Attorney Evan Brown

May 22, 2017 Copyright, Litigation

Eleventh Circuit requires copyright owner to obtain registration certificate before filing suit

Although an author owns the copyright in a work the moment he or she creates the work, a court will not hear a case over infringement of the work until the work is registered with the Copyright Office. Here is relevant language from the Copyright Act:

[N]o civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title.

17 U.S.C. 411(a). Since the Copyright Office issues a certificate of registration when it registers the copyright in a work, one view is that the statute requires a copyright plaintiff to have that registration certificate in hand before filing suit.

But that is not how courts have always applied the statute. Other language in the Copyright Act says that:

the owner of copyright or of any exclusive right in the work may obtain registration of the copyright claim by delivering to the Copyright Office the deposit specified by this section, together with the application and fee specified by sections 409 and 708 [of the Copyright Act].

17 U.S.C. 408(a). Notice how 408(a) does not talk about receiving a registration certificate – it seems to indicate that registration occurs simply by the owner submitting the application, fee and deposit. Some courts have read this portion of the statute this way, and allowed a plaintiff to file suit for copyright infringement after submitting the materials to the Copyright Office but before the registration certificate is issued.

So there is a split among the federal circuits on this issue, namely, between the “registration approach” (requiring certificate in hand) and the “application approach” (requiring only that the application, fee and deposit have been made).

Recently, the Eleventh Circuit Court of Appeals weighed in on the issue. It sided with the registration approach – holding that the plain language of the Copyright Act requires it.

Plaintiff owned the copyright in online articles to which it granted a license to defendant website operator under a subscription agreement. The agreement required defendant to discontinue publication of the licensed content when the agreement terminated. But after termination, the articles remained online. So plaintiff sued for copyright infringement.

The lower court dismissed the action on defendant’s motion because plaintiff had not alleged receipt of the copyright registration certificate in the works at issue. It had only alleged that it had filed the applications to register the copyright claims in the works. Plaintiff sought review with the Eleventh Circuit. On appeal, the court affirmed the dismissal.

The court concluded that the Copyright Act defines registration as a process that requires action by both the copyright owner and the Copyright Office. It relied heavily on language from Section 410 of the Copyright Act that reads as follows:

When, after examination, the Register of Copyrights determines that, in accordance with the provisions of this title, the material deposited constitutes copyrightable subject matter and that the other legal and formal requirements of this title have been met, the Register shall register the claim and issue to the applicant a certificate of registration under the seal of the Copyright Office.

17 U.S.C. 410 (emphasis added). Bolstered by the dictionary definition of “after,” the court held “that registration occurs only after examination of an application necessarily means that registration occurs ‘[l]ater in time than’ or ‘subsequent to’ the filing of the application for registration.”

Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC, —F.3d —, 2017 WL 2191243 (11th Cir. May 18, 2017)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

February 20, 2017 Cybersquatting

UDRP complainant denied relief where disputed domain name also contained competitor’s trademark

A National Arbitration Forum panel denied relief to industrial manufacturer NSK (owner of the same mark) in a dispute over the domain name <skfnsk.com>. The panel found that the complainant did not meet the first element under the Uniform Domain Name Dispute Resolution Policy (UDRP) – the disputed domain name was not confusingly similar to the complainant’s NSK mark..

The case serves as an example of a panel departing from the ordinary determination that a disputed domain name incorporating the complainant’s mark as a whole will suffice to demonstrate confusing similarity.

The distinguishing fact in this case was that the other portion of the mark (SKF) is the trademark of one of the complainant’s competitors. The panel cited two other cases where complainants were denied relief in UDRP actions over disputed domain names containing both the complainant’s mark and that of another company. In NIKE, Inc. and Nike Innovate, C.V. v. Mattia Lumini and Yykk Snc, NAF Case No. FA1679233 (July 15, 2016), the panel denied relief to Nike over the disputed domain name <nikegoogle.com>. Similarly, in Dell Inc. v. Ionel Adrian Nicolae, NAF Case No. FA1683104 (August 22, 2016) the panel held that “Nvidia Corp. has not been joined as a Complainant in this matter and there is no nexus available through which Complainant can claim to have rights to the transfer of the <alienware-nvidia.xyz>”

NSK LTD. v. Li shuo, NAF Case No. 1683104 (February 16, 2017)

This post also appeared on UDRP Tracker.

February 16, 2017 Contracts

Florida court rules that online seller’s terms and conditions were not enforceable

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Beware the browsewrap.

A Florida state appellate court recently held that an online seller’s terms and conditions, appearing in a “browsewrap” agreement linked-to from the bottom of its web pages, were not enforceable.

Plaintiff, an online purchaser of defendant’s dietary supplements, sued defendant seller over liver damage plaintiff allegedly sustained from the products. Defendant filed a motion with the trial court seeking to enforce an arbitration clause in its online terms and conditions. Plaintiff objected to that motion, arguing that he never agreed to the arbitration clause contained in the browsewrap agreement.

The lower court denied defendant’s motion to compel arbitration, finding that the terms of the browsewrap agreement were not incorporated into the sales agreement. Defendant sought review with the Florida appellate court. On appeal, the court affirmed the denial of the motion to compel.

This was a case of first impression in the Florida state courts.

The court observed that in other jurisdictions, browsewrap agreements have generally been enforced only when the hyperlink to the terms and conditions is conspicuous enough on the web page to place a user on inquiry notice of their terms. (Inquiry notice, simply stated, is, as its name suggests, notice sufficient to make the user aware enough of the terms that their natural inclination is to inquire further as to what the particular terms are.)

The court distinguished this case from the case of Hubbert v. Dell Corp., an Illinois case in which the court found a browse-wrap agreement to be enforceable.

Here, unlike in the Hubbert case, the defendant’s website allowed a purchaser to select a product and proceed to checkout without seeing the hyperlink to the terms and conditions. The website user could complete the purchase without scrolling to the bottom of the page where the link to the terms and conditions appeared.

In this situation the court found that the online seller’s website failed to advise the plaintiff that his purchase was subject to the terms and conditions of the sale, and did not put him on the required inquiry notice of the arbitration provision.

Vitacost.com, Inc. v. McCants, — So.3d — 2017 WL 608531 (Fla.Ct.App. Feb. 15, 2017)

February 10, 2017 Copyright

Ninth Circuit revives software download copyright infringement case

The main issue before the Ninth Circuit Court of Appeals in the case of Design Data Corp. v. Unigate Enterprise was whether the trial court properly granted summary judgment in defendant’s favor on the theory that one unauthorized download of a copy of plaintiff’s software was a de minimis infringement. The court held that the grant of summary judgment was not proper and sent the case back to the lower court.

Defendant claimed that it downloaded an authorized free trial version of the plaintiff’s software. But plaintiff brought forward evidence that it did not offer free trial versions. And plaintiff found evidence of the installation of two versions of its software on defendant’s computer systems, as well as patches designed to circumvent the software’s licensing requirements.

The Ninth Circuit determined that on this record, important questions of fact remained to be resolved surrounding the downloading and use of the software. Importantly, the appellate court held that the trial court committed error in determining that any infringement would have been merely de minimis. It was a mistake to have granted summary judgment in light of “the overwhelming thrust of authority” that upholds liability even under circumstances where use of a copyrighted work is of minimal consequence.

Another interesting issue before the court was whether defendant’s distribution of output files generated by its contractor’s use of an unauthorized copy of the software was actionable as infringement. The court affirmed summary judgment on this issue. It noted that copyright protection may extend to a program’s output if the program does the “lion’s share” of the work, with the user’s role being so “marginal” that the output reflects the program’s contents. But in this case, plaintiff did not put forth enough evidence to meet this standard, so the appellate court let stand the grant of summary judgment in defendant’s favor on this issue.

Design Data Corp. v. Unigate Enterprise, Inc. — F.3d —, 2017 WL 541010 (9th Cir. Feb. 9, 2017)

January 20, 2017 Social Media

Ownership of domain names and social media accounts a key issue in case

Plaintiff sued defendant for unauthorized use of domain names and social media accounts. Plaintiff asked the court to declare its rights to these digital assets and to hold defendant accountable for trademark infringement and other claims. The court decided to allow some claims to proceed while dismissing others based on New York law’s treatment of intangible property.

Plaintiff, a luxury grooming and fragrance company operating under the name MiN New York, hired defendant, Mindy Yang, through her company Superego Management LLC, to manage marketing and social media efforts. After the business relationship ended, plaintiff alleged that defendant retained control of website domains and social media accounts. Defendant allegedly redirected these assets to promote its new business, even using plaintiff’s accounts to advertise its own events.

Defendant argued that the claims for replevin, conversion, and trespass should be dismissed because domain names and social media accounts are intangible and not considered property under New York law. Defendant also sought dismissal of the breach of fiduciary duty claim, asserting that as an independent contractor, it did not owe fiduciary obligations to plaintiff.

The court partially agreed with defendant. It dismissed the trespass claim, finding that plaintiff failed to show harm to the online assets themselves. However, the court allowed plaintiff’s claims for replevin and conversion to proceed, ruling that domain names and social media accounts can qualify as property under New York law. The court recognized that these assets were crucial to plaintiff’s business and plausibly alleged to have been wrongfully controlled by defendant.

On the claim for breach of fiduciary duty, the court ruled in plaintiff’s favor. The court held that plaintiff sufficiently alleged that defendant, by accessing sensitive accounts, using a corporate credit card, and managing key aspects of plaintiff’s marketing, owed fiduciary duties despite being an independent contractor. This established that defendant had a responsibility to act in plaintiff’s best interests.

Three reasons why this case matters:

Addresses rights to digital assets: The court’s decision tends to confirm that domain names and social media accounts can be considered property under New York law.
Defines fiduciary duties for contractors: The ruling clarifies that independent contractors can owe fiduciary obligations when entrusted with significant responsibilities.
Offers a blueprint for online disputes: This case sets important standards for businesses seeking to reclaim control over misappropriated digital assets.

Salonclick LLC v. Superego Management LLC, 2017 WL 239379 (S.D.N.Y. Jan. 18, 2017).

December 6, 2016 Cybersquatting

Court stops former dealer and company spokesperson from using trademark in domain name

Plaintiff likely to succeed on merits of claim under Anticybersquatting Consumer Protection Act (ACPA).

Defendant worked as a dealer, spokesperson and consultant to plaintiff. About the time she ended her relationship with plaintiff, defendant and another woman formed a competing business and registered several domain names comprised of plaintiff’s trademark or otherwise mimicking the domain name of plaintiff’s legitimate site. They used those domain names to redirect web users to the new company’s website.

Plaintiff sued under the ACPA and sought a temporary restraining order against the use of the domain names. In entering the TRO, the court found plaintiff was likely to succeed on the merits of its ACPA claim.

The court easily found the domain names were confusingly similar to plaintiff’s registered trademarks.

On the issue of bad faith use or registration, the court looked to the prior relationship between the parties, the electronic mail correspondence between them, and the undisputed fact that the parties were competitors. The court concluded that common sense suggested that the direction of traffic with the use of the disputed domain names to defendants’ website was for the purpose of commercial gain. Therefore, the court concluded that plaintiff had established a likelihood of success on the merits as to the cybersquatting claim.

Ball Dynamics Int’l LLC v. Saunders, 2016 WL 7034974 (D. Colo. December 1, 2016)

November 28, 2016 Defamation, Section 230

Quora gets Section 230 victory in the Tenth Circuit

Pro se plaintiff Silver filed suit in federal court in New Mexico against the online question-and-answer website Quora, alleging that statements made by two different individuals concerning his professional services were defamatory. Quora moved to dismiss, arguing that the immunity provisions of the Communications Decency Act, at 47 U.S.C. 230 shielded it from liability arising from content posted by its users. The district court granted the motion to dismiss. Plaintiff sought review with the Tenth Circuit Court of Appeals. On review, the court affirmed the lower court’s dismissal of the case.

Citing to its previous Section 230 precedent, Ben Ezra, Weinstein, & Co. v. Am. Online Inc., 206 F.3d 980 (10th Cir. 2000), the court held that Quora was a provider of “an interactive computer service,” that its actions forming the basis of alleged liability, namely, in hosting the content, were that of a “publisher or speaker,” and that the content giving rise to the alleged liability was from “another information content provider,” i.e., the users who posted the content.

Silver v. Quora, Inc., 2016 WL 6892146 (10th Circuit, November 23, 2016)

November 23, 2016 Copyright

Is a copyright registration required before filing an infringement lawsuit?

It depends on what court you are in. In the Western District of Wisconsin, you have to have the registration certificate in hand.

Plaintiff photographer sued defendant sports memorabilia dealers for infringement of the copyright in a photo of Green Bay Packers quarterback Aaron Rodgers. Certain defendants moved to dismiss for failure to state a claim, arguing that since he had not obtained a copyright registration certificate before filing suit, plaintiff had not satisfied this required precondition for making a copyright infringement claim.

The court granted the motion, holding that under 17 USC 411(a)‘s plain meaning, it is not sufficient for a plaintiff to simply allege it has filed an application to register the infringed copyright before filing suit. Instead, the statute’s language requires that a registration “has been made”.

Copyright litigants should note that there currently exists a circuit split on this issue — whether an application or actual registration –- is sufficient to meet the precondition for bringing an infringement action. And even district courts within the same circuit have differed on the reading of Section 411(a) (this is the case in the Seventh Circuit). The issue even splits well known copyright commentators William Patry and (the late) Melville Nimmer. Patry reads the statute to require registration certificate in hand, while Nimmer would read it to require only that an application has been filed.

The safer route, absent guidance from an authoritative appellate court, a Supreme Court decision, or a clarifying amendment to the Copyright Act, a plaintiff should make sure it has a registration certificate in hand before filing suit. The Copyright Office, for a fee, will process applications on an expedited basis. That extra fee is certainly more affordable than having the litigation matter hung up and possibly dismissed.

Robbins v. Svehla, 2016 WL 6900719 (W.D. Wis. November 22, 2016)

October 28, 2016 Cybersquatting, Trademarks

Court keeps door open on cabinet retailer’s domain name lawsuit

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A guy named Plaza worked for defendant cabinet retailer for a few years and then left to start a competing business called 411 Kitchen Cabinets. Defendant seems to have not liked the new competition and registered the domain name <411kitchencabinet.com>. This allegedly caused confusion among consumers and negatively impacted the new business.

So the new company sued in federal court alleging claims under the Anticybersquatting Consumer Protection (15 U.S.C. § 1125(d)) (“ACPA”) and for trademark dilution. Defendant moved to dismiss. The court dismissed the dilution claim but allowed the ACPA claim to move forward.

Not like “Budweiser, Camel and Barbie”

To properly plead dilution, plaintiff was required to allege, among other things, that its mark was “famous”. Under the federal trademark law – the Lanham Act – a mark is “famous” when “it is widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark’s owner.” 15 U.S.C. § 1125(c)(2)(A).

The court found that plaintiff had not alleged enough facts to show fame. In the court’s view, at most, plaintiff had alleged that its mark “ha[d] enjoyed a good name and reputation in the cabinets, countertops, vanities and granite industry.” That allegation did not establish the requisite fame required for a dilution claim and fell “well-short of alleging that Plaintiff’s mark [was] on the same scale as marks like Budweiser, Camel, and Barbie,” citing Brain Pharma, LLC v. Scalini, 858 F. Supp. 2d 1349, 1357 (S.D. Fla. 2012)

Yes on the cybersquatting claim

But the ACPA claim fared better. The court found plaintiff’s complaint sufficient to allege that plaintiff had sufficiently alleged that its use of its mark in commerce prior to the registration of the disputed domain name made the mark distinctive and entitled to protection. It also successfully pled that defendant’s domain name was confusingly similar to plaintiff’s mark. And the court also found that plaintiff successfully alleged that defendant had a bad faith to intent in registering and using the domain name. Key to this last portion was the fact that plaintiff alleged that defendant used the domain name to divert customers to its main website for commercial gain.

411 Kitchen Cabinets LLC v. King of Kitchen and Granite Inc., 2016 WL 7335840 (S.D. Fla. October 25, 2016)

See also:

September 16, 2016 Cybersquatting, Trademarks

When can you use a competitor’s trademark in a domain name?

The recent case of XPO CNW, Inc. v. R+L Carriers, Inc. coming out of a federal court in Michigan tells the interesting story of one company opportunistically using its competitor’s trademark in a domain name to set up an employee recruiting website. The decision sketches out certain circumstances when this practice passes legal muster.

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The parties to the dispute are major trucking lines. If you have driven on any highways in the United States, you have no doubt seen 18-wheelers bearing the trademarks of the parties involved in this case. In late 2015, plaintiff XPO acquired Con-Way Freight. Shortly thereafter, defendant R+L launched a website targeting Con-Way’s employees using the domain name conwaylayoff.com. The website included the following statement:

Were you laid off from Con-way? Don’t worry about the XPO Logistics acquisition, when one door closes another opens. R+L Carriers is hiring today….Turn your valuable years of knowledge and experience into a new career with R+L Carriers, which was named a Top National/Multiregional LRL Carrier in Logistics Management magazine’s 2015 Quest for Quality Awards. R+L Carriers launched Conwaylayoff.com to inform those employees that may have been affected by the recent acquisition of Con-way Freight, of similar opportunities that we have where they may be able to put their skills to work.

Plaintiff sued for trademark infringement and for cybersquatting under the Anti-Cybersquatting Consumer Protection Act (“ACPA”). Defendant moved for judgment on the pleadings. The court granted the motion.

The court found there to be no sufficient allegations of trademark infringement because the documents before the court showed there was no likelihood of confusion as to the origin of defendant’s services. The language on the website (quoted above) contradicted plaintiff’s assertions of likely confusion.

On the ACPA claim, the court found there was no evidence that defendant used the domain name with a bad faith intent to profit.

The court compared this situation with the one in the case of Lucas Nursery and Landscaping, Inc. v. Grosse, 359 F.3d 806 (6th Cir. 2004). In Lucas Nursery, there was no evidence that defendant intended to divert consumers from the plaintiff’s online location. Nor was there evidence that defendant ever sought to mislead consumers with regard to the site’s sponsorship. The site explicitly stated that it was established for the purposes of relaying defendant’s experience with the plaintiff’s nursery. Moreover, there was no offer to sell the site to plaintiff, and no other indicators of bad faith existed, such as providing misleading contact information or acquiring batches of additional domain names.

In this case, it was undisputed that defendant set up a web site and used plaintiff’s trademark in the domain name. But this was insufficient to establish that defendant operated in bad faith. Plaintiff did not allege that defendant ever offered to sell the domain name to plaintiff. Nor did it allege that defendant acquired other suspect domain names. Instead, plaintiff offered the court a barebones recital of the statutory language, stating that defendant registered and has used the domain name without plaintiff’s authorization and with bad faith, to profit from plaintiff’s trademark, and that the infringing domain name directed or redirected to a website controlled by defendant, who profited from its use. The court found this to be insufficient to survive the relevant pleading standard. Accordingly the court granted the motion for partial judgment on the pleadings concerning this claim.

XPO CNW, Inc. v. R+L Carriers, Inc., No. 16-10391, 2016 WL 4801283 (E.D. Mich. September 14, 2016)

Photo courtesy of Flickr user Jean-Pierre Magnan under this Creative Commons license.