“architectural plan” by 4max // via Shutterstock

In March, a district court in Virginia examined in-depth the justifications for awarding attorney’s fees with respect to weak copyright and DMCA claims.

Background

Ross Builder and Boathouse Creek Graphics (BCG) are custom home designers. In 2010, Ross filed a complaint against BCG claiming that BCG had violated Ross’s copyrighted plans for the “Bainbridge” home design. In September 2011, the court granted BCG’s summary judgment motion because BCG’s plans were not “substantially similar.” Ross appealed.

During the appeal process, the district court granted BCG’s motion for attorney’s fees specifically as to the DMCA copyright management information (CMI) claim because Ross “recited no facts whatsoever” to support its allegations that BCG removed copyright information from Ross’s plans.

The Fourth Circuit later vacated these attorney’s fees when it vacated the underlying award of summary judgment on appeal. On remand, the district court again granted summary judgment to the defense–this time on the basis that Ross “fail[ed] to raise a genuine issue of material fact concerning BCG’s access to the Bainbridge design.”

After its second win at the district court level, BCG filed another motion for attorney’s fees. Ultimately, the court denied attorney’s fees as to the copyright claim, but awarded them as to the DMCA CMI claim.

Award of Attorney’s Fees Inappropriate as to the Copyright Claim

The court identified and focused on four factors in making its determination as to whether to award attorney’s fees:

(i) the motivation of the parties;
(ii) the objective reasonableness of the legal and factual positions advanced;
(iii) the need in particular circumstances to advance considerations of compensation and deterrence; and
(iv) any other relevant factor presented.

Despite noting that “Ross was the party who chose to risk litigation despite the thin protection
granted by its copyright,” the court held that almost all relevant factors weighed in favor of Ross.

First, the court found that there was no evidence that Ross acted in bad faith. While conceding that contacting BCG before filing suit “might have been a ‘more appropriate response,’” the court noted that Ross had no legal obligation to do so.

Second, Ross’s legal and factual positions were not “objectively unreasonable” or frivolous according to the court:

The copyright law regarding architecture has broadened so far as to create colorable claims for copyright infringement even between homes built in the Georgian style. In light of this fact, Charles Ross’s legal and factual positions in this case, while unable to support a claim of copyright infringement, were not so objectively unreasonable as to merit an award of attorney’s fees to BCG in defending against them.

While no reasonable basis existed for Ross’s claim that BCG had direct access to the Bainbridge plans, his reliance on an inference of intermediary access was not objectively unreasonable in the court’s opinion.

The third factor also weighed in Ross’s favor. Although the Fourth Circuit instructed district courts to deter frivolous lawsuits, the court did not agree that Ross’s copyright claim was frivolous in the first place. Rather, the court actually found the dispute useful in clarifying the “intermediary access” issue:

Charles Ross’s lawsuit in fact helped more clearly demarcate the boundaries of copyright law, and thus the Court FINDS that the interests of compensation and deterrence do not favor an award of attorney’s fees in this case.

Weighing all factors, the court denied BCG’s motion for attorney’s fees with respect to Ross’s copyright claim.

Ross’s “Frivolous” DMCA CMI Claim Supported Award of Attorney’s Fees

While Ross was able to avoid attorney’s fees for the copyright claim, he ended up having to pay $13,760 in attorney’s fees and other costs with respect to the DMCA CMI claim.

Ross essentially stood pat when the Fourth Circuit vacated the original fees and remanded the case–he did not contend that any material facts changed in regard to their liability for attorney’s fees incurred while defending against the DMCA CMI claim. Since BCG won summary judgment again on remand, however, the relevant factors still supported an award of attorney’s fees.

Unlike the copyright claim, the DMCA CMI claim lacked any basis in law or fact. Thus, the court held that the factors weighed in favor of awarding attorney’s fees to BCG:

BCG is again the prevailing party after the case was remanded, all four of the relevant factors still support an award of attorney’s fees regarding the DMCA claim, and Charles Ross does not contest liability for DMCA attorney’s fees. The DMCA claim, in fact, was frivolous and lacking any basis in law or fact. BCG’s Motion for Attorney’s Fees on Charles Ross’s DMCA claim, therefore, is GRANTED.

______

As far as we can tell, the fee shift under 1203(b)(5) for a bogus CMI claim is one of the first of its kind. Note the court’s choice of words:

The DMCA claim, in fact, was frivolous and lacking any basis in law or fact. (emphasis added)

It’s unclear whether weak CMI claims will be under greater scrutiny as a whole from now on, or whether this was just a particularly egregious claim that, as the court noted, Ross did not even try to contest at all on remand. Given the rarity of DMCA fee shifting, it seems like the latter is probably true. Either way, it’s a good sign for those who dislike the “kitchen sink” approach taken by some rightsholders.

Another interesting aspect of the opinion was its biting criticism of the Architectural Works Copyright Protection Act of 1990:

Congress has foisted on the nation a system of copyrights for architectural works largely devoid of guiding principles as to what constitutes infringement, leaving to this Court the job of fleshing out what is and is not “substantially similar.”

In this case, Ross’s copyright claim was too weak to survive summary judgment but did not trigger attorney’s fees because it was not in bad faith alone. Unfortunately, the only other ingredient was legal confusion as to the boundaries of copyright law.

Case Citation: Charles W. Ross Builder, Inc. v. Olsen Fine Home Building, LLC, No. 4:10 cv 129 (E.D. Va. Mar. 18, 2014)

The post Defendant Gets Attorneys’ Fees For ‘Frivolous’ DMCA Copyright Management Information Claim appeared first on Technology & Marketing Law Blog.

Cite: WhatRU Holding, LLC v. Bouncing Angels, Inc., No. 13-2745 (D. Minn. February 19, 2014)

Background

Plaintiff WhatRU Holding is a Minnesota company that manufactures and distributes “inflatable tents and party accessories.” Defendants Bouncing Angels and EZ Inflatables (“EZI”) are both small California companies that also manufacture inflatables.

In connection with a product called the Carousel Jumper, WhatRU Holding sued defendants alleging several federal and state causes of action:

• Patent infringement,
• Copyright infringement,
• Trade dress infringement,
• False advertising,
• Deceptive trade practices, and
• Unfair competition.

Both Bouncing Angels and EZI moved to dismiss for lack of personal jurisdiction. Ultimately, the court decided to grant the motion for EZI but not Bouncing Angels.

Single Sale Sufficient for Jurisdiction over Bouncing Angels

The court cited the general rule that a forum may exercise personal jurisdiction over a defendant who sold an allegedly infringing product in the forum state. In this case, Bouncing Angels sold a whopping total of three products to Minnesota customers over the course of thirteen years. Even so, the court held that those sales sufficed Plaintiff’s burden in proving personal jurisdiction:

Bouncing Angels purposefully directed its activities at the forum, by accepting an order and shipping the accused product to the forum, such that the first condition is met . . . As to the second factor, the infringement claim adequately arises out of or relates to Bouncing Angel’s forum activities because the product it sold in Minnesota is the product accused of infringement.

Bouncing Angels’s main argument against jurisdiction was to emphasize the fact that it only had one allegedly infringing sale to a customer in Minnesota. The court did not buy this argument, however, arguing that multiple other district courts had found personal jurisdiction over a patent claim based on a single sale or minimal sales within the forum.

Finding personal jurisdiction over the patent count, the court noted that jurisdiction also exists for the other counts under the supplemental jurisdiction statute.

Website Access & Facebook “Likes” Not Sufficient for Jurisdiction over EZI

Establishing jurisdiction for EZI was not as EZ. Unlike Bouncing Angels, EZI had no direct sales to Minnesota residents. Thus, WhatRU Holding had to argue that EZI’s website constituted minimum contacts with the forum state. The court disagreed:

EZI’s website does not show that EZI purposefully directed its activities at residents of the forum as required under the first prong of the Federal Circuit’s specific jurisdiction test. A website that is not specifically directed at the forum and is available to customers throughout the country cannot, standing alone, establish personal jurisdiction over the website owner. See Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed. Cir. 2008).

Even with its social media, EZI did not direct much (if any) attention to Minnesota. Although EZI has general invitations to “Like” on Facebook and “Follow” on Twitter, the court noted that the minimal interaction with Minnesota residents was not a hook for specific jurisdiction:

The record does show one inquiry on Facebook initiated by a Minnesota resident about a pricing list for EZI’s products. But given the primary importance of quality, quantity, and relationship to the cause of action of EZI’s contacts in the jurisdictional analysis . . . that one lonesome communication—without any apparent connection to the Carousel Jumper—does not support a finding of specific jurisdiction.

Ultimately, WhatRU simply could not point to any meaningful EZI interaction with Minnesota residents via its website or social media, and the court consequently granted EZI’s motion to dismiss.

________

With this complaint, WhatRU Holding essentially blasted its IP shotgun at both defendants and prayed that it would hit something. Not only is the purported damage to plaintiff minimal at best, but each claim is weak.

The patent infringement argument construes the patent’s coverage broadly. Also, asserting an “inflatable sculpture” copyright in this context seems troubling because the purpose is to maintain a monopoly on inflatable carousels, not the expression of this particular inflatable carousel. Further, how would WhatRU argue that Bouncing Angels copied their design specifically, and not just the common visual elements of all carousels that came before it?

The rest of the claims are equally laughable given the de minimis nature of the alleged harm, but the trade dress argument is especially ridiculous. How can WhatRU argue with a straight face that the visual elements of a carousel are so distinctive that they identify the company to consumers?  Honestly . . . WhatRU smoking?

On the bright side, the court did right to deny general jurisdiction over EZI. As Venkat mentioned in a post from a few years ago:

[The resolution of an Internet jurisdiction question] ends up being a crapshoot much of the time, albeit one that’s informed by the court’s view of the equities.

But similarly to these recent jurisdiction cases, the court shunned the importance of the defendant website’s “interactivity” and focused more on concrete evidence of activity purposely directed at the forum state (often for pecuniary gain).

In Mavrix (discussed in Venkat’s post linked above), the court stated:

Not all material placed on the Internet is, solely by virtue of its universal accessibility, expressly aimed at every state in which it is accessed. But where, as here, a website with national viewership and scope appeals to, and profits from, an audience in a particular state, the site’s operators can be said to have “expressly aimed” at that state.

This case did not cite Mavrix, but its reasoning seems consistent with the above sentiment. Here, EZI did not have a national viewership by any account and it certainly did not profit (even once) from customers in Minnesota.

Unfortunately for Bouncing Angels, the dark (inflatable) carnival continues.

Related Posts:

The 9th Circuit Tackles a Pair of Internet Jurisdiction Cases

Consumer Reviews at “Local” Review Sites Don’t Support Jurisdiction–Wilkerson v. RSL

Facebook Faces Jurisdictional Hurdle in its Trademark Lawsuit Against Faceporn–Facebook v. Pedersen

Facebook’s Trademark Enforcement Effort Against “Faceporn” Hits Jurisdictional Snag — Facebook v. Pedersen

Consumer Reviews at “Local” Review Sites Don’t Support Jurisdiction–Wilkerson v. RSL

Two Recent Social Media Defendants Avoid Personal Jurisdiction

The post IP Battle Between Jumpy House Manufacturers Isn’t Bounced – WhatRU Holding v. Bouncing Angels appeared first on Technology & Marketing Law Blog.

Syda Productions via Shutterstock

See the photo in controversy at New York Daily News’s website.

Cite: In re: Laraine Cook, Docket No. 14-03 (Pocatello School District Grievance Panel)

Background

Laraine Cook was a substitute teacher in the Pocatello School District (“PSD”) and the head coach of the Pocatello High School Girls Basketball team. While attending a family reunion in July 2013, she took the photo in controversy with her then-boyfriend—a teacher/football coach also working in the Pocatello school district:

. . . Ms. Cook and the male who accompanied her posed for a photo in their bathing suits while standing in front of a lake. They each had one arm around the other’s waist and the male had his other hand touching Ms. Cook’s breast. There was a third person in the photograph who appears to be ‘photobombing’ the picture.

Cook posted the photo to her Facebook page as part of an album, which was accessible to the public and to the various Pocatello High School students with which she was “friends.” Within 48 hours, Cook removed the photo after getting word from her athletic director that it “was not a good idea to post such a photo.”

Unfortunately for Ms. Cook, the damage was already done.

In October 2013, the school district caught wind of the photo and fired her soon after. The district then reported Cook to the Idaho State Department of Education Professional Standards Commission for “posting a picture of a sexual nature on a social media website.”

In response, Cook filed a grievance with the Pocatello School District Grievance Panel. The panel considered whether the decision to fire Cook was “unfair treatment” or otherwise violated the district’s policy.

Cook Deserved Discipline, But Not Termination

PSD claimed to terminate Cook’s employment for violating a PSD Policy provision prohibiting “immoral” and “indecent” acts. The panel noted that those specific words overstated the conduct, but nonetheless found some catch-all language within the policy that covered Cook’s actions:

PSD Policy 7121 (in relevant part): Any person who fails to continually maintain appropriate conduct, or who acts in a manner contrary to the best interest of the district, may subject himself/herself to corrective disciplinary action, suspension or revocation of a certificate, or termination of employment.

But while it found Cook to deserve discipline, the panel ultimately disapproved of PSD’s decision to terminate her employment:

While it was certainly an error in judgment, Ms. Cook removed the photograph when the problem was brought to her attention. She has subsequently acknowledged that her decision was a mistake and even PSD personnel recognize a sincere regret on Ms. Cook’s part. There is no evidence in the record that Ms. Cook has ever had any prior discipline or performance issues.

In the end, the grievance panel found that the school district should rescind the termination letter and reinstate Ms. Cook to her prior positions as a substitute teacher and head coach of the girls basketball team.

__________________

The panel’s decision did not make clear how much of a distraction this incident actually created for PSD’s students. But absent some major uproar, it is hard to understand how this escalated the way it did.

Admittedly, the boyfriend does have his hand on Ms. Cook’s breast. But as a whole, the photo seems more lighthearted than it does sexual. Judging by posture and facial expression, neither Ms. Cook nor her boyfriend seem to be overly inebriated. They are also clearly posing for the camera–not caught in the act of lusting after each other. In a family slideshow context, one can imagine the photo receiving a chuckle rather than a gasp.

Even so, Cook still should have known that the photo was borderline and not posted it in the first place–especially knowing that she had students that were also Facebook friends. In the wake of this episode, she most likely second-guessed the wisdom of friending current students in the first place. A large number of teachers/professors refuse to do so because it invites the potential for controversies like this.

Another interesting aspect of this story is how differently the school district treated the male teacher touching Ms. Cook’s breast in the photograph. The boyfriend in the picture is Tom Harrison, who is the football coach at Pocatello High School and also a teacher. But unlike Cook, Harrison was merely “reprimanded” for the photograph. Of course, Cook was the one who posted it to Facebook in the first place, so the disparity in punishment makes sense in that context at least. Regardless, the controversy has ignited several discussions about heightened societal sensitivity to the female body and whether it speaks to some underlying sexism.

All things considered, it was clear that the school district was utterly unprepared to handle the social media slip-up. A common refrain throughout the opinion was the panel’s frustration that the school district did not have a social media policy:

PSD does not have a policy governing the use of social media by its employees. This is unfortunate because had such a policy been in place this matter may have been avoided.

The panel also made it a priority for the district as part of the resolution:

A fair resolution of this matter at this point is [for PSD] to . . . adopt a social media policy to avoid confusion about standards of conduct and instruct PSD employees about the standard to make sure it is understood.

Lastly, as Eric noted on Twitter, this is probably the first time we’ve seen the word “photobombing” in a legal opinion. Nice.
____

Related links:

* AAUP Says Kansas Regents’ New Faculty Social Media Use Policy Violates Academic Freedom (Guest Blog Post)

* Court Upholds Doocing For Snarky Facebook Post — Rodriquez v. Wal-Mart

* Employee Termination Based on Mistaken Belief of Facebook Post Authorship Upheld — Smizer v. Community Mennonite Early Learning Ctr.

* Social Worker’s Facebook Rant Justified Termination — Shepherd v. McGee

* Organizing an “Internet Safety” Presentation? Don’t Troll Through Students’ Facebook Accounts Looking for Bikini Photos

* The “I Didn’t Understand Facebook’s Privacy Settings” Argument Isn’t Persuasive to Judges–Sumien v. CareFlite

* Accessing an Employee’s Facebook Posts by “Shoulder Surfing” a Coworker’s Page States Privacy Claim — Ehling v. Monmouth Ocean Hosp.

* Facebook “Likes” Aren’t Speech Protected By the First Amendment–Bland v. Roberts

* Facebook Posts Complaining About Supervisor Conduct do Not Support Retaliation Claim – DeBord v. Mercy Health System

* Employee Wins Harassment Claim Based in Part on Co-Workers’ Offsite Blog Posts

* Overreactive Guidance for Social Networking Du Jour — NLRB Edition

* Private Employers and Employee Facebook Gaffes [Revisited] and the prior post Do Employers Really Tread a Minefield When Firing Employees for Facebook Gaffes?

* School District Didn’t Violate First Amendment for Reassigning Teacher Who Blogged–Richerson v. Beckon

* Employee Blogging Risks

* Employee Terminated for Facebook Message Fails to State Public Policy Claim — Barnett v. Aultman

* Employee Wins Harassment Claim Based in Part on Co-Workers’ Offsite Blog Posts–Espinoza v. Orange

The post Teacher’s Semi-Racy Facebook Photo Doesn’t Justify Firing – In re Laraine Cook appeared first on Technology & Marketing Law Blog.

Screenshot of “Ramapo Islands”

Background

This bizarre case stemmed from a payment dispute for digital design services related to the virtual world “Second Life.” For those unaware with Second Life, the court described it as an “internet-based simulation in which users appear via digital characters called ‘avatars’ and interact with a computer-generated environment.”

The operators of Second Life (Linden Research, Inc.) sell parcels of virtual space called “islands” that essentially begin as blank slates that look like flat green rectangles. Second Life users can then change these virtual landscapes and populate their island with objects, buildings, and other things they create or purchase–a process called “terraforming.”

As a teacher, Defendant Cindy Sheehy saw Second Life as an educational opportunity and worked with her school’s technical staff to purchase three “islands” in Second Life that would later be “terraformed” into a virtual classroom for her students. She met Plaintiff Fred Fuchs at a Second Life convention in San Francisco, and ultimately hired his FireSabre consulting company to create digital content and terraform her virtual islands.

FireSabre terraformed a total of six islands for the defendants, referred to as “Ramapo Islands”:

(1)  “The First Three Islands” created in 2005-06, and

(2)  “The Second Three Islands” created in 2007-08.

Unfortunately, the parties didn’t nail down the specific details of this relationship. Sheehy claims that Fuchs was a “volunteer” for the First Three Islands, whereas Fuchs claims that he was an independent contractor hired to create the content for $10,000. But the two parties never executed a formal written contract, let alone discuss who owned the IP rights to this “Ramapo Islands” project.

The school district did eventually pay Fuchs $5,000 for the terraforming of the Second Three Islands, but the parties dispute whether that sum effectively purchased a copy of the content or merely a license of limited duration. Fed up in 2008, Fuchs submitted forty screenshots of the islands to the Copyright Office and registered his company’s digital artwork copyright. He then contacted the defendants and told them that the continued use of any of FireSabre’s Second Life content after August 1, 2008 would be “unlicensed.”

After that date came and went, FireSabre submitted several DMCA takedown requests to Linden Research. It also alleged that the defendants created a copy of the Second Life terraforming and uploaded it to servers for “OpenSim,” a different virtual world simulation. Ultimately, FireSabre sued for copyright infringement.

“Terraforming” is Copyrightable Under Section 102

The Defendants first attacked the validity of Firesabre’s terraforming copyright, arguing that terraforming should not qualify for copyright protection because it is not “fixed in any tangible medium of expression” within the meaning of § 102. The court did not buy this argument and compared the terraforming to digital images in video games:

Plaintiff’s designs existed on Linden’s data servers and were visible within Second Life for some period of time . . . clearly of more than “transitory duration.” The work was “sufficiently permanent . . . to permit it to be perceived” by the students who interacted with the Ramapo Islands simulation.

The court also shot down the argument that the terraforming was not “sufficiently permanent” because students were able to alter it. Defendants were similarly unsuccessful in arguing that the terraforming was not within the scope of FireSabre’s copyright because it was not prominently featured in the screenshots Plaintiff submitted to the Copyright Office.

Dispute Over Authorization Precluded Court From Granting Summary Judgment

In its complaint, FireSabre alleged two instances of infringement: (1) the unauthorized display of the “Second Three Islands” after August 1, 2008, and (2) the unauthorized copying of the “First Three Islands” into the OpenSim environment in early 2011.

Ultimately, the court denied FireSabre summary judgment for both instances.

With respect to the First Three Islands, the court claimed that it had not been presented with enough information to give summary judgment on the question of substantial similarity.

As for the Second Three Islands, the dispute over authorization prevented summary judgment for FireSabre:

While Defendants have done a less-than-admirable job of teeing this issue up for the Court’s attention, they do assert that Sheehy believed the District had purchased the right to the continued use of the content Plaintiff had created for the Second Three Islands at her request.

Sheehy and the school district claimed that the $5,000 payment to FireSabre authorized them to continue using and displaying that content. The court gave considerable weight to this question, and noted that such an authorization could have been obtained by an implied license, under the first sale doctrine, or as a volunteered gift. The lack of evidence as to these three possibilities ultimately influenced the court to hold off on granting summary judgment.

Defendants Unsuccessful in Claiming Fair Use

In addition to the “authorization via implied license” defense, Sheehy and the defendants claimed that their continued use of the virtual islands constituted fair use. But one by one, the court laid out its rationale as to why each fair use factor weighed against a finding of fair use.

1) Purpose and Character of the Use: For this factor, the court relied on the distinction as described in Harper & Row:

[t]he crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.

Despite acknowledging that “Defendant’s use of the material in question [was] primarily . . . for nonprofit educational purposes,” the court found that the allegations more closely resembled misappropriation because the defendants stood to gain from exploitation of the digital content without paying the customary price.

2) Nature of the Copyrighted Work: The court quickly weighed this favor against the defendants, noting that FireSabre’s digital artwork “is within the creative ‘core of intended copyright protection’ for which fair use is more difficult to establish.

3) Amount and Substantiality of the Use: The court noted that FireSabre has produced evidence, uncontroverted by the defendants, that the amount of content used by the defendants was a substantial part (if not the entirety of) FireSabre’s copyrighted works.

4) Effects of the Use on the Market for or Value of the Work: This factor also weighed against fair use, as the court reasoned that “the market in which Defendants’ use of the material occurred is the same market that [FireSabre] is targeting in creating its works in the first place.” By continuing to use the content, the defendants chose not to avail themselves of the “ready . . . means to pay for the use” in the Second Life market.

Since none of these factors weighed in Defendants’ favor, the court denied defendants’ cross-motion for summary judgment. All in all, the court struck down both parties’ summary judgment motions and set the stage for this strange case to proceed to trial.

__________

The lesson here: don’t stiff your virtual landscaper!

Actually, the bigger lesson (too often ignored) is to make sure you have an agreement nailed down and in writing before beginning a time-intensive project. Judging by the earliest entries for FireSabre in the Internet Archives (circa 2007), it seems that the business was in its infant stages and thus less likely to have a firm process in place. But absent any documents outlining the relationship, the “authorization” question loomed heavily over this case and all but prevented summary judgment.

In fact, the major questions here were more factual related and less about the application of copyright law in virtual worlds. The defendants’ attack on copyrightability did not stick, nor did the fair use defense. It’s pretty clear that even educational uses of copyrighted material will not be protected when you’re using the entirety of the work and not paying for it.

As always, we must ask ourselves whether proceeding with a full trial is worth it.  Something tells me that when you’re knee-deep in litigation over a few virtual islands, the answer is no. Then again, I can only speak to this issue from a First Life perspective.

___

Case Citation: FireSabre Consulting, LLC v. Linden Research, Inc., No. 11-CV-4719 (S.D.N.Y. Sept. 26, 2013)

The post Copyright Suit Over Second Life Terraforming Survives Summary Judgment, Then Settles — FireSabre v. Linden appeared first on Technology & Marketing Law Blog.

Headache. Obsession. […] // Shutterstock

Cite: Sanders v. Walsh, 219 Cal.App.4th 855 (Sept. 16, 2013).

Background

Plaintiff Sanders’ mother lost her hair from chemotherapy treatment for breast cancer. Sanders bought a wig for her mother from defendant Wiggin Out. She claimed she was told that the wig was custom-made, but Wiggin Out’s owner Wals) denies that she ever made that representation. Sanders prevailed in small claims court and subsequently made a post to Ripoffreport.com. In a lengthy “rebuttal” post, Walsh and Wiggin Out made two allegations that Sanders claimed were defamatory.

First, Walsh claimed that Sanders paid with an “unauthorized” check:

“Fact: Cheryl Saunders who works for the City of Anneheim, CA … wrote an unauthorized check out of her boyfriends (she told us it was her husbands account that day) from West Coast Building Contractors out of Annehiem and at the bottom by the ‘notes section’ wrote that it was a ‘Prosthetic Donation.’”

Second, Walsh claimed that Sanders had fabricated a letter from Fed Ex in order to prove that Sanders’s mother tried to return the wig to Wiggin Out:

“Fact: New court date. Cheryl Saunders came into court with a made up letter from Fed Ex stating that ‘Constance Walsh opened the package and saw what was in it and gave it back to Fed Ex.”

Months later, Sanders found anonymous posts online suggesting that she was receiving “under the table” bribes in exchange for construction contracts. These posts were ultimately traced back to Walsh and Wiggin Out.

In response to the various defamatory posts, Sanders sued Walsh and Wiggin Out for libel, false light, and intentional infliction of emotional distress (IIED). The trial court found that each of the online statements in question were false and defamatory, awarding $10,000 on the IIED claim, $10,000 on the defamation claim, and $4,000 in punitive damages. Walsh appealed.

Walsh’s Defamatory Statements Were Not Mere Opinion

Walsh argued that her statements fell in the category of protectable opinion. As part of this strategy, she harped on the “relaxed communication style” of the Internet and how, in that context, readers would understand her statements as mere opinions. Some prior California cases supported this theory, citing commentators who “’likened cyberspace to a frontier society free from the conventions and constraints that limit discourse in the real word.’” See Krinsky v. Doe 6, 159 Cal. App. 4th 1154 (2008).

Despite acknowledging the “fast and loose” nature of online posts, the court refused to accept that online commenters are immune from defamation liability or that online commentary is always opinion. Instead, the court looked to the specific language and found false factual allegations:

The Yelp.com posting mentioned Cheryl Sanders in connection with awarding city contracts to friends and family members and taking under the table money, i.e., bribes. The MerchantCircle.com article was even more explicit, accusing Cheryl Sanders of “giving all the construction business in Anaheim for a under the table bribe.” These statements are not mere opinion.

The court called these “historical facts” and also made sure to point out that Walsh’s post on Ripoff Report actually prefaced most of its paragraphs with the word “fact.”

Substantial Evidence Supported Lower Court’s Finding of Malice

Walsh said that she held an honest belief that the statements on Ripoff Report were true based on her experience related to the small claims suit. But the court noted that even if this were true, such an honest belief would not cover the various city planning corruption allegations.

In addition, the court noted that Walsh “plainly had a hostile relationship” with Sanders which was evidenced by the Ripoff Report statements:

The patently false nature of the claims, Walsh’s false denial that she posted the statements, and Walsh’s hostile attitude towards plaintiff are substantial evidence to support the trial court’s finding of malice.

For these reasons, the court affirmed the prior judgment.

___________________

First of all, we would appreciate if any of our readers could explain the main differences between custom and generic wigs–the opinion does not mention the delta in quality or price. Apparently, however, it was enough to start an online war of words that would escalate and spill over into the courtroom.

Sometimes, you can’t help but marvel at the great things happening on the Internet. Duolingo, Khan Academy, Justinguitar, Wikipedia… Right now, people all over the world are online learning and becoming better people.

Other times, you can’t help but place your palm on your forehead, close your eyes, and slowly shake your head. This is one of those times.

This is not to say that sites like Ripoff Report and Merchant Circle shouldn’t exist, but does posting a rant online truly help matters? Do prospective customers really use them to prepare for a purchase, or are they more like an online diary where venting has the potential of hurting the other side’s business? At the same time, how does it help to “rebut” these rants with extremely specific (and misspelled) falsehoods? In this case, it seems it was clear sailing on the high road.

Regardless of the ridiculous origin of the lawsuit, this case is interesting in another respect because the defense is essentially trying to capitalize on the public’s skeptical perception of Internet conjecture. On one hand, the “anonymous” nature of the Internet does invite these types of “fast and loose” factual claims. Readers are often told to take everything on the Internet with a grain of salt, let alone unmoderated forum posts. Even younger readers are often able to spot “trolls” and brush off incendiary comments knowing the content is untrue and only meant to get a rise out of the target. How far are courts willing to go to punish this type of online mudslinging?

On the other hand, the court is right that the allegations in controversy are definitely specific factual allegations damaging to Sanders’s reputation. Whether on the Internet, in print, or elsewhere, it is not accurate to portray them as mere opinion.

For more information, see Eric’s post: “Want to Avoid Defaming Someone Online? Link to your Sources.“

The post “Wiggin Out” Over a Wig Purchase Dispute Leads to Online Defamation – Sanders v. Walsh appeared first on Technology & Marketing Law Blog.

Dudley v. Healthsource Chiropractic, Inc., 883 F. Supp. 2d 377 (W.D.N.Y. August 7, 2012)

What happens when there’s a small, regional trademark and a national player wants to adopt the same trademark on the Internet?

In August 2012, a New York district court held that a senior user of a common law trademark could not claim exclusive use of that mark on the Internet. While the court agreed that plaintiff Dudley was the senior user of the common law trademark HEALTHSOURCE CHIROPRACTIC for chiropractic services, it held that Dudley’s rights were limited to his use in the greater Rochester, New York and that the defendant’s use of the mark on the Internet did not violate the common law trademark rights.

Background

Upon beginning his practice, plaintiff Dudley obtained a d/b/a certificate for “HealthSource Chiropractic” from the Monroe County Clerk’s office on December 8, 2003. Since then, Dudley has taken measures to advertise his practice via classified ads, print magazines, radio spots, and partnerships with local sports teams.

As part of his advertising, Dudley also registered the domain name healthsourcechiropractic.com and created a web site.

Defendant “HealthSource Inc.” was founded by Chris Tomshack in 2005 with intentions of starting a national franchise. Tomshack had actually been operating chiropractic offices since 2001 under the name “HealthQuest,” but he says he switched to HealthSource because HealthQuest was already being used by others. In 2005, Tomshack’s legal counsel conducted a trademark search with the USPTO, the Ohio Secretary of State, and on the Internet. Tomshack claims he never saw Dudley’s website because it was either unavailable or down. Subsequently, he registered the domain healthsourcechiro.com and began the registration process with the PTO.

After incorporating in Ohio and filing allegations of use, Tomshack eventually obtained registrations for HS Healthsource and HealthSource Chiropractic from the PTO in 2008. HealthSource currently has 325 franchisees nationwide, including Dr. Divito, who opened a franchise in Rochester near Dudley in 2007. Divito realized that Dudley had already been using the name “HealthSource” for chiropractic services and later agreed with Tomshack that it was best to use “HealthQuest” for that franchise location instead (Note: the court runs a likelihood of confusion analysis between those marks and ultimately decides that no such likelihood exists).

Despite this move, Dudley brought suit alleging trademark infringement, cybersquatting, unfair competition, and false designation of origin for the “HealthSource Chiropractic” and “HealthQuest Chiropractic” marks. Both sides moved for summary judgment.

Dudley’s Mark is Legally Protectable, and He Was the Senior User

The court held that Dudley’s mark was suggestive rather than merely descriptive, reasoning that (1) customers would have to use imagination to make the connection with chiropractic services, (2) Defendants used HealthSource as a trademark, and (3) use of the term would not deprive competitors of a way to describe their services. As a result, Dudley’s HealthSource mark was considered inherently distinctive and he did not have to provide evidence of secondary meaning.

[Eric’s comment: I think the court was generous calling HealthSource suggestive.]

There was little dispute as to who had priority. According to the court, Dudley had provided uncontroverted evidence that he had been using the mark prior to Tomshack’s constructive use date of July 10, 2007 (i.e. the d/b/a certificate and the domain registration).

As a senior user of the common law HealthSource trademark, Dudley’s territorial rights are limited to the geographic area in which he established those rights prior to Tomshack’s constructive use date of July 10, 2007. Dudley claims that the boundaries of this zone includes Monroe County and its five contiguous counties, but this is still in dispute.

Even as Senior User, Dudley May Not Claim Exclusive Use of the Mark on the Internet

Dudley argued that since he had priority on the Internet, Tomshack’s use of the HealthSource mark online also infringed upon his rights by extension in the greater Rochester area. In response, Tomshack made a policy argument that Internet exclusivity for senior common law users would undermine the purpose of federal registration in the first place.

More sympathetic to Tomshack’s argument, the court concluded that neither party could claim exclusivity on the Internet:

If, as the Plaintiff suggests, a senior common law user could claim exclusive use on the internet, then it would undermine the benefits and security provided by federal registration. A federal registrant could never be certain that its rights extended to the internet and that a senior user would not come forward claiming priority and exclusivity to the internet. Similarly, allowing a federal registrant exclusive use of the mark on the internet would undermine the territorial rights of a senior user.

Even though the court blesses some extent of concurrent use on the Internet, it warns that competitors should not make use of their marks in a way “manipulated to intrude on another’s territory in bad faith.” For example, the court mentions that it would be improper for a user “to target Internet advertisements to consumers within another user’s exclusive territory or to advertise on locally focused web sites that target that market.”

In this case, however, the court reasoned that Tomshack had taken reasonable measures to make sure that they are not using the Internet to intrude on Dudley’s territory:

The Defendants have removed Dr. Divito’s practice completely from HealthSource Inc.’s web site. Dr. Divito maintains his own web site, rochesterspinalcare.com, for his Rochester practice and only uses the HealthQuest mark on his web site. The Plaintiff has presented no evidence that indicates the Defendants have used the HealthSource mark on the internet to specifically target the Rochester market.

Dudley also argued that the confusion between his practice and Tomshack’s franchisees was so great that he would be forced to re-brand. As evidence, he cited bits of actual confusion like Google searches that led to competitors and mistaken links by third parties. Citing Lang v. Retirement Living Pub. Co., Inc., the court countered that this was more general confusion, which is not the type of confusion that the trademark laws are designed to prevent (i.e. mistaken purchasing decisions). Dudley had no proof that customers had been deceived into purchasing Tomshack’s chiropractic services instead. Thus, the court dismissed Dudley’s infringement claims based on Tomshack’s Internet use.

The court also dismissed Dudley’s cybersquatting claims because he could not claim that Tomshack used the mark “in bad faith.”

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This case is interesting because it pits legitimate concerns against compelling policy arguments. First of all, I can understand why Dudley would be upset–it seems that he has accumulated a considerable evidence of actual confusion. Regardless, I agree with the court and Tomshack that to give Internet exclusivity to a senior common law mark user would be a much worse outcome.

As the court implies, it is not reasonable to give one concurrent user Internet exclusivity simply because the nature of the Internet makes it hard to stake clear zones of territorial rights:

The internet is not, however, a geographic territory to be subdivided; instead, it is a global communication medium that is accessible from anywhere on the planet. The internet has become vital for local, regional, national, and international communication.

Instead, the court ends with a nice quote on how trademark owners must adapt to lawful concurrent use on the Internet:

A trademark owner cannot reasonably expect to have exclusive use of a term on the internet . . . Users of a mark must develop ways to distinguish themselves on the internet beyond resorting to the trademark laws.

[Eric’s note: this case was filed in 2007 and still isn’t resolved. According to the PACER docket, it appears this case has been in mediation throughout 2013.]

Photo Credit: Sebastian Kaulitzki / Shutterstock.com

The post Regional Trademark Owner Can’t Block Junior User’s Internet Presence–Dudley v. HealthSource (Catch-up Post) appeared first on Technology & Marketing Law Blog.

D’Agostino v. eBay, Inc., NO. A–5954–11T4 (N.J. Super. Ct. Sept. 13, 2013)

To what extent is eBay liable for “lost profits” when a technical glitch makes a seller’s listing less appealing? This lawsuit is too weak to be a good test case, but it’s a start. A court in New Jersey upheld the dismissal of pro se plaintiff Steven D’Agostino’s claim against eBay for lost profits when a technical glitch obscured the listing’s photographs of the vehicle he was trying to sell–in part because he could have set a reserve price and didn’t.

Background

D’Agostino was no rookie to selling on eBay–at the time of the sale in controversy, he had been selling merchandise on the auction website for years. This time, he was selling his 1999 Subaru Outback wagon. The listing went up on September 18, 2011 and was set to last until that Sunday, the 25th. Notably, D’Agostino did not set a reserve price (i.e. a hidden minimum price) for the listing. Apparently this was a conscious decision, as he thought that setting a reserve price could drive the price down. The crux of D’Agostino’s complaint, however, revolved around a technical glitch that occurred during the listing’s run.

[Eric’s note: on the empirical question of the effect of a reserve price on sales prices, there is mixed evidence. A relatively recent study suggested that reserve prices lead to higher prices on average but reduce the probability of sale. An older study indicated that secret reserve prices drive down auction prices as well as reduce the probability of sale.].

On September 24th, D’Agostino tried to revise the posting and unluckily suffered a technical glitch that he thinks harmed the listing’s earning potential. Upon the revision, the glitch caused the photographs of the car to move so far down the listing area that it was unlikely the listing browsers would even see them. That same day, D’Agostino contacted eBay’s customer service department. They promised to resolve the problem within twenty-four hours, but only a day later the point was moot: the car had sold for $711.25.

D’Agostino tried to complain to eBay, but the customer service representative said all they could do was offer partial credit toward a $60 auction fee. Presumably unhappy with the response, D’Agostino refused to pay. When a collection agency contacted him about the fee, he sued eBay demanding $800 in lost profits, plus “tort damages from the loss of [his] perfect flawless account on eBay since Mar[ch] of 1999, and tort damages from the negative credit reported by eBay.”

D’Agostino didn’t have claim against eBay

The Superior Court quickly dismissed D’Agostino’s claims, pointing to his considerable experience using the online platform and noting that he made certain conscious decisions that backfired for him:

He had the right to post a reserve auction. He did not do that . . . He also testified that there is no obligation to follow through with a sale; that although he felt that there would be some impact on his reputation if he did that, but legally . . . he had no obligation to fulfill the sale if he didn’t want to.

Further, the court had trouble agreeing that $711 was disproportionate or grossly undervalued in the first place. First of all, the $1,500 purchase price on Craigslist acted as a price ceiling–there is no reason to buy it on eBay when you can get it cheaper somewhere else. Second, by his own notes, D’Agostino seemed to envision a situation in which the car sold for $500 or less:

. . . Last note: if the car sells for $500 or less, I’m taking the CD player out and selling it myself separately (emphasis added).

Ultimately the judge denied the motion for a new trial on the grounds that (1) D’Agostino’s case for unlawful interference with prospective economic damage was severely lacking, and (2) that he couldn’t prove that the compensation for the vehicle was unreasonable. As the judge noted, he still had not paid the commission to eBay–thus, eBay decided not to allow him to post any more. To the court, this was a business decision well within their rights.

In the court’s view, the trial judge’s factual findings had enough support in the record. Since D’Agostino could not get the court to act as a new factfinder, he was left with only a few longshot arguments (mostly related to New Jersey evidence rules).

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On one hand, this is a short decision with relatively small stakes. On the other hand, it’s still a solid victory for eBay since it fended off what would be an annoying trend: unhappy with your auction results? Sue eBay!

This case was a stretch from the start; the only way I could have seen this proceeding further is if somehow (1) eBay did not allow a “reserve” price, (2) eBay forced sellers to follow through with the sale no matter what, and (3) the technical glitch caused by eBay happened early on in the process, significantly diverting potential buyers. Even so, the first two are negated by eBay’s policies and the third factor would be near-impossible to prove. When the facts are this bad, I have to wonder whether the plaintiff was just hoping for a “go away” settlement or simply trying to stick it to the company for personal satisfaction.

To avoid this type of mess, sellers should avoid making the same mistakes as D’Agostino. First of all, set a reserve price so you don’t end up with seller’s remorse. Second, don’t set too strict of a range in your Notes section. In this case, the court had no trouble using these numbers to make a conclusion on what was “reasonable.”

Photo Credit: 360b / Shutterstock.com

The post eBay Not Liable for Technical Glitch When Seller Doesn’t Set Reserve Price — D’Agostino v. eBay appeared first on Technology & Marketing Law Blog.

Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., 2013 WL 3722365 (4th Cir. July 17, 2013)

This is a follow-up to our massive post on anti-scraping lawsuits in the real estate industry from New Year’s Eve 2012 (Note: the portion on MRIS is about halfway through the post, labeled “Same Writ, Different Plaintiff”).

AHRN is a California real estate broker that owns and operates NeighborCity.com. The site gets its data in part by scraping from MLS databases–in this case, MRIS. As part of the scraping, however, AHRN had collected and displayed copyrighted photographs among the bits and pieces of general textual information about the properties. MRIS sent a cease and desist letter to AHRN, and filed suit alleging various copyright claims after the parties failed to agree on a license to use the photographs. Ultimately, a district court in Maryland granted a motion made by MRIS for a preliminary injunction.

When we last left off, the district court had revised its preliminary injunction order to enjoin only AHRN’s use of MRIS’s photographs–not the compilation itself or any textual elements that may be considered a part of it. Since then, AHRN appealed the injunction. On July 18th, the Fourth Circuit Court of Appeals affirmed.

Background

AHRN argued that MRIS failed to show a likelihood of success on its copyright infringement claim because MRIS: (1) failed to register its copyright in the individual photographs when it registered the database, and (2) did not have a copyright interest in the photographs because the subscribers’ electronic agreement to MRIS’s terms of use failed to transfer those rights.

 MRIS Did Not Fail to Register Its Interest in the Photographs

This first question revolved around the scope of MRIS’s registrations. AHRN argued that MRIS’s collective work registrations did not cover the individual photographs because MRIS did not identify the names of the authors and titles of those works. MRIS argued that 17 U.S.C. §409 did not require any such identification when applied to collective works, and that its general description of the pre-existing photographs’ inclusion sufficed.

The court began its discussion by noting the “ambiguous” nature of §409’s language and its varying judicial interpretations. Some courts have barred infringement suits because the collective work registrant failed to list the authors, while others have allowed infringement suits where the registrant owns the rights to the component works as well as the collective work.

In this case, the court agreed with MRIS and found that the latter approach was more consistent with the relevant statutes and regulations:

Adding impediments to automated database authors’ attempts to register their own component works conflicts with the general purpose of Section 409 to encourage prompt registration . . . and thwarts the specific goal embodied in Section 408 of easing the burden on group registrations[.]

As part of its decision, the court looked favorably upon the 3Taps case, in which Craigslist sued 3Taps and Padmapper for scraping and repackaging its online classified ads. In that case, the court reasoned that it would be “inefficient” to require registrants to list each author of an extremely large number of component works to which the registrant already had obtained an exclusive license.

Having found that MRIS’s general description satisfied § 409’s pre-suit registration requirement, the court moved on to the merits of MRIS’s infringement claim–more specifically, the question of whether MRIS’s Terms of Use actually transferred a copyright interest to its subscribers’ photographs.

E-SIGN Applies to Assignments of Copyrights and Overrides § 204

AHRN challenged MRIS’s ownership of the photographs by arguing that an MLS subscriber’s electronic agreement to MRIS’s Terms of Use does not operate as an assignment of rights under § 204, which requires a signed “writing.”

In a bad sign for AHRN, the court began its discussion by volunteering an argument that MRIS did not even bring up:

[I]n situations where “the copyright [author] appears to have no dispute with its [assignee] on this matter, it would be anomalous to permit a third party infringer to invoke [Section 204(a)’s signed writing requirement] against the [assignee].”

With that in mind, the court went on to discuss the E-SIGN act’s impact on the conveyance of copyrights. After establishing the meaning of “e-signature,” the court focused on whether the act was limited from covering this type of situation.

The Act provides that it “does not . . . limit, alter, or otherwise affect any requirement imposed by a statute, regulation, or rule of law . . . other than a requirement that contracts or other records be written, signed, or in nonelectric form[.]”

The court emphasized the phrase “other than,” reasoning that a plain reading of the E-SIGN language showed that Congress intended the provisions to limit § 204. It also noted that Congress did not list copyright assignments among the various agreements to which E-SIGN did not apply–nor was there a catchall that included such assignments.

The court then turned to the Hermosilla case, in which a district court in Florida upheld the validity of a copyright conveyance via e-mail. It emphasized the Hermosilla court’s reliance on the purpose of § 204–“to resolve disputes between copyright owners and transferees and to protect copyright holders from persons mistakenly or fraudulently claiming oral licenses or copyright ownership.” The appellate court agreed with the Hermosilla court that allowing assignment via e-mail actually helped cut down on these types of disputes.

To invalidate copyright transfer agreements solely because they were made electronically would thwart the clear congressional intent embodied in the E-Sign Act.

All in all, the court basically said “we don’t see why E-SIGN shouldn’t apply.” Note that it did not pass judgment specifically on whether MRIS’s Terms of Use constituted a valid contract. It simply mentioned that AHRN waived that argument by not bringing it up sooner.

For more on the Hermosilla decision and its implications, see John Ottoviani’s great post from November 2011. For a somewhat-similar case where the e-mail failed to meet § 204, see Venkat’s also-great post from November 2012.

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Eric’s comments:

1) I feared that Craigslist v. 3Taps would screw up Internet law, just as Ticketmaster v. RMG did a half-decade ago. This particular cite to 3Taps isn’t too remarkable, but it could be the leading edge of more problematic favorable citations to that opinion.

2) I believe this is the first appellate ruling that E-Sign applies to copyright’s statute of frauds, i.e., copyright’s statute of frauds can be satisfied by electronic documents. I think that is a straightforward conclusion, but it’s amazing it’s taken 15 years to get this doctrinal clarity at the appellate level.

3) Still, don’t miss the big picture point. The practical implication of this ruling is that websites can acquire exclusive copyright licenses or outright ownership from users using clickthrough agreements, something we’re likely to see happen with increasing frequency. Here, the MLS taking copyright interests in brokers’ photos is unquestionably an overreaching legal artifice designed to suppress competition, both by the brokers who can’t republish the photos elsewhere and by any rival real estate websites that want to display those photos. We’ve seen other similar overreaching copyright grabs, such as Craigslist’s attempt to take an exclusive license to the photos in its advertisers’ ad copy for similar anti-competitive purposes and (of course) Medical Justice’s form agreement to take the copyright to patients’ unwritten reviews. I’m sure the future holds even more egregious abuses of copyright assignments buried in online T&Cs. Something to look forward to.

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Venkat’s comments:

1) Although the opinion does reject AHRN’s argument that the database itself is not entitled to protection, the court notes that this may not even be an issue properly before it (since the district court’s revised preliminary injunction only applies to the photos). I suppose this is a good thing. Maybe we can slot this case in the “photos are different” category?

2) The conclusion that E-SIGN applies to copyright transfers is inevitable, although as Professor Goldman notes, it has taken longer than expected to get a clear appellate ruling to this effect.

But what does this mean, exactly? In Hermosilla, there was an email exchange, but here, what was the “electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record”? Is it the act of uploading content after having been made aware of transfer language, or is it the act of clicking on “I agree” in a mandatory click through terms of use scenario? The court is unclear on this point. It notes on the one hand that it’s asking whether a “subscriber, who ‘clicks yes’ in response to MRIS’s electronic TOU prior to uploading copyrighted photographs” indicates assent via E-SIGN. On the other hand, the court also says that it makes “no comment” as to whether the terms of service in this case work as a contract or “fail for lack of mutual assent”. As Pam Chestek notes in her post about this case, this seems like an important point that’s necessary to resolve the question of ownership and validity of MRIS’s copyrights. (See “Update: What is an E-Signature“.) Arguably, this need not be resolved at the preliminary injunction stage, but this still seems central to the merits of MRIS’s claims.

[Photo Credit: Kaetana / Shutterstock.com]

The post Multiple Listing Service Gets Favorable Appellate Ruling in Scraping Lawsuit appeared first on Technology & Marketing Law Blog.

Rosen v. Netfronts, CV 12-658 CAS (C.D. Cal. July 9, 2013)

What happens when a website operator takes down a potentially copyright-infringing item, only to have it reappear through a technical mix-up?

On July 9, a district court in California found that an online memorabilia seller was liable to a photographer for copyright infringement, but awarded the absolute minimum in statutory damages since it was “an honest mistake.”

Background

This is a fact-driven case that revolves around four photographs of actress Gena Lee Nolin (The Price is Right, Baywatch) taken by plaintiff Barry Rosen and registered with the Copyright Office in 2004.

Defendant Stephen Pierson sells entertainment memorabilia by mail, online, and he once operated a retail store in Los Angeles. Sometime in the late 1990s, visitors showed up at Pierson’s retail store and sold him several prints (including the Nolan prints). Upon purchasing the prints, Pierson offered them for sale through his store, through mail-order catalogs, and over the Internet. When Rosen found out, he began confronting Pierson and demanding that he back off from selling the prints.

In the early 2000s, Rosen issued several notices under the DMCA demanding that the photographs be removed from eBay and Pierson’s website, “dejavugalleries.com.” But Pierson did not learn of the notices from his webmaster until around 2004, at which point he decided not to risk it and ceased trying to sell the photographs online.

A year later, however, his website crashed and he discontinued his online business. In 2010, Pierson hired someone new to rebuild his website. As part of the rebuild, the new site iteration pulled content from an older database that included Rosen’s photographs, even though they had been removed from the original site in 2004.

Defenses

The case for infringement was not a hotly contested question, and the court quickly put away any defenses. First of all, the first sale doctrine is not applicable in this case because Pierson presented no evidence that the prints he tried to sell were authorized copies. The court also dismissed any laches argument, noting that the evidence showed that Rosen did not unreasonably delay in asserting his rights–he refrained from bringing a suit earlier because he believed Pierson had gone out of business when the website went down.

Remedies

Pierson argued that statutory damages were unavailable under the doctrine of continuing infringement. After all, these were the same prints he had been trying to sell since the late 1990s, which was before Rosen had registered the prints with the Copyright Office. While this may be true with regard to the catalog, the court found that Rosen could pursue statutory damages arising out of of the offers that occurred through Pierson’s website:

The doctrine of continuing infringement does not apply to these acts because Pierson ceased displaying the Photographs through his website between 2005-2010, and this cessation of infringing activity renders the defense of continuing infringement inapplicable to the claims arising out of the website.

Thus, the court found that Rosen could be awarded statutory damages for each of the four photographs. But while the standard amount per work ranges from $750-$30,000, courts are able to award as little as $200 per work if the infringement is “innocent.” In this case, Pierson argued that the infringement was innocent because he was unaware that he had actually posted the photos online with offers to sell. The court agreed:

The evidence at trial showed that Pierson did not personally handle technical duties regarding his website, but instead retained Romero and Daniel for this purpose. Moreover, Pierson consistently directed both Romero and Daniel to remove the Photographs from the website upon learning of Rosen’s complaints . . . when he reestablished his online business in 2010, Pierson had no reason to believe that he would engage in infringing acts by reviving the website . . . Pierson’s infringement was the result of a reasonable mistake, and therefore Pierson’s infringement was innocent.

The court denied Rosen attorneys fees, citing much of the same reasoning and especially noting Pierson’s “good faith attempts to avoid infringement.”

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This is one of those copyright cases where after all is said and done, was it really worth it for the rights holder to pursue? Four photograph prints whose asking prices were roughly $50 each? This was an extremely fact-driven case, which means higher attorneys’ fees and thus a diminishing return on investing in a lawsuit. Even to this cash-strapped law student, it seems like the juice is not worth the squeeze.

It’s possible that Rosen may have been deceived by an “easy win.” By “easy,” I mean that it did not take too long for the court to establish a prima facie case for infringement. The key was always going to be the remedies, and in this case the court thought the defendant’s actions throughout the dispute warranted an appropriately measured response.

One last thing: this case seems like it would have been suited well for some type of copyright small claims court. For an update on the potential of such a court, check out Jonathan Bailey’s coverage at Plagiarism Today.

[Photo Credit: Featureflash / Shutterstock.com]

The post Online Retailer Pays Minimum Damages When Taken Down Item Inadvertently Returns–Rosen v. Netfronts appeared first on Technology & Marketing Law Blog.

Masck v. Sports Illustrated, et al., 2:13-cv-10226-GAD-DRG (E.D. Mich. June 11, 2013)

Back in February, we blogged about photographer Brian Masck’s Shakespearean complaint, asserting copyright infringement claims (and others) against numerous defendants for using his famous “Heisman Pose” photo.

Together, the defendants moved to dismiss all non-copyright claims. Defendants Desmond Howard and Amazon also filed motions to dismiss on separate bases. On June 11, a district court in Michigan ruled on the various motions. For each, the court granted in part and denied in part.

Court Hesitant to Strike Down Lanham Act Claims

Masck brought unfair competition claims under the Lanham Act, alleging that the defendants caused confusion as to the origin of the Heisman Pose photo (in this case, the “goods”). But the Supreme Court in Dastar v. Twentieth Century Fox held that “origin” of “goods” refers only to tangible goods, not communicative products. If the Lanham Act were held to cover such intangible works, it would effectively stretch the language of the act to emulate copyright protection. However, the court was not ready to decide if Masck’s Heisman pose photo was an intangible item:

Through his website, Plaintiff sells physical copies of his photograph, making him a producer of tangible goods. Many of the alleged infringing activities were production of tangible goods incorrectly attributed to other Defendants . . . While there is a communicative aspect to Plaintiff’s photo, it is not as easily reduced to simply an “idea, concept, or communication” as other photos. Consumers do not purchase the photo simply for its communicative properties, they purchase it as a token of their fandom for the University of Michigan, or Desmond Howard.

For this reason, the court denied defendants’ motion to dismiss the Lanham Act claims without prejudice.

State Law Claims Preempted

Masck also brought claims under Michigan state law for (1) Tortious Interference, (2) Unfair Competition, and (3) Unjust Enrichment. The focus with the state law claims was whether they were preempted by the Copyright Act. Under the Sixth Circuit rule, Masck’s various state claims would have had to be “qualitatively different” from the copyright action to constitute a separate cause of action.

With regard to the tortious interference claim, the court did not buy any such argument:

The “interference” committed by Champions Press was the unauthorized copying of the photo, the exact conduct complained of in Plaintiff’s copyright claims. When the essence of a state law claim is the same as that in a copyright action it is not qualitatively different.

The court quickly dismissed the unfair competition claim for similar reasons, noting that “the underlying conduct complained of is the unauthorized copy of Plaintiff’s photo.” The unjust enrichment claim shared a similar fate:

. . . only an implied in fact contract requires alleging an extra element of a promise to pay. Since Plaintiff does not allege Defendants made any promise to pay, there is no extra element to prove. As such, their unjust enrichment claim is preempted.

Masck May Not Pursue Statutory Damages or Attorney Fees

One issue we highlighted since the suit’s inception was that Masck had most likely missed his shot at statutory damages by dragging his feet registering the photograph. Under Section 412(2) of the Copyright Act, there is no award for statutory damages or attorney fees if the infringement in question commenced after publication of the work but before the effective date of its registration, unless the author registered the work within three months after the first publication. In this case, defendant Howard used the photograph in 2010 and Masck did not register the photograph until 2011, well after first publication.

Instead, Masck tried to argue that Howard engaged in separate acts of infringement because he used an indiscernibly-altered version of the photograph on his website after registration. The court did not agree:

As Howard stated, this is effectively the same photo, placed on the same website, by the same defendant. What little difference there is between the two photos is not enough to demonstrate that there are two separate acts of copyright infringement.

The court ruled that Masck may not pursue statutory damages or attorney fees, and that the ruling applied to all defendants who were alleged to have infringed before the effective registration date.

Amazon’s Motion to Dismiss

Amazon filed a separate motion to dismiss on the basis that Masck had not stated a proper claim for vicarious copyright infringement. Emphasizing its vulnerable position as an “e-commerce platform provider,” Amazon argued that it did not have the requisite ability to supervise the infringing conduct. The court sided with Amazon, agreeing that the company could not be expected to examine every third party product:

Plaintiff must put forth factual allegations that demonstrate Amazon could plausibly verify the copyright status of each and every piece of merchandise it lists from third-party sellers. Failure to do so requires dismissal of this claim.

Unfortunately for Amazon, the court did not let them off the hook for the contributory infringement claim. While the company may not have a duty to inspect every item a third party sells,  Masck did ask them to take down the infringing photographs and yet they continued to sell them. In response, Amazon tried to argue that the holding of the Sony Betamax case provided a defense in that the site is “capable of substantial non-infringing uses.”

The court, however, did not agree with the analogy:

. . . the holding of Sony is not even applicable to this case. “Sony’s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product.” [MGM v. Grokster]. There is no need to impute culpable intent since the products sold by Amazon already possessed their infringing characteristics.

Since the court reasoned that selling such merchandise was a material contribution, it held that Masck had a proper claim and denied Amazon’s motion.

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I was somewhat surprised that the Lanham Act claims survived, despite the low bar for motions to dismiss. Eric pointed me to the Dastar decision early on, and after reading it I thought all those claims would be struck down.

I still would not be surprised if this settled, especially with the court acknowledging that the door for statutory damages is shut. As for now, we can only speculate what kind of numbers are being thrown around behind closed door settlement discussions.

[Photo Credit: Debby Wong / Shutterstock.com]

The post “Heisman Pose” Photographer’s Lawsuit Whittled Down–Masck v. Sports Illustrated appeared first on Technology & Marketing Law Blog.