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.

Last week I blogged about a lawsuit that some of the Ripoff Report folks brought against the Phoenix New Times and its reporter, Sarah Fenske, for defamation based on quotes attributed to attorney Christopher Sharp in an article published in February 2007. In my post, I pointed out some potentially ironic aspects of the lawsuit. Thomas Duffy, general counsel of Xcentric Ventures (the company that operates the Ripoff Report), was kind enough to send me a reply, which I am republishing below with his permission. (Note: I don't plan to let this blog become a new battleground to litigate the case in public, but I thought this response deserved airtime). I don't have much commentary to add to this response but I gratefully welcome thoughts from those of you who have faced similar litigation choices. In all cases, I sincerely hope the parties can find a prompt solution that doesn't involve wasted litigation expenses.

TEXT OF LETTER -----------------------------------------

Dear Professor Goldman:

Your analysis of the New Times suit is, as usual, very insightful. Rip-off Report not only saw the irony of a suit against New Times, but actually was loathe to even file the suit. In fact, we still have not even served it on the New Times. Here's the catch-22 that led to filing the suit: Sharp (the attorney quoted in the New Times) keeps saying he was taken out of context and the quote might not have been accurate. I am sure you have heard of the "empty chair" defense -- when a defendant points to someone not there to say it is their fault. Even with Sharp's statements that the quote was not accurate, we still did not want to involve New Times in a suit so we sent them a subpoena asking for the recording of the interview (if it exists), for any notes of the interview or to take Ms. Fenske's deposition. The answer we got was no, no and no. We will be filing a motion to compel. In the meantime, the statute of limitations would have run if we did not at least file the suit. Imagine if Fenske's testimony eventually is, "That's not what Sharp said at all and I intentionally misquoted him." Neither litigation counsel nor I wanted to explain to Ed nothing could be done because the statute of limitations has run. I am sure you understand this "in the trenches" litigation dilemma.

Even with all these litigation considerations, Rip-off Report would not have filed the New Times suit if they had simply published a retraction that what Attorney Sharp said was not supported by any evidence OR if New Times had proven to us that Sharp did actually say what was attributed to him. As you know, people assume newspapers have been fact checked and Ed and Rip-off Report just wanted a simple statement that Sharp's statement was unverified or, in the alternative, proof that Sharp was actually responsible for the statements in question.

As you point out, the irony was not lost on us that this situation is very similar to the usual attempt to get around Section 230 by claiming that Ed wrote the Rip-off Report in question. Proving that negative is never easy given that we guaranteed the report writer's anonymity. There are no such concerns here: there is a statement which has been attributed to Sharp and there may be a tape of the interview. There is no reason to keep a tape or notes private: the Shield Laws do not apply (Sharp was not an anonymous source and specifically waived any privilege), it is extremely relevant and, sooner or later, it is going to have to be produced. Given this doubt about who actually uttered the statements in question, I must respectfully point out that, even if New Times were solely an online provider, the suit against them would still be in exactly the same posture. There is an unfair dichotomy between print and online providers but this is not a case that shows the dichotomy: online or off, Ed and Rip-off Report will leave New Times alone if shown New Times is not responsible for the quote. Similarly, if New Times misquoted Mr. Sharp as he claims, there would be liability for both print and online media. Simply put, this is not a derivative liability case but Ed does want to get to the bottom of the issue of who made the statements.

I wish we could just assume that New Times had properly quoted Mr. Sharp. Unfortunately, there are some questions about New Times' motives in this. New Times knows Ed runs a legitimate site: they had listed Rip-off Report as the best consumer website in the past and Ed had assisted all the New Times newspapers around the country including the Village Voice before and after New Times purchased it. We have our suspicions about why New Times decided to do a hatchet job on Ed but we will leave that for another day. What I can tell you for sure is that Ed's contacts at several government agencies, such as the IRS, and members of the Corporate Advocacy Program independently told Ed that Ms. Fenske was only looking for dirt on Ed. When they had nothing but praise for Ed and Rip-off Report, she was not interested in what they had to say.

In summation, the problem here is New Times' lack of cooperation leaving us no choice in the particular (and, perhaps, peculiar) factual situation. For the sake of media accuracy, we hope New Times can show the statements are solely attributable to Mr. Sharp but, until they do, we have a client to protect.

Thank you for your commentary and for all your work keeping us all up to date on the latest in Internet Technology, Marketing and First Amendment Law.

END OF LETTER TEXT ----------------------------------

Sincerely,

Thomas B. Duffy,
General Counsel to Xcentric Ventures, LLC

Last week I spoke at the "Center for Creativity and Commerce Symposium: New Media, New Markets, New Rights" at Georgia State University in Atlanta. This event was sponsored by four different departments within GSU (law, business, communications, digital media), which created an unusually heterogeneous audience that was heavy on content creators and their vendors (like their lawyers). As a result, after I did the audience assessment, I decided the most useful direction was a practice-oriented talk focusing on how rights owners can enforce against third party intermediaries. Of course, this topic should strike regular readers as odd/ironic: first, a law professor talking about practice issues, and second, a defense-side guy talking about bringing enforcement actions...?! With those caveats, my slides.

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.

The Center for Democracy and Technology has authored a brief, for itself, anti-spyware vendors and other advocacy groups, in favor of Kaspersky in the Zango v. Kaspersky case. I thought this brief was a useful contribution to the discourse. The brief focuses heavily on the issue of empowering users' control over their desktops, which is the critical issue but a complicated one when users give instructions that may conflict with each other. The brief addresses this issue squarely:

Two scenarios illustrate the interplay of “consent” in the anti-spyware context. First, assume that a user did consent to the installation of Zango software, but later concluded that the software and resulting advertisements were harassing and objectionable. Kaspersky Lab (and most anti-spyware services and tools) offers the ability to disable Zango software, and for a user to choose to install Kaspersky software to block Zango’s advertisements is fully consistent with the user’s true choice (notwithstanding the assumed initial consent to install the Zango software).

Second, if the Kaspersky Lab software is installed on a computer before someone attempts to download and install the Zango software (and Kaspersky software blocks the Zango installation), that is quite possibly also fully consistent with the wishes of the user. By installing anti-spyware software, the user is asking to be protected from spyware even if the user does not immediately recognize certain downloaded software as spyware. Moreover, it may well be that the owner of the computer (such as a parent or an employer) decided to install anti-spyware software such as Kaspersky Lab’s, and then some other users (such as a child or employee) attempts to install Zango software (and that installation is blocked). In that scenario, the anti-spyware software is in fact doing precisely the job that it was asked to do.

I think both of these examples tell a story of how a user's putatively inconsistent instructions could be reconciled. But these examples are also pretty stylized, so minor changes in the facts would expose situations where the reconciliation might be tougher.

The case library:

* Kaspersky's answering brief [warning: 5MB file].
* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion

The Virginia Supreme Court revisits its First Amendment holding in Jaynes.

In what is likely a second stroke of luck for criminal spammer Jeremy Jaynes, the Virginia state Supreme Court recently granted a discretionary rehearing on the earlier 4-3 opinion. The Court limited review to First Amendment standing issues. These standing issues were the focus of skepticism in the dissent and in an earlier post on this blog.

The rehearing order is here.

This blog's earlier post discussing the ruling is here.

In late January, I attended the Anti-Spyware Coalition's Public Workshop entitled Spyware: What's Worked, What's Left, and What's Coming. I was on a panel entitled "Is Adware Dead?" with Alissa Cooper from CDT and Colin O'Malley from TRUSTe. This is a timely topic because I've been pondering this question myself for a while now. This blog post recaps some of my thoughts.

Adware Is Dead

At the workshop, everyone agreed that adware is dead, although we may have been using different definitions of adware. (Commissioner Leibowitz declared adware "mostly dead," invoking the phrase from the Princess Bride). I was a little surprised to see such broad consensus on this topic. Let's explore what happened.

Looking back, it's clear that the 2003-06 period was a wild time for the adware industry. Several new entrants sought to build "legitimate" businesses on client-side software that displayed advertising, and others were seeking technical exploits for more nefarious purposes.

Collectively, these efforts sparked the Great Adware Wars of the 2000s. This was a time of mania, with everyone scrambling for the largest network of installs. In turn, vendors attempted lots of aggressive practices, such as bundled installs with obscure notice/consent, difficult uninstalls, loosely controlled/uncontrolled third party distribution chains, and overgrazing of user attention once a desktop install was achieved.

I'm declaring that the Great Adware Wars of the 2000s are over, and the anti-adware forces won. The signs of a decline in the adware industry are everywhere. Most obviously, most of the entrants are out of the business. Of the players trying to run legit adware companies, arguably only Zango persists in its client-side software business model circa 2004.

Why Did Adware Die?

It's hard to tell exactly what ended the Great Adware Wars. Some possible contributing factors:

* enforcement actions by the FTC, state AGs and private litigants (including class action lawsuits)
* new laws, including the laws passed by Utah and Alaska
* technological responses, including enhanced filtering/labeling by anti-spyware vendors
* changes in the economics. In particular, paying third party distributors for installs spurred a lot of unprofitable behavior, so installation economics improved. At the same time, due to the enforcement actions and negative publicity, advertisers have become increasingly gun-shy about advertising via adware. There is some anecdotal evidence that advertisers are now including anti-adware policies in their agency agreements. It's not clear that such policies are actually being enforced, but collectively they send a signal that suppresses the demand for advertising inventory in adware.
* changes in user behavior, due to user education and press attention to adware. Adware has become a dirty/tainted word, and that taint suppresses demand up and down the chain.

Ultimately, I think the single biggest contributing factor to the demise of adware is that it often provides a lousy consumer experience. Even when adware doesn't carpetbomb users with ads, it is still largely based on interruption marketing (a term from Seth Godin's excellent book Permission Marketing [Amazon affiliate link]), i.e., getting the user to stop what they are doing to focus on the ad being presented. Telemarketing is a great example of interruption marketing, and it's universally reviled. Interruption marketing might work if the ads are routinely sufficiently relevant, but I believe that even the "best" adware rarely fulfills that potential.

In the end, I believe lousy consumer experiences always fail in the marketplace. The adware being deployed during the Great Adware Wars didn't prove otherwise.

What Consequences from the Death of Adware?

The Great Adware Wars are over. Now what?

Regulatory Proliferation

Even though the war is over, regulators haven’t gotten the message. In fact, I predict that we will see continued efforts to regulate 2005-era adware. Why? If the threat has been neutralized, shouldn't regulators focus their attention elsewhere?

This is a classic public choice problem. Everyone hates pop-up ads and scary adware, so regulators can pander to their constituencies' fears. At the same time, no one is opposing these efforts--the adware companies have largely vanished (not that they were ever a potent lobbying force in the first place), and no one else will stand up in their stead. As a result, regulators seeking some publicity bounce for being “tough on Internet threats” can easily enact ineffectual laws to combat past problems. (As an example of this, see the continued unopposed efforts of the Humane Society to ban Internet hunting).

Long Live Adware!

Adware circa 2003-06 may be dead, but adware in the broad sense--client-side software that displays advertising--will never die. Instead, as I argue here, adware is an inevitable part of our future for several reasons.

First, client-side software can interact with the user whenever they are using their computer. As a result, the vendor doesn’t have to worry about Internet connectivity. Plus, each vendor wants to be able to reach the consumer 100% of the time, not just when the user is visiting its servers.

Second, client-side software has access to the very best data about a user. Server-side applications generally only see the data made available when users are communicating with it. This partially explains the Facebook Beacon offering; it's an attempt by Facebook to aggregate data about user behavior that's captured by third party servers (i.e., data that Facebook ordinarily wouldn't see). But even compared with Beacon, client-side software will see more--and better--data.

At the conference, it was pointed out that behavioral targeting doesn't necessarily improve with deeper datasets. While this is true, it also remains true that a website never knows if the user has transacted with its competitor (i.e., when I searched for flights at both American and United's websites, the losing company has no idea if I transacted with its competitor or not). Client-side applications can see all of this valuable information.

As a result, vendors will always want to get onto users' hard drives and watch the users' communication flows from there. Thus, the race for client-side installations will remain an omnipresent fixture of our technological environment.

At the same time, the residual legislative and regulatory efforts--made in a vacuum without a direct threat and without any counterbalancing lobbying--has a serious risk of inhibiting the development of beneficial client-side applications. Simply put, in the legislative grandstanding to put the "nail in the coffin" of adware, regulators might in fact distort the innovation cycles of software developers who can improve users' lives. It's this risk of collateral fallout that drives my objection to most types of anti-adware regulation, and when I see stupid and regressive state laws (like the Utah Spyware Control Act, or Alaska's anti-adware law, or the screwed up Utah Trademark Protection Act), the potential harm on innovation is palpable.

So here's my proposal. Let's take a moment to pause and celebrate the end of the Great Adware Wars of the 2000s, and congratulate the many people who worked very hard to contribute to its demise. Then, let's all collectively vow to move on and focus our energies on looking forward to the next round of bona fide and serious threats, instead of looking backwards at perceived threats already vanquished.

Xcentric Ventures v. Village Voice Media, CV 2008-02416 (Ariz. Superior Ct. complaint filed Jan. 31, 2008). The case history.

I've lost count of the number of times I've blogged on lawsuits involving Ed Magedson and related entities Xcentric Ventures, the Ripoff Report, badbusinessbureau.com and others. Certainly they seem to get sued a lot, especially for defamation, as Sarah Bird documented here. If I spent that much time in court, the last thing I’d want to do is bring a lawsuit. But as Sarah Bird’s report enumerates, Magedson and his group have gone on the offensive a few times. Some people just seem destined to spend their lives litigating.

This lawsuit relates to a lengthy and in-depth article on Magedson and the Ripoff Report written by Sarah Fenske that published in February 2007. (I mentioned this article in a blog post here.) To minimize my risk of being the next defendant, I won't restate the allegedly defamatory language, but it involves a purported quote of Christopher Sharp, a Florida attorney representing Whitney Information in their lawsuit against the Ripoff Report group. See pages 3-4 of the complaint. Not only did the plaintiffs sue the story's publisher (the Phoenix New Times and its parent the Village Voice), but they sued the reporter Sarah Fenske and her husband (as a Doe to be named later) as well.

On the one hand, I understand why the Ripoff Report group sued over these quotes. I suspect the Phoenix New Times article already has been cited in various plaintiffs' briefs, and I'm sure that future plaintiffs will continue to do so unless the Ripoff Report group clears their names and establishes the falsity of Mr. Sharp's allegations.

On the other hand, I thought this lawsuit was rich with irony. In earlier drafts of this post, I had a long list of ironies, many of which I ultimately decided were too snarky even for me. You'll have to use your imagination. Instead, I've decided to focus on just two odd aspects of this lawsuit.

Why Sue the Intermediary?

According to Sarah Bird's report, Magedson filed a lawsuit against Sharp in February 2007. I haven't seen the complaint or other case documents, but given the timing I suspect that the lawsuit involves his article quotes (and maybe other issues). The complaint says that Mr. Sharp now "contends that the quotes attributed to him were taken out of context and/or were improperly quoted," so perhaps the plaintiffs now feel that Sharp has adequately recanted. Either way, a lawsuit against Sharp should be adequate to clear the Ripoff Report's name.

As a result, unless the Phoenix New Times completely fabricated the statement (which the complaint didn’t allege), the plaintiffs should be satisfied pursuing only Sharp. Indeed, if a company has a problem with a user-supplied report published on Ripoff Report, the Ripoff Report folks say to take it up with the user and leave the Ripoff Report out of it. When the shoe is on the other foot, why did the plaintiffs go after the intermediaries as well?

Cyberspace Exceptionalism

Ripoff Report owes its existence to 47 USC 230. Without that immunization, Ripoff Report almost certainly would have been sued to oblivion. But 47 USC 230 is an exceptionalist statute available only to online media companies. Offline media companies don't get the same protection, creating a regulatory imbalance that puts offline print publishers at a competitive disadvantage. See Randy Picker’s comments on this point.

So if the Phoenix New Times had published the allegedly defamatory third party quotes only in its online edition, it should have been clearly and fully insulated by 47 USC 230 (as the plaintiffs well know because they helped create some of the expansive 230 precedent that would apply). In contrast, the plaintiffs can bring this lawsuit only because the Phoenix New Times also chose to publish the exact same article in its dead trees edition. I understand that 230 creates this medium-specific dichotomy in defamation law, but if it were my decision, I wouldn’t want to take advantage of it.

UPDATE: I've posted the complaint in Magedson v. Sharp.

UPDATE 2: See the response from Ripoff Report's general counsel.

Continuing my coverage of the Zango v. Kaspersky litigation over 230(c)(2), Kaspersky has filed its answering brief (warning: 5MB file). If you want to save time, the actual argument starts on page 32 of the PDF.

The case library:

* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion

The High Tech Law Institute is cosponsoring (along with the Center for Science, Technology and Society and the Markkula Center for Applied Ethics) the following event:

The World that Wikipedia Made: The Ethics and Values of Public Knowledge
May 15, 2008, 6.30-8.00 p.m., de Saisset Museum, Santa Clara University
Speakers: Mike Godwin (GC of Wikimedia and one of the pioneers of Cyberlaw) and Carl Hewitt. Pedro Hernández-Ramos will moderate.
Admission is free; parking is $6. RSVPs aren't required.
More details about the event and bios for the participants.

This event should be a great opportunity to explore the ethical, legal and credibility issues associated with Wikipedia's editing structure (something I've critiqued before). I haven't heard Carl speak before, but I can confirm that Mike Godwin is a brilliant and entertaining speaker.

47 USC 230 cases have been coming at such a rapid clip that I've fallen behind. In this blog post, I'll catch up on three recent cases:

Friendfinder

Doe v. Friendfinder Network, Inc., 2008 WL 803947 (D.N.H. March 27, 2008)

This case involves the publication of a false user-supplied profile on adult dating/hook-up services operated by AdultFriendfinder and Various. Fake dating profiles have been the source of a fair amount of 230 litigation; see, e.g., the Anthony v Yahoo, Landry-Bell v. Various, Doe v. SexSearch, Barnes v. Yahoo, and of course the Carafano case. The Friendfinder case involves two allegations we haven't seen before: (1) when the plaintiff complained, the sites removed the profile but displayed the following message on the profile page: "Sorry, this member has removed his/her profile," which allegedly implied that the plaintiff in fact had authorized the page initially, and (2) portions of the fake profile had been displayed on third party sites as "teasers" to advertise the adult dating services.

The court quickly dismisses the defamation, intentional infliction of emotional distress and various soft tort claims per 230, even if the defendants affirmatively reposted the profiles and even with respect to pull-down menus used to help profile building. This opinion came out before the Ninth Circuit en banc ruling in Roommates.com, but taking Kozinski's disclaimers at face value, the discussion about pull-down menus should have survived Roommates.com.

The court also says that 230 protects the site-authored announcement on the removed profile because "the allegedly tortious nature of those statements proceeds solely from the association they create between the plaintiff and the content of the profile." This might be an important standard to help future courts determine when 230 governs allegations of false marketing representations predicated on bad user info.

The court takes a less defense-favorable direction regarding the right of publicity claim. In direct conflict with the Ninth Circuit's ccBill ruling, this court says that 230 does not preempt state IP claims. Personally, I think this court got the statutory construction right and the Ninth Circuit got it wrong. As this court correctly explains, a court cannot interpolate the word "federal" into 230(e)(2) if it uses intellectually rigorous statutory interpretation.

Having left open the state IP claims, the court (also correctly, IMO) says that a right of publicity claim is an IP claim while any other invasion of privacy claim (i.e., the other three prongs of Prosser's four privacy torts) is not.

The court also survives the plaintiff's allegation of a Lanham Act false designation of origin claim with respect to the use of the false profile in the advertising teasers. But why didn't the court examine the application of 230 to this Lanham Act provision, which arguably isn't an IP claim? I think the court considered the false designation of origin claim, as applied to a false endorsement, to be equivalent to a right of publicity claim, but it would have been nice for the court to unpack this assumption.

The litigation over teaser content raises a question that's been bothering me for some time--when is republication of user-supplied editorial content (in this case, the dating profile) as teaser content on third party websites legally governed as commercial advertising? Teaser editorial content is ubiquitous, but it also serves a marketing function that could (should?) be regulated by commercial advertising restrictions such as the right of publicity. Hey, if you're looking for a paper topic, I think this issue (use of user content in teaser content as a right of publicity issue) is a good one.

More discussion about this case: CMLP, Rebecca, Jeff Neuburger, John Leonard

e360Insight

e360Insight, LLC v. Comcast Corp., 2008 WL 1722142 (N.D. Ill. April 10, 2008)

e360 is an email marketer/alleged spammer. Comcast blocks their emails from getting to Comcast subscribers. e360 sues Comcast for a variety of torts. The court sweeps all of the claims away on a judgment on the pleadings per 230(c)(2), saying that spam filtering constitutes the blocking of objectionable content contemplated by the statute. Further, agreeing with the Kaspersky case, the court says that any good faith requirement in the statute is subjective, not objective, and e360 didn't plead any evidence of subjective bad faith. Case dismissed.

This opinion adds to the burgeoning caselaw under 230(c)(2) showing that it will crunch claims by anyone upset that their communications are being filtered. As applied to an IAP like Comcast, I think this raises an interesting angle in the net neutrality debate. If you're looking for a paper topic, it seems like it would be timely to recap 230(c)(2) jurisprudence and analyze its interplay with other speech-preserving doctrines (must-carry laws, Constitutional free speech restrictions, net neutrality, consumer protection requirements of disclosure, etc.).

iBrattleboro

Mayhew v. Dunn, 580-11-07 (Vt. Superior Ct. March 18, 2008)

This is a simple and clean opinion. The defendants operate the iBrattleboro.com website. A third party posted material to the website that allegedly harmed the plaintiff. The website operators get a judgment on the pleadings. Case dismissed. This is a nice illustration of 230 working exactly as it should. Some useful color on the case from CMLP.

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.

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.

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.

We're hiring! Please send interested candidates to the online job descriptions and application mechanism.
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The High Tech Law Institute (HTLI) is the umbrella organization that sponsors and helps administer Santa Clara University School of Law's well-regarded program in high tech and intellectual property law. Among other duties, the HTLI manages SCU's rich curriculum of high tech and IP courses and offers events for academics, Silicon Valley lawyers and others.

The HTLI is looking to fill two important administrative positions:

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Last Friday, the High Tech Law Institute and the Berkeley Center for Law & Technology co-sponsored the Law & Business of Online Advertising conference. We had first-rate panelists and an enthusiastic audience of over 100 attendees. Rebecca blogged the event (tutorials, consumer issues, publisher issues, advertiser issues) and Sarah Bird posted her own recap. My understanding is that BCLT will post the audio from the conference to the conference website in the near future.

I'm going to focus my recap on just three of the talks.
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Joel Winston from the FTC (speaking for himself, not on behalf of the commission) spoke on the consumer issues panel. He said that consumers have a feeling of lack of control on the Internet. He thinks that consumers are generally aware of online tracking, but the tracking process is opaque, and consumers don't understand the future implications for use and disclosure of the tracked data. Surveys say that most consumers think tracking shouldn't be done at all or should be governed by an opt-in or opt-out process. Many people like targeted ads but they are worried about other uses of the data, such as security breaches, government misuse and secondary uses.

So consumers want transparency and control, and trust is the key. Adults are concerned about posting data online but kids will post very intimate details online. People don't understand the privacy tradeoffs, such as the connection between targeted ads and free content. And transparency isn't working when consumers don't read privacy policies. Self-regulation is the right approach, but the FTC will step in to protect consumers.

The FTC's behavioral principles:
* transparency and control
* reasonable security and limited data retention
* express consent for material changes to a privacy policy
* express consent to use sensitive data.
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Mark Cooper spoke about an interesting new paper he's working on. He starts with the premise that everyone hates "interruption marketing" such as TV ads: consumers hate TV ads (interruptive) and advertisers hate TV ads (can't measure efficacy). In contrast, he thinks newspaper ads are clearly better because they are easy to skip, easy to store and contain more useful information. [Eric's note: Mark is making a highly stylized argument. I explored the relative merits of different ad media in this paper.]

He thinks online advertising can improve on interruption marketing because the Internet is a two way conversation, not push marketing. He outlined 4 dimensions to measure the acceptability of advertising:

* influence. Online advertisers don't create audiences, they chase audiences created for them.

* intrusiveness. Online advertising isn't in the "middle of content." [Sounds like Mark has never experienced an unconsented adware install...and I'm not sure how he'd explain spam in one's in-box...] But he worries that data collection may be more intrusive than other media.

* ubiquity. I think he argued that online advertisers don't devote as much on-the-page real estate to ads as newspapers do. [Sounds like he's never been to a domainer's website...]

* efficiency (delivery of useful information). The cost of online advertising is less than TV, which expands the market for advertisers. This also facilitates the creation of hyper-niche content sites.

Despite some of the benefits of online advertising, he worries about how much information he needs to give up to get these improvements. He thinks behavioral targeting and tracking is inherently deceptive but in-session contextual advertising is OK, and maybe informed consent may be OK.

[Eric's comments:

* I'm not sure the four dimensions he uses are the right dimensions to measure advertising

* His arguments relied on a number of assumptions that aren't very robust, which limits the extensibility of his analysis.

* I think the statement that behavioral tracking is inherently deceptive must be overstated for rhetorical emphasis. Otherwise, I don't think that statement stands up to critical scrutiny.

* I argue (in great/excessive detail) that some types of behavioral targeting are both good and inevitable in this paper.]
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Rebecca Tushnet spoke on intermediary liability. She made two main points:

1) Intermediaries aren't good representatives of the speakers who they facilitate because the intermediaries are adverse to their users. Ex: the 512 notice-and-takedown provisions, Google's policy on TMs in ad copy.

2) There is pressure to move away from a robust interpretation of 47 USC 230. Ex: Roommates.com, the recent Adult Friendfinder case (which I hope to blog on soon) and the Quiznos case.

She thinks there may be merit to looking at the New York Times v. Sullivan case, which people sometimes forget is an advertising case (i.e., the plaintiff was trying to hold the newspaper liable for ad copy supplied by an advertiser). The newspaper wasn't liable in that case unless it had actual malice about the definition--a very high scienter bar. Perhaps the actual malice standard could be more widely used in the online context; among other benefits, notice alone wouldn't create liability.