Attorney Evan Brown

May 22, 2024 Copyright, DMCA

Artist’s side hustle lands him in DMCA litigation with autonomous vehicle company

A dispute between a digital artist and his former employer over content rights resulted in a court allowing the employee’s DMCA claim while striking the employee’s state law claims.

For over five years, plaintiff worked for defendant, crafting digital street scenes of San Francisco to train the company’s self-driving vehicles. But plaintiff’s passion for digital art extended beyond his day job. So, in his spare time, using his own equipment, he created intricate urban scenery for video games, which he then sold on the Epic Games marketplace.

When defendant learned of plaintiff’s side hustle, it claimed plaintiff’s project infringed defendant’s copyright rights. It demanded that plaintiff cease all sales of his digital art. Plaintiff refused to comply. He argued that his creations were made on his own time, with his own resources, and did not utilize any proprietary information from defendant.

Defendant considered plaintiff’s refusal as a resignation and terminated his employment. But that did not end the matter. Defendant escalated the situation by sending a takedown notice to Epic Games under the Digital Millennium Copyright Act (DMCA), alleging that plaintiff’s content infringed on defendant’s copyrighted material. This resulted in Epic removing plaintiff’s content from its marketplace.

The lawsuit

Plaintiff sued, claiming that that defendant sent the takedown notice in bad faith, asserting federal claims under the DMCA and state law claims for interference with contractual relations, interference with prospective economic advantage, and violation of California’s Unfair Competition Law. Defendant moved to dismiss the DMCA claim and also moved to strike the state law claims under California’s anti-SLAPP statute, which aims to prevent lawsuits that chill the exercise of free speech.

The court’s decision

The court denied defendant’s motion to dismiss the DMCA claim, allowing plaintiff’s federal claim to proceed. It found that plaintiff had sufficiently alleged that defendant acted in bad faith when it issued the takedown notice, a key requirement under Section 512(f) of the DMCA. But the court granted defendant’s motion to strike the state law claims. It held that the state law claims were preempted by the DMCA and were also barred by California’s litigation privilege, which protects communications made in anticipation of litigation.

Shande v. Zoox, Inc., 2024 WL 2306284 (N.D. Cal., May 21, 2024)

May 7, 2024 First Amendment

TikTok v. Garland: A full rundown of the Constitutional issues

As anticipated, TikTok and ByteDance have initiated legal action against the U.S. government, challenging a recently enacted law that would ban TikTok unless ByteDance sells the company off in the next nine months to an entity not controlled by a foreign adversary. Petitioners argue that the law infringes on constitutional rights in several ways: the First Amendment, the prohibition against bills of attainder, and the Equal Protection Clauses and Takings Clauses of the Fifth Amendment. They are seeking a declaration from the court that the law is unconstitutional and an injunction to prevent the Attorney General from enforcing the law.

TikTok tries to make itself look good

The allegations of the complaint contest any characterization of the law as a mere regulatory measure on ownership. The companies assert that compliance with the ban — especially within the 270-day timeframe — is not feasible due to commercial, technical, and legal constraints. Moreover, petitioners argue that the law represents an unconstitutional overreach, setting a dangerous standard that could allow Congress to bypass First Amendment protections under a thin guise of national security.

The complaint discusses how TikTok enjoys over 170 million monthly users in the U.S. and more than 1 billion globally. The platform is known for its powerful recommendation engine, enhancing user engagement by presenting curated content on its “For You” page. Although developed by the China-based ByteDance, TikTok operates internationally, including a significant presence in the U.S., under American law.

TikTok claims to be a repeat victim of overreach

Petitioners continue by describing how the U.S. government has previously attempted to ban TikTok while citing national security concerns. These efforts began in earnest with President Trump’s 2020 executive order, which the courts blocked for exceeding the scope of the International Emergency Economic Powers Act (IEEPA) and for constitutional issues. Although discussions aimed at resolving these security concerns led to a draft National Security Agreement under President Biden, these talks have faltered, and a resolution remains elusive.

Selling isn’t easy

Petitioners claim the requirement for TikTok to divest its U.S. operations from its global network is impractical for technological, commercial and legal reasons. A U.S.-only version of TikTok would lose access to global content, severely diminishing its appeal and commercial viability. Technologically, transferring the sophisticated source code within the law’s tight timeline is unachievable. And legal constraints, particularly China’s stringent export controls, prevent the divestiture of essential technologies like the recommendation engine.

Why TikTok thinks the law is unconstitutional

Petitioners provide four grounds on which they believe the law is unconstitutional: (1) the First Amendment, (2) Article 1’s prohibition of bills of attainder, (3) the Equal Protection Clause of the Fifth Amendment, and (4) the Takings Clauses of the Fifth Amendment

First Amendment:

Petitioners assert that the law significantly limits their First Amendment rights, impacting both the company and the free speech rights of some 170 million users in the U.S. Petitioners claim that TikTok is recognized for its editorial activities in selecting and presenting content, and argue that these activities are protected forms of expression under the First Amendment. TikTok not only curates third-party content but also creates and shares its own, especially on topics such as support for small businesses and educational initiatives, which it considers core speech. Additionally, the law restricts other ByteDance subsidiaries from reaching U.S. audiences, further stifling protected speech activities.

Petitioners argue that the court should apply strict scrutiny to the law for three reasons. First, the law imposes content- and viewpoint-based restrictions, favoring certain types of speech such as business and travel reviews, over others such as political and religious speech, and appears motivated by the viewpoints expressed on TikTok. Second, the law discriminates between speakers, specifically targeting TikTok and other ByteDance subsidiaries by automatically deeming them as foreign adversary controlled, while other companies face less stringent criteria. Third, the law constitutes an unlawful prior restraint, suppressing speech in advance by prohibiting TikTok and its users from expressing themselves on the platform, a severe infringement on First Amendment rights.

Petitioners assert that the law fails the strict scrutiny test as it neither serves a compelling government interest nor is narrowly tailored. Citing national security, Congress has not provided concrete evidence that TikTok poses a specific threat or that the law effectively addresses such threats. The speculative nature of these risks and the continued use of TikTok by officials such as President Biden and members of Congress undermine the credibility of these security concerns. Furthermore, the law lacks a fair process or sufficient evidence to justify its restrictive measures. Additionally, the law is not narrowly tailored — less restrictive measures such as an agreement involving data security protocols with TikTok were already under negotiation. These alternatives, including more targeted regulations or industry-wide data protection laws, suggest that the law’s broad prohibitions and lack of procedural fairness for TikTok are unjustified, failing to meet the precision required by strict scrutiny.

Moreover, Petitioners argue that the law independently fails strict scrutiny because it is both under- and over-inclusive. It is under-inclusive as it neglects how other foreign and domestic companies could pose similar data security risks and spread misinformation, thereby suggesting selective enforcement against certain speakers or viewpoints. Over-inclusively, it targets all ByteDance-owned applications without evidence that these pose any significant risk, covering applications irrespective of their data collection practices and only if they display content. This flawed scope suggests no direct link between the law’s restrictions and the stated security concerns, weakening its justification under strict scrutiny.

And in a way similar to the way a federal court in Montana treated that state’s TikTok ban last year, TikTok argued that the law would not even survive under a less-demanding “intermediate scrutiny” standard. This is the standard applied to content-neutral time, place, and manner restrictions. Petitioners assert that the law completely prohibits TikTok speech activities across all settings in the U.S., requiring the law to be narrowly tailored to a significant government interest and not overly restrict more speech than necessary. But Petitioners assert the government cannot show its concerns about data security and propaganda to be anything beyond speculative. Furthermore, the law does not leave open adequate alternative channels for communication, as it significantly prevents TikTok from reaching its audience. For these reasons, along with the availability of less restrictive measures, TikTok asserts the law fails intermediate scrutiny as well.

The last part of the First Amendment argument is that the law closes off an entire medium of expression, which Supreme Court precedent generally deems unreasonable. And the law is constitutionally overbroad, as it prohibits all speech on ByteDance-owned applications, regardless of content. This broad suppression encompasses substantial unconstitutional applications, far outweighing its legitimate scope, making it a clear example of overbreadth as defined in U.S. law.

Bill of Attainder:

TikTok also challenges the law as an unconstitutional bill of attainder, which is prohibited by Article I of the U.S. Constitution. This part of the Constitution forbids Congress from enacting legislation that imposes legislative punishment on specific individuals or groups without a judicial trial. Petitioners say that the law specifically targets them, imposing severe restrictions by forcing the divestment of their U.S. businesses and barring them from operating in their chosen fields, akin to punitive measures historically associated with bills of attainder. Unlike other entities that can avoid similar prohibitions through less restrictive measures, petitioners face unique, punitive burdens without meaningful opportunities for corrective action, thus violating the separation of powers by allowing legislative encroachment on judicial functions. Additionally, petitioners assert that the law disproportionately impacts them by not applying the same standards to similarly situated companies, making it effectively a punitive measure against a specific corporate group, thereby rendering it a bill of attainder.

Equal Protection:

Petitioners’ third constitutional argument is that the law violates their rights under the equal protection component of the Fifth Amendment’s Due Process Clause by discriminatorily targeting them without justification. Unlike other companies deemed “controlled by a foreign adversary,” petitioners are automatically classified as such without the due process of notice and a presidential determination supported by evidence, which other companies receive. This classification imposes undue burdens on their free speech rights by bypassing the necessary procedural safeguards that other entities are afforded, such as detailed justifications for national security concerns that enable judicial review. Additionally, the law exempts other similarly situated companies from certain restrictions if they offer applications for posting reviews, unjustifiably leaving petitioners without similar exemptions. This differential treatment lacks a rational basis, undermining the equal protection principles by imposing arbitrary and discriminatory restrictions on petitioners.

Takings Clause:

And petioners’ fourth constitutional argument is that the law effects an unlawful taking of private property without just compensation, in violation of the Fifth Amendment’s Takings Clause. The law mandates the shutdown of ByteDance’s U.S. operations or forces the sale of these assets under conditions that do not assure fair market value, severely undercutting their worth. This compulsion to sell or close down constitutes a per se taking, as it strips ByteDance of all economically beneficial uses of its property without just compensation. Furthermore, the law also represents a regulatory taking by significantly impacting the economic value of ByteDance’s investments and interfering with reasonable investment-backed expectations. The legislative action here goes beyond permissible bounds, triggering a need for regulatory scrutiny under established criteria such as economic impact, disruption of investment expectations, and the nature of government action. As such, petitioners argue that the law unjustly deprives them of their property rights without adequate compensation, necessitating prospective injunctive relief.

Petitioners seek a judicial declaration that the law is unconstitutional and an injunction against its enforcement, arguing that the government’s measures are excessively punitive and not grounded in adequately demonstrated national security risks.

May 7, 2024 First Amendment

TikTok’s constitutional arguments against the ban: a first look

tiktok constitution

As expected, TikTok has sued the federal government over the law enacted last month that requires ByteDance to sell off the app or be banned. It seeks a declaratory judgment that the law is unconstitutional and asks for an injunction barring the law’s enforcement. Here’s a first look at the constitutional issues TikTok is raising:

First Amendment: TikTok contends the Act restricts its right to free speech more severely than other media entities without sufficient justification, failing to consider less restrictive alternatives. The ban also violates the free speech rights of the app’s 170 million American users.
Bill of Attainder: TikTok asserts that the Act singles out TikTok for punitive measures typically reserved for judicial processes, without due process.
Equal Protection: Under the Fifth Amendment, TikTok argues the Act wrongfully applies stricter conditions on it than on other similar entities.
Takings Clause: TikTok claims the Act effects an unlawful taking of its property without just compensation, as it forces a sale or shutdown of its U.S. operations at undervalued prices.

More analysis to come.

May 7, 2024 Contracts

Software contract was not unconscionable

software contract

Software vendor sued its customer because the customer stopped paying the vendor during implementation. Customer filed a counterclaim asserting that the contract between the parties was unconscionable because, if enforced, it would provide a “gross disparity in the values exchanged.” In other words, customer would be required to pay, but vendor would not have to provide the software.

The court rejected customer’s argument and dismissed the claim of unconscionability. It observed that “[i]n essence, [customer’s] argument is that the Agreement is unconscionable because [vendor] did not perform on its promise to deliver software that could provide and perform certain functions. These are allegations supporting a claim for breach of contract, not unconscionability.”

PCS Software Inc. v. Dispatch Services, 2024 WL 1996126 (S.D. Texas, May 6, 2024)

See also:

April 24, 2024 First Amendment

TikTok is now officially among the walking dead

It’s now the law of the land that come nine months from now, if any of the app stores make TikTok available or if any hosting provider lends services enabling TikTok, those companies will face substantial penalties.That is, unless TikTok’s owner ByteDance sells off the company to an entity that is not located in or controlled by anyone from Russia, Iran, North Korea or China.The version of the law that the President signed on April 24, 2024 is pretty much the same as the one the House of Representatives passed in March 2024.

The only difference is that if in nine months there is a transaction underway to sell off TikTok, the President can grant one 90-day extension for the sale to be completed.

No doubt we’re going to see some serious free speech litigation over this. Stay tuned.

April 22, 2024 Artificial Intelligence, Litigation

Footnote in opinion warns counsel not to cite AI-generated fake cases again

A federal judge in Wisconsin suspected that one of the parties appearing before the court had used generative AI to write a brief, which resulted in a hallucinated case. The judge issued an opinion with this footnote:

Although it does not ultimately affect the Court’s analysis or disposition, Plaintiffs in their reply cite to a case that none of the Court’s staff were able to locate. ECF No. 32 at 5 (“Caserage Tech Corp. v. Caserage Labs, Inc., 972 F.3d 799, 803 (7th Cir. 1992) (The District Court correctly found the parties agreed to permit shareholder rights when one party stated to the other its understanding that a settlement agreement included shareholder rights, and the other party did not say anything to repudiate that understanding.).”). The citation goes to a case of a different name, from a different year, and from a different circuit. Court staff also could not locate the case by searching, either on Google or in legal databases, the case name provided in conjunction with the purported publication year. If this is, as the Court suspects, an instance of provision of falsified case authority derived from artificial intelligence, Plaintiffs’ counsel is on notice that any future instance of the presentation of nonexistent case authority will result in sanctions.

One must hope this friendly warning will be taken seriously.

Plumbers & Gasfitters Union Local No. 75 Health Fund v. Morris Plumbing, LLC, 2024 WL 1675010 (E.D. Wisconsin April 18, 2024)

April 15, 2024 Cybersquatting

Does renewing a domain name count as “registering” a domain name under the ACPA?

ACPA

The Anticybersquatting Consumer Protection Act (“ACPA”) is a federal law – part of the Lanham Act that deals with trademarks and unfair competition. It says that a person can be liable if he or she registers a domain name that contains another’s distinctive trademark with a bad faith intent to profit from that mark.

One issue that has arisen over the years is whether registration that can give rise to liability means only the first time the domain name is registered, or whether it applies to the re-registration, e.g., each year when the registration is up for renewal with the registrar. See this case from earlier this year where the court held that renewal was not registration.

The various federal circuits are split over the issue. At least the the Third, Fourth, and Eleventh Circuits have all concluded that the ordinary meaning of the word “registers” necessarily includes both the first registration and any subsequent re-registrations. The Ninth Circuit has held that Congress meant “registration” to refer only to the initial registration.

The Second Circuit does not appear to have weighed in on the question. But a recent district court sitting in the Second Circuit sided with the “re-registration is registration” take from the Third, Fourth and Eleventh Circuits.

In the case of We the Protesters, Inc. v. Sinyangwe, 2024 WL 1195417 (S.D.N.Y., March 20, 2024), counter-defendant registered the disputed domain name in 2015. The issue was whether the re-registration of the disputed domain name in 2023 was a registration of a distinctive mark done in bad faith. This passage of time was important because it gave the arguably descriptive mark MAPPING POLICE VIOLENCE enough time to become distinctive.

Concerning the word “registers” in the ACPA, the court applied its ordinary meaning, noting that it was not the province of the court to add words to statutes that Congress enacts. “Had Congress wished to restrict the word ‘registration’ as used in the ACPA to initial registrations, it surely knew how to do so.”

We the Protesters, Inc. v. Sinyangwe, 2024 WL 1195417 (S.D.N.Y., March 20, 2024)

See also:

April 11, 2024 Defamation, Section 230

Section 230 protected President Trump from defamation liability

TRUMP 230

Plaintiff sued the Trump campaign, some of the President’s advisors and several conservative media outlets asserting claims for defamation. Plaintiff – an employee of voting systems maker Dominion – claimed defendants slandered him by saying plaintiff had said he was going to make sure Trump would not win the 2020 election.

The Trump campaign had argued that two retweets – one by Donald Trump and another by his son Eric – could not form the basis for liability because Section 230 shielded the two from liability. The lower court rejected the Section 230 argument. But on review, the Colorado Court of Appeals held that Section 230 immunity should apply to these retweets.

Section 230 shields users of interactive computer services from liability arising from information provided by third parties. The facts of the case showed that both President Trump and Eric Trump simply retweeted a Gateway Pundit article and an One America Network article without adding any new defamatory content.

The court specifically rejected plaintiff’s argument that Section 230 immunity should not apply because of the Trump defendants’ knowledge that the retweeted information was defamatory. The court looked to a broader consensus of courts that hold such an idea is not woven into Section 230 imm.

The case supports the proposition that defendants could repost verbatim content that someone else generated – even with knowledge that the content is defamatory – and not face liability.

Coomer v. Donald J. Trump for President, Inc., — P.3d —, 2024 WL 1560462 (Colo. Ct. App. April 11, 2024)

April 10, 2024 Artificial Intelligence, Trademarks

Key Takeaways From the USPTO’s Guidance on AI Use

uspto ai

On April 10, 2024, the United States Patent and Trademark Office (“USPTO”) issued guidance to attorneys about using AI in matters before the USPTO. While there are no new rules implemented to address the use of AI, the guidance seeks to remind practitioners of the existing rules, inform of risks, and provide suggestions for mitigating those risks. The notice acknowledges that it is an effort to address AI considerations at the intersection of innovation, creativity and intellectual property, consistent with the President’s recent executive order that calls upon the federal government to enact and enforce protections against AI-related harms.

The guidance tends to address patent prosecution and examination more than trademark practice and prosecution, but there are still critically important ideas relevant to the practice of trademark law.

The USPTO takes a generally positive approach toward the use of AI, recognizing that tools using large language models can lower the barriers and costs for practicing before the USPTO and help practitioners serve clients better and more efficiently. But it recognizes potential downsides from misuse – some of which is not exclusive to intellectual property practice, e.g., using AI generated non-existent case citations in briefs filed before the USPTO and inadvertently disclosing confidential information via a prompt.

Key Reminders in the Guidance

The USPTO’s guidance reminds practitioners of some specific ways that they must adhere to USPTO rules and policies when using AI assistance in submissions – particularly because of the need for full, fair, and accurate disclosure and the protection of clients’ interests.

Candor and Good Faith: Practitioners involved in USPTO proceedings (including prosecution and matters such as oppositions and cancellation proceedings before the Trademark Trial and Appeal Board (TTAB)) are reminded of the duties of candor and good faith. This entails the disclosure of all material information known to be relevant to a matter. Though the guidance is patent-heavy in its examples (e.g., discussing communications with patent examiners), it is not limited to patent prosecution but applies to trademark prosecution as well. The guidance details the broader duty of candor and good faith, which prohibits fraudulent conduct and emphasizes the integrity of USPTO proceedings and the reliability of registration certificates issued.

Signature Requirements: The guidance outlines the signature requirement for correspondence with the USPTO, ensuring that documents drafted with AI assistance are reviewed and believed to be true by the signer.

Confidentiality: The confidentiality of client information is of key importance, with practitioners being required to prevent unauthorized disclosure, which could be exacerbated by the use of AI in drafting applications or conducting clearance searches.

International Practice: Foreign filing and compliance with export regulations are also highlighted, especially in the context of using AI for drafting applications or doing clearance searches. Again, while the posture in the guidance tends to be patent heavy, the guidance is relevant to trademark practitioners working with foreign associates and otherwise seeking protection of marks in other countries. Practitioners are reminded of their responsibilities to prevent improper data export.

USPTO Electronic Systems: The guidance further addresses the use of USPTO electronic systems, emphasizing that access is governed by terms and conditions to prevent unauthorized actions.

Staying Up-to-date: The guidance reiterates the duties owed to clients, including competent and diligent representation, stressing the need for practitioners to stay informed about the technologies they use in representing clients, including AI tools.

More Practical Guidance for Use of Tools

The guidance next moves to a discussion of particular use of AI tools in light of the nature of the practice and the rules of which readers have been reminded. Key takeaways in this second half of the guidance include the following:

Text creation:

Word processing tools have evolved to incorporate generative AI capabilities, enabling the automation of complex tasks such as responding to office actions. While the use of such AI-enhanced tools in preparing documents for submission to the USPTO is not prohibited or subject to mandatory disclosure, users are reminded to adhere to USPTO policies and their duties of candor and good faith towards the USPTO and their clients when employing these technologies.

Likely motivated by court cases that have gotten a lot of attention because lawyers used ChatGPT to generate fake case cites, the USPTO addressed the importance of human-review of AI generated content. All USPTO submissions, regardless of AI involvement in their drafting, must be signed by the presenting party, who attests to the truthfulness of the content and the adequacy of their inquiry into its accuracy. Human review is crucial to uphold the duty of candor and good faith, requiring the correction of any errors or omissions before submission. While there is no general duty to disclose AI’s use in drafting unless specifically asked, practitioners must ensure their submissions are legally sound and factually accurate and consult with their clients about the representation methods used.

More specifically, submissions to the TTAB and trademark applications that utilize AI tools require meticulous review to ensure accuracy and compliance with the applicable rules. This is vital for all documents, including evidence for trademark applications, responses to office actions, and legal briefs, to ensure they reflect genuine marketplace usage and are supported by factual evidence. Special attention must be given to avoid the inclusion of AI-generated specimens or evidence that misrepresents actual use or existence in commerce. Materials produced by AI that distort facts, include irrelevant content, or are unduly repetitive risk being deemed as submitted with improper intent, potentially leading to unnecessary delays or increased costs in the proceedings.

Filling out Forms:

AI tools can enhance the efficiency of filing documents with the USPTO by automating tasks such as form completion and document uploads. But users must ensure their use aligns with USPTO rules, particularly regarding signatures, which must be made by a person and not delegated to AI. Users are reminded that USPTO.gov accounts are limited to use by natural persons. AI systems cannot hold such accounts, emphasizing the importance of human oversight in submissions to ensure adherence to USPTO regulations and policies.

Automated Access to USPTO IT Systems:

The guidance notes that when utilizing AI tools to interact with USPTO IT systems, it is crucial to adhere to legal and regulatory requirements, ensuring authorized use only. Users must have proper authorization, such as being an applicant, registrant, or practitioner, to file documents or access information. AI systems cannot be considered “users” and thus are ineligible for USPTO.gov accounts. Individuals employing AI assistance must ensure the tool does not overstep access permissions, risking potential revocation of the applicable USPTO.gov account or face other legal risk for unauthorized access. Additionally, the USPTO advises against excessive data mining from USPTO databases with AI tools. The USPTO reminds readers that it provides bulk data products that could assist in these efforts.