Trying to salvage its jury win, the defense challenges the jury’s finding of confusion. The defense argued that the 2024 jury’s likelihood of consumer confusion finding could have only been based on the initial interest confusion doctrine. The defense further argued that the 6th Circuit, in its 2020 ruling this case, rejected the doctrine. The court responds:

The Sixth Circuit did not squarely decide in its 2020 ruling that Dassault’s initial interest confusion theory failed as a matter of law. Indeed, that issue was not even presented to the Sixth Circuit.

The court has this to say about the 2020 Sixth Circuit opinion:

Dassault contended that Childress’ use of the CATIA mark created initial interest confusion as a matter of law. The Sixth Circuit disagreed with that contention. It held that the jury reasonably could have rejected Dassault’s initial interest confusion theory and reasonably have found that Childress’ use of the CATIA mark was “unlikely to cause confusion.”…

The Sixth Circuit was not asked to decide, and did not decide, whether Dassault’s evidence of likelihood of confusion – including its evidence of initial interest confusion – was so weak as to compel judgment in Childress’ favor. Simply put, the Sixth Circuit did not squarely decide that Dassault’s initial interest confusion theory failed as a matter of law…

To be sure, as Childress highlights, the Sixth Circuit was somewhat critical of Dassault’s initial interest confusion theory. But the Sixth Circuit offered those comments in the course of explaining its holding that Dassault was not entitled to judgment in its favor on that theory.

Here’s what the Sixth Circuit said about the initial interest confusion doctrine in its 2020 opinion:

Dassault argues that Childress’s “practicalcatia” domain name would appear whenever someone searched “CATIA” in Google. Before clicking on the link, Dassault argues, a consumer would not see the webpage’s identifying information that clarifies it is not affiliated with Dassault. Dassault characterizes this as a type of “initial interest” confusion that supports infringement.

Dassault’s argument is unavailing. “Simply invoking the term ‘initial-interest confusion’ does not state a viable claim,” let alone warrant judgment as a matter of law. Dassault fails to “explain why, assuming that such initial confusion were to take place, it would not be instantly dissipated without any harm” once the consumer clicks the www.practicalcatia.com link and enters the website—a website with numerous indicators that clarify it is not affiliated with Dassault. Moreover, when www.practicalcatia.com is displayed in Google’s search results, Childress suggests that even the preview of the site displays the disclaimer: “CATIA is a registered trademark of Dassault Systèmes and has no affiliation with Practical Catia Training.”

If the principal source of purported consumer confusion is that the domain name shows up in inscrutable search results that link to a website with ample disclaimers, the Fourth Circuit (per Lamparello) would decisively say any confusion about the domain name must be evaluated in combination with the (disclaimered) website. If the Sixth Circuit follows the Fourth Circuit’s lead on this point, then how can there be any initial interest confusion? (The Lamparello case has been good law in the Fourth Circuit and beyond for 20 years).

That leaves me to wonder what value the initial interest confusion doctrine is adding to this case. I didn’t sort through the nearly 20 years of filings to figure out if there were other facts that could have caused “initial interest” confusion, but precision about those facts matters a lot. Based on this 2026 opinion, I can’t see any aspect of the court’s analyses that was enhanced by the “initial interest confusion” doctrine.

Case Citation: Dassault Systemes, S.A. v. Childress, 2026 WL 323779 (E.D. Mich. Feb. 6, 2026). The GovInfo page.

The post How Does the Initial Interest Confusion Doctrine Improve Trademark Analyses?–Dassault v. Childress appeared first on Technology & Marketing Law Blog.

The court explains: “domain names are not necessarily equivalent to URLs (Uniform Resource Locators).” Domain names do not include “vanity URLs” where the trademark shows up in the post-domain path:

Take, for instance, one of the URLs named as a Doe Defendant in this action: https://facebook.com/Athene.Network/. Within this URL, “Athene.Network” is the vanity URL, or post-domain path. The domain name, distinct from the post-domain path, remains facebook.com.

In this case, the only actionable domain name is athene.network, registered with Namecheap. [The website at that domain name is slathered with the words “blockchain” and “AI,” so I noped out of there quickly]. As a result, the judge reduces the damages award to $100k, the maximum statutory damages for a single ACPA violation.

I’m blogging this ruling because it is the second time in the past four months that I have seen a court (each time acting without a defense appearance) incorrectly treat post-domain URLs as a trademark law violation. (See my extended and angsty discussion of this issue in the Modlily v. Funlingo blog post). I can’t believe plaintiffs and courts are still making this mistake in 2025 despite a quarter-century of jurisprudence to the contrary. With respect to the ACPA, Congress was clear: the ACPA only applies to second-level domain names–not social media handles, vanity URLs, third-level domain names, or anything else.

Case Citation: Athene Annuity and Life Company v. Athene Group Ltd., 2025 WL 2426690 (D. Ariz. Aug. 22, 2025)

The post ACPA Doesn’t Apply to Vanity URLs–Athene Annuity v. Athene Group appeared first on Technology & Marketing Law Blog.

Four years ago, NFTs were the hottest collectibles on the market and were being touted as the NBT (Next Big Thing). People were paying tens of thousands, or in some cases millions, of dollars (or the equivalent in highly volatile crypto-currencies) to have some bytes of digital code added to a blockchain — essentially, a permanent digital ledger. What did it get them? At best, the contract accompanying an NFT sometimes gives the buyer an ownership interest in or a license to use some piece of digital art (that could easily, if not always lawfully, be replicated by others for free). At worst, it gives the buyer, well, NFT — Not a F***ing Thing.

It was a speculative bubble that had to burst, and it did. In 2022, the NFT market fell more than 90% from its peak sales volume. The vast majority of all NFTs are now essentially worthless.

Anytime people are making or losing large amounts of money, lawsuits are inevitable. But law moves very slowly. Last week, we got the first published (precedential) appellate opinion in a federal lawsuit concerning NFTs: Yuga Labs, LLC v. Ryder Ripps, No. 24-879, 2025 WL 2056060 (9th Cir. July 23, 2025).

As I explained in my article Non-Fungible Tokens (NFTs) and Copyright Law, there is nothing in U.S. copyright law that prevents someone from minting and selling an NFT that links to a work of art that they did not create and do not own. That is essentially what happened here, which is why the plaintiff had to resort to trademark law instead.

The Facts

In April 2021, Yuga Labs created the Bored Ape Yacht Club (BAYC), a series of 10,000 NFTs, each linked to a cartoon drawing of an ape, with mixed-and-matched variations in expression, attire, and accessories. Ownership of a Bored Ape also gives the owner access to special online and (occasionally) real-world events. Each Bored Ape was initially priced at about $200, and the entire collection sold out in a month, netting Yuga Labs about two million dollars. (It also earns a royalty of 2.5% on all secondary sales of the NFTs.)

Ryder Ripps, a self-described conceptual artist, began criticizing Yuga Labs for allegedly using “neo-Nazi symbolism, alt-right dog whistles, and racist imagery” in their NFTs. In May 2022, he minted and sold a parallel series of 10,000 NFTs, each pointing to the same Bored Ape digital images as their authorized counterparts. He called his collection the Ryder Ripps Bored Ape Yacht Club (RR/BAYC). The NFTs themselves did not contain any kind of disclaimer; but Ripps’s website (where they were sold) provided the following “artist’s statement”:

By purchasing this Ryder Ripps artwork in the form of an NFT, you understand that this is a new mint of BAYC imagery, re-contextualizing it for educational purposes, as protest and satirical commentary.

Ripps’s NFT collection also sold out, earning him about $1.36 million in initial sales, and about $100,000 in royalties on secondary sales. In June 2022, Yuga Labs sent a series of takedown notices, and all of Ripps’s NFTs were removed from secondary marketplaces.

Yuga Labs sued Ripps for trademark infringement, false advertising, and cybersquatting under federal law, plus eight state-law claims. Ripps counterclaimed for knowing misrepresentation of infringing activity under 17 U.S.C. § 512(f), a declaratory judgment that Yuga Labs did not own any valid copyrights, and three state-law claims. Ripps also filed an anti-SLAPP (Strategic Lawsuit Against Public Participation) motion to strike. The district court denied the motion, and the Ninth Circuit affirmed in an unpublished three-paragraph opinion.

Yuga Labs moved for summary judgment. The district court granted the motion in favor of Yuga’s trademark infringement and cybersquatting claims, and against Ripps’s defenses and counterclaims. Yuga dismissed its state-law claims and its claim for damages, and it went to trial seeking equitable remedies only (an injunction and disgorgement of profits) on its two successful claims, which the district court granted. Ripps appealed.

Trademark Law: Are NFTs “goods”?

A trademark is “any word, name, symbol, or device” that is “used by a person … to identify and distinguish his or her goods … from those manufactured or sold by others and to indicate the source of the goods.” 15 U.S.C. § 1127. (There is a similar definition for service marks for services.) The first question was whether NFTs are “goods” for purposes of trademark law. The Ninth Circuit held that they are. [Slip op. at 22]  It quoted from a joint report of the U.S. Patent and Trademark Office (PTO) and the U.S. Copyright Office, which actually drew a more subtle distinction:

Trademarks perform the same functions in NFT markets as they do in other markets…. For example, trademarks can be used to indicate the source of underlying assets associated with NFTs, such as digital art…. Trademarks can also indicate the source of services, such as unique entertainment experiences or club memberships, access to which is represented by NFTs.

Non-Fungible Tokens and Intellectual Property: A Report to Congress 45 (Mar. 2024) (emphasis added).

The main counter-argument was the U.S. Supreme Court’s opinion in Dastar Corp. v. Twentieth Century Fox Film Corp., which stated that “the ‘origin’ of ‘goods’ … is the producer of the tangible product sold in the marketplace.” 539 U.S. 23, 31 (2003) (emphasis added). The Court elaborated: “as used in the Lanham Act, the phrase ‘origin of goods’ is in our view incapable of connoting the person or entity that originated the ideas or communications that ‘goods’ embody or contain.” Id. at 32. The Ninth Circuit thought those sentences were taken out of context, noting that in Dastar, the “tangible goods” were videocassettes:

[T]he Supreme Court did not adopt a bright-line rule delineating tangible and intangible goods. Rather, it recognized a distinction between the tangible good and the intangible aspects of that same good. In so doing, it concluded that “the author of any idea, concept, or communication embodied in [tangible] goods” is not afforded trademark protection separate and distinct from the protection afforded to the producer of the tangible cassette housing the author’s content.

Slip op. at 23 (emphasis in original). “Unlike the intangible content at issue in [Dastar], NFTs are not contained in or even associated with tangible goods that are sold in the marketplace…. [However,] NFTs are marketed and actively traded in commerce … in online marketplaces specifically curated for NFTs.” [Slip. op. at 24]  “Thus, we conclude that Yuga’s NFTs are ‘goods’ under the Lanham Act.” [Slip op. at 25]

Trademark Law: Validity

Assuming NFTs are goods, there was no credible argument that the Bored Ape Yacht Club marks were invalid. The marks are inherently distinctive (arbitrary) for NFTs; and even if the marks were considered descriptive (the artwork depicts “bored apes” after all), there is little doubt that the marks have acquired distinctiveness, or secondary meaning, from their use to identify and distinguish these NFTs (and associated entertainment services) from others in the marketplace. And it was uncontested that BAYC was the first to use the marks in commerce. Ripps did not even try to argue lack of distinctiveness or priority.

Instead, Ripps argued that the NFTs are unregistered securities that were being sold in violation of the securities laws, so they should be ineligible for trademark protection. The Ninth Circuit rejected the argument: “we conclude that there is an insufficient nexus between Yuga’s alleged securities violation and its use of the BAYC Marks in commerce to warrant withholding trademark protection.” [Slip op. at 28]

Next, Ripps argued that Yuga lost its trademark rights when it sold the Bored Apes to buyers. Selling a mark by itself, without an accompanying business (or at least the “goodwill” of the business) is an invalid “assignment in gross.” The court noted that Yuga’s terms and conditions “undoubtedly gave buyers … an unlimited, royalty-free right to use its associated artwork (i.e., the Bored Ape image).” [Slip op. at 29-30]  “But the BAYC Marks are distinct from the artwork, and the T&Cs are silent as to trademark rights.” [Slip op. at 30]

Because the T&Cs did not grant any trademark licenses, the court also rejected Ripps’s argument that Yuga had “abandoned” its trademark rights through so-called “naked licensing,” granting a license while failing to exercise quality control over the licensee. [Slip. op. at 31]

Ripps also argued that Yuga had abandoned its trademark rights by “failing to adequately police ‘unlicensed, commercial uses of the asserted marks.’” [Slip op. at 32] Despite trademark owners’ commonly expressed fears, this defense almost never works, and it didn’t work here. “Yuga did police its marks by sending takedown notices for unlicensed uses of its trademarks to NFT marketplaces.” [Slip op. at 33]

Trademark Law: Infringement

Trademark infringement requires a showing that the defendant’s use has caused a likelihood of confusion among an appreciable number of reasonably prudent consumers. This usually is analyzed using a multi-factor test (in the Ninth Circuit, the eight Sleekcraft factors). But where a defendant alleges a nominative fair use (where the use lawfully refers to the trademark owner or the trademark owner’s goods or services), the Ninth Circuit instead applies the three-factor test that originated in New Kids on the Block v. News America Pub. Co., 971 F.2d 302 (9th Cir. 1992), and was applied in Toyota Motor Sales U.S.A., Inc. v. Tabari, 610 F.3d 1171 (9th Cir. 2010). “A common example is where one ‘deliberately uses another’s trademark or trade dress for the purposes of comparison, criticism, or point of reference.’” [Slip op. at 34 (citation omitted)]

Ripps claimed he made a nominative fair use of the BAYC marks. But in Jack Daniel’s Properties, Inc. v. VIP Prods. LLC, 599 U.S. 140 (2023) (the Bad Spaniels case), the Supreme Court held that there was no First Amendment defense to trademark infringement “when the accused infringer has used a trademark to designate the source of its own goods — in other words, has used a trademark as a trademark.” The Ninth Circuit held that the same was true when the defendant is claiming a nominative fair use:

If Ripps had solely depicted the BAYC Marks in the context of critiquing the Bored Ape images as racist, that may have been nominative fair use. But Defendants went well beyond criticism: they used the BAYC Marks to create, promote, and sell their own NFTs associated with the same artwork as Yuga’s NFT collection.

[Slip op. at 36 (emphasis in original)]  For the same reason, Ripps had no First Amendment or expressive use defense. Ripps tried to argue that his “constant criticism and public protest of the Bored Ape Images’ racism and the business practices associated with the Bored Ape NFT collection was intended to undermine Yuga’s good will, not to trade on it.” [Slip op. at 40 (emphasis in original)] But the court rejected any “intent” inquiry in determining whether defendants were making a trademark use of the mark. Thus, it held the proper analysis was the eight-factor Sleekcraft test:

• Strength of the Mark. The Bored Ape marks are conceptually strong because they are arbitrary: “There is no obvious conceptual link between NFTs and Apes, Bored Apes, or Yacht Clubs.” [Slip op. at 44]
• (2) Relatedness of the Goods. The court acknowledged that “it would be reductive to suggest that all NFTs are the same and be done.” [Slip op. at 45] But here, “the two products are nearly identical,” because both sets of NFTs link “to the exact same Bored Ape images and corresponding Ape ID numbers.” [Slip op. at 46]
• (3) Similarity of the Marks. Although there were obvious similarities, defendants almost always used “RR” as a prefix when using the BAYC marks, which pointed to Ryder Ripps at the origin of the defendants’ NFTs. “Despite the similarities between the marks at issue, the differences discussed above are sufficient for a reasonable juror to conclude that these marks are not similar.” [Slip op, at 49]
• (4) Actual Confusion. Yuga presented some evidence of actual confusion, but Ripps presented evidence that users understood the difference between the two series of NFTs. Thus, this factor was neutral. [Slip op. at 49-50]
• (5) Marketing Channels. Although some secondary NFT marketplaces were the same, the primary markets were two different websites: the original bayc.com and defendants’ rrbayc.com. Giving defendants the benefit of favorable inferences, this factor “heavily favors them.” [Slip op. at 51]
• (6) Degree of Purchaser Care. “Given the nature of NFTs, their relative novelty, and that they remain a mystery to most consumers, they are inherently sophisticated goods” that “can also be expensive” and “are non-essential and virtual.” [Slip op. at 52] At the time defendants sold their NFTs (for between $100 and $200), the original Bored Apes were only available in secondary markets at highly inflated prices (up to $24 million in one case), undercutting a likelihood of confusion. [Id.] Because sophisticated purchasers are less likely to be confused, this factor also weighed in defendants’ favor.
• (7) Defendants’ Intent. “Defendants could have been fueled by dual motives. Their intent to criticize and satirize Yuga is not incompatible with an intent to confuse consumers. Indeed, these two motives necessarily may be intertwined in accomplishing Ripps’s overall artistic goal of exposing the vacuity of NFTs.” [Slip op. at 55] Resolving the relative weight of these motives was improper on summary judgment.
• (8) Likelihood of Expansion. Since the parties already compete directly, this factor was unimportant.

Overall, the court believed that there were genuine issues of material fact that made summary judgment on the issue of likelihood of confusion improper. [Slip op. at 56]

Cybersquatting

In the 1990s, Congress passed a law prohibiting cybersquatting, where “the defendant registered, trafficked in, or used a domain name … identical or confusingly similar to a protected mark owned by the plaintiff; and … the defendant acted ‘with bad faith intent to profit from that mark.’” [Slip op. at 57]  Here, the contested domain names were rrbayc.com (compared to the plaintiff’s BAYC mark and bayc.com domain name) and apemarket.com (alleged to be similar to “Bored Ape”).  The Ninth Circuit held it was improper to grant summary judgment to the plaintiff on this claim, because “Yuga has not established as a matter of law that these domains are ‘confusingly similar.’” [Slip op. at 59]

DMCA Counterclaim

The Digital Millennium Copyright Act created four “safe harbors” for internet service providers, three of which are conditioned on complying with a “notice-and-takedown” system for material alleged to be infringing. 17 U.S.C. § 512. Subsection 512(f) imposes liability on “[a]ny person who knowingly materially misrepresents … that material or activity is infringing” in a takedown notice, if “the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing.”

Here, Yuga Labs did not even attempt to allege that Ripps had infringed any copyrights. As I wrote in my article:

There are likely several reasons why Yuga Labs chose not to rely on copyright. First, it had not yet registered any copyrights in its cartoon images, a precondition to filing a lawsuit for “United States works.” See 17 U.S.C. § 411(a)…. Second, there is at least a serious legal question whether algorithmically generated images are entitled to copyright protection. See … Thaler v. Perlmutter [130 F.4th 1039 (D.C. Cir. 2025)] (affirming denial of registration to an AI-generated work “autonomously created by a computer algorithm running on a machine” without any human involvement). Third, as explained above, minting and selling NFTs of images created by others likely is not a copyright infringement under U.S. law.

40 Santa Clara High Tech. L.J. at 32 n.173.

Only three takedown notices resulted “in removing or disabling access to the material,” all of which expressly were based on trademark law, despite being labelled “Notice Under DMCA.” The court affirmed the dismissal of the section 512(f) claim: “Referencing a copyright statute to enforce trademark rights may have been sloppy, but we discern no evidence of any ‘actual knowledge of misrepresentation,’ particularly where the notices exclusively referenced trademark infringement.” [Slip op. at 62]  Moreover, the court found no evidence that any service provider relied on the improper references to the DMCA. [Slip op. at 61]

Declaratory Judgment Counterclaim

Ripps also sought a declaratory judgment that Yuga did not have any valid copyrights in its Bored Apes images. The district court dismissed this claim for lack of a “case or controversy” under Article III, because Yuga had not asserted any copyright claims or even registered any copyrights. Ripps did not challenge that ruling on appeal; but he argued that the counterclaim should have been dismissed without prejudice, rather than with prejudice. The court agreed with Yuga’s argument that a dismissal with prejudice only resolved the question of whether a case or controversy existed at the time of dismissal. “[I]f [Yuga] were to successfully register a copyright and subsequently threaten litigation, the district court’s dismissal with prejudice would not bar Defendants from reasserting their declaratory-judgment claims.” [Slip op. at 63]

The court summarized its holdings:

Yuga is not entitled to prevail on its trademark-infringement and cybersquatting claims at this stage because it has not proven as a matter of law that Defendants’ RR/BAYC project is likely to cause consumer confusion in the marketplace. Yuga may ultimately prevail on these claims, but to do so it must convince a factfinder at trial. But we affirm the district court’s grant of summary judgment for Yuga on Defendants’ DMCA counterclaim and the district court’s dismissal of Defendants’ declaratory-judgment counterclaims. [Slip op. at 63]

Commentary

In the imaginary world of classical economics, where all people are rational actors, this case would settle quite easily. Now that the market for NFTs has crashed, there simply isn’t enough money at stake to justify continuing to litigate. And it’s hard to see what an injunction would accomplish; neither the buyers of Ripps’s NFTs nor any NFT marketplaces are parties to the lawsuit, so they wouldn’t be bound by any injunction. Nonetheless, in the real world, I suspect this case will be hard to settle for two reasons: first, the obvious animosity between the parties; and second, the prospect that the prevailing party may be able to recover its attorneys’ fees.

The ruling that NFTs are “goods” for purposes of trademark law establishes a precedent, but it is hard to know whether anyone still cares. Trademark defendants will be encouraged by the reversal of summary judgment on likelihood of confusion, and they will cite this case in support of their oppositions. Ultimately, however, I predict this case will be forgotten relatively quickly, just as the NFT craze itself has largely faded from memory.

For those who are still interested in NFTs, however (i.e., those who have identified themselves by reading this far), there is another NFT appeal to watch. Last October, the Second Circuit heard oral arguments in Hermès Int’l v. Rothschild, 678 F. Supp. 3d 475 (S.D.N.Y. 2023), appeal pending, No. 23-1081 (2d Cir. filed July 24 ,2023). That case involves NFTs of digital artworks that Rothschild dubbed “MetaBirkins,” because the artworks depict fictional fur-covered handbags that are similar in appearance to the registered trade dress of Hermès Birkin handbags. The district court held a trial, ostensibly using the defendant-favorable Rogers test (a test that was rejected in the Jack Daniels case under those circumstances), and the jury found Rothschild liable for trademark infringement and awarded $133,000 in damages. “While the Court instructed the jury that even the modest elements of artistic expression contained in Rothschild’s works entitled him to total First Amendment protection against Hermès’ claims unless Hermès proved that Rothschild intentionally misled consumers into believing that Hermès was backing its products, the jury had no difficulty in concluding that Hermès had so proved.” 678 F. Supp. 3d at 481.

In 2023, the Second Circuit had a median time of just over one month from oral argument to final decision. It has already been nine months since oral argument in the Hermès v. Rothschild case. That likely indicates either that the panel is having difficulty resolving the issue, or that there will be a dissenting opinion. But unless the jury instructions were materially incorrect, well beyond the possibility of harmless error, the jury’s finding of intentional misrepresentation makes it extremely unlikely that the jury verdict will be overturned.

* * *

Eric’s Comments

The entire NFT industry sketches me out. In this case, I’m unsure if Ripps’ commentary on the BAYC NFTs crossed from being an artistic statement into a hanger-on-er cash grab/grift. At the same time, I’m not a fan of alt-right dog whistles either. As a result, this is one of those cases where I want both parties to lose. In a sense, I think that’s the outcome of this opinion–it’s daring each side to spend maybe up to $1M each to get a trial that almost certainly will not produce a result worth that investment. As Prof. Ochoa indicates, this ruling should force both sides to the settlement table to avoid the trial costs. If they each decide to spend another mil on attorneys’ fees to get a trial, well, I have no sympathy for whoever loses at trial.

I had previously blogged the district court’s 512(f) ruling. The district court rejected Ripps’ 512(f) claims because BAYC’s takedown notices made trademark demands (despite expressly invoking the DMCA), not copyright demands, and therefore are outside 512(f)’s scope. I wrote in my prior post:

It’s a neat parlor trick to avoid 512(f) liability: make claims that are SO bogus that they evade the statutory scope….Apparently, a takedown notice only becomes a DMCA takedown notice when the sender adds a screaming neon label flashing “DMCA TAKEDOWN NOTICE SUBJECT TO 512(F).”

The Ninth Circuit’s response to my concern: ¯\_(ツ)_/¯

As you can tell, I was already done with this case the first time I blogged it. I have to imagine the district court judge was bummed to see that this case is coming back to his docket.

Prior Posts on Section 512(f)

* Viral DRM Awarded Damages for Its 512(f) Claims, But At What Cost?
* Big YouTube Channel Gets TRO Against Being Targeted by DMCA Copyright Takedown Notices–Invisible Narratives v. Next Level Apps
* The Competition Between Temu and Shein Moves Into a Courtroom–Whaleco v. Shein
* Copyright Battles Over City Council Videos
* Record Label Sends Bogus Takedown Notice, Defeats 512(f) Claim Anyway–White v. UMG
* Plaintiffs Make Some Progress in 512(f) Cases
* 512(f) Doesn’t Restrict Competitive Gaming of Search Results–Source Capital v. Barrett Financial
* 512(f) Once Again Ensnared in an Employment Ownership Dispute–Shande v. Zoox
* Surprise! Another 512(f) Claim Fails–Bored Ape Yacht Club v. Ripps
* You’re a Fool if You Think You Can Win a 512(f) Case–Security Police and Fire Professionals v. Maritas
* 512(f) Plaintiff Must Pay $91k to the Defense–Digital Marketing v. McCandless
* Anti-Circumvention Takedowns Aren’t Covered by 512(f)–Yout v. RIAA
* 11th Circuit UPHOLDS a 512(f) Plaintiff Win on Appeal–Alper Automotive v. Day to Day Imports
* Court Mistakenly Thinks Copyright Owners Have a Duty to Police Infringement–Sunny Factory v. Chen
* Another 512(f) Claim Fails–Moonbug v. Babybus
* A 512(f) Plaintiff Wins at Trial! –Alper Automotive v. Day to Day Imports
* Satirical Depiction in YouTube Video Gets Rough Treatment in Court
* 512(f) Preempts Tortious Interference Claim–Copy Me That v. This Old Gal
* 512(f) Claim Against Robo-Notice Sender Can Proceed–Enttech v. Okularity
* Copyright Plaintiffs Can’t Figure Out What Copyrights They Own, Court Says ¯\_(ツ)_/¯
* A 512(f) Case Leads to a Rare Damages Award (on a Default Judgment)–California Beach v. Du
* 512(f) Claim Survives Motion to Dismiss–Brandyn Love v. Nuclear Blast America
* 512(f) Claim Fails in the 11th Circuit–Johnson v. New Destiny Christian Center
* Court Orders Rightsowner to Withdraw DMCA Takedown Notices Sent to Amazon–Beyond Blond v. Heldman
* Another 512(f) Claim Fails–Ningbo Mizhihe v Doe
* Video Excerpts Qualify as Fair Use (and Another 512(f) Claim Fails)–Hughes v. Benjamin
* How Have Section 512(f) Cases Fared Since 2017? (Spoiler: Not Well)
* Another Section 512(f) Case Fails–ISE v. Longarzo
* Another 512(f) Case Fails–Handshoe v. Perret
* A DMCA Section 512(f) Case Survives Dismissal–ISE v. Longarzo
* DMCA’s Unhelpful 512(f) Preempts Helpful State Law Claims–Stevens v. Vodka and Milk
* Section 512(f) Complaint Survives Motion to Dismiss–Johnson v. New Destiny Church
* ‘Reaction’ Video Protected By Fair Use–Hosseinzadeh v. Klein
* 9th Circuit Sides With Fair Use in Dancing Baby Takedown Case–Lenz v. Universal
* Two 512(f) Rulings Where The Litigants Dispute Copyright Ownership
* It Takes a Default Judgment to Win a 17 USC 512(f) Case–Automattic v. Steiner
* Vague Takedown Notice Targeting Facebook Page Results in Possible Liability–CrossFit v. Alvies
* Another 512(f) Claim Fails–Tuteur v. Crosley-Corcoran
* 17 USC 512(f) Is Dead–Lenz v. Universal Music
* 512(f) Plaintiff Can’t Get Discovery to Back Up His Allegations of Bogus Takedowns–Ouellette v. Viacom
* Updates on Transborder Copyright Enforcement Over “Grandma Got Run Over by a Reindeer”–Shropshire v. Canning
* 17 USC 512(f) Preempts State Law Claims Over Bogus Copyright Takedown Notices–Amaretto v. Ozimals
* 17 USC 512(f) Claim Against “Twilight” Studio Survives Motion to Dismiss–Smith v. Summit Entertainment
* Cease & Desist Letter to iTunes Isn’t Covered by 17 USC 512(f)–Red Rock v. UMG
* Copyright Takedown Notice Isn’t Actionable Unless There’s an Actual Takedown–Amaretto v. Ozimals
* Second Life Ordered to Stop Honoring a Copyright Owner’s Takedown Notices–Amaretto Ranch Breedables v. Ozimals
* Another Copyright Owner Sent a Defective Takedown Notice and Faced 512(f) Liability–Rosen v. HSI
* Furniture Retailer Enjoined from Sending eBay VeRO Notices–Design Furnishings v. Zen Path
* Disclosure of the Substance of Privileged Communications via Email, Blog, and Chat Results in Waiver — Lenz v. Universal
* YouTube Uploader Can’t Sue Sender of Mistaken Takedown Notice–Cabell v. Zimmerman
* Rare Ruling on Damages for Sending Bogus Copyright Takedown Notice–Lenz v. Universal
* 512(f) Claim Dismissed on Jurisdictional Grounds–Project DoD v. Federici
* Biosafe-One v. Hawks Dismissed
* Michael Savage Takedown Letter Might Violate 512(f)–Brave New Media v. Weiner
* Fair Use – It’s the Law (for what it’s worth)–Lenz v. Universal
* Copyright Owner Enjoined from Sending DMCA Takedown Notices–Biosafe-One v. Hawks
* New(ish) Report on 512 Takedown Notices
* Can 512(f) Support an Injunction? Novotny v. Chapman
* Allegedly Wrong VeRO Notice of Claimed Infringement Not Actionable–Dudnikov v. MGA Entertainment

The post Does Anyone Still Care About NFTs? (Yuga Labs, LLC v. Ripps) — Guest Blog Post appeared first on Technology & Marketing Law Blog.

[Nomenclature note: in an example URL of “https://www.ericgoldman.org/biography.html,” the word “ericgoldman” is the second-level domain, the word “www” is the third-level domain, the word “org” is the top-level domain, and the word “biography.html” is in the post-domain path.]

In support of its injunction, Modlily identified 129 URLs for Funlingo product postings on Amazon. The court summarizes:

Plaintiff does not argue that “Modlily” appears in the product name or description of these listings, or anywhere on the webpage itself.  Instead, plaintiff’s evidence consists of the appearance of the term “Modlily” in the post-domain paths of the identified URLs.

Time for a stroll down Internet Law’s memory lane….

Cases about including a trademark in post-domain URLs date back to the 1990s. The flagship precedent in this area is Patmont Motors v. Gateway Marine, 1997 WL 811770 (N.D. Cal. 1997), which said:

the text that follows the domain name in a URL–in other words, the text that comes after the slash–serves a different function. This additional text, often referred to as the “path” of the URL, merely shows how the website’s data is organized within the host computer’s files. Nothing in the post-domain path of a URL indicates a website’s source of origin, and Patmont has cited no case in which the use of a trademark within a URL’s path formed the basis of a trademark violation. Therefore, the fact that the Go-Ped mark appeared in the path of Anthony DeBartolo’s website’s URL–
“www.idiosync.com/goped”– does not affect the Court’s conclusion that the website does not imply Patmont’s sponsorship or endorsement.

Patmont was followed by Interactive Products Corp. v. a2z Mobile Office Solutions, Inc., 326 F.3d 687 (6th Cir. 2003). Echoing Patmont, the court said the “post-domain path of a URL, however, does not typically signify source. The post-domain path merely shows how the website’s data is organized within the host computer’s files.” The court then held (emphasis added):

Because post-domain paths do not typically signify source, it is unlikely that the presence of another’s trademark in a post-domain path of a URL would ever violate trademark law. For purposes of the present case, however, it is enough to find that IPC has not presented any evidence that the presence of “laptraveler” in the post-domain path of a2z’s portable-computer-stand web page is likely to cause consumer confusion regarding the source of the web page or the source of the Mobile Desk product, which is offered for sale on the web page.

In other words, for decades, everyone believed that any URL component to the right of the top-level domain was irrelevant to trademark law. And yet, in 2025, Modlily actually shut down an Amazon merchant by asserting trademark infringement based on post-domain URL paths.

Heres how Modlily responded when Funlingo pointed out these problems to the court:

plaintiff does not contest Funlingo’s position that terms appearing in post-domain paths cannot constitute infringement, nor does it present any additional evidence of infringement.

Injunction dissolved.

[As a second-order consideration, it’s likely that Amazon, not its merchants, determines the post-domain URL in its marketplace. In other words, even if the inclusion of the Modlily trademark in the URL had trademark significance (which it doesn’t), Modlily hasn’t shown that Funlingo, as opposed to Amazon, made the requisite trademark use in commerce by putting it in the URL. So I believe this case is f’ed in multiple ways.]

* * *

We’ll have to see what additional consequences will hit Modlily after the injunction dissolution. In other circumstances where a SAD Scheme plaintiff gets caught making a serious litigation error, the judge typically will resolve the motion on its desk and move on. However, I am not satisfied with that.

First, Modlily took an objectively unreasonable legal position to support its TRO and PI and, in so doing, harmed Funlingo, Amazon, and consumers. Even if Modlily claims it was a mistake to include Funlingo in the complaint, the court ought to issue Rule 11 sanctions for Modlily’s inadequate investigation/preparation of the case that led to a serious and consequential abuse of legal process. If I were a judge, and I realized that Modlily’s bad case prep had led me to grant extraordinary relief to Modlily, I would be PISSED.

[Note: if Modlily claims it made an innocent “mistake,” I would vigorously disagree. I would counterargue that litigation errors are the PREDICTABLE, FORESEEABLE, and INEVITABLE consequence when SAD Scheme plaintiffs corner-cut on due process. Had Funlingo’s case proceeded using a proper litigation process, the post-domain URL “mistake” would have been caught earlier (or perhaps Modlily would have properly done its homework as required by Rule 11 and never sued Funlingo at all). Thus, I don’t think there are any “innocent mistakes” when it comes to the SAD Scheme–there are only abuses of due process, and each abuse deserves to be classified–and sanctioned–as an egregious violation of the rule of law.]

Second, Funlingo certainly should have its case dismissed, and the court should award a fee shift under trademark law for Modlily’s abuses. (For years, it has been my position that SAD Scheme cases gone wrong should qualify as “extraordinary” for purposes of the trademark fee shift).

Third, it seems extremely likely that Modlily has sued other Amazon merchants based on post-domain URLs. In a footnote, the judge says “Plaintiff submitted evidence of the term “Modlily” appearing on the webpage for most of the other defendants.” HOLD UP…the court seems to treat this as exculpatory evidence, but it sounds inculpatory to me. “Most” ≠ “all.” Are the claims against those other defendants still active? And has Modlily made similar “mistakes” in its other SAD Scheme cases? The judge ought to issue an order to show cause requiring Modlily to explain any other times it has sued defendants solely based on post-domain URLs and how it will remediate its errors and compensate those victims.

And yet, the most likely scenario is that Modlily will get away with its abuses without so much as a slap on the wrist.

The court does allow Funlingo to peek into the sealed defendant list in a different Modlily SAD Scheme case. In that other case, Judge Daniel challenged joinder, and Modlily responded by dropping all of the defendants but one. Funlingo believes that some of the dropped defendants from that case were recycled into a different complaint, perhaps on the gamble that it could find another judge who’s less vigilant about policing joinder. The judge in this case says “it would be troubling if, dissatisfied with Judge Daniel’s order, plaintiff simply turned around and refiled against the same defendants before a different judge.” I agree, though Modlily deserves condemnation regardless of whether or not they are engaging in judge-shopping.

Case Citation: Hong Kong Yu’En E-Commerce Co. v. Individuals, Corporations, Limited Liability Companies, Partnerships and Unincorporated Associations Identified in Schedule “A”, 2025 WL 1413251 (N.D. Ill. May 15, 2025). Thanks to Prof. Fackrell for calling this ruling to my attention.

Prior Blog Posts on the SAD Scheme

• SAD Scheme-Style Case Falls Apart When the Defendant Appears in Court—King Spider v. Pandabuy
• Serial Copyright Plaintiff Lacks Standing to Enforce Third-Party Copyrights–Viral DRM v 7News
• Another N.D. Ill. Judge Balks at SAD Scheme Joinder–Zaful v. Schedule A Defendants
• Judge Rejects SAD Scheme Joinder–Toyota v. Schedule A Defendants
• Another Judge Balks at SAD Scheme Joinder–Xie v. Annex A
• Will Judges Become More Skeptical of Joinder in SAD Scheme Cases?–Dongguan Juyuan v. Schedule A
• SAD Scheme Leads to Another Massively Disproportionate Asset Freeze–Powell v. Schedule A
• Misjoinder Dooms SAD Scheme Patent Case–Wang v. Schedule A Defendants
• Judge Hammers SEC for Lying to Get an Ex Parte TRO–SEC v. Digital Licensing
• Judge Reconsiders SAD Scheme Ruling Against Online Marketplaces–Squishmallows v. Alibaba
• N.D. Cal. Judge Pushes Back on Copyright SAD Scheme Cases–Viral DRM v. YouTube Schedule A Defendants
• A Judge Enumerates a SAD Scheme Plaintiff’s Multiple Abuses, But Still Won’t Award Sanctions–Jiangsu Huari Webbing Leather v. Schedule A Defendants
• Why Online Marketplaces Don’t Do More to Combat the SAD Scheme–Squishmallows v. Alibaba
• SAD Scheme Cases Are Always Troubling–Betty’s Best v. Schedule A Defendants 
• Judge Pushes Back on SAD Scheme Sealing Requests
• Roblox Sanctioned for SAD Scheme Abuse–Roblox v. Schedule A Defendants
• Now Available: the Published Version of My SAD Scheme Article
• In a SAD Scheme Case, Court Rejects Injunction Over “Emoji” Trademark
• Schedule A (SAD Scheme) Plaintiff Sanctioned for “Fraud on the Court”–Xped v. Respect the Look
• My Comments to the USPTO About the SAD Scheme and Anticounterfeiting/Antipiracy Efforts
• My New Article on Abusive “Schedule A” IP Lawsuits Will Likely Leave You Angry
• If the Word “Emoji” is a Protectable Trademark, What Happens Next?–Emoji GmbH v. Schedule A Defendants
• My Declaration Identifying Emoji Co. GmbH as a Possible Trademark Troll

The post Because the SAD Scheme Disregards Due Process, Errors Inevitably Ensue–Modlily v. Funlingo appeared first on Technology & Marketing Law Blog.

Scott Rigsby is the first double-leg amputee to complete an Iron Man Triathlon. He registered “scottrigsbyfoundation.org” with GoDaddy.com in 2007. He didn’t pay the renewal fee in 2018 (allegedly due to a glitch in GoDaddy’s billing), so GoDaddy released the domain name. It was bought by a domainer who set up a gambling information site. Rigsby sued GoDaddy for a variety of claims. The district court dismissed his complaint. The Ninth Circuit affirms.

Lanham Act. “Rigsby’s suit under § 1125(a) is essentially a repackaging of secondary liability claims, targeting the domain registrar directly for the acts of the registrant.” Rigsby did not make the required showing of “use in commerce” to support the direct claim. As did the District Court, the 9th Circuit sidesteps that the non-trademark Lanham Act claim should be covered by Section 230 per its Malwarebytes ruling.

Furthermore, GoDaddy qualifies for the registrar immunity in the ACPA. “Rigsby has not plausibly alleged that GoDaddy registered, used, or trafficked in his domain name with a bad faith intent to profit, nor has he plausibly alleged that GoDaddy’s allegedly wrongful conduct surpassed mere registration activity.”

State Law Claims. Section 230 applies to Rigsby’s claims for invasion of privacy, publicity, trade libel, libel, and violations of Arizona’s Consumer Fraud Act.

• ICS Provider. GoDaddy qualifies as a domain name registrar and website hosting provider.
• Publisher/Speaker Claims. “The third-party registrant—arguably an information content provider—is the one posting the content, not GoDaddy. Section 230 shields GoDaddy from publisher liability when another party is doing the speaking.” Cite to Ricci.
• Third-Party Content. “Rigsby’s complaint is devoid of allegations that GoDaddy contributed to the content of the gambling site. GoDaddy is offering only a domain name and a platform…. Rigsby does not allege that GoDaddy required or otherwise induced the third-party registrant to post the objected-to gambling content on scottrigsbyfoundation.org. GoDaddy’s ‘act’ was limited to providing the third party a domain name.”

Throughout the opinion, the Ninth Circuit waffles on GoDaddy’s precise relationship with the domainer–whether it had acted as the domainer’s registrar, domain name host, and/or web host. It likely wouldn’t matter to the legal conclusions, but it does make the court’s statements (and my blog coverage of the case) less precise.

Case citation: Rigsby v. GoDaddy, Inc., 2023 WL 1489914 (9th Cir. Feb. 3, 2023). The complaint.

The post Domain Name Sniping Covered by Section 230–Scott Rigsby v. GoDaddy appeared first on Technology & Marketing Law Blog.

The court discusses two social media accounts: Instagram.com/misshayleypaige and pinterest.com/misshayleypaige/_saved/. Gutman opened both accounts after she entered into the employment contract with JLM. While certain attributes of the accounts made it unclear as to whether they were personal or business-focused accounts, the evidence was clear that the accounts were used extensively by JLM or by Ms. Gutman in her role as an employee of JLM. JLM exerted significant control (or “influence”) over both accounts and in particular the Instagram account. The court is emphatic that the accounts “served as critical advertising platforms for JLM’s products affiliated with the Hailey Paige brands.” The court also found “Ms. Gutman and JLM employees worked together to strategize as to how best to leverage the social media platforms to market the HP brands.” JLM (and Gutman) also used the Instagram account to communicate with actual and potential customers of JLM. While it was true that the accounts were imbued with aspects of Ms. Gutman’s personality and personal life, these were part of the overall marketing strategy for JLM.

The district court initially punted on the ownership question. The Second Circuit also declined to address this issue when resolving the appeal from the preliminary injunction, finding that the injunction previously entered by the district court could be valid if tied to her contractual duties to assist JLM with its advertising. The contract term was set to expire in August 2022, and thus the injunction would be dissolved as well. JLM sought to extend the injunction on the basis that it was likely to succeed on the ownership and conversion questions. JLM’s argument was that if the court ultimately decided that it “owned” the accounts, then JLM would need some form of injunctive relief protecting its property interest in the social media accounts.

The court starts by noting that ownership of social media accounts is a novel question that only a few courts have addressed. The court relies on two decisions: (1) In re CTLI, a bankruptcy ruling from 2015 blogged here: “Company’s Social Media Accounts Transferred in Bankruptcy” and (2) Int’l Bhd. Teamsters Loc. 651 v. Philbeck. The court summarizes the considerations relied on by those courts as relevant to determining ownership of an employee social media account:

• Whether the account handle reflects the business name;
• How the account describes itself;
• Whether the entity relied on the account in its promotional efforts;
• Whether the account links to the business websites or accounts;
• The purpose behind the account;
• Whether employees or the entity had access to the account.

The court distills these down to three factors:

• How the account is held out to the public;
• How the account has been utilized;
• Whether the business used the account to further the interests of the business.

Ms. Gutman argued that the inquiry should be focused on the date of creation of the account, but the court says this is simplistic and “the dynamics of social media warrant a much fuller examination of how the accounts were held out to the public, the purposes for which the accounts were used, and how the accounts were ‘managed'”.

Here, the bulk of evidence supports JLM’s view that it owned the accounts in question.

1. “The accounts were held out as official accounts of JLM.”
2. “The accounts were regularly used to promote JLM’s business.”
3. “The evidence demonstrates clearly that JLM’s employees were involved in formulating the marketing strategy for the accounts and directly participated in the management of the accounts in support of JLM’s business interests.”

The court says JLM has a clear likelihood of success in showing that it owned the accounts in question.

Ms. Gutman pointed to her own creative input into the account, but the court says that this is consistent with her being the point person for JLM in managing the account. The mixture of personal and professional content in the accounts was also consistent with Ms. Gutman’s vision for JLM’s marketing that it would be an extension of her personality.

She also pointed to anecdotal references by JLM employees to the accounts as Ms. Gutman’s “personal accounts,” but the court says these stray references are hardly determinative.

She also argued that the employment agreement did not contain any provisions regarding ownership, but the court falls back on the work-for-hire language in the agreement.

Finally, the court concludes that JLM has likely shown conversion by virtue of Gutman’s interference with JLM’s access and use of the account.

The court says loss of ongoing access to the social media accounts would cause irreparable harm: “JLM’s ability to control the content of the accounts is critical to maintaining the strong internet presence of [its] brands, . . . reputation, and the goodwill [it] has created among potential and actual customers who follow the accounts.”

__

The court is not very sympathetic to Ms. Gutman. Indeed, it has harsh words for her conduct vis-a-vis her intent and ability to honor her contractual obligations. One of the Second Circuit judges was much more sympathetic to Ms. Gutman, observing that depriving her from use of her name in bridal fashion endeavors would be unduly onerous. This judge’s sympathy along with the lack of a unanimous opinion in the Second Circuit makes me wonder whether Ms. Gutman will appeal.

The dispute is interesting in many ways–especially the fact that it’s been this heavily litigated. Perhaps the ongoing cycles of litigation have caused the parties to become invested in their respective positions and less interested in resolving the dispute. In any event, it’s surprising to see the parties so many resources on litigating over Instagram and Pinterest accounts.

The court’s fact-based inquiry to resolve the nature of the account is reminiscent of the Sixth Circuit’s recitation of factors in Lindke v. Freed. As Eric notes, the Sixth Circuit in Lindke ended up giving government actors a lot of leeway by asking “[whether the government actor operated the account:] (1) pursuant to his actual or apparent duties or (2) using his state authority.” In this case, the court seems to apply the factors more faithfully.

The court at one point cites to a case involving domain names in addition to social media accounts, in concluding that JLM has a property rights in the accounts. Still, the court acknowledges that its resolution while definitive is only as between the two parties (i.e., it still depends on whether “Ms. Gutman or the relevant platforms may hold title to the accounts”). It’s always worth keeping in mind in these cases that the accounts exist at the discretion of the platform.

This case differs significantly from the typical social media ownership dispute because of the existence of a written agreement and because of the assignment of name-rights to the employer. It’s unclear from the court’s ruling whether the conclusion depends on the existence of a written agreement. Of course, the court’s fact-based analysis is as strong an admonition as they come in favor of securing an agreement in writing regarding social media accounts.

A final note is that the opinion does not mention the laws restricting employer access to employee social media accounts or ownership of such accounts. Those laws were enacted by several states with a lot of fanfare, but they have seen little, if any, activity.

Dec. 2022 UPDATE: Gutman has been ordered to pay $118k in attorneys fees. 2022 WL 17832303 (SDNY Dec. 21, 2022)

Case citation: JLM Couture, Inc. v. Gutman, 2022 U.S. Dist. LEXIS 131139 (S.D.N.Y Jul. 25, 2022)

Other coverage:

The Fashion Law: Court Reviews “Novel” Issue of Social Media Account Ownership in Hayley Paige Lawsuit

Bloomberg Law: “JLM Likely Owns ‘Hayley Paige’ Insta Account, Court Says (Correct)”

Linnea Orians: “More Than a Name: A New Era”

Related Posts:

Social Media Ownership Disputes, Part I: the Satanic Temple of Washington Can’t Get Its Facebook Pages Back

Ex-Employee’s Continued Use of Twitter Account May Be Conversion–Farm Journal v. Johnson

The Spectacular Failure of Employee Social Media Privacy Laws

Do Employers Own LinkedIn Groups Created By Employees?–CDM v. Sims

Creating Parody Social Media Accounts Doesn’t Violate Computer Fraud & Abuse Act – Matot v. CH

When Does A Parody Twitter Account Constitute Criminal Identity Theft?–Sims v. Monaghan

Trademark Owner Sues Over Alleged Twittersquatting–Coventry First, LLC v. Does

Steps Brand Owners Can Take to Deal With Brandjacking on Social Networks

Battle Over LinkedIn Account Between Employer and Employee Largely Gutted–Eagle v. Morgan

Ex-Employer’s Hijacking of a LinkedIn Account Is a Publicity Rights Violation–Eagle v. Morgan

Washington State’s Proposed Employer Social Media Law: The Legislature Should Take a Cautious Approach — SB 5211

Big Problems in California’s New Law Restricting Employers’ Access to Employees’ Online Accounts (Forbes Cross-Post)

“Social Media and Trademark Law” Talk Notes

Court Denies Kravitz’s Motion to Dismiss PhoneDog’s Amended Claims — PhoneDog v. Kravitz

An Update on PhoneDog v. Kravitz, the Employee Twitter Account Case

Another Set of Parties Duel Over Social Media Contacts — Eagle v. Sawabeh

Employee’s Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward–Maremont v. SF Design Group

Courts Says Employer’s Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed–PhoneDog v. Kravitz

Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer–Ardis Health v. Nankivell

Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account — Deck v. Spartz, Inc.

Employee’s Twitter and Facebook Impersonation Claims Against Employer Move Forward — Maremont v. Fredman Design Group

MySpace Profile and Friends List May Be Trade Secrets (?)–Christou v. Beatport

The post Who Owns a Disputed Social Media Account? – JLM v. Gutman appeared first on Technology & Marketing Law Blog.

* * *

This opinion addresses a venerable issue in Internet Law: can a website control how visitors see its web pages? I first remember this issue flaring up in the late 1990s when Third Voice, a browser plug-in, let users write commentary “over” third-party websites. That sparked angst among website operators who couldn’t control what users were saying about them in the Third Voice frame. Third Voice was followed by adware vendors such as AllAdvantage, which framed third-party websites, displayed ads in the frame, and shared some ad revenue with users (its tagline: “Get Paid to Surf the Web”). Gator, WhenU, and other adware vendors followed. By its nature, adware changes the screen display of the sites users are visiting. A series of lawsuits from two decades ago covered some important ground regarding the ability of website owners to block adware. Wells Fargo v. WhenU concluded that copyright was a dead-end. 1-800 Contacts v. WhenU concluded that trademarks was a dead-end. Nevertheless, because adware often provided poor consumer experiences, adware largely fizzled out by 2010. As a result, the legal issues rarely are litigated any more.

* * *

The court approaches this case like it’s an adware case, but the court never once uses the term. The issue is that Google incorporated a new feature into its Android software. You can see how it modified a website’s display in these before/after screenshots (the component at issue is the “view 15 related pages” bar on the bottom right):

As you can see, the new bar covers up the “cove base” line. If a user selects the up arrow, a new screen covers up most of the web page and displays links to rival vendors:

Google has since dropped this feature.

The plaintiffs alleged that the prior screenshot contains ads, which turns this case into an adware case. But the screenshot doesn’t label the listings as “ads,” so either Google uncharacteristically cut that corner or these listings are organic search results, and this isn’t an adware case at all. I’m going to characterize Google’s feature as an “adware bar” because the court accepts the plaintiffs’ allegations as true on a motion to dismiss, but I wonder if that characterization will withstand further scrutiny.

Underlying this litigation is an epistemological question: what does a “canonical” version of a web page look like? Every browser software makes its own choices about how to render a page; every browser software “frames” every web page with its software features; and every browser software lets users configure the display in ways that affect website owners’ expectations. As just one example of the latter point, browser software programs let users magnify or shrink the display size, so what appears above/below the fold critically depends on user configuration, not just the website operator’s choices.

For this reason, if courts want to assess the veracity of the plaintiffs’ claim that the “cove base” link gets covered up, judges must assume how a canonical version of a web page appears. For example, in the “before” image above, the court doesn’t explain the source of the screenshot, what technological conditions it reflects, and how often those conditions will hold in the field. Thus, a court’s hypothesis may have no grounding in reality. It also strips users of their own agency to decide what browsing tools best serve their needs and how best to configure those tools.

* * *

In this lawsuit, the plaintiffs aren’t suing Google for violating their copyrights or trademarks. With respect to copyright, the court says: “Plaintiffs do not rely on copyright protection for their websites in pleading their claim…Plaintiffs are not asserting infringement of any right to the reproduction, performance, distribution, or display of their websites. Plaintiffs want and expect Google to copy and display their websites in Chrome browser and Search App, and acknowledge that Google has license to do so.”

Wait, what? We need to know more about this license. If a website “permits” browser software to display them (assuming such permission is even required in the first place, and assuming that permission isn’t automatically granted by connecting the website to the web), then a website can’t control the browser software configurations. It seems like this license could be dispositive to the case, but the court doesn’t explore it more.

Trespass to Chattels

The plaintiffs instead claim that the adware bar constitutes a trespass to chattels. However, Google’s adware bar never interacts with the plaintiffs’ physical servers at all. As the court says, “None of Plaintiffs’ websites, files, or data were physically altered in any way. Nor were Plaintiffs’ servers disrupted.” Instead, the adware bar’s display customization takes place solely on the user’s device, supplementing how the code renders on the device. So the “chattel” at issue here isn’t the website operator’s servers; it’s the HTML code that the website operators send to each user’s device (and gave Google permission to display).

If the “chattel” at issue is only the intangible HTML code, then no “chattels” are being trespassed. It’s not possible to “trespass” an intangible asset; any legal protection for the asset comes from contract law (but the plaintiffs gave a license) or IP law, such as copyright law, which the plaintiffs aren’t invoking. Thus, given that “intangible chattel” is a legal oxymoron, a lawsuit over “trespassing HTML code” should fail hard. It didn’t.

Citing a 2003 Ninth Circuit case, Kremen v. Cohen, the court says “a website can be the subject of a trespass to chattels claim.” This abstract statement requires more clarification. The Kremen case involved the alleged theft of the sex.com domain name by improperly modifying the electronic records evidencing ownership of the domain name. The Ninth Circuit held that the intangible asset (the domain name) could be “converted,” even though normally conversion only applies to chattel (i.e., physical property), not intangibles. We need legal doctrines to redress the improper hijacking of the monetary value of owning a domain name, just like we would redress the improper acquisition of monetary value stored in an online bank or cryptocurrency account. Thus, other cases have applied conversion law to alleged theft of domain name registrations (e.g., CRS v. Laxton).

But the Kremen case didn’t say that all of a website’s intangible assets are like tangible assets. If it had, it would have eliminated the distinctions between IP law and the law of chattels.

So when this court says “Plaintiffs have property rights to their websites for the same reasons a registrant has property rights to a domain name,” I have no idea what it means. A website can sometimes control access to its servers (see the Van Buren case). A website can own the copyrights to the HTML code and the files that users download. Website owners can prevent the unauthorized reassignment of their ownership interests, such as someone trying to modify their copyright registration records. But the broad statement “property rights to their websites” is mostly wrong.

To find the HTML code’s physicality necessary to treat it like a chattel, the court makes this garbled statement:

like a domain name, a website is a form of intangible property that has a connection to an electronic document. “A website is a digital document built with software and housed on a computer called a ‘web server,’ which is owned or controlled in part by the website’s owner.  website occupies physical space on the web server, which can host many other documents as well.” Compl. ¶ 34. Plaintiffs’ website is also connected to the DNS through its domain name, bestcarpetvalue.com, just as Kremen’s domain name was connected to the DNS.

This is very, very confused. My copyrighted works may be printed on physical pages, but that doesn’t mean a third-party’s encroachment into my intangible copyrights becomes trespass to chattels. That’s the purview of copyright–or not restricted at all. And the linkage to the domain name record is nonsensical because the domain name wasn’t “taken,” and indeed the website operator gave a license to display it. The court even acknowledges that its line of logic has been rejected before:

After Kremen, the California Court of Appeal, Sixth Appellate District, noted that conversion traditionally required a taking of tangible property and that “this restriction has been greatly eroded,” but not “destroyed.” Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 239 n.21 (2010). The Silvaco court also cautioned that “the expansion of conversion law to reach intangible property should not be permitted to ‘displace other, more suitable law.’” As discussed above, however, Plaintiffs’ websites have a connection to a tangible object.

Having accepted the core fallacy of the plaintiffs’ claims, the court makes unhelpful statements like “trespass to chattels ought to apply to a website, and several courts have so found.” The first half of the sentence isn’t in contention; everyone agrees that trespass to chattels can protect a website’s servers (not at issue in this case). Some of the cited precedent do not involve applying trespass to chattels only to intangible code. Some courts have in fact done this (not all of which the court cited), but those cases are overwhelmed by precedent rejecting the point. The court disregards Google’s citations those cases, breezily saying “Other cases cited by Google do not discuss the distinction between tangible and intangible property and offer little guidance.” (That critique might apply to this opinion, too).

Having satisfied itself that “a website is a form of intangible property subject to the tort of trespass to chattels,” the court next turns to harm. The court ignores the plainly stated and impossible-to-miss holding of Intel v. Hamidi, which says that common law trespass to chattels is actionable only when electronic signals cause or threaten to cause measurable loss to computer system resources. The plaintiffs can’t possibly prove any harm to any computer system resources.

Instead, the court cites a different part of the Hamidi opinion saying that Intel didn’t show any “physical or functional harm or disruption” to its computer systems. The court proceeds: “although Plaintiffs are not alleging physical harm to their websites, they do allege functional harm or disruption.” HOLD ON. The plaintiffs may claim “functional harm or disruption,” but the complete test is functional harm or disruption…TO THEIR COMPUTER SYSTEMS. By omitting those words, the court dramatically and improperly expands the test. Seriously, it’s impossible to read the Intel v. Hamidi opinion and miss the majority’s point that not all intangible harms count; only harms to COMPUTER SYSTEM RESOURCES count.

The court says the plaintiffs sufficiently alleged “functional disruption” by claiming that Google’s ads “obscured and blocked their websites, which if true, would interfere with and impair their websites’ published output. Although Google’s ad may not have disabled or deactivated the ‘Cove Base’ product link, it nevertheless allegedly impaired the functionality of the website: an Android phone user cannot engage a link that cannot be seen.” But “published output” isn’t a computer system resource, and an “obscured link” assumes what the hypothetical canonical website looks like.

Implied-in-Law Contract/Unjust Enrichment

Given that the plaintiffs granted a license to Google to display its site, I don’t know what this claim could possibly cover. Google responds that whatever it means, it’s preempted by copyright law. Google’s position seems reasonable given that this claim wades squarely into copyright’s realm. The adware cases from 2 decades ago rejected copyright claims in virtually identical facts; and there are the old copyright cases involving things like adding ads to pre-manufactured videos. Not surprisingly, this judge finds a way around that too.

The court summarizes that “Google allegedly covered up or obscured a portion of Plaintiffs’ websites from Android phone users for financial benefit, which makes their claim ‘qualitatively different’ from a copyright claim.” No, that’s exactly what the derivative work right covers, and it’s the exact issue litigated in the old WhenU cases. To get around this, the plaintiffs argued:

Google could not in the brick-and-mortar marketplace lawfully plant its logo on Plaintiffs’ storefront windows without Plaintiffs’ consent, even if Google owned their buildings. Nor could Google place ads in Plaintiffs’ marketing brochures or superimpose ads on top of Plaintiffs’ print advertisements without Plaintiffs’ permission and without paying Plaintiffs’ price. Likewise, Google cannot in the online marketplace unilaterally superimpose ads on Plaintiffs’ website without Plaintiffs’ consent and without compensation just because Google makes the software through which Android users view that website on their mobile screens…

a storefront business owner is injured when its window is obscured, regardless of whether that window is clear or covered with advertisements. By analogy, a website owner is injured when its website is obscured by unwanted ads, regardless of the content displayed in the website.

Are we really doing this again? I agree Google can’t unilaterally stick its logos onto a physical retailer’s windows…because THAT WOULD BE REAL PROPERTY TRESPASS. I’m not sure what law prevents Google from placing ads over marketing brochures or print ads OTHER THAN COPYRIGHT LAW (or possibly trademark law–but at this point, what does any of this have to do with IMPLIED-IN-LAW CONTRACTS?). And there are many other forms of competitive marketing adjacencies that are fully permissible in the offline/physical space world, as I documented over a decade ago in my Brand Spillovers paper.

Plus, let’s not lose sight of the users’ agency–they are the ones responding to the marketing signals. They aren’t passive automatons in this equation. My Deregulating Relevancy article from 15 years ago explains that principle more.

First Amendment

There is some discussion about the First Amendment, but it’s so terrible that I can’t bring myself to blog it. To summarize: the court seems to be saying that the plaintiffs can suppress truthful non-misleading advertising without relying on any intellectual property rights (and without any countervailing public policy doctrines, like fair use). That can’t possibly be right.

Implications

As you can see, the court creates a distorted pastiche of the precedent to reach an obviously wrong and wholly counterintuitive outcome.

In particular, the court’s mangled summaries, like “Plaintiffs have property rights to their websites” and “a website is a form of intangible property subject to the tort of trespass to chattels,” cannot survive critical scrutiny. What is the point of calling it “trespass to CHATTELS” if no actual chattels are harmed? In that circumstance, the trespass to “chattels” doctrine becomes a boundary-less “commercial trespass to intangibles” concept that both lacks any precedent and conflicts with the entire system of IP.

A boundary-less commercial trespass doctrine creates plenty of problematic edge cases:

• By design, ad blockers block portions of how websites display. (The websites can’t claim copyrights in third-party ads, but this court wasn’t considering copyright anyways). How would the court’s “commercial trespass” doctrine apply to ad blockers? Indeed, unlike Google’s browser software, many websites expressly contractually ban ad blockers.
• What about updates of browser software? By definition, those updates change the previous website renderings to a new website rendering. If any website prefers the old rendering to the new, can it sue the browser software for commercial trespass?
• Browser software programs allow users to resize their windows. Commercial trespass?
• Phone manufacturers create different screen sizes. If this cuts off “cove base” from being above the fold, liability?

This case brought to mind the Edible Arrangements v. Google lawsuit in Georgia (also not cited by the court). In that case, the trademark owner claimed that Google committed theft/conversion by selling its trademark for keyword advertising purposes. Unlike this court, the Georgia appellate court rejected the theft/conversion analysis. Weirdly, though, the Georgia Supreme Court granted a petition to hear the case, so who knows anything any more?

Case citation: Best Carpet Values Inc. v. Google LLC, 5:20-cv-04700 (N.D. Cal. Sept. 24, 2021)

The post If “Trespass to Chattels” Isn’t Limited to “Chattels,” Anarchy Ensues–Best Carpet Values v. Google appeared first on Technology & Marketing Law Blog.

The SHOP SAFE Act, H.R. 5374, seeks to curb harmful counterfeit items sold through online marketplaces. That’s a laudable goal that I expect everyone supports. However, this bill is itself a giant counterfeit. It claims to focus on “counterfeits” that could harm consumer “health and safety,” but those are both lies designed to make the bill seem narrower and more balanced than it actually is.

Instead of protecting consumers, this bill gives trademark owners absolute control over online marketplaces by overturning Tiffany v. eBay. It creates a new statutory species of contributory trademark liability that applies to online marketplaces (defined more broadly than you think) selling third-party items that bear counterfeit marks and implicate “health and safety” (defined more broadly than you think), unless the online marketplace operator does the impossible and successfully navigates over a dozen onerous and expensive compliance obligations.

Because the bill makes it impossible for online marketplaces to avoid contributory trademark liability, this bill will drive most or all online marketplaces out of the industry. (Another possibility is that Amazon will be the only player able to comply with the law, in which case the law entrenches an insurmountable competitive moat around Amazon’s marketplace). If you want online marketplaces gone, you might view this as a good outcome. For the rest of us, the SHOP SAFE Act will reduce our marketplace choices, and increase our costs, during a pandemic shutdown when online commerce has become even more crucial. In other words, the law will produce outcomes that are directly opposite to what we want from Congress.

In addition to destroying online marketplaces, this bill provides the template for how rightsowners want to reform the DMCA online safe harbor to make that functionally impossible to achieve as well. In this respect, the SHOP SAFE Act portends how Congress will accelerate the end of the Web 2.0 era of user-generated content.

* * *

[The rest of this post is 4k+ words explaining what it does and why it sucks. You might stop reading here if you don’t want the gory/nerdy details.]

Who’s Covered by the Bill

The bill defines “electronic commerce platform” as “any electronically accessed platform that includes publicly interactive features that allow for arranging the sale or purchase of goods, or that enables a person other than an operator of the platform to sell or offer to sell physical goods to consumers located in the United States.”

Clearly, the second part of that definition targets Amazon and other major marketplaces, such as eBay, Walmart Marketplace, and Etsy. I presume it also includes print-on-demand vendors, such as CafePress, Zazzle, and Redbubble, that enable users to upload images (unless those vendors are considered to be retailers, not online marketplaces).

The first part of the definition includes services with “publicly interactive features that allow for arranging the sale or purchase of goods.” This is a bizarre way to describe any online marketplace, and it covers something other than enabling third-party sellers (that’s the second part of the definition), so what services does this describe? Read literally, all advertising “allow[s] for arranging the sale or purchase of goods,” so this law potentially obligates EVERY ad-supported publisher to undertake the content moderation obligations the bill imposes on online marketplaces. That doesn’t make sense because the bill uses the undefined term “listing” 11 times, and display advertising isn’t normally considered to be a listing. Still, this wording is unusual and broad–and you better believe trademark owners like its breadth. If the bill wasn’t meant to regulate all ads, the bill drafters should make that clear.

Like most Internet regulations nowadays, the bill distinguishes entities based on size. See my article with Jess Miers on how legislatures should do that properly. The bill applies to services that have “sales on the platform in the previous calendar year of not less than $500,000.” Some problems with this distinction:

• the bill doesn’t define “platform,” so it’s unclear what revenues count. In Amazon’s case, is it only revenues from the marketplace or does it also include the revenues from Amazon’s retailing function? If the latter, then the definition will pick up smallish online retailers that have small marketplace components.
• the bill also doesn’t distinguish between gross and net revenue. So, for example, assume a site takes a 10% commission on sales. If a service  has $500k in merchandise sales (gross revenue), but only keeps $50k in commissions (net revenue), is it covered by the law or not? I think the bill covers gross revenue, which means the bill reaches companies with small net revenues.
• as usual, the bill doesn’t provide a phase-in period. A service may not know its revenues until some time after the calendar year closed, but it would be obligated to comply with the law from the beginning of the calendar year. As usual, then, this forces services below the revenue threshold to comply anticipatorily in case they clear the threshold. How hard is it for bills to include a phase-in period?

I’d fret more about the $500k threshold, but it’s likely to be irrelevant anyways. The bill also applies to smaller services once they receive 10 NOCIs over their lifetimes from all sources. (Unlike the other services, these services get a 6 month phase-in period).

To qualify as a NOCI, the notice must (1) refer to the SHOP SAFE Act, (2) “include an explicit notification of the 10-notice limit and the requirement of the platform to publish” the NOCI disclosures below [I have no idea what this element means], and (3) “identify a listing on the platform that reasonably could be determined to have used a counterfeit mark in connection with the sale, offering for sale, distribution, or advertising of goods that implicate health and safety.” [So, a NOCI counts against the 10 threshold if it “reasonably could be determined” that the listing was counterfeit, even if the NOCI is actually wrong.]

A month after getting its first NOCI, the service must publicly post an attestation that it has less than $500k in revenue and a running tally of the number of NOCIs received…I guess for shits and giggles so that trademark owners can compete to be the one to put the service over the 10 NOCI threshold? I mean, even tiny services will quickly accrue 10 NOCIs. Indeed, I imagine rightsowners will coordinate their NOCIs to ensure that small services clear this threshold and are obligated to comply with the law. Thus, the 10 lifetime NOCIs threshold is a ruse to mislead people that smaller services aren’t governed by the law, when of course they will be.

What’s Regulated?

The law applies to counterfeit “goods that implicate health and safety,” defined as “goods the use of which can lead to illness, disease, injury, serious adverse event, allergic reaction, or death if produced without compliance with all applicable Federal, State, and local health and safety regulations and industry-designated testing, safety, quality, certification, manufacturing, packaging, and labeling standards.” I mean, pretty much every physical product meets this definition, right? Virtually every misdesigned or nonconforming physical item has the capacity to cause personal injury. For example, electronic items that don’t comply with industry standards can cause physical harm from electrical charges, which means every electronic item is categorically within the bill’s scope even if the allegedly counterfeited item actually complies with industry standards. Now, replicate that analysis for other goods and tell me which categories of goods lack the capacity to cause harm. Once again, the “health and safety” framing is another deceptive ruse because the bill functionally applies to all goods, not just especially risky goods.

Overturning Tiffany v. eBay

In 2010, the Second Circuit issued a watershed decision about secondary trademark infringement. Essentially, the court held that eBay wasn’t liable for counterfeit sales of Tiffany items because eBay honored takedown notices and Tiffany’s claims sought to hold eBay accountable for generalized knowledge. That ruling has produced a kind of détente in the online secondary trademark infringement field, where we just don’t see broad counterfeiting lawsuits against online marketplaces any more.

The SHOP SAFE Act ends that détente. First, it creates a new statutory contributory trademark infringement claim for selling the regulated items. Second, the bill says that the new contributory claim doesn’t preempt other plaintiff claims, so trademark owners will still bring the standard statutory direct trademark infringement claim and common law contributory trademark claims (and dilution, false designation of origin, etc.). Third, online marketplaces nominally can try to “earn” a safe harbor from the new statutory contributory liability claim (but not from the other legal claims) by jumping through an onerous gauntlet of responsibilities. Those requirements will impose huge compliance costs, but those investments won’t prevent online marketplaces from being dragged into extraordinarily expensive and high-stakes litigation over eligibility for this defense. Fourth, the law imposes a proactive screening obligation, something that Tiffany v. eBay rejected. Fifth, unlike Tiffany v. eBay, generalized knowledge can create liability; and takedown notices aren’t required as a prerequisite to liability. Sixth, in litigation over direct trademark infringement and common law contributory trademark infringement claims, trademark owners can cite compliance/non-compliance with the defense factors against the online marketplace, putting the online marketplace in a worse legal position than they currently are in.

All told, the SHOP SAFE Act will functionally repeal the Tiffany v. eBay standard that has fostered the growth of online marketplaces for the last decade-plus, and usher in a new era of online shopping that will likely exclude online marketplaces entirely.

The “Safe Harbor” Preconditions

To earn protection from the newly created contributory trademark infringement doctrine, online marketplaces must perfectly implement all of the following 13 requirements:

1. Determine, and periodically confirm, that third-party sellers have a registered US agent for service or designated a “verified” US address for service. [Just wait until other countries require the equivalent from US-based online sellers on foreign marketplaces. A new frontier for a trade war.]

2. Verify the third-party seller’s identity, principal place of business, and contact information through “reliable documentation, including to the extent possible some form of government-issued identification.” [What is “reliable” documentation, and how much risk will online marketplaces be willing to take?]

3. Require the third-party seller to take reasonable steps to verify the authenticity of its goods and attest to those steps. This requirement doesn’t apply to sellers who sell less than $5k/yr and lists no more than 5/yr of the same items. [Is the online marketplace liable if the seller doesn’t actually take reasonable steps? How can the online marketplace “require” independent sellers to do this?]

4. Impose TOS terms that the third-party seller (1) won’t use counterfeit marks, (2) consents to US jurisdiction, and (3) designates a US agent for service or has a verified US address for service. [Note: can trademark owners take advantage of the US jurisdiction consent between the online marketplace and its third-party sellers? Normally trademark owners aren’t third-party beneficiaries of that contract. Also, that consent isn’t limited to jurisdiction over counterfeit claims–it’s over everything the TOS might govern.]

5. Conspicuously display on the platform:

• the third-party seller’s verified principal place of business,
• contact information,
• identity of the third-party seller, and
• the country from which the goods were originally shipped from the third-party seller

But the online marketplace isn’t required to display “the personal identity of an individual, a residential street address, or personal contact information of an individual, and in such cases shall instead provide alternative, verified means of contacting the third-party seller.”

6. Conspicuously display “in each listing the country of origin and manufacture of the goods as identified by the third-party seller, unless such information was not reasonably available to the third-party seller and the third-party seller has identified to the platform the steps it undertook to identify the country of origin and manufacture of the goods and the reasons it was unable to identify the same.” This requirement doesn’t apply to sellers who sell less than $5k/yr and lists no more than 5/yr of the same items.

7. Require third-party sellers to “use images that accurately depict the goods sold, offered for sale, distributed, or advertised on the platform.” [Does this create an affirmative obligation to include images? While rare, I believe that some marketplace sellers sometimes currently sell their items without including any photo.]

[Also, product shots have been a constant source of copyright litigation. The manufacturer can sue the seller for copying its shots; the manufacturer can sue for false advertising if non-official shots aren’t “accurate,” and freelancers love to sue over product shots they took and ones they think are too similar to the ones they took.]

8. Undertake “reasonable proactive measures for screening goods before displaying the goods to the public to prevent the use by any third-party seller of a counterfeit mark in connection with the sale, offering for sale, distribution, or advertising of goods on the platform. The determination of whether proactive measures are reasonable shall consider the size and resources of a platform, the available technological and non-technological solutions at the time of screening, the information provided by the registrant to the platform, and any other factor considered relevant by a court.” [This is the most coveted payload for trademark owners. Every rightsowner wants UGC services to engage in proactive screening. The screening won’t be limited to harmful counterfeit goods, and consider how courts will punish online marketplaces for undertaking this proactive screening in their analysis of direct and contributory trademark infringement.]

9. Provide “reasonably accessible electronic means by which a registrant and consumer can notify the platform of suspected use of a counterfeit mark.” [What are the odds that the consumer notifications will be made in good faith? Consider, in particular, how a dissatisfied buyer could weaponize this provision for reasons having nothing to do with counterfeiting. Note also how buyer complaints of counterfeiting, when not accurate (and buyers won’t necessarily know), could create scienter on the online marketplace’s part–and the countermoves by the marketplace could work to the detriment of the marketplace, the seller, AND the manufacturer by reducing their online marketplace sales.]

10. Implement “a program to expeditiously disable or remove from the platform any listing for which a platform has reasonable awareness of use of a counterfeit mark in connection with the sale, offering for sale, distribution, or advertising of goods.” The online marketplace’s scienter may be inferred from:

• information regarding the use of a counterfeit mark on the platform generally,
• general information about the third-party seller,
• identifying characteristics of a particular listing, or
• other circumstances as appropriate.

[This differs from the DMCA online safe harbor in many ways. The most obvious is that online marketplaces can be liable for the new statutory contributory trademark claim even if trademark owners never send them takedown notices. Among other things, this factor also emboldens trademark owners to send notices like “there are counterfeits on your site–find and remove them” without identifying any specific infringing listing. It seems those generalized notices would confer scienter sufficient to impose contributory trademark infringement. This, of course, directly rejects the Tiffany v. eBay precedent, which said such generalized knowledge wasn’t enough.]

An online marketplace can restore a listing “if, after an investigation, the platform reasonably determines that a counterfeit mark was not used in the listing.” [How many services will want to do the investigation, and how confident will the service be that the trademark owner will agree that they “reasonably” determined the listing wasn’t counterfeit? In practice, once a listing is down, it ain’t going back up.]

11. Implement “a publicly available, written policy that requires termination of a third-party seller that reasonably has been determined to have engaged in repeated use of a counterfeit mark.” [Note how this combines several parts of the DMCA online safe harbor, including the obligation to adopt a repeat infringer policy, to publish the repeat infringer policy, and to reasonably implement the repeat infringer policy.]

Apparently online marketplaces are free to create their own repeat termination policy, but the bill says “Use of a counterfeit mark by a third-party seller in 3 separate listings within 1 year typically shall be considered repeated use.” [This sidesteps the obvious question of how services “know” that a seller used the counterfeit mark. Remember, in obligation #10, online marketplaces must terminate listings when the service has a “reasonable awareness,” which isn’t conclusive proof that counterfeiting actually took place. So does each removal based on that lowered scienter count as one of the 3 strikes?]

Online marketplaces can reinstate terminated sellers in some circumstances, none of which have any realistic chance of happening.

12. Take reasonable measures to ensure terminated sellers don’t reregister on the service. [Another coveted item by rightsowner: a permanent staydown.]

13. Provide “a verified basis to contact a third-party seller upon request by a registrant that has a bona fide belief that the seller has used a counterfeit mark.” [I didn’t understand this provision because the trademark owners should already have all of the information they need to blast counterfeiters from obligation #5].

Whew! Could trademark owners ask for anything more? These obligations are pretty much their dream wishlist.

Liability for Bogus NOCIs

The bill creates a new cause of action for bogus takedown notices sent to online marketplaces. I’m going to dig into this cause of action, but no need to master the details: Congress has learned absolutely nothing from the failure of 17 USC 512(f), so there’s no possible way for any plaintiff to benefit from this provision.

The cause of action: “Any person who knowingly makes any material misrepresentation in a notice to an electronic commerce platform that a counterfeit mark was used in a listing by a third party seller for goods that implicate health and safety shall be liable in a civil action for damages by the third-party seller that is injured by such misrepresentation, as the result of the electronic commerce platform relying upon such misrepresentation to remove or disable access to the listing, including temporary removal or disablement.” If the third-party seller declines to sue the trademark owner, the online marketplace can sue (with the third-party seller’s consent) if the trademark owner sent 10+ bogus notices. The bill provides statutory damages that range between $2,500-$75,000 per notice.

That sounds swell, but it’s useless for two reasons.

First, the bill doesn’t require trademark owners to send takedown notices in the first place. Trademark owners can sue online marketplaces for contributory trademark infringement without ever sending a takedown notice. So if trademark owners face potential liability for sending bogus takedown notices, why send them at all? Or trademark owners will send very generalized notices that don’t trigger liability for them but will trigger liability for the online marketplace.

Second, and more importantly, the cause of action requires a scienter that plaintiffs can’t prove. How can a third-party seller or online marketplace show the trademark owner *knowingly* made a material misrepresentation in their takedown notices? They can’t–unless they find smoking-gun evidence in discovery, but their complaints won’t survive a motion to dismiss sufficient to get to discovery. So there’s no way to win.

The “knowingly makes any material misrepresentation” standard is virtually identical to the 512(f) standard (“knowingly materially misrepresents”), so I expect courts will interpret the scienter standards the same. The Ninth Circuit killed 512(f) claims when it concluded in the Rossi case that the copyright owner’s subjective belief of infringement was good enough to defeat liability. As a result, over the past 20+ years, there has been only a small handful of 512(f) cases that have led to damages, and those few mostly involve default judgments. If trademark owners similarly can defend against this claim based on their subjective belief that counterfeiting is taking place, plaintiffs cannot win.

This provision is yet another ruse. It’s designed to make people think there’s a disincentive against trademark owner overclaims; but anyone who knows the 512(f) caselaw knows that this cause of action is completely worthless and a waste of everyone’s time.

* * *

Selected Problems with the Bill

What is “Counterfeiting”? The bill defines “counterfeit mark” as “a counterfeit of a mark” (I can’t make this up). But there’s actually a lot of confusion about what constitutes counterfeiting. See, e.g., my post about the trademark enforcements involving the “EMOJI” word mark, where they take the position that a marketplace item using the term “emoji” in the product name or description “counterfeits” their mark (seriously, look at the example from their exhibit and tell them that’s not bogus). A similar issue arises with print-on-demand services, where trademark owners take the position that any variation of their mark being manufactured onto a good constitutes counterfeiting, even if it’s parodic or an obvious joke. Thus, the bill’s grammar restricting the “use of counterfeit marks” potentially covers a much wider range of activity than classic piratical counterfeiting. Trademark owners will weaponize that ambiguity.

Lack of State Preemption. The Lanham Act doesn’t preempt state trademark laws, so this law isn’t likely to preempt any state law equivalents. It also would leave in place laws like the Arkansas Online Marketplace Consumer Inform Act, which has overlapping but different requirements than the SHOP SAFE Act. That overlap jacks up compliance costs and risks even more. While the SHOP SAFE Act is terrible and should never pass, it is even more terrible without a preemption provision.

Country of Origin Problems. The mandatory reporting of products’ country of origin is a liability trap. The bill excludes the smallest sellers from making this disclosure, but plenty of small-scale sellers will be obligated nonetheless, and they (and even bigger players) are sure to botch this because the law is confusing and the information won’t always be available to resellers. Any error on country-of-origin disclosures sets up the third-party sellers for false advertising claims. (Per Malwarebytes, the online marketplace should qualify for Section 230 protection for the Lanham Act false advertising claims). This gives trademark owners a second way of targeting third-party sellers; even if those sellers aren’t engaging in counterfeiting or any trademark infringement at all, country-of-origin false advertising claims can still be weaponized to drive them out of the marketplace.

Repudiation of the 512 Deal. The DMCA online safe harbor struck a grand bargain: online copyright enforcement responsibility would be a shared responsibility. Copyright owners would identify infringing items; service providers would then remove those items. There has never been a trademark equivalent of the DMCA, but the Tiffany v. eBay case has de facto created a similar balance. Unsurprisingly, copyright owners hate the DMCA shared responsibility, and they have tried to undermine that deal through lawfare in courts. Trademark owners similarly want a different deal.

This bill, as Congress’ first trademark complement to the DMCA, emphatically repudiates the DMCA deal. It gives trademark owners everything they could possibly want: turning online marketplaces into their trademark enforcement deputies, getting them to proactively screen for infringing items, making them wipe out listings without having to send listing-by-listing notices, upfront disclosure of the information needed to sue the sellers (rather than going through the 512(h) subpoena process), and permanent staydown of allegedly recidivist sellers.

Not only does this represent terrible trademark policy, but it’s a preview of how copyright owners will force DMCA safe harbor reform. They will want all of the same things: proactive monitoring of infringement, no need to send item-specific notices, authentication of users before they can upload, and staydown requirements. The SHOP SAFE Act isn’t just about counterfeits; it’s a proxy war for the next round of online copyright reform, and the open Internet doesn’t have a chance of surviving either reform.

“Reasonableness” Isn’t Reasonable to Online Marketplaces. I’ve blogged many times about how a “reasonableness” standard of liability in the online context is a fast-track to the end of UGC. As a legal standard, “reasonableness” often can’t be resolved on motions to dismiss because it’s fact-intensive and defendants can’t tell their side of the story at that procedural stage. As a result, “reasonableness” standards substantially increase the odds that lawsuits survive the motion to dismiss and get into discovery, which raises the defense costs by a factor of 10x or more.

The bill contains 21 instances of the term “reasonable” or variations. Each and every one of those is a fight the defendants can’t cost-justify. That means defendants will give up at the earliest opportunity; or more likely, self “censor” to avoid any potential courtroom battle over their “reasonableness.”

Too Many Defense Factors Makes the Defenses Unwinnable. More generally, to avoid the new cause of action, online marketplaces must win each and every one of the 13 preconditions (many of which have subparts). In other words, they must do everything perfectly AND prove all 13 elements to the court’s satisfaction. Safe harbors with that many prerequisites are extraordinarily costly because the plaintiffs can contest each element and engage in expensive discovery related to them. The DMCA online safe harbor has functionally failed for this reason; it’s too expensive for startups to prove they qualify, and copyright owners can weaponize those costs intentionally to drive entities out of the industry. This has turned the DMCA online safe harbor into a sport of kings; so only larger companies can afford it, which has exacerbated the concerns about “Big Tech” market consolidation. The SHOP SAFE Act replicates the structure that failed in the DMCA online safe harbor, so it’s predictable that the SHOP SAFE defenses also will fail to help out online marketplaces, leaving them highly vulnerable to the new cause of action.

Goodbye, Scalability. The Internet enables scalable operations in new and important ways. That scalability has created new functionality that never existed in the offline world–like online marketplaces. The SHOP SAFE Act blows scaling apart. Not only do the “reasonableness” requirements require careful attention to the facts, but the bill makes it impossible to have truly self-service signups of third-party sellers. Instead, there will need to be several levels of human review of new signups to satisfy the various authentication requirements. Furthermore, the proactive screening requirement will also require substantial human monitoring because determining “counterfeits” cannot be delegated solely to the machines. The absence of scalability and the need for substantial human labor will reward services that are really small, like a one-person operation, or really large, like a market-dominant player. Thus, SHOP SAFE’s elimination of scalability will exacerbate competition problems in the online retailing world.

Who Cares About Privacy? Trademark owners demanded the WHOIS system to make it easier for them to sue domain name registrants. The WHOIS system has collapsed due to the GDPR, which exposed how the WHOIS system was highly privacy-invasive. The SHOP SAFE Act doubles down on privacy invasions in two ways.

First, it requires online marketplaces to collect lots of sensitive information they don’t want, such as government-issued IDs. Those databases are honeypots for law enforcement and hackers.

Second, it requires publication of some information that sellers might consider private, especially if they are small operations with close identity between their professional and personal lives. (The bill’s exclusion of some private information incompletely addresses this concern). For example, that information can be highly sensitive for sellers of controversial items who can be targeted by trolls and haters for local ostracism or physical attacks like swatting; and competitors can use this information too to engage in anti-competitive harassment.

Just like WHOIS struck a lopsided balance between trademark owners’ interests and registrant privacy, the SHOP SAFE Act similarly tosses privacy concerns under the trademark owners’ bus.

Why Would Anyone Support This Bill? This bill will kill online marketplaces and make markets less efficient. Where the online marketplace owner has a retailing function, like Amazon and Walmart, they can shut down the marketplace and subsume some items into their standard retailing function. That transition cuts off the long tail of items consumers expect to find online, and it burns hundreds of thousands of independent businesses that currently thrive in the marketplace system but become irrelevant in a retailing model. Meanwhile, standalone online marketplaces, like eBay and Etsy, have to revamp their entire business or exit the industry entirely, which further reduces competition for online retailing. The net competitive effects, then, are that consumers will pay higher prices, consumers will lose their ability to find long-tail items and incur higher search costs to do so, existing market leaders will consolidate their dominant positions, and hundreds of thousands of people will lose their jobs.

In contrast, who wins in this situation? The only winners are trademark owners, some of whom hate online marketplaces because they are tired of seeing their goods leak out of official distribution channels into more price-discounted online marketplaces, because they hate competing against used items of the goods they sell, and because some counterfeiting does take place there (as it does in the offline world too). To address those concerns, they are willing to burn down the entire online marketplace industry. What I can’t understand is why any members of Congress would be so willing to give trademark owners their wishlist when the results would be so disadvantageous for their constituents. The trademark owner lobby is strong, but our governance systems should be strong enough to resist terrible and selfish legislation like this.

Prior Blog Posts on the 117th Congress’ Efforts to Kill the Internet

• Comments on the PROMISE Act
• Comments on the “SAFE TECH” Act
• Comments on the “Protecting Constitutional Rights from Online Platform Censorship Act”
• While Our Country Is Engulfed By Urgent Must-Solve Problems, Congress Is Working Hard to Burn Down Section 230

The post The SHOP SAFE Act Is a Terrible Bill That Will Eliminate Online Marketplaces appeared first on Technology & Marketing Law Blog.

* Kid Car NY, LLC v. Kidmoto Techs. LLC, 2021 WL 466975 (S.D.N.Y. Feb. 9, 2021):  “At the motion to dismiss stage, Kidmoto has plausibly alleged more than just the purchase of a competitor’s mark as a search engine keyword standing alone. The Counterclaim alleges that Kid Car purchased “KIDMOTO” as keyword on Google and that by using ‘kid car’ in the resulting advertisement there is a likelihood of consumer confusion.”

* RVC Floor Decor, Ltd. v. Floor and Decor Outlets of America, Inc., 2021 WL 1163117 (E.D.N.Y. March 18, 2021)

The Google AdWords purchase too may not alone evidence bad faith. Defendant’s acquisition of the “Floor Decor” search term could simply reflect savvy business sense in the Information Age: it is self-explanatory why Defendant Floor & Decor purchased search terms for a permutation of its own tradename. And the Defendant’s failure to “negative keyword,” i.e., deactivate, the term “Floor Decor” from its AdWords could be viewed as a failure to self-flagellate – which does not entail bad faith. But New York’s common law unfair competition cause of action is “adaptable and capricious.” “It has been broadly been described as encompassing ‘any form of commercial immorality,’ or simply as ‘endeavoring to reap where (one) has not sown,’; it is ‘taking the skill, expenditures and labors of a competitor,’ and ‘misappropriati(ng) for the commercial advantage of one person … a benefit or “property” right belonging to another.’ ” It is not confined to Defendant’s decision to adopt its mark. And it is assessed not by viewing acts in isolation but upon the totality of the evidence, including their timing…

* Caraway Home, Inc. v. Pattern Brands, Inc., 2021 WL 1226156 (S.D.N.Y. April 1, 2021). “Caraway’s final three claims are for trademark infringement, unfair competition and false designation, and trademark dilution under the Lanham Act as a result of Defendant’s purchase of the Caraway Mark so as to advertise Equal Parts when consumers searched for the term ‘Caraway’ in Google’s search engine. Caraway has adequately pled trademark infringement with respect to these claims.”

* Snyder’s Lance, Inc. v. Frito-Lay North America, 2021 WL 2322931 (W.D.N.C. June 7, 2021). This is a long-running battle over whether the term “pretzel crisps” is generic. (Spoiler: after dozens of pages, the court says it is generic). Some interesting discussion on the use of Google and Twitter to determine genericness:

Plaintiffs also offered evidence of Google searches and social media mentions on Twitter to support their position that PRETZEL CRISPS is not generic. Specifically, Plaintiffs’ attorneys’ employee Mr. Lauzau (whose work and conclusions the Court criticized with respect to media references above) conducted a Google search for the term “pretzel crisps” in October 2018 that he alleges shows “based on my review of results” that 87 (90%) of the first 97 results “used the term PRETZEL CRISPS as a trademark or referred directly to Princeton Vanguard’s product.” With respect to Twitter, another of Plaintiffs’ law firm’s nonattorney staff members (Elliot Beaver) conducted a subjective review of social media mentions of “Pretzel Crisps” on Twitter from April 1, 2018 through October 24, 2018 and concluded that a majority of tweets (63%) “referenced the PRETZEL CRISPS brand in a non-generic fashion.”

However, the Court does not find either the Google search or the Twitter analysis persuasive on the issue of genericness. First, as discussed above, these searches have only a limited usefulness in establishing whether PRETZEL CRISPS is generic due to the more than a decade (and $50 million in advertising and marketing expenditures) that has passed since the challenged registration of the mark in 2005. Again, the repeated use of ordinary words cannot give a single company a proprietary right over those words, even if an association develops between the words and that company.

…the vast bulk of the Google search results simply identify websites of large companies offering PRETZEL CRISPS for sale. Again, there is no dispute that Plaintiffs have developed a very large business selling their pretzel product; however, the typical commercial sales efforts associated with that business – including the websites featured in the Plaintiffs’ Google search, do not reflect consumer perceptions of genericness….

merely referencing Plaintiffs or their hashtag does not necessarily make the use of “pretzel crisps” in a tweet a brand reference. As with the Google search results discussed above, use of the disputed product name in the normal course of business communications, here on Twitter, does not reveal whether or not a consumer understands the product name primarily as a brand or a type of goods. Instead, it just reflects consumer engagement with the product…

* Soter Technologies, LLC v. IP Video Corporation, 2021 WL 744511 (SDNY Feb. 26, 2021). A company used [competitortrademark].com to redirect to its website. The court says this may be a trademark violation, including because it could qualify as initial interest confusion.

* Archi’s Acres, Inc. v. Whole Foods Market Service, Inc., 2021 WL 424286 (S.D. Cal. Feb. 8, 2021):

Plaintiffs argue that Defendants have caused “initial interest confusion whereby consumers were seeking Plaintiffs’ products and were lured to Defendants’ stores, at which they were unable to purchase Plaintiffs’ products and instead purchased a product sold by Defendants.”

The Court finds that Plaintiffs have not alleged sufficient likelihood of confusion to survive Defendants’ Motion to Dismiss and instead only establish the mere possibility of diversion.

* Dent v. Lotto Sport Italia SpA, 2021 WL 242100 (D. Az. Jan. 25, 2021). Domain name owners awarded nearly a quarter-million for defeating a failed attempt at reverse domain name hijacking.

Copyright 

* Bell v. Eagle Mountain Saginaw Independent School District, 2021 WL 1151706 (N.D. Tex. March 26, 2021). A stinging rebuke against a serial copyright plaintiff’s lawsuit against a school district for tweeting a motivational statement. The court holds that the school district qualified for fair use and ordered the plaintiff to pay attorneys’ fees. Prior blog post on a Bell lawsuit.

* Fellner v. Travel 4 All Seasons, CV-19-01719-PHX-DJH (D. Ariz. Sept. 29, 2020):

Defendant did not reproduce the Article to attempt to gain a financial benefit to Plaintiff’s detriment or for any nefarious reason. Defendant simply thought that the topic of pickleball on cruise ships would be interesting to the relatively few readers who visited his website. There is no evidence to suggest that Defendant’s use of the material was anything other than fair

* Stebbins v. Polano, 2021 WL 2682339 (N.D. Cal. June 30, 2021): Dismissing a 512(f) claim: “Plaintiff alleges that Defendant’s Counter-Notice claiming fair use was false and frivolous, and that Defendant’s pattern of harassment suggests that Defendant’s video was meant to harass, not parody. However, the facts as alleged do not plausibly suggest that any misrepresentation in Defendant’s Counter-Notice was knowing. The allegations more plausibly suggest that Defendant believed his use of Plaintiff’s video was fair use, and that such a belief might have been reasonable.”

* Variety: Inside the Dirty Business of Hit Songwriting

* Vice: John Deere Promised Farmers It Would Make Tractors Easy to Repair. It Lied.

Patents

* Bloomberg Law: IBM’s Patent Income Slips as Companies Resist ‘Godfather’ Deals

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Lanham Act. For domain name registrars, the court treats the ACPA as the exclusive source of any Lanham Act liability. Stated the proposition that broadly, we know it can’t be true. I think the court meant to say that such preemption only occurs with respect to performing the function of domain name registration (or domain name hosting, though courts rarely are that precise about the different functions). Applying the court’s overbroad standard, GoDaddy is a domain name registrar and didn’t have the requisite bad faith intent to profit to satisfy the ACPA, so it isn’t liable under the Lanham Act. Also, GoDaddy didn’t “use” the domain name in commerce (cites to Petroliam Nasional Berhad v. GoDaddy and Lockheed Martin v. NSI).

Section 230. With respect to the defamation and publicity rights claims, the court says “At no point do Plaintiffs assert that Defendants independently publish or generate the website content at issue,” so Section 230 applies. The court treats the unfair competition claim as being based on GoDaddy’s publication of allegedly false material, so that too is covered by Section 230. The court says that Section 230 didn’t apply to the Lanham Act claim because of 230’s IP exclusion, apparently missing the Ninth Circuit’s Malwarebytes ruling directly on point.

E-SIGN. Rigsby claimed that GoDaddy’s contract formation process didn’t comply with E-SIGN. The court responds that E-SIGN doesn’t have a private right of action, nor does Arizona’s implementation of UETA. Note: we don’t get many court opinions discussing E-SIGN or UETA, so I was nerdding out about this discussion.

Case citation: Rigsby v. GoDaddy Inc., 2021 WL 2416829 (D. Ariz. June 14, 2021). Rigsby’s complaint.

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