May 12, 2008
Lifestyle Lift v. RealSelf Settles
By Eric Goldman
In early March, I blogged on Lifestyle Lift's trademark infringement lawsuit against RealSelf based on user criticisms of Lifestyle Lift. This lawsuit was noteworthy on at least two fronts. First, it was a prime example of a trademark owner invoking trademark law to stifle online word of mouth. Second, RealSelf fought back with a novel counterclaim against Lifestyle Lift alleging that it wrote shill reviews.
The parties have now settled the lawsuit on confidential terms. See the dismissal order. It's not clear who "won" this lawsuit, but the conversation about Lifestyle Lift is still going strong at RealSelf.
Posted by Eric at 08:32 PM | Derivative Liability , Trademark | 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 22, 2008
March 2008 Quick Links, Part II
By Eric Goldman
Copyright
* A lot of action on whether “making available” a file in a P2P share directory is copyright infringement, including Elektra v. Barker and London-Sire v. Doe. Patry summarizes the action.
* Ticketmaster L.L.C. v. RMG Technologies, Inc., 2008 WL 649788 (C.D. Cal. March 10, 2008). Copyright misuse is not an independent cause of action; it's only a defense. HT Evan Brown.
* A student asked me a good Q that I couldn't answer. Given that copyright work transfers are subject to the risk of a non-waivable termination of transfer 35-40 years after the transfer, how do companies account for that risk on their financial statements?
* A man whose Youtube video was taken down by lawyers for Van Morrison strikes back with a new video: "The Lawyers Pulled My Video Down."
Trademark
* The Utah governor signed SB 151, the repeal of the Utah Trademark Protection Act.
* Wilson v. Yahoo! UK Ltd., No. 1HC 710/07, Feb. 20, 2008. A UK court says that buying the broad-matched keyword "spicy" does not constitute an actionable use in commerce of the trademark "Mr. Spicy." In response, Google liberalized its keyword policy in the UK and Ireland to match its US and Canada policy.
* Vulcan Golf, LLC v. Google Inc., 2008 WL 818346 (N.D. Ill. March 20, 2008). This is another interesting development that I just didn't have time to blog (see my earlier post when the lawsuit was filed). In a lengthy opinion, the district court rejected most of the significant motions to dismiss, saying that she wanted to let the case develop. Ironically, she also complained about the workload in the case--perhaps this is obvious, but granting some motions to dismiss would help clear your docket queue! Unfortunately, most of the opinion isn't insightful because so many issues were reserved for further development. Perhaps the most interesting discussion relates to the "use in commerce" question, and the court rejected a motion to dismiss on that basis: "The plaintiffs have alleged that Sedo and the other Parking Defendants transacted in and improperly profited from domain names that are deceptively similar to the plaintiffs' trademarks. Such statements sufficiently allege the "use" of a domain name to allow the infringement claims against Sedo and Oversee to move forward on this issue." Some other commentary on the case: Sarah Bird and David Fish.
* American Airlines loves Google (except for the part where it's suing Google). HT Search Engine Land.
State Regulation of the Internet
* Some state legislators are becoming privacy entrepreneurs about behavioral targeting. Venkat does a recap. But Zachary Rodgers points out that some of the operative provisions track NAI's self-regulatory guidelines. More angst about deep packet inspection by IAPs.
* Ewert v. eBay, Inc., 5:07-cv-02198-RMW (N.D. Cal. March 31, 2008). eBay isn't an "auctioneer" or an "auction company" as defined by California's Auction Act.
* The Tennessee legislature is considering a goofy response to the Hannah Montana ticket furor.
* Ken Magill at Direct wrote an article entitled "Psychotic Law Clowns in Utah at it Again." A highlight: "Whenever I think of Utah's state legislature, I envision a room full of Jack-in-the-Boxes straight out of a never-made Twilight Zone episode. Every fall, when it's time for the next legislative session, their cranks begin to turn, a chorus of "Pop Goes the Weasel" begins, and on the note for "pop" the lids fly open and dozens of psychotic clown heads spring out of the boxes chanting: "New Internet Law! New Internet Law!""
Other Stuff
* The Economist: The Battle for Wikipedia's Soul. "To create a new article on Wikipedia and be sure that it will survive, you need to be able to write a "deletionist-proof" entry and ensure that you have enough online backing (such as Google matches) to convince the increasingly picky Wikipedia people of its importance. This raises the threshold for writing articles so high that very few people actually do it. Many who are excited about contributing to the site end up on the "Missing Wikipedians" page: a constantly updated list of those who have decided to stop contributing. It serves as a reminder that frustration at having work removed prompts many people to abandon the project." See a similar article in the NY Times Review of Books.
* FTC busts Goal Financial for inadequate security practices.
* The DOJ is busting people who click on a link that purportedly offered child porn, prosecuting them for attempted downloading of child porn.
* Orin Kerr, "Criminal Law in Virtual Worlds," University of Chicago Legal Forum (forthcoming). Orin sensibly argues against virtual world exceptionalism with respect to criminalizing activities in virtual worlds.
Posted by Eric at 10:09 AM | Content Regulation , Copyright , Domain Names , Marketing , Privacy/Security , Trademark , Virtual Worlds | TrackBack
April 14, 2008
"Trademark Use in Commerce" Revisited
By Eric Goldman
You may recall my repeated discussion about the trademark use in commerce doctrine. A quick recap: the federal trademark infringement statute references the requirement that the defendant make a "use in commerce" of the plaintiff's trademark. This language has triggered a lot of confusion. Some believe that the statutory language is simply a jurisdictional requirement (i.e., Congress can only regulate "interstate commerce"), while others believe that the language requires plaintiffs to show much more--such as the Rescuecom case, where the court kicked out the trademark infringement lawsuit against Google for selling keyword advertising because Google didn't make the requisite use in commerce.
I've previously blogged on some of the academic literature about the "trademark use in commerce" requirement, including articles by Dinwoodie/Janis and Lemley/Dogan, McKenna, Barrett and Widmaier. I've also written on the topic myself--see, e.g., here and here. Collectively, some academics (e.g., Lemley, Dogan, Barrett and I) are fans of the trademark use doctrine as a gatekeeping/boundary-setting doctrine and other academics (e.g., Dinwoodie, Janis, McKenna) are skeptical that it can/should play this role.
With the burgeoning literature, we really needed to gather as a community to discuss the issue in real time. We're very lucky that Mark Janis and Graeme Dinwoodie graciously convened a meeting of 16 trademark professors this weekend in Iowa City, Iowa. Iowa City isn't the easiest place to get to (especially when the FAA is grounding MD-80s and tornadoes are ripping through the Midwest), but the conversation and camaraderie made it worth the travel hassles.
I walked away from the event more convinced than ever that we have no chance of reaching consensus about the validity and meaning of the "trademark use in commerce" doctrine. We spent the weekend talking about statutory interpretations, the benefits of rules v. standards, whether trademark law preempts or codifies common law, how to reduce enforcement costs and errors, how to reduce consumer search costs, the many problems of understanding and measuring consumer perceptions and the "balloon-squeezing" problem of fixing one doctrinal problem only to put pressure on some other doctrine. These discussions pointed in lots of different directions, and there were no magic solutions.
At the end of the discussion, I had the opportunity to make some summary remarks. I made 3 points:
1) I think trademark law needs better boundary-setting and channeling doctrines, especially as we get away from the paradigmatic counterfeiting cases. Without such channeling doctrines, whenever a defendant is sued for some expressive activity that somehow references or invokes a third party trademark, trademark law lacks a limiting principle to kick out the case at the outset. Instead, the defendant must fit within various defenses. Some of the channeling defenses, such as functionality and genericism, work pretty well at redirecting cases out of trademark law and into other doctrines, but others don't, such as descriptive fair use and nominative use--both are limited doctrines, poorly understood and put the persuasive burden on the defendant.
The trademark use in commerce doctrine can serve the requisite channeling function, but it doesn't do it very well. But whether it's the trademark use in commerce doctrine or something else, we need some gatekeeping doctrine to trademark law!
2) As we get further away from counterfeiting, other doctrines--contracts, fraud, the FTC Act (and state law equivalents), various other consumer protection and false advertising doctrines--may do a better job of protecting consumers than trademark law.
For example, we need to retire the example of a consumer ordering Coke and the retailer silently delivering Pepsi instead from trademark law. This example is so distracting because we already know that the retailer can't do this--at minimum, such a delivery is a breach of warranty and perhaps even a fraud. Trademark law does provide producers with a remedy (more on this in a moment), but from a consumer protection standpoint, what does trademark liability add to the analysis? Personally, I don't think it adds much.
[UPDATE: James Grimmelmann offers a spirited defense of the "beverage substitution" example. FWIW, the other conference attendees jumped all over me as well by saying that this passing-off example was hard to distinguish from counterfeiting.]
3) In terms of providing producers with a policing doctrine, they typically have numerous doctrines beyond trademark law. However, I'm still stuck on the doctrinal inconsistency here. As I discuss in my forthcoming Brand Spillovers paper (my most recent slides), there is no concerted effort to impose trademark liability on retailers for auctioning third party trademarks or otherwise profiting from third party trademarks through practices such as couponing, shelf space adjacencies, loss leaders, upsells/cross-sells and geographic proximity to branded stores. But why haven't we had any conferences on the boundaries of retailer liability for these trademark practices? Why aren't retailers sued more under trademark law?
One answer (not the complete explanation, but nevertheless relevant) is that numerous doctrines control retailer behavior, including antitrust law, price controls, consumer protection doctrines and numerous retailer-specific rules. Accordingly, we don't need trademark law to police retailer behavior.
4) Conclusion: re-reading the Dinwoodie/Janis paper, I was struck by the pervasive feeling that we're asking trademark law to do too much when thinking that trademark law should regulate search engine ordering or curb information overload. But we're never going to reach consensus on trademark use in commerce as a gatekeeping doctrine given the statute's poor drafting. As a result, I think it's time for us to seriously consider a major redraft of the Lanham Act. After all, the statute has been on the books for over 60 years, and I don't think the law has aged well. Therefore, I propose that we commence working on the Goldman Act of 2025 (I'm just being realistic about the timing, and I'm happy to yield on branding if that will speed up a redraft) to update it for the modern era.
Rebecca has also blogged her observations from the conference: 1, 2, 3 and 4 and reading list.
UPDATE: Mark McKenna has posted his own recap.
Posted by Eric at 10:35 PM | Trademark | TrackBack
April 10, 2008
Trademark Dilution Symposium Videos
By Eric Goldman
It seems like only yesterday that the High Tech Law Institute sponsored the Trademark Dilution Symposium, but a quick look at the calendar reveals that it's been over 6 months. Wow, how time flies!
Even at this late date, I think the videos from the event will be interesting to any trademark geek, and we've finally been able to get them online, albeit not in the most convenient format. You can download the videos from iTunesU, which annoyingly also requires you to download the iTunes client if you don't have it already. Sorry about that. I'm working on a more convenient downloading location, but for now at least they are online, so let's call the glass half-full. [UPDATE: You can watch the videos without needing the iTunes client by following this link.]
The whole day was fascinating, but my personal favorite moment occurred when Prof. McCarthy analogized the dilution doctrine to Bigfoot--because no one has offered incontrovertible evidence of either. A long, long time ago, some other bloggers posted more fulsome recaps from the event:
* Rebecca Tushnet, Comparative Analyses of Dilution; Dilution Regulation, Part 2 (Doctrinal Challenges); Dilution Regulation, Part 1 (A Look Back); Consumer Perceptions, Part 2; Consumer Perceptions, Part 1; McCarthy keynote
* Devan Desai, An Example of a Well-Planned and Run Single Topic Conference
* Joyce Cutler, BNA Patent, Trademark and Copyright Journal, Santa Clara Law School Seminar Focuses on Dilution Act Revisions (BNA subscription required)
We have posted a variety of resources on trademark dilution law on the HTLI website, including the slides used by the speakers. If you're working on trademark dilution issues, check it out.
Finally, the Computer & High Tech Law Journal is publishing an issue filled with excellent papers from the symposium. IP law profs on the AALS list will automatically get a complete copy of the issue in your mailbox in the next few weeks, courtesy of the High Tech Law Institute. Everyone else can find the papers though the journal's website when they are posted.
Posted by Eric at 06:23 AM | Trademark | 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 search box, so Google already faces this liability, and (3) in all cases, Google may lack the requisite use in commerce to be liable for trademark infringement regardless of how deep it goes into the consumer search process.
Irrespective of the legal analysis, I think it's interesting that some publishers are revolting against Google, which forces Google to think carefully about how it can maintain good publisher relations. Even more interesting is if Google is cutting special deals with some publishers to remove the site-specific search. I don't think that Google can realistically support treating different sites differently, so I assume that Google ultimately will be pressured to give all sites an opt-out option (or take down the tool entirely).
One last thought--I wonder just how many searchers are using this new search option? It wouldn't surprise me if usage is modest, in which case this could all be a tempest in a teapot.
Posted by Eric at 03:42 PM | Search Engines , Trademark | TrackBack
March 26, 2008
Griper Selling Anti-Walmart Items Through CafePress Doesn't Infringe or Dilute--Smith v. Wal-Mart
By Eric Goldman
Smith v. Wal-Mart Stores, Inc., 2008 WL 760196 (N.D. Ga. March 20, 2008)
Charles Smith doesn't like Walmart. Like many gripers, he has taken his cause to the web. Among other things, he set up two CafePress stores to sell t-shirts and other items that bore a variety of anti-Walmart designs and slogans, including the phrases "Walocaust" and "Wal-Qaeda." He registered domain names containing those phrases and pointed them to his CafePress pages. He also did some other limited promotions of the CafePress stores.
It appears Smith hoped that the CafePress sales might defray the litigation costs, and he chose to set the merchandise price at a 30% profit margin rather than at cost (which was an option in CafePress' menu). Even so, market response to these lightly marketed goods wasn't strong, and he sold less than 50 shirts in total (excluding the sales to plaintiff's lawyers). All told, "The revenues from Smith's CafePress Walocaust and Wal-Qaeda account sales have been less than his costs for the domain names and CafePress account fees." Doesn't sound like a good business decision.
Worse, the CafePress stores could have been detrimental from a legal standpoint. These sales confirmed that Smith was making a "use in commerce" of the designs and slogans, eliminating one potential defense argument that other non-commercial gripers try to invoke. As a result, the decision to expand his griping campaign to CafePress was a potentially risky one--not only didn't Smith make any money to help fund his defense, but he may have weakened his defense from a legal perspective. Stated differently, there are rules of engagement for gripers, and some courts will hold that the rules prohibit a CafePress battlefront. It worked out OK for Smith, but other gripers should proceed cautiously.
In any case, with no argument over use in commerce, Smith's defense focuses on likelihood of confusion. Walmart brought out the big guns in the form of frequent trademark expert Prof. Jacob Jacoby, who did two mall intercept surveys (including regular surveys plus a mock website) to establish confusion and dilution. First, what a ridiculous and expensive waste of money for Walmart to retain Jacoby for such a low-stakes dispute--Jacoby is like a nuclear flyswatter in this case. Second, the court rightly sees the problems of trying to fit a griping dispute into a standard trademark survey, and as a result most of Jacoby's survey gets tossed or ignored. Third, the court embraces Smith's activities as a parody, which doesn't automatically resolve the likelihood of confusion analysis in Smith's favor but swings some of the factors over to his side. Summary judgment for Smith on the trademark infringement and related claims.
The court also grants summary judgment against Walmart's dilution claims because "Smith's parodic work is considered noncommercial speech and therefore not subject to Wal-Mart's trademark dilution claims, despite the fact that Smith sold the designs to the public on t-shirts and other novelty merchandise."
Finally, to complete Smith's success, the court rejects the trademark claims over Walmart's smiley face, saying that "Wal-Mart has failed to establish that the smiley face has acquired secondary meaning or that it is otherwise a protectible trademark." Due to this ruling, Walmart ends this lawsuit with fewer trademark rights than when it began (see the analogous consequence in the American Blinds case). Whoops!
This raises the question most on my mind: why did Walmart try to enforce its rights against Smith in the first place? To be fair, Walmart didn't sue Smith; Smith brought a DJ. But Walmart did send C&Ds to Smith and CafePress, and as every trademark owner knows, every C&D has the risk of prompting a DJ that leads to the invalidation of their trademark rights--EXACTLY WHAT HAPPENED HERE! So why did Walmart send the C&D in the first place? After all, Smith was a small potatoes griper, and the enforcement action served to raise his obscure profile. More importantly, I can't imagine any construction of a trademark owner's policing duty that extends to cover a griper like this. If Walmart felt it needed to shut down Smith to satisfy some policing obligation, I respectfully but emphatically disagree with that judgment.
Walmart didn't drag CafePress into this lawsuit (after all, CafePress did initially fold in response to Walmart's C&D). Nevertheless, I'm struck by the fact that this is the second time I'm blogging on CafePress in the last month. See my previous blog post on Curran v. Amazon. It seems to me that future cases will address the liability of websites like CafePress that help users become retailers with minimal upfront investments. It's not 100% clear to me that sites like CafePress can point the finger at their users and walk away from liability.
More on this case:
* Public Citizen's web page with source material from the case
* Public Citizen's press release
* A thorough Law.com article with some good interviews
* Atlanta Journal-Constitution
* Sam Bayard
* Ron Coleman
Posted by Eric at 02:50 PM | Trademark | TrackBack
March 23, 2008
Adwords Ad Creates Initial Interest Confusion--Storus v. Aroa
By Eric Goldman
Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).
(Sorry for my delay blogging this one).
A federal district court has held that displaying a competitor's trademark in Adwords ad copy constitutes impermissible initial interest confusion, leading to a summary judgment win for the trademark owner. This is one of the first competitor-vs.-competitor search advertising cases where the plaintiff has won the trademark claims. This case also has an interesting and rare discussion about the trademark implications of a retailer’s internal search engine.
Claims Against Aroa
Storus distributes money clips under the trademark "smart money clips." Storus was able to get a federal registration for the mark, which is interesting because I’d love to see the showing of secondary meaning. Given the registration, Aroa instead tries to knock out "smart" as a laudatory phrase, but the court isn't convinced. Thus, the court permits Storus to proceed with a pathetic descriptive mark.
Aroa sells competitive money clips. Through Adwords, it purchased the keyword "smart money clip" to display the following ad:
Smart Money Clip
www.steinhausenonline.com Elegant Steinhausen accessories. Perfect to add to any collection.
Per Google's standard formatting, the trademark shows up bold and underlined, which the court says overshadows Aroa’s display of its own trademarks in the ad copy. The court also invokes initial interest confusion (as part of the Ninth Circuit's inconsistently invoked "Internet trilogy" likelihood of consumer confusion analysis) and notes that "defendants offer no evidence to show a lack of actual initial interest confusion." Summary judgment for plaintiff.
Claims Against Skymall
Skymall is an online retailer of Aroa products. Storus alleges that Skymall included the term "smart money clip" on Aroa product pages, which meant that if a person searched for "smart money clip" in Skymall's internal search engine, Aroa's products would appear in the search results. Storus portrayed this as initial interest confusion, but the court wasn't persuaded enough to grant summary judgment. Instead, the court observes that "a page offering an Aroa money clip will appear as a search result solely because the consumer searches using the phrase “money clip,” irrespective of whether the consumer adds the word “smart” to the search term and irrespective of whether the page contains the word “smart.”" Isn't it amazing that a page containing the phrase "smart money clip" would also appear for a search on "money clip"?!
Implications
On the surface, this case looks problematic for the search advertising industry. Any time a search advertising practice is deemed infringing, it should promptly eliminate all similar ads from other advertisers, taking a chunk of revenues out of search engine pockets. Further, when advertisers are liable for trademark infringement, it increases the risk that search engines will be contributorily liable for those infringing ads.
Yet, Aroa’s practices here (displaying a competitor’s trademark in the ad copy) are already restricted by all of the search engine trademark policies. Therefore, this ruling shouldn’t reduce much ad revenue for search engines.
But that raises the obvious question: why didn't Storus just invoke these search engine policies to shut down Aroa? As Dennis Toeppen might have said, perhaps Storus' lawyer wanted a new boat, because this trademark lawsuit made absolutely no financial sense for Storus. The court determines that over 11 months Aroa got 1,374 clicks on its ads (from 36,164 ad impressions, yielding a 3.7% clickthrough rate--not bad). If we value each click at $1/click (a generous amount given that Aroa sells its money clip for $30), Storus could have acquired the "diverted" clicks for $1,374--an amount that is surely no more than 5% (and perhaps even less than 1%) of what Storus spent in this lawsuit. Smart business decision there, guys.
Doctrinally, this case is a textbook example of how the initial interest confusion doctrine is completely bogus. As I’ve said before, a defendant cannot mount an adequate defense against the initial interest confusion doctrine because the doctrine lacks any rigorous definition or normative support in the first place. The defense challenge is especially problematic where, as here, a court improperly puts the burden on the defendant to disprove that consumers experienced initial interest confusion. Exactly what proof would satisfy the court here? I can’t answer this and I bet the court couldn’t either, and I can go further and assert that evidence to disprove initial interest confusion simply does not exist at all.
This court also unfortunately buys into the tired and outdated syllogism that every click on Aroa’s ad was a “diverted” consumer. As I’ve explained here, this massively overstates the quantum of “diversion” (whatever that means) because we don’t know what consumers expected to find when they entered the search term “smart money clip.” The low general risk of diversion is even lower here because consumers saw Aroa’s trademarks in the ad copy, further reducing the risk that anyone was confused by the time they decided to click on the ad.
Other comments on this case:
* Thomas O'Toole
* Tech LawForum
* IP Law Observer
* Las Vegas Trademark Attorney
Posted by Eric at 10:05 PM | E-Commerce , Search Engines , Trademark | TrackBack
March 07, 2008
Utah Amends Trademark Protection Act (But Only After Some Drama)
By Eric Goldman
One of the arguments in favor of federalism is that it enables states to act as "laboratories of experimentation," a phrase attributed to Louis Brandeis. The idea is that if enough states try different things legislatively, then some good ideas will percolate up the system and other states can emulate the best ideas. But the "Law of Large Numbers" argument cuts the other way too. If we have enough different legislatures trying out different things, inevitably some legislatures are going to cook up some really crazy shit. And when it comes to state legislatures trying to impose their experiments on a global Internet, even a single mad scientist can wreak a lot of havoc.
Unfortunately, the Utah legislature is the Dr. Frankenstein of Internet regulation. With their track record, I consider the Utah legislature the flagship example of why Internet federalism doesn't work.
And among the bad experiments by the Utah legislature is the Utah Trademark Protection Act, one of the worst pieces of Internet legislation of all time. Fortunately, the Utah legislators responsible for the act ultimately realized the errors of their ways and decided to repeal the substantive provisions.
But isn't it so true-to-form that the Utah legislature nearly botched the repeal of their botched law? At the 11th hour, after the Utah Senate had passed the repealing amendments and after 2 readings in the Utah House, a Utah representative introduced a different amendment that attempted to salvage some of the act's substantive restrictions. You can see the proposed amendments here. Kate Kaye reports that this amendment was introduced at the behest of our old friend 1-800 Contacts, who initially had been part of the coalition to repeal the Utah Trademark Protection Act but apparently had a last-minute change of mind.
I don't fully understand the substantive consequences of the proposed amendments. According to Kate, 1-800 Contacts apparently wants Google to call its keyword ads "paid advertising" instead of "sponsored links," but I'm not sure why that would be particularly valuable to 1-800 Contacts, and in any case this clearly isn't something that can or should be legislated at the state level. Ironically, due to sloppy drafting, the proposed amendments squarely seemed to govern Catalina Marketing's widely used system of in-store delivery of coupons triggered by competitive purchases, so these amendments would likely have stirred up a hornet's nest of protests from local grocery stores. That's what happens when legislatures act too fast on topics they don't understand, and here raising new substantive amendments on the House floor without any time for critical review and discussion ensured that confusion would reign. As a result, it was guaranteed that if 1-800 Contacts' amendments passed, (a) Google and other Internet companies were going to make yet another trip to the Utah legislature to school them, and (b) if that reeducation didn't lead to the repeal that was promised, a lawsuit would be forthcoming.
Remarkably, despite the fact that Utah already had so badly muffed the initial Trademark Protection Act, and despite the process violation of introducing a major substantive amendment with no time to critically vet it, the Utah House handily passed 1-800 Contacts' proposed legislation. Since the Utah Senate had already passed the substantive repeal of the Trademark Protection Act, the bills went to a committee for reconciliation. I haven't yet gotten any insight into these backroom negotiations, but the House backed down and passed the repeal in the form passed by the Senate. Whew, that was close!
So the law now goes to the governor for signature. Given Utah's track record, it wouldn't surprise me in the least if there is some more nonsense before his ink hits the paper.
Meanwhile, this 11th hour drama only reinforces how important it is that we as a community monitor developments in every legislative forum. As 1-800 Contacts' end run shows, we can never be too vigilant. And as I mentioned in my last post and in light of 1-800 Contacts' ominous statements (and as Tom O'Toole reports, also noting that keyword plaintiffs American Blinds and American Airlines also were urging on the Utah legislature too), I guarantee you that the legislative battles over keyword advertising aren't going away. If nothing else, with term limits, new mad scientists are joining the legislative ranks constantly.
UPDATE: Google's Public Policy Blog lauds the amendment.
Posted by Eric at 01:03 PM | Trademark | TrackBack
March 04, 2008
Utah Quietly Killing the Trademark Protection Act [UPDATED]
By Eric Goldman
[See update below]
We're coming up on the one year anniversary of the Utah Trademark Protection Act, Utah's effort to kill/tax keyword advertising. It looks like the law may not survive until its first birthday, as the Utah legislature is in the process of amending the act. On Feb. 6, the Utah Senate passed SB 151 and sent it to the Utah House, where it is now pending. A quick perusal of SB 151 indicates that the amendments strike every instance of the term "electronic registration mark" (Utah's phrase for the new sui generis property right it created in the Trademark Protection Act). As I blogged before, the amendments instead focus on allowing trademark owners to electronically register their trademarks in a Utah database (more on this in a moment).
Thus, it looks like the Utah legislature will eliminate all of the new substantive provisions added in the Utah Trademark Protection Act--in other words, a complete 180. On the one hand, I applaud the Utah legislature for reaching the only logical conclusion available to it--that the Utah Trademark Protection Act was stupid and untenable, so wiping the slate clean was both the best social policy and the lowest cost option. On the other hand, I remain shocked that Utah residents tolerate legislators who screw up this big and waste valuable resources enacting ill-advised laws only to waste more resources reversing themselves. If a California legislator screwed up like this, he or she would be recalled faster than you can say "Rose Bird" or "Gray Davis." And I apologize if it's rude to say this, but I get asked this question a lot--when the legislature whiffs as bad as this, yes, we do think the Utah legislature is a (bad) joke.
As for the new electronic registry, I'm a little confused about what Utah is considering. If the database is simply an e-government initiative to cut down on paper filings and push registrants to make electronic filings, that sounds like a positive development but I'm not sure why it would require legislative authorization. But there is an intimation that this will generate new incremental revenues from trademark owners who seemingly will value listing in Utah's electronic database. The fiscal report indicates that the law should generate $50,000 of revenues, enough to compensate for $50,000 of database development costs. Perhaps Utah is planning to get into the worthless-registry business, an industry well-known to all trademark owners. After a trademark registers, the owner gets a blizzard of official-looking letters from companies offering to list the trademark in a proprietary but worthless registry. What better way to scare some cash out of unsophisticated trademark owners than an official solicitation on Utah state letterhead?
Even when the Utah Trademark Protection Act has been fully gutted and eliminated as a threat to the keyword advertising industry, I guarantee that the war is hardly over. Future state legislators are going to find regulating online advertising irresistible, and each of these legislative initiatives poses grave risks to our information economy. As a community, we need to undertake the Sisyphean effort of continuously monitoring our legislators and educating them about the harm they can do with misguided regulatory intervention.
UPDATE: Hold the phone! Perhaps this is not surprising, but the Utah legislature is doing more screwy stuff. When the dust clears, I'll post a new blog post trying to make sense of the madness.
UPDATE 2: It appears that Utah passed the law in the form I blogged about. See here and here. This presumably sends the bill to the governor for signature. I'll blog more about the last 24 hours shortly.
Posted by Eric at 11:14 AM | Derivative Liability , Marketing , Search Engines , Trademark | TrackBack
March 03, 2008
Lifestyle Lift Tries to Use TM Law to Shut Down User Discussions; Website Countersues for Shilling--Lifestyle Lift v. RealSelf
By Eric Goldman
Lifestyle Lift Holding, Inc. v. RealSelf Inc., 2:08-cv-10089-PJD-RSW (complaint filed Jan. 7, 2008 and answer/counterclaims filed March 3, 2008)
[disclosure note: I have done some legal work for RealSelf, including some limited counseling on this lawsuit]
No matter how many times I see it--and in the Internet era, I see it all too frequently--I always shake my head in disappointment and frustration when a company uses trademark law to lash out against unflattering consumer reviews. To these companies, trademark law is a cure-all tonic for their marketplace travails, and trademark doctrine is so plastic and amorphous that defendants have some difficulty mounting a proper defense. As a result, all too frequently, the threat of a trademark lawsuit causes the intermediary to capitulate and excise valuable content from the Internet. Fortunately, a defendant has decided to fight back and resist the pressure to succumb to unmeritorious trademark claims. See the press release.
I don't know much about Lifestyle Lift and its relative pros and cons as a cosmetic surgery. Fortunately, there are thousands of Lifestyle Lift customers who do, and a large number of them have shared their opinions publicly on RealSelf, a website that allows consumers to discuss anti-aging products and services. I think it's fair to say that many of the consumer-submitted reviews of Lifestyle Lift are unfavorable--exactly the kind of word of mouth that prospective consumers should consider before undergoing a Lifestyle Lift surgery.
But this kind of negative buzz can be fatal to providers of health/beauty products and services, especially given the faddishness of that market. As a result, Lifestyle Lift has resorted to legal mechanisms to prop up its business. (Indeed, Lifestyle Lift is no stranger to court; see this PACER report on their litigation history in federal court).
In doing so, Lifestyle Lift has limited tools to go after RealSelf for consumer-submitted reviews. After all, 47 USC 230 clearly eliminates almost all of RealSelf's possible liability for those reviews. However, 47 USC 230 leaves open federal trademark claims--hence, Lifestyle Lift has embraced trademark law as its recourse to wipe the negative reviews off RealSelf and keep them from influencing prospective consumers.
(Lifestyle Lift could always go after individual consumers submitting negative reviews...if they have a meritorious claim. Given Lifestyle Lift's litigiousness, it wouldn't surprise me if they bring some of these lawsuits regardless of merit).
In its answer, RealSelf goes on the offensive and alleges that Lifestyle Lift directly or indirectly posted shill reviews to the Lifestyle Lift discussion, thereby breaching RealSelf's user agreement. Off the top of my head, I can't think of another lawsuit where the message board operator sued a company for shill postings, so I think this case may be breaking important new legal ground. If in fact Lifestyle Lift was trying to manipulate the perceptions of prospective consumers through shill reviews, I hope they are brought to justice for their efforts to pollute the information environment.
More generally, regardless of who wins these specific lawsuits, Lifestyle Lift will never succeed at stifling negative discussion about its offerings. This may just be another painful lesson in the power of online word of mouth.
Posted by Eric at 01:45 PM | Derivative Liability , Trademark | TrackBack
March 02, 2008
Feb. 2008 Quick Links
By Eric Goldman
Advertising
* BusinessWeek: Monetizing social networking sites isn't as easy as everyone had hoped, clickthrough rates are through the floor (0.04%!), and ad proliferation on the sites is driving users away.
* Wilbur, Kenneth C. and Zhu, Yi, "Click Fraud" (January 2, 2008). This paper appears to argue that search engines can increase their profits by failing to disclose the true rate of click fraud on their network.
* In re Miva, Inc. Securities Litigation, 2008 WL 450037 (M.D. Fla. Feb. 15, 2008). This lawsuit alleges that Miva and some associated individuals understated or misreported Miva’s reliance on click fraud, spyware and third party distributors in its public statements and thus inflated the company's stock price. Last year, the court dismissed many of the allegations but let a couple survive. In this ruling, the court dismisses a few more defendants from some statements and lets the rest of the case proceed.
* Going-out-of-business sales are often just another scam. (HT ContractsProf). Note this is completely consistent with economists’ theoretical predictions of final-period behavior of trademark owners.
* Google's stock has lost $70B in market cap in 7 weeks. Oh darn. Clickz offers some theories about why Google's clicks are declining. Could lower rates of click fraud be part of it?
* Hal Varian, Google's Chief Economist, argues that Google's marketplace success is solely due to its "secret sauce" (i.e., the advantage of learning by doing) rather than any defects in the marketplace.
Spam
* Jaynes v. Virginia (Va. Sup. Ct. Feb. 29, 2008). By a 4-3 vote, the Virginia Supreme Court upheld Jeremy Jaynes' 9 year sentence for violating Virginia’s spam law.
* Silverstein v. Experienced Internet.com, 2008 U.S. App. LEXIS 3364 (9th Cir. 2008). Ninth Circuit dismissed a CAN-SPAM lawsuit for lack of jurisdiction when the defendants attest that they didn't send the message and aren't local.
Domain Names
* NSI has been sued for its practice of grabbing pre-registration domain names based on WHOIS searches. The complaint. Good luck defending those practices, NSI!
* Two more breathy articles about the economics of domaining from the New York Times and Network World.
47 USC 230
* Johnson v. Barras, 2007 CA 001600 B (DC Superior Ct Feb. 1, 2008). Court dismisses a lawsuit against a website for republishing a defamatory story per 47 USC 230.
* Yet another doomed lawsuit against MySpace for facilitating communications between an adult male and an underage female that led to sex. Sam Bayard's comments.
Pornography
* NY Lawyer (login required): "Defense Bar Sees Growing Practice in Internet Sex Crimes"
* A federal obscenity prosecution for publishing graphic short stories (without pictures) on the Internet? As Tim Wu says, "astonishing."
* The Utah legislature is considering entering the marketplace again, this time through a certification mark program for Internet access providers who are willing to combat porn. See HB407. Of course, the Utah legislature has had terrific success in the past creating successful new business opportunities that the marketplace has overlooked.
User-Generated Content
* Nick Carr: "What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay." Like, I think, Wikipedia.
* Slate on the top-heavy nature of contributions to Wikipedia and Digg.
* Christian Science Monitor: Teachers Strike Back at Students' Online Pranks.
* Sam Bayard on a motion to quash in the AutoAdmit case.
Reputation
* eBay no longer lets sellers leave negative/neutral feedback for buyers. This putatively stops sellers from retaliating against buyers who leave legitimate complaints, but it also skews the database towards only positive reviews, which ultimately undercuts its credibility.
* In India, where courtships remain very brief by US standards and grooms can be paid dowries by the bride's families, there is an emerging trend for brides to hire "wedding detectives" to ferret out the scoop on grooms and whether their representations are correct.
* Funny article on being a secret shopper for Consumer Reports.
* Dan Solove's book, The Future of Reputation, is now available online for free. Ethan's review of the book.
Patents
* Six years later, eBay finally buys it now: eBay v. MercExchange settles with eBay buying out some of MercExchange's patents and licensing others.
* Mike Masnick: "Psst! Patent Examiners Do Not Scale"
Copyright
* Mike Masnick: “Why We Should All Want Politicians Who Plagiarize.”
* Do Not Resuscitate...My Copyrights (funny).
Miscellaneous
* Citizen Media Law Project has a useful discussion on getting insurance for cyberlaw risks.
* People v. Fernino, 2008 WL 382348 (N.Y. City Crim. Ct. Feb. 13, 2008) (woman violated a no-contact order when sending a MySpace message to the person).
* Mike Masnick: "We Need A Broadband Competition Act, Not A Net Neutrality Act"
* A retrospective on some of the leading dot-coms from the 1990s.
Posted by Eric at 05:32 PM | Content Regulation , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Marketing , Patents , Privacy/Security , Search Engines , Spam , Trademark | TrackBack
February 27, 2008
Rescuecom v. Google Oral Arguments Finally Calendared
By Eric Goldman
You may recall Rescuecom v. Google, where the district court dismissed a trademark infringement lawsuit against Google for selling trademarked keywords because the sales lacked the requisite use in commerce. We are all watching this case closely because (1) it involves Google, (2) the district court ruling was such a clean and decisive win for Google, (3) the Second Circuit ducked search engine liability in its influential 1-800 Contacts v. WhenU precedent and will now have to address it squarely, (4) an affirmance might prove persuasive enough to encourage other courts to harmonize on the Second Circuit's rule and eliminate the current circuit split on the trademark use in commerce question, and (5) a reversal could lead to doctrinal anarchy.
Over a year after the appeal and all of the briefs were filed, the Second Circuit has finally calendared oral arguments for April 3 at 10 am in NYC (500 Pearl Street, 9th floor). Each side has been allotted 10 minutes. I won't be there but I suspect many others will be.
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
* Google's initial brief
* Rescuecom's initial brief
* District Court's opinion
Posted by Eric at 05:50 PM | Search Engines , Trademark | TrackBack
February 21, 2008
Eric Menhart Backs Off CyberLaw Trademark Claim
By Eric Goldman
You may recall that last month we all had a good laugh over self-proclaimed Cyberlawyer Eric Menhart's trademark application for the term "CyberLaw" to describe his Cyberlaw practice. (In case it wasn't clear, we weren't laughing WITH him...). Despite his initial blustery defense of the application (which, as a reader noted to me, violated the First Rule of Holes), Menhart has now backed off his claim to own the term "CyberLaw." Instead, he has amended his application to seek a trademark registration only in his stylized CyberLaw logo. (Thanks to Tricia Bishop at the Baltimore Sun for calling my attention to the amendment and sending the copy). Unfortunately, I won't dare display the logo here because it would likely make me his next enforcement target; but you can see the design in the amended application.
With this amendment, I'm inferring that all of us--even Michael Grossman, the victim of Menhart's efforts to enforce his purported trademark rights in the term "CyberLaw"--are now free to use the term "Cyberlaw" for its dictionary meaning without fear of getting sued by Menhart. However, Menhart doesn't appear to have changed his tune about the merits of his initial application. Instead, the Baltimore Sun quotes him as saying that he amended his application because:
It was very clear that this was not going to be an academic argument, it was going to be more of a shouting match, and I didn't think it was worth my time to get involved in a shouting match with people that were going to shout louder and had more ammunition in their holsters than I had
Funny--I would have thought it wasn't worth his time because the application was completely unmeritorious.
What Eric Menhart might characterize as a "shouting match" is actually online word of mouth in action. (Note: the Baltimore Sun article incorrectly quoted me as saying that the blogosphere "gang-heckled" him. Actually, I said that we "gang-tackled" him, but the imagery of gang-heckling is perhaps nevertheless appropriate). Historically, it has been fairly rare to see bona fide public evaluations of a lawyer by his or her peers; that kind of reputational information was often well known among lawyers practicing in the geographic/doctrinal area and effectively unavailable to everyone else. Now, through the Internet, everyone--including Menhart's prospective clients--can easily find out what his peers think of Eric Menhart's choices, enabling this reputational information to have a much greater effect at rewarding or punishing marketplace participants as appropriate.
UPDATE: More coverage of this topic:
* Brett Trout
* Ron Coleman
* Sam Bayard
* Techdirt
Posted by Eric at 11:32 AM | Internet History , Trademark | TrackBack
February 19, 2008
McKenna on Trademark Use in Commerce
By Eric Goldman
As you know, a big issue in online trademark law is the meaning and import of a "trademark use in commerce" requirement. To win its case, a trademark plaintiff must show that the defendant made a use in commerce of the plaintiff's trademark. This sounds simple in theory but, due to bad statutory drafting and deep-seated conflicting policy norms, in practice this element has proven baffling to judges. As a result, courts have deeply split on whether keyword triggering or metatag inclusion qualifies as a trademark use in commerce. This has also sparked a robust academic debate; see, e.g., my previous blog post.
Prof. Mark McKenna of St. Louis University (a former guest-blogger here) contributes to this debate with an important insight in his paper "Trademark Use and the Problem of Source in Trademark Law." I (and others) have lauded the trademark use in commerce doctrine as a way to bypass messy factual inquiries into consumer confusion; but as Mark points out, this apparent attractiveness is false, because to determine if a defendant is making a trademark use in commerce, it's necessary to assess if consumers would interpret the trademark usage as a designation of the source of defendant's products. In other words, the trademark use in commerce doctrine still requires a consumer confusion inquiry, negating its elegance as a solution.
Mark is technically right as a descriptive matter, but I'm uncomfortable with the normative implications of his argument. Mark's paper suggests that (as trademark law is currently constructed) we can never avoid a messy inquiry into consumer confusion in trademark cases, making trademark cases inherently difficult and expensive to resolve.