):

Prediction: 3-0 for Rescuecom, Leval authoring, in a narrow opinion that emphasizes the 12(b)(6) rule against incorporating matters not apparent from the face of the complaint. A Calabresi concurrence mentions the narrowness of the holding and explains why, in his view, it does not affect the settled understanding that retail shelving arrangements, handing out flyers in front of billboards, and other common offline practices are not trademark infringements. Neither opinion says much about the implication of the holding for other online businesses.

Wendy Davis of Mediapost was at the oral argument too, and she wrote up a recap article and an editorial.

Reading James' report, I'm struck by how much of the time the judges spent spinning out hypotheticals, many of them pretty far-fetched. That's unfortunate because judges in full fantasy mode can hypothesize some really crazy scenarios that have no relationship to reality, and writing opinions in response to these hypotheticals ultimately leads to more confusing opinions.

In response to James' prediction, I do think that the case's 12(b)(6) posture heightens the concern for the judges, so I could why the judges would decide to move the legal question to a summary judgment stage. Personally, I am a fan of resolving these issues on the 12(b)(6) because I believe defendants will win these cases anyway after full litigation, so the 12(b)(6) is just a quick way to reach the right result that would likely obtain later only at much higher transactions costs.

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 05:19 PM | Search Engines , Trademark | TrackBack

March 27, 2008

Rescuecom v. Google Pre-Oral Argument Details

By Eric Goldman

We're anxiously awaiting oral arguments in the Rescuecom v. Google case next week. In advance of that, the court cleaned up a couple of matters:

1) The court denied the amicus brief from Yahoo, AOL and eBay. It didn't give a reason for bouncing the brief, although sometimes it's done to avoid a panelist's recusal.

2) Earlier this week, the court posted the following notice:

"Judge Leval wishes to advise the parties as follows:

1. A year ago Judge Leval was invited by the Stanford Law School to be a participant in a two-day conference at the school focusing on Internet issues, which was to be jointly sponsored and organized by the Stanford Law School and Google, Inc. [Eric's note: this is the Legal Futures Conference--see the conference website.] The conference, which was held at the Law school on March 7 and 8, 2008, will pay the travel, lodging and board expenses of the participants. The conferees, numbering approximately 50, included professors of law, business, economics and communications, participants the Internet from the profit and not-for-profit sectors, writers, lawyers, government representatives, judges, and Stanford law students. In preparation for the conference, Judge Leval communicated by email with a Google representative concerning the subject matter and organization of a panel in which he would participate (The subject of the panel was unrelated to trademark law or to any other issue involved in this case.). On one evening, the conferees were hosted for dinner by Google at its campus. During the two days, Judge Leval met and chatted briefly with Google representatives who were involved in organizing the conference.

2. Judge Leval has been friendly for nearly twenty years with William Patry, Esq., since the time Mr. Patry was employed in the United States Copyright Office in the Library of Congress and as Copyright Counsel to the US House of Representatives, Committee on Intellectual Property. For approximately the last two years, Mr. Patry has been part of the legal staff of Google (Mr. Patry was not a participant in the Stanford conference).

Judge Leval is confident that these contacts with Google, Inc. Would in no way influence his consideration of the case. If either party wishes to move for Judge Leval`s recusal from consideration the case (or to request further information or clarification), it should submit a letter-motion (or letter requesting such further information) to the Clerk of the Court by 11:00am on Friday March 28."

Barring such a recusal request, the panel will be Judges Calabresi, Leval and Wesley.

More case resources:

* 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 04:17 PM | Search Engines , Trademark | TrackBack

Google Site-Specific Search-Within-Search Tool--Why is Everyone So Worked Up About This?

By Eric Goldman

On Monday, Bob Tedeschi at the NYT published an article entitled "A New Tool From Google Alarms Sites" about Google's recently launched site-specific search-within-search box. When I first saw the feature, I really didn't think about it very much because I already use Google to search within a site and bypass the site's internal search function. In fact, I routinely use Google to locate items in my own website and blog instead of my own search tool (blog.ericgoldman.org is the #1 site in my Google Web History).

As a result, I didn't think the tool or the article was particularly blog-worthy. However, I've now gotten at least 4 emails from people wanting to chat about this tool. So, by popular demand, some thoughts:

From a trademark law standpoint, I don't think the tool changes the analysis. In theory, Google is gaining more insights into the searcher's intentions; instead of knowing just X (the first search term), it now knows X+Y, which increases the odds that we might intuit the searcher's intent well enough to assess if the searcher is being "diverted" by alternative options. However, (1) even with the additional information, Google still doesn't know searcher intent, so it will still be improper to make any conclusions of "diversion," (2) in practice, this really isn't any different than if the searcher initially puts in X+Y into the sear