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May 17, 2008 Computer Crime

What’s the story on the MySpace suicide indictment?

The media has given a lot of attention to the indictment by a federal grand jury in Los Angeles of the mother who allegedly set up a bogus MySpace account to harass one of her daughter’s 13 year old friends. That friend later hung herself in the closet, purportedly because of the harassment.

But what’s the basis of the indictment? It’s not for homicide, nor even harassment. It’s for criminal violation of the Computer Fraud and Abuse Act, 18 U.S.C. 1030, a subject which we’ve covered a number of times here on Internet Cases. In so many words, the defendant is accused of accessing MySpace’s servers without authorization, namely, in violation of the site’s terms of service.

Orin Kerr covers the governmnet’s theory in detail over at the Volokh Conspiracy, and also spells out why he thinks the case should fail.

May 16, 2008 Copyright, Uncategorized

Court reconsiders “making available” in file-sharing case

A U.S. District Court judge in Minnesota presiding over the case of Capitol Records Inc. v. Jammie Thomas has issued an Order breathing new life into the Defendant’s case.

Thomas was found liable for copyright infringement for activities over the KaZaA network, and had moved for either a new trial or lowering of damages on the ground that the amount of the jury award ($220,000 for 24 songs at $9,250 each) was excessive and a violation of due process. The Court’s Order however, stated that it was “contemplating granting a new trial for a different reason”, because Jury Instruction No. 15 which stated that that “[t]he act of making copyrighted sound recordings available for electronic distribution on a peer‐to‐peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown” was contrary to prevailing case law. Specifically, the Court noted that binding Eighth Circuit precedent from National Car Rental System, Inc. v. Computer Associates Int’l, Inc., required that “[i]nfringement of [the distribution right] requires an actual dissemination of either copies or phonorecords…”

The order notes that this precedent appears to require “actual dissemination” but that neither party brought this to the Court’s attention. The Order goes on to state that “at least one authority relied upon by Plaintiffs…Atlantic Recording Corp. v. Howell [blogged here], has since been vacated, and, on reconsideration, that court has now held that making sound recordings available for distribution is not actionable under the Copyright Act and that ‘actual distribution’ is required.” The Court invited amicus briefs on the issue, and will hear arguments in the case on July 1, 2008.

Case is: Civil File No. 06‐1497 (MJD/RLE)

May 13, 2008 Contracts

Court upholds forum selection clause in YouTube’s terms of use

Bowen v. YouTube, Inc., No. 08-5050, 2008 WL 1757578 (W.D.Wash. April 15, 2008)

Plaintiff Bowen, a registered YouTube user, sued YouTube over some harassing comments others had posted about her on the site, as well as for some sort of dissatisfaction about misappropriation of her intellectual property rights. (The opinion is not clear about exactly what Bowen’s claims were.)

YouTube moved to dismiss the complaint for, among other things, improper venue, invoking a provision of the site’s Terms of Use which read:

You agree that: (i) the YouTube Website shall be deemed solely based in California; and (ii) the YouTube Website shall be deemed a passive website that does not give rise to personal jurisdiction over YouTube, either specific or general, in jurisdictions other than California. These Terms of Service shall be governed by the internal substantive laws of the State of California, without respect to its conflict of laws principles. Any claim or dispute between you and YouTube that arises in whole or in part from the YouTube Website shall be decided exclusively by a court of competent jurisdiction located in San Mateo County, California.

Looking to the cases of Pebble Beach Co. v. Caddy, 453 F.3d 1151 (9th Cir.2006), Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1020 (9th Cir.2000) and Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 418-20 (9th Cir.1997), the court observed that “for the proposition that when a ‘website advertiser [does] nothing other than register a domain name and post an essentially passive website’ and nothing else is done ‘to encourage residents of the forum state,’ there is no personal jurisdiction.”

The court found that Bowen’s allegations arose from her use of YouTube, and no conduct was alleged to provide the “something more” necessary for rendering YouTube subject to jurisdiction in the Western District of Washington.

May 9, 2008 Trademarks, Uncategorized

A look at some keyword cases and a PPC class action suit

Court orders use of “negative keywords”

Orion Bancorp, Inc. v. Orion Residential Finance, LLC, No. 07-1753, 2008 WL 816794 (M.D. Fla., March 25, 2008)

Plaintiff Orion Bancorp, Inc. is a bank operating under the ORION name and registered trademark since 2002. Defendant Orion Residential Finance, LLC provides financial and real estate related services, and used the term “Orion” in interstate advertising and in the domain name “orionresidentialfinance.com” without Orion Bancorp’s authorization or consent.

The court entered an agreed permanent injunction, ordering Orion Residential Finance to refrain from any and all use of the term “Orion”. The defendant was prohibited from purchasing the word “Orion” as a keyword to trigger sponsored advertising. Moreover, it was required to activate “Orion” as a “negative keyword” (specifically preventing Orion Residential Finance’s ads from appearing when one searches using the terms “Orion”).

N.D. Cal.: Competitor’s trademark as keyword causes initial interest confusion

Storus Corp. v. Aroa Marketing Inc., 2008 WL 449835 (N.D. Cal. Feb. 15, 2008).

Plaintiff Storus Corporation (“Storus”) sued Defendants Aroa Marketing, Inc. (“Aroa”) and Skymall, Inc. (“Skymall”) for trademark infringement based on the defendants’ use of Storus’ mark “Smart Money Clip” to trigger sponsored listings. Storus sells its patented Smart Money Clip, and Aroa sold competing products under its Steinhausen mark which were marketed as the “Smart Money Clip”. Aroa tried unsuccessfully to argue that Storus’ mark was a descriptive term not entitled to protection (but offered no evidence of lack of secondary meaning, i.e., it did not prove consumers do not think of Storus when they see the Smart Money Clip mark).

The Court found that Aroa’s use of Storus’ mark in the sponsored ad caused initial interest confusion. In 11 months, the ad was displayed 36,164 times in response to a search for “smart money clip,” resulting in 1,374 clicks on Aroa’s ad. The court found that the marks were identical, were used on the same type of product, and were marketed via the Internet. (Even though Aroa’s mark appeared in the ad, Storus’ mark appeared first, was larger, and was underlined).

11th Circuit: Competitor’s Trademark as Keyword Likely to Cause Confusion

North American Medical Corp. v. Axiom Worldwide, Inc., 2008 WL 918411 (11th Cir. April 7, 2008)

Eric Goldman has a thorough report on his Technology & Marketing Law Blog of a case where the defendant’s use of the plaintiff’s ACCU-SPINA and IDD THERAPY trademarks in metatags constituted use in commerce, and thus trademark infringement where a Google search listed the defendant as the second most relevant organic search result (below the plaintiff). In a footnote, the court did hint that if the defendant’s website included an explicit comparative advertisement, things might have come out differently.

Possible Class Action Suit against Google and PPC Groups

Finally, Sarah Bird reports on SEOmoz.org that a class action trademark and ACPA lawsuit against Google and other domain parking agencies will move ahead. (Goolge’s adsense program contributes to the pay-per-click links on “parked”, i.e., recently acquired, or tasted domain names). The Plaintiff’s are seeking to hold them liable for these PPC links which may offer competing goods. Though for Google’s part, it notes on its FAQ that it is not responsible for the domain names on which its adsense ads appear, it seems disingenuous to suggest that their algorithms are not behind the PPC links that appear. Google’s method for trademark owners to object to sponsored links places the burden for policing this practice on mark owners.

April 30, 2008 Copyright, Uncategorized

Distribution under the Copyright Act requires more than merely making copies available

Atlantic Records v. Howell, No. 06-2076 (D. Az. April 29, 2008)

Several record companies, including Atlantic Records, sued Pamela and Jeffrey Howell after the record companies learned, through their private investigator, that the Howells used KaZaA to share files. After discovery in the matter closed, the record companies moved for summary judgment, asserting that the Howells infringed the copyright in the sound recordings merely by making them available for the public to copy. The court found in favor of the Howells and denied the motion.

The Copyright Act provides that an owner of a copyright enjoys certain exclusive rights in connection with the work including, among other things, the exclusive right to distribute copies of the work. The record companies case was a bit problematic on this point, as the only evidence of record was that the allegedly infringed files were in KaZaA’s shared folder. There was no indication that actual copies of the files had been transferred.

In support of the argument that making the sound recordings available was an unauthorized distribution, the record companies relied heavily on Hotaling v. Church of Jesus Christ of Latter-Day Saints, 188 F.3d 199 (4th Cir. 1997). In Hotaling, the court held that a library which created a number of unauthorized copies of a work and made those copies available in its various branches could be liable for infringement, despite the absence of evidence that any member of the public had viewed the unauthorized copies.

The Hotaling decision was based largely on policy grounds. The library kept no records of who had viewed the unauthorized copies, thus the plaintiff could not provide direct evidence that the works were distributed to the public. The court opined it would be against sound policy for defendants to avoid liability through the omission of record keeping.

The court in this case rejected and criticized the Hotaling decision, holding that evidence of making a copy available “only shows that [a] defendant attempted to distribute the copy, and there is no basis for attempt liability in the statute, no matter how desirable such liability may be as a matter of policy.”

The recording companies argued that although the term “distribution” is not explicitly defined in the Copyright Act, it is synonymous with the term “publication,” which the statute defines to include “[t]he offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display.” 17 U.S.C. § 101. In other words, if the Howells offered to distribute the copyrighted works to the public for purposes of further distribution, they distributed the works within the meaning of the Copyright Act.

But the court looked to the plain meaning of statutory provision granting an exclusive right to distribute, which requires an identifiable copy of the work to change hands in one of a number of prescribed ways (e.g., sale or lease) for there to be a distribution. The court found it untenable that the definition of a different word in a different section of the statute was meant to expand the meaning of “distribution” and liability to include offers to distribute.

April 29, 2008 Copyright

A guide to registering the copyright in your blog

The required procedures for registering claims of copyright in the United States Copyright Office don’t match up well with the practicalities of modern web publishing. It would be almost a full time job to file new copyright applications each time a blog is updated, let alone prohibitively expensive. And what on earth forms are you supposed to fill out? How do you send in a copy of your blog to claim copyright registration in it?

Sarah Bird, Esquire over at SEOmoz.org has written an excellent little article titled Copyright: Sample Forms and Strategies for Registering your Online Content which helps cut through the confusion and anachronisms you’ll face when sending materials to the Copyright Office. She’s a terrific writer (I wish I could write so clearly), and does a great job outlining a subject that is needlessly confounding.

April 26, 2008 DMCA, Evidence, Uncategorized

Emails held sufficient to amend employment contracts in NY

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

The New York Court of Appeals, 1st Division recently upheld a lower court ruling that a series of “signed” emails is a sufficient writing to modify a contract.

Plaintiff Stevens sold his business (L-S) to Defendant Publicis under two contracts: a stock-purchase agreement including an initial up-front payment, and an employment contract whereby Plaintiff would continue as Chairman and CEO of the new company (PDNY) for three years with additional contingent fees based on earnings. Shortly after the acquisition, problems arose, including loss of a major client and failure to meet revenue and profit targets. Approximately halfway into the three-year term, Plaintiff was removed as CEO and presented 3 options for continued employment. The then-acting CEO of PDNY (Bloom) exchanged a series of emails with Plaintiff. The culmination of this exchange was an email from Bloom on behalf of PDNY describing his understanding of the parties’ terms regarding Plaintiff’s new role at PDNY that Plaintiff’s time would be allocated 70% towards new business development, 20% in maintaining former L-S clients, and 10% devoted to management/operations of PDNY.

Plaintiff responded the next day by email stating: “…I want to thank you again for helping me…That being said, I accept your proposal with total enthusiasm and excitement…” Bloom for PDNY replied the same day: “I am thrilled with your decision…all of us will continue to work in the spirit of partnership to achieve our mutual goal.”

The bottom of each email had the typed name of the sender.

The lower court held, and the Court of Appeals sustained that the parties had agreed in writing (by their emails) to modify Plaintiff’s duties under his employment contract, specifically because both sides expressed their unqualified acceptance of the modification to the contract. (Bloom’s email set forth the terms of the proposed contractual modification, Plaintiff accepted those terms by his email, and Bloom’s reply memorialized that acceptance). Plaintiff also confirmed his acceptance of the modified contract terms in another email to PDNY’s COO.

The Court of Appeals held that Plaintiff’s (and Bloom’s) emails “constitute ‘signed writings’ within the meaning of the statute of frauds, since plaintiff’s name at the end of his e-mail signified his intent to authenticate the contents.” Moreover, the signed writings (the emails) satisfied a requirement of the original employment contract that any modifications must be signed by all parties, i.e., the several emails served as counter-signatures. The same result may not have been reached in a different state, but at least in NY, “signed” emails can be valid for contract purposes.

Case is: Stevens v. Publicis, S.A., 602716/03.

April 22, 2008 Right of Publicity

Borat movie plaintiff not successful in image appropriation case

[Brian Beckham is a contributor to Internet Cases and can be contacted at brian.beckham [at] gmail dot com.]

Lemerond v. 20th Century Fox, No. 07-4635, 2008 WL 918579 (S.D.N.Y. March 31, 2008)

In the movie Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, the fictional Kazakh character (alter ego of comedian Sacha Cohen) journeys to America — all the while videotaping his interactions with unsuspecting people. One scene shows Borat greeting plaintiff Lemerond (“Hello nice to meet you. I’m new in town. My name a Borat”), then promptly running off in the opposite direction screaming (“Get away! What are you doing?”). (Those who have not seen the movie should note that the text does not capture the awkwardness of the exchange). The 13-second clip is shown twice in the full-length film, as well as in a movie trailer (but in the trailer the plaintiff’s face is blurred).

Plaintiff Lemerond filed suit under New York Civil Rights Law section 51 and New York common law for the unlawful use of his image. Defendant 20th Century Fox filed a 12(b)(6) motion to dismiss the suit for failure to state a claim. The court granted the motion.

Since New York does not recognize a common law right of privacy (the related right of publicity, like a trademark must be used in commerce to identify the source of goods or services — celebrities would normally enjoy such a right), the court decided the plaintiff’s suit on the basis of whether his likeness was used for “advertising purposes or purposes of the trade” without written permission. The most significant question was whether his appearance in the clips and trailer was for advertising purposes.

The court offered what might be considered a strained reading of the New York statute. It first cited to case law that held the statute was limited to “nonconsensual commercial appropriations of the name, portrait, or likeness of a living person.” It then pointed to another case which held that the nonconsensual use of a person’s image to depict “newsworthy events or matters of public interest” is protected by the statute. The court then quoted yet another case stating that this newsworthiness exception broadly covered “social trends, or any subject of public interest” and went on to observe that “public interest” and “newsworthy” have been defined in the most liberal and far reaching terms. Accordingly, the court found that Borat’s antics fit “squarely” within the newsworthiness / social commentary exception of the New York statute, stating that

[T]he movie employs as its chief medium a brand of humor that appeals to the most childish and vulgar in its viewers. As its core, however, Borat attempts an ironic commentary of ‘modern’ American culture…challeng[ing] its viewers to confront, not only the bizarre and offensive Borat character himself, but the equally bizarre and offensive reactions he elicits from ‘average’ Americans.

In a footnote, the court approvingly cited a 1970 case in pointing out that “the mere fact that defendants are spurred by the profit motive and engaged in the commercial exploitation of [a] motion picture does not negate their right to depict a matter of public interest or to advertise the picture by the showing of a ‘trailer’.”

Perhaps an open question is when, if ever, a New York news reporter or movie producer would need permission to use a non-celebrity’s image in his or her reporting, movie, or advertising, i.e., on a subject not necessarily in the public interest.

April 18, 2008 Copyright, DMCA

The vexing linkage between access and protection in DMCA anticircumvention analysis

A couple of days ago David Donoghue wrote about the recent case of Nordstrom Consulting, Inc. v. M&S Technologies, Inc., No. 06-3234, 2008 WL 623660 (N.D. Ill. March 4, 2008). Dave’s post gives a very thorough treatment of all aspects of the case, which involve primarily allegations of infringement of the copyright in software.

The case also involved a claim of circumvention under the Digital Millennium Copyright Act, at 17 U.S.C. 1201(a). The court granted the defendants’ summary judgment motion on this claim.

The dispute arose from a rather typical set of facts. The parties had collaborated on the development of some software. Along the way the principal author of the software became dissatisfied and parted ways. Litigation ensued over the parties’ ownership and use of the source code.

Before plaintiff Nordstrom officially severed ties, he went on vacation. While he was gone, one of the defendant’s employees (Butler) sent Nordstrom an email saying that Butler needed access to the source code which was stored on a computer there in the office, in order to help out a customer. Nordstrom didn’t respond for several days, and in the meantime, Butler disabled the BIOS password for the computer.

Nordstrom sued under Section 1201 over this disabling of the password. The court relied heavily on the Federal Circuit’s decision in Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178 (Fed. Cir. 2004) to conclude that there was no violation of Section 1201’s anticircumvention provisions.

The Chamberlain case draws a necessary connection between circumvention and infringement. And the presence of this connection is the vexing part of the analysis. A quick reading of Section 1201 does not reveal the link.

But the Chamberlain court held that Section 1201’s prohibition on circumvention does not give rise to a new property interest, only a new cause of action, one that goes after circumvention of methods controlling access to protected works. One can’t pursue a defendant just for circumvention in a vacuum, so to speak. The circumvention has to bear some “reasonable relationship to the protections that the Copyright Act otherwise affords copyright owners.” Chamberlain, 381 F.3d at 1202. In other words, without infringement or the facilitation of infringement arising from the cirumvention, a cause of action under 1201 does not arise. The linkage is one between access and protection.

The holding of the Nordstrom case as to the DMCA claim picks up on this link between access and protection. Summary judgment on the circumvention claim was proper because the plaintiff could not show that Butler’s disabling of the BIOS password protection on the computer storing the source code enabled any infringement. The evidence before the court was that Butler accessed the code to fix a problem on behalf of an authorized licensee of the software. Because of the license, there could be no infringement. Without any connection to infringement, under the teaching of Chamberlain, a cause of action for circumvention could not be sustained.

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