April 28, 2009
Promatek Redux: Software Consultant Enjoined from Metatag Usage and Other TM References--Deltek v. Iuvo
By Eric Goldman
Deltek, Inc. v. Iuvo Systems, Inc., 2009 WL 1073196 (E.D. Va. April 20, 2009). The Justia page.
Every year in Cyberlaw, I teach Promatek v. Equitrac, a Seventh Circuit metatags case from 2002 noteworthy for its multiple litigant and judicial errors typical of a cyberspace freakout case. Among the many mysteries of the case is how the court treats the fact that Equitrac advertised that it provided servicing of Promatek's equipment. The court says that Equitrac was free to say that, but it couldn't say it in the metatags...for reasons that I still don't understand.
Today's case raises similar issues to the Promatek case, and the resolution isn't much clearer. Deltek sells complex cost-accounting software. Iuvo includes three former Deltek employees who started a business providing consulting about Deltek software and other Deltek software-related services. Iuvo's websites advertise the fact that it provides servicing for Deltek software, but Deltek apparently doesn't like that or, apparently, the competition (not surprising because Iuvo was allegedly undercutting Deltek's price). Thus, Deltek launches a multi-prong attack on Iuvo, including claims that the site infringes its trademarks, the former employees misappropriated Deltek trade secrets, and the former employees violated their non-compete agreements.
With respect to the trademark claims, the defendants assert "fair use" (more precisely, nominative use). The court isn't convinced, in part because of the implied affiliation from Iuvo's references to Deltek's trademarks, even though the websites had an appropriate disclaimer of any relationship. Citing the doctrinally confused Axiom case, the court relies on the same implied-affiliation grounds for the metatags, saying "This use of Deltek's trademarks as metatags may cause a consumer to believe that Iuvo is affiliated or related to Deltek and may therefore constitute an improper attempt to trade on the commercial value associated with the marks." However, no one who understands metatags believes this statement is in the least bit credible.
Ultimately, the court crafts a split-the-baby injunction, restricting Iuvo:
from using in the "www.iuvosystems.com" website the phrases "Deltek Upgrade", "We Provide Deltek Solutions" and "Technology Consultants With Deltek Experience"; from using as metatags for any website associated with the Defendants' business activities any Deltek trademarks or trade names including, but not limited to, "Deltek Costpoint," "Deltek Time Collection," "Deltek Install," "Deltek Hosting" and "Deltek Consulting" and from using the web domain names "www.installdeltek.com" and "www.installdeltek.net."
Although the injunction is relatively narrow, it is still obviously problematic. First, the blanket restriction on including Deltek in the metatags makes no sense. See the Welles case. Second, I don't immediately see anything wrong with the phrase "installdeltek" in the domain name if Iuvo acts as a systems integrator and, in fact, installs Deltek software (a point I believe Deltek contested). Finally, I'm struggling to see what's wrong with the phrase "Technology Consultants with Deltek Experience," which seems completely accurate in describing both the former Deltek employees' experience as well as the company's accumulated experience.
Three observations about the case:
1) I hate metatag cases!
2) This is yet another example that the nominative use defense isn't very robust.
3) It's interesting that the court declined to issue an injunction based on the trade secret and non-compete claims, so Deltek's only victory came from its trademark claims. This is a good example of trademark's power to restrict competition, even when other anti-competition legal doctrines fail, and even when the competition may be in the consumers' best interest.
Posted by Eric at 09:31 AM | Trade Secrets , Trademark | TrackBack
April 12, 2009
Q1 2009 Quick Links, Part 4
By Eric Goldman
Security
* Massachusetts Data Security regulations were amended.
* In Facebook v. Power.com, Facebook brought another lawsuit to block extraction of user data from the site (similar to the Facebook v. ConnectU lawsuit). Venkat, Masnick, News.com, NYT, Justia. In this case, I wonder if Facebook has adequately distinguished between Power.com's behavior and the operation of its own "Find a Friend" service that taps into third party email servers to extract email addresses. Power.com’s response.
* Andritz, Inc. v. Southern Maintenance Contractor, LLC, 2009 WL 48187 (M.D. Ga. Jan. 7, 2009). IP infringement isn't a cognizable harm under the Computer Fraud & Abuse Act.
Adware/Spyware
* Who says Valentine's Day is just a Hallmark holiday? Sales of spyware and other tools to track cheating SOs also increase around Valentine's Day.
* Susan Brenner on the Cybercrimes Treaty and the US's decision not to criminalize possession of malware as required by the treaty.
Venture Capital
* BusinessWeek: Silicon Valley innovation is being stifled by VCs who only want to make small bets, not big bets. But VC investing is faddish, so the wind might change tomorrow.
* $600M of VC investments in virtual worlds.
Contracts
* Burcham v. Expedia, Inc., 2009 U.S. Dist. LEXIS 17104 (E.D. Mo. Mar. 6, 2009). Buyer was bound to user agreement even though he argued (without any evidence) that someone else established the account he used. This dovetails nicely with the broad reading of who is bound by an online user agreement; see my discussion in the Lori Drew case. Jeff Neuburger's writeup. Aside: I wonder if Expedia will be insulated by 47 USC 230 for the allegedly wrong description of amenities if they got the description of the hotel from third parties. For an analogous result involving the binding of users who didn't agree to the initial contract, see CoStar Realty Information, Inc. v. Field, 2009 WL 841132 (D. Md. March 31, 2009).
* Fractional Villas Inc. v. Tahoe Clubhouse, No. 08cv1396 (S.D. Cal. Feb. 25, 2009). Citing the RMG case, the court says that merely visiting a site may be sufficient to bind visitors to a browsewrap. However, in this case, there was insufficient evidence that the defendant had ever visited the site.
* Cherny v. Emigrant Bank, 2009 U.S. Dist. Lexis 2486 (March 12, 2009). Latest case that breach of privacy policy isn’t actionable unless there are actual damages. Venkat’s writeup.
* A stat I fully believe: "studies have shown that more than half of all companies cannot even locate signed copies of 10% or more of their contracts." The Zen Master asks: if both parties think they have entered a contract but neither can find a copy, do they have a contract? (this has really happened to me before).
Taxes
* Amazon v. New York and Overstock v. New York (N.Y. Sup. Ct. Jan. 12, 2009). Kudos to New York for finally figuring out a way to break the Internet and defeat the Internet Tax Freedom Act by treating Amazon Associates as traveling salespeople for sales tax collection purposes. I imagine every state in the country will jump on this bandwagon, at which point some e-tailers will kill their affiliate program and others will end up imposing sales tax collection nationwide.
* Pitt County v. Hotels.com, L.P. (4th Cir. Jan. 14, 2009), Online travel aggregators aren't "retailers" (as referenced in the statute) for purposes of collecting local hotel occupancy taxes.
General
* Some interesting cyberspace exceptionalism developments involving cases where paper presentation may be different from electronic presentation of the exact same content. In Smith v. Under Armour, Inc., 2008 WL 5486764, web payment confirmations displayed on-screen are not "printed" within the meaning of the Fair and Accurate Credit Transactions Act. Accord Smith v. Zazzle.com, Inc., 2008 U.S. Dist. LEXIS 101050. See generally this Proskauer recap. In Saulic v. Symantec Corp., a California law prohibiting data collection with credit card sales was held inapplicable online.
* Sudduth v. Donnelly, 2009 WL 918090 (N.D. Ill. April 1, 2009). Plaintiff got stiffed on his eBay transaction and sued eBay for 1983 equal protection and conspiracy claims as well as a Title VI civil rights claim. Because eBay isn't a state actor, however, the court dismissed eBay.
* My colleague Steve Diamond is blogging every detail of the battle for SAG's soul over at his new blog, King Harvest. For example, he summarizes the travails of the Screen Actor's Guild.
* Oddee: 10 Geekiest T-Shirts. I own a t-shirt that says "I'm Blogging This" (a gift from a former student) and a mug that says "Vegetarian Blogger" (gift from a colleague).
* Oddee: 15 Most Unfortunate Town Names. I think Licking County should have been a contender.
* Is there any better sign of Cyberlaw's maturity than the publication of Internet Law in a Nutshell
* Oddee: 12 Most Ridiculous Lawsuits. I welcome your nominations for the most ridiculous Internet lawsuits of all time. I hope to write that up some day.
* Happy birthday, Gmail! Best email software I've ever used. The battles over Gmail privacy seem so...2004!
Free Stuff
* The Ninth Circuit recently updated its website...with RSS feeds!
* Nolo Press' "NDAs for Free." Potentially useful site.
* I have one extra copy of my Fall 2008 Cyberspace Law course reader. First person to send an email with their mailing address gets it. [CLAIMED]
Posted by Eric at 12:03 PM | Adware/Spyware , E-Commerce , Licensing/Contracts , Privacy/Security , Trade Secrets , Virtual Worlds | TrackBack
April 26, 2006
Employee Blogging Risks
By Eric Goldman
A couple of weeks ago, I spoke at the North Carolina Journal of Law & Technology's symposium called "Attack of the Blog: Legal Horrors in the Workplace." (I definitely did not pick the name!) In the morning, I spoke about the risks that companies face when their employees blog. I see blogging as a subset of Internet communications generally, so I'm not sure these risks are limited to blogging. Nevertheless, the following risks are possible:
Non-Legal Risks
* Employee relations risk. A personal dispute between employees could be taken online, triggering a flame war or exposing the personal dispute to a broad audience within and outside the company.
* Customer relations risk. Employees could make disclosures that undermine customer confidence in the company's products by revealing too much about the company's inner workings or by disparaging the company's products. Employees could also oversell customers by making overstated claims about the products.
* Reputational risk. Employees might make personal disclosures about other employees/stakeholders that degrade the overall public perception of the company.
Legal Risks
* Admissions. Blog posts could be party admissions. Even if not, they could be adverse evidence introduced in litigation.
* Trade Libel. Employees could actionably disparage competitors' products.
* Disclosure of Non-Public Information. There are several ways that employees could convert non-public information into public information in ways that have legal significance.
- If the company is publicly traded, these disclosures may manipulate the stock price or constitute securities fraud
- Employees could undermine the company's position by tipping off competitors about plans in the works. If the employee publishes company trade secrets to the blog, in most cases that information will be irretrievably lost as a trade secret.
- Employees might disclose third party trade secrets, which could lead those third parties to bring a trade secret misappropriation claim.
- Employees might disclose patentable information that jeopardizes the company's ability to obtain a patent using that information. For example, a blog post should start the 1 year clock ticking under 102(b). Similarly, if the foreign patent applications have not yet been filed, the blog post should negate the company's ability to seek foreign patents on the published information. This is a real gotcha that may catch some unsuspecting companies.
Conclusion
Just to be clear, I'm not convinced these risks are all that serious. The emergence of blogs might lower the guard or caution of employees, but all of these risks would exist even without blogs, and most employees will make good choices. Even so, some employees will make poor choices, and thus companies who are concerned about employee blogging might choose to address blogging as part of an overall policy on Internet usage or disclosure of company information. At the same time, employee blogging can be a significant asset to the company, so companies might look at employee blogging as an resource to nurture rather than risky behavior to squelch.
Posted by Eric at 08:05 PM | General , Patents , Trade Secrets
December 07, 2005
Keeping C&D Letters Confidential
By Eric Goldman
An all-too-familiar story. A famous celebrity takes her clothes off in a private outdoor space (in this case, Jennifer Aniston goes topless in her backyard). The paparazzi captures the event for posterity and profit. Celebrity finds out and unleashes a bulldog lawyer on the case. Lawyer writes a cease and desist letter to potential publisher with stern warnings about republishing the photos. The cease-and-desist letter hits the Internet. (In all likelihood, the photos will hit the Internet too, but to my knowledge we haven't gotten that far yet).
Here's the twist that triggers this blog post. The lawyer's letter says no less than 3 times that the C&D recipient may not publish the cease-and-desist letter:
* the letter is titled at the top "confidential legal notice/not for publication"
* the second sentence says "This is a confidential legal notice...and may not be published or disseminated in any way."
* the last paragraph reads: "This letter is a confidential legal communication and is not for publication. Any publication, dissemination or broadcast of any portion of this letter will constitute a breach of confidence and a violation of the Copyright Act, and You are not authorized to publish this letter in whole or in part absent our express written authorization."
These brouhahas never seem to end up well for anyone. Let's deconstruct the situation.
Jennifer Aniston
Jennifer Aniston should have known better. I recognize this may sound a little heartless; after all, she was in her own home and her lawyer alleges that the photographer was a mile away using an incredibly high-powered telephoto lens. If true, no question she should have had a reasonable expectation of privacy.
However, I believe that in practice, the rules are simply different for the top 1,000 most famous people in the world. For these celebrities, certain activities (nakedness, friskiness, ingesting) in a potentially observable place are never consequence-free, regardless of what the law says or the celebrity wants.
In this case, an afternoon of topless sunbathing at home has the consequence of a multi-month multi-continent pitched legal battle that, in all likelihood, will be futile (i.e., the pictures will almost certainly irrevocably hit the Internet). I'm not saying this is a good outcome, but it's an inevitable result in this era. This has to be on the minds of the world's most famous celebrities at this point.
The Paparazzi
If the photographer really did use a telescopic lens to take pictures of someone's backyard from a mile away and then tried to resell the photos, I'm fairly comfortable that there will be legal redress.
The Lawyer and the Smoking Gun
Some people complain that lawyers can't communicate very well, but good news here--we have no problem understanding what this lawyer wanted. He did not want to see this letter posted to the Internet. Yet, there it is, on the Smoking Gun in all its glory.
There are some problems with the lawyer's desire. How can a lawyer claim that a cease-and-desist letter is a confidential communication? In general, sending the letter to a third party without any confidentiality assurances should blow any legal confidentiality protections. The lawyer's redundant declarations doesn't change the analysis one iota (if anything, repeating these statements to bloggers will invariably lead to the opposite outcome). So, on its face, I don't see how the confidentiality demands/instructions are anything more than hyperbolic and low-efficacy scare tactics.
The copyright issue is more complex. The letter should qualify as an original work of authorship, and posting the letter online should violate at least 2 of the 106 rights (reproduction and distribution).
But is there some legal defense that nevertheless permits the reposting of C&D letters? The most obvious one is fair use, but fair use analyses are always tricky. For a good example in a relevant context, consider how Google deals with C&D letters it receives. At the Yale Regulating Search conference, a Google representative explained that Google turns over all 512(c)(3) demand letters to ChillingEffects.org because (a) Google wants the letters to see the light of day, (b) Google feared that publishing the letters would be an unexcused infringement, and (c) Google thinks that ChillingEffects.org's republication of the letters would be protected by fair use.
Can this be right? Google can't republish the letter but a third party can? ChillingEffects.org changes the fair use analysis in two ways: first, it's a non-profit actor, and second, it does add some commentary to the letter. But this seems like a silly formalistic solution. (I'll note that the Aniston C&D letter recipient apparently took the same approach, handing the letter off to the Smoking Gun, who added some light commentary).
C&D letter recipients shouldn't have to go to such extremes. Senders of C&D letters should be accountable for their actions. They seek legal redress and the letters themselves are legally significant (i.e., they could create the basis for willfulness determinations; they may be the basis for the recipient seeking a declaratory judgment). To fully understand what is taking place in the field, information about these C&Ds has to enter the public discourse. And simply reporting the receipt of a C&D isn't enough--to understand the letter and its potential impacts, external observers have to read the precise words used.
Therefore, I would strongly favor a statute that exculpates C&D letter recipients from republishing the letter. Because such a statute is unlikely, I am hoping the courts will create a defacto per se fair use exclusion for republishing C&D letters. Meanwhile, kudos to the Smoking Gun for not letting the repeated exhortations keep the letter off the Internet.
Finally, I suspect some readers of this post got here on the mistaken hope of seeing the pictures in question (or others of a similar nature). If you made it this far with that expectation, I'm sorry to disappoint.
Posted by Eric at 11:28 AM | Copyright , Trade Secrets | Comments (8)