Attorney Evan Brown

October 10, 2006 Trademarks

A review of the Rescuecom case: AdWords trademark infringement suit dismissed

Plaintiff Rescuecom, a computer services business, filed suit against Google, claiming that the search engine infringed its trademark by suggesting and selling the registered mark RESCUECOM as a keyword to competitors advertising through Google’s AdWords program. Google moved to dismiss for failure to state a claim, arguing that Rescuecom had not adequately alleged that Google’s sale of the keyword and triggering of ads was an actionable trademark use under the Lanham Act, 15 U.S.C. 1051 et seq.

The court agreed with Google and dismissed the case.

The court first looked to the Lanham Act for the elements of a trademark infringement claim. Under the Act, infringement occurs when (1) a defendant uses a plaintiff’s valid and protectible mark in commerce, without the plaintiff’s consent, in connection with the sale or advertising of goods or services, and (2) that use is likely to cause confusion as to the source of those goods or services.

The court observed that the Second Circuit has not decided whether the sale of a trademarked keyword for advertising purposes constitutes trademark infringement. It noted, however, eight recent decisions indicating a split among district courts over the issue of trademark use in the sponsored listing context.

Rescuecom offered four arguments as to why Google’s suggestion and sale of RESCUECOM as a keyword was trademark “use” under the Lanham Act. First, Google was free-riding on the good will associated with the trademark. Second, Google lured searchers away from the Rescuecom website. Third, the keyword’s use by competitors altered search results, causing confusion. Fourth, Google used “Rescuecom” internally as a keyword to trigger competitor’s advertisements.

The court addressed Rescuecom’s good will argument first, and found that Rescuecom’s allegations could not support improper trademark use by Google. Although the allegation of use of the mark “in commerce” could be supported, the court gave a nod to the decisions in 1-800 Contacts v. WhenU, 414 F.3d 400 (2d Cir. 2005) and Merck v. Mediplan Health Consulting, 425 F.Supp.2d 402 (S.D.N.Y. 2006) to hold the subtle point that commercial use is not the same as “use in commerce” for trademark purposes. In the absence of an allegation of an improper trademark use, there could be no violation of the Lanham Act.

In addressing Rescuecom’s next argument – that Google lured searchers away from Rescuecom’s website – the court rejected the faulty premise that a trademark use occurs when a searcher clicks a sponsored link triggered by “Rescuecom” but the user is not led to the Rescuecom site. Critical to the court’s analysis in rejecting this argument was that Rescuecom had not alleged that any of the sponsored links, besides those leading to Rescuecom’s own site, displayed the RESCUECOM mark.

The court also rejected Rescuecom’s next argument, that Google caused confusion via altered search results. Similar to its analysis for the previous argument, the court found that because searchers could still find Rescuecom’s website in the search results, and because none of the sponsored links displayed Rescuecom’s trademark, there was no infringing use by Google.

Rescuecom’s final argument, namely, that Google’s internal use of the mark to trigger ads was infringing also failed. Where Google did not place the RESCUECOM mark on any “goods, containers, displays, or advertisements” and where Google’s “use” of the mark was not visible to the public, there was no cognizable trademark use under the Lanham Act.

Because Rescuecom had not adequately alleged that Google’s actions constituted a trademark “use,” the court dismissed the federal trademark infringement, false designation of origin and dilution claims. The court refused to exercise supplemental jurisdiction over the remaining state law claims.

Rescuecom Corp. v. Google, Inc., 2006 WL 2811711 (N.D.N.Y., Sept. 28, 2006).

October 5, 2006 Miscellaneous

A review of the Target ADA case: California federal court denies motion to dismiss lawsuit over website accessibility

In the case of National Federation of the Blind v. Target Corporation, the U.S. District Court for the Northern District of California has held that it will allow in part, and dismiss in part, a lawsuit brought against Target by an advocacy group claiming that Target’s website violates the Americans with Disabilities Act (ADA).

Plaintiffs, national and state advocacy groups for the blind, claimed that defendant’s website (Target.com) is inaccessible to the blind, and therefore violates the ADA and similar California state laws. The plaintiffs have sought declaratory, injunctive, and monetary relief. Because Target.com allows a customer to perform functions related to Target stores, the plaintiffs argued, and because the website is not fully accessible to the blind, those customers are denied full and equal access and enjoyment of Target stores.

Target asked the court to dismiss the lawsuit for failure to state a claim, and presented three arguments in support: First, it argued that the ADA only prohibits discrimination in physical spaces. Second, it argued that any off-site discrimination must still deny access to a physical space. Third, Target argued that the website provides auxiliary aid in conformity with the ADA, and therefore no violation exists.

The court looked first to Title III of the ADA, which prevents discrimination against disabled persons in places of public accommodation. Title III states in part that “[n]o individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, [and] services … of any place of public accommodation…” 42 U.S.C. 12182(a). In rejecting the defendant’s first argument, the court emphasizes that the ADA applies to services of a place of public accommodation, and that the statute’s application is not limited to services offered in a place of public accommodation. This clear language indicates that the ADA applies to more than discrimination in physical spaces only.

The court next addressed defendant’s second argument, that off-site discrimination must deny access to a physical space to be considered an ADA violation. The court found this argument unpersuasive because the ADA prohibits non-physical barriers that keep a disabled person from enjoying the defendant’s goods and services. The court noted that because Target.com is integrated heavily with defendant’s stores, and because the website offers services and goods available in defendant’s stores, the website operates as a gateway to the store. Because the website is a gateway to a place of public accommodation, and because blind people cannot enjoy the services of the website, defendant may be violating the ADA.

The court then addressed defendant’s third assertion, that a satisfactory auxiliary aid is being provided. Defendant claims that all goods and services available on the website are also available on the telephone, and this satisfies the ADA’s auxiliary aid exception. The court rejected this argument by noting that this exception is an affirmative defense. Because the lawsuit was at the pre-trial motion phase, this affirmative defense was pleaded prematurely.

The court finished its discussion of defendant’s motion to dismiss by agreeing that the plaintiff failed to state a claim under the ADA inasmuch as the goods and services on Target.com are unconnected to Target’s brick-and-mortar stores. In a footnote, however, the court commented on the future of plaintiff’s ADA claim: “The website is a means to gain access to the store and it is ironic that Target, through its merchandising efforts on the one hand, seeks to reach greater numbers of customers and enlarge its customer-base, while on the other hand it seeks to escape the requirements of the ADA.”

National Federation of the Blind v. Target Corporation, 2006 WL 2578282 (N.D. Cal., September 6, 2006).

September 26, 2006 Trademarks

Trademark dilution law about to change

Some time in the next few days President Bush is expected to sign the Trademark Dilution Revision Act of 2006. [Full text of the Act] Among other things, the Act essentially overrules a significant portion of the Supreme Court’s 2003 Moseley decision, which held that in order to be successful, a dilution plaintiff must allege and prove actual dilution of its mark. The Act provides that a plaintiff must show a mere likelihood of dilution to sustain a claim.

Inasmuch as lowering the standard to “likelihood of dilution” may assist plaintiffs with part of their case, the Act makes another aspect more difficult. Certain circuits (including the Seventh) currently hold that a plaintiff need only show that its mark is well-known among a defined segment of the population (e.g., Star Trek fans) in order to be famous for trademark dilution purposes. This is known as “niche market fame.” The Act does away with niche market fame by providing that “a mark is famous if 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.”

Hat tip to John Welch for picking up on this legislation.

September 22, 2006 Personal Jurisdiction

Michigan federal court exercises personal jurisdiction over out-of-state eBay seller

In the case of Dedvukaj v. Maloney, the U.S. District Court for the Eastern District of Michigan has held that it can exercise personal jurisdiction over a New York eBay seller accused of breach of contract, fraud and misrepresentation in connection with an auction that went sour.

Plaintiff Maloney, a Michigan resident, won two eBay auctions for paintings from defendant Dedvukaj, a seller based in Syracuse, New York. The auctions advertised the paintings as being originals, and the defendant apparently verified the authenticity of the paintings over the phone. After the auctions closed, the plaintiff sought to collect the art works, but the defendant never shipped them. (There appears to be a dispute over whether the defendant was selling original paintings or copies.) The plaintiff refused a refund and demanded either the original paintings or their fair market value.

The plaintiff filed a lawsuit in his home state of Michigan alleging breach of contract, fraud and misrepresentation. The defendant moved to dismiss for lack of personal jurisdiction, or alternatively to transfer venue to the Northern District of New York.

The defendant argued that the Michigan court did not have personal jurisdiction over him because he sold items through eBay, and bids are “random” and “fortuitous,” as sellers cannot control who bids on a given item. The defendant also argued that because he did not target or specifically market his auctions to Michigan residents, his contacts were too attenuated for the court to find personal jurisdiction.

The court first looked to whether the Michigan long arm statute would support the exercise of personal jurisdiction. It held that by communicating with the Michigan plaintiff by telephone and e-mail, accepting the winning bids, and confirming shipping charges to Michigan, the defendant transacted business in Michigan. Because the dispute arose out of that business transaction, the defendant satisfied the requirements of the long arm statute.

The court next looked to whether the exercise of personal jurisdiction would pass muster under a constitutional due process analysis. It discussed a number of analogous cases, eventually holding that the defendant’s auction clearly supported personal jurisdiction in Michigan through purposeful availment.

For example, in First Tennessee Nat. Corp. v. Horizon Nat. Bank a court found personal jurisdiction existed where the defendant’s website stated the bank could lend in “[all] 50 States.” 225 F.Supp.2d 816, 820-21. In another case, a court found purposeful availment where a website stated it would do business “for any parent in any state,” specifically including Michigan. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 891 (2002).

Using these cases as precedent, the court noted that the defendant’s auction listing stated he would ship anywhere in the United States. Additionally, defendant listed a toll-free telephone number and e-mail address in the auction. In part because the defendant did not limit buyers from Michigan from participating in his auction, and because he displayed a willingness to communicate with buyers from any state, the court found that the defendant had purposefully availed himself to the benefits of conducting business in Michigan.

Some other factors the court considered in finding purposeful availment: the number of e-mails and phone calls between the plaintiff and the defendant, the intentional and misleading nature of the communications between the parties, and the defendant’s acceptance of payment from Michigan.

Accordingly, the court denied the defendant’s motion to dismiss for lack of personal jurisdiction, and also denied the alternate motion for transfer of venue. It presented an essential fact underlying the analysis of personal jurisdiction arising from web-based transactions: “Sellers cannot expect to avail themselves of the benefits of the internet-created world market that they purposefully exploit and profit from without accepting the concomitant legal responsibilities that such an expanded market may bring with it.”

Dedvukaj v. Maloney, 2006 WL 2520347 (E.D. Mich., August 31, 2006)

Introducing Greg Smith, contributor to InternetCases.com

Gregory Smith, a second year law student at Chicago-Kent College of Law, has agreed to be a contributor to InternetCases.com. Greg has a strong background and interest in both law and technology, which is demonstrated by his creation of the law blog aggregator Juris Novus. He also created the popular bicycling social networking site velospace. Before starting law school, Greg received a bachelor’s degree in network technology from DePaul University. He has worked for the Illinois Attorney General’s High Tech Crimes Bureau as a law clerk, and is an avid bicyclist and gin rummy player.

Greg’s ability and enthusiasm is sure to add to the quality of material you can find at InternetCases.com. Check out his first contribution — a summary of the recent case of Dedvukaj v. Maloney.

Contact Greg by e-mail at greg [at] metanovus dot com.

And by the way, I’ve given myself a bit of a promotion as well. I will now call myself the “Editor & Publisher” of this site.

September 6, 2006 Cybersquatting

Summary judgment denied in a case of creative typosquatting

In the case of Lands’ End, Inc. v. Remy, the defendant website owners were accused of crafting a clever scheme to get some extra commissions from their affiliate relationship with landsend.com. It looks like the scheme has backfired, however, as Lands’ End’s claim against the defendants under the Anticybersquatting Consumer Protection Act, [15 U.S.C. §1125(d)] (“ACPA”) has survived a summary judgment motion and the case is heading for trial.

Lands’ End operates an affiliate program that allows owners of approved websites to put up links to landsend.com. If a visitor to one of those approved websites clicks on the link and ends up buying something at the Lands’ End site, the affiliate website owner gets a 5% commission. The defendants in this case signed their websites up to be affiliates, and were approved.

In the process of signing up to become affiliates, however, the defendants only disclosed the URLs of their legitimate websites, e.g., savingsfinder.com. They did not tell Lands’ End that they also owned other domains like lnadsend.com and landswnd.com.

The defendants set up these other domain names so that if an Internet user accidentally typed one of them into a web browser, he or she would be automatically and invisibly redirected to the Lands’ End site. If one of those typosquatting victims purchased something at landsend.com, the defendants would pick up a commission.

The redirect only worked the first time a user would mistype the domain name. Perhaps to avoid detection, the defendants set up the redirect so that if a user typed the wrong domain name again, a 404 error would appear. (“Oh, I guess it was just a fluke.”)

After it noticed the defendants’ setup, Lands’ End filed suit alleging, among other things, violation of the ACPA. The defendants moved for summary judgment, arguing that there was no showing of bad faith. After all, the defendants argued, their scheme had sent visitors to the Lands’ End site, not diverted them away.

The court rejected the defendants’ argument and denied the motion for summary judgment as to the ACPA claim. It held that Lands’ End adduced substantial evidence to show that the defendants exploited the Lands’ End trademark to get commissions to which they were not entitled. Accordingly, the question of bad faith should ultimately be left up to the finder of fact.

Lands’ End, Inc. v. Remy, — F.Supp.2d —-, 2006 WL 2521321 (W.D. Wis., September 1, 2006).

This entry originally posted by Evan Brown at InternetCases.com.

August 30, 2006 Privacy

No reasonable expectation of privacy in files on work computer

Defendant Ziegler was arrested after his employer’s ISP tipped off the FBI that he was accessing some illegal pornographic websites while at work. At the trial court level, the defendant moved to suppress evidence obtained from his office computer, arguing that it had been searched in violation of his Fourth Amendment rights.

The court denied the motion to suppress, and the defendant sought review. On appeal, the Ninth Circuit affirmed. It held that given the circumstances, the defendant did not have a reasonable expectation of privacy in his work computer or the files contained on its hard drive.

Although it was undisputed that the defendant had a subjective expectation of privacy in the contents of the hard drive — the computer was password protected and kept in a locked office — the relevant inquiry was whether he had an objectively reasonable expectation of privacy. For a number of reasons, the Ninth Circuit held that such an expectation had been defeated.

Most significantly, the employer’s IT department had a policy of routinely monitoring the traffic crossing the company’s firewall, and had full administrative access to all computers in the facility. The defendant did not demonstrate that he was unaware of that monitoring policy. (A defendant bears the burden of showing a reasonable expectation of privacy. U.S. v. Caymen, 404 F.3d 1196 (9th Cir. 2005)).

The court looked to a number of other cases to support its conclusion. It readily endorsed the district court’s reliance on U.S. v. Simons, 206 F.3d 392 (4th Cir. 2000), a case with similar facts. It also embraced the holding of a California case called TBG Ins. Serv. Corp. v. Superior Court, 117 Cal.Rptr.2d 155 (Cal. Ct. App. 2002), to note that “community norms” tolerate employee monitoring of computer activity, so that companies can, for example, avoid liability for permitting a hostile work environment. These social norms “effectively diminish the employee’s reasonable expectation of privacy.”

U.S. v. Ziegler, — F.3d —-, 2006 WL 2255688 (9th Cir., August 8, 2006).

August 25, 2006 Copyright, Electronic Discovery, Litigation

Evidence-destroying defendant severely sanctioned in P2P file-sharing case

In the case of Arista Records v. Tschirhart, the U.S. District Court for the Western District of Texas has shown little mercy on a defendant accused by record companies of illegal file-sharing.

Knowing that a court order was in place requiring her to turn over her hard drive to be copied, the defendant allegedly used “wiping” software in an attempt to destroy all evidence of her illegal P2P file sharing. In response, the plaintiff record companies moved, pursuant to Fed. R. Civ. P. 37(b), for the most severe form of sanctions against the defendant – entry of default against her. The court granted the plaintiffs’ motion, and provided them with 30 days to submit a proposed order spelling out their damages.

Given that the record companies’ expert opined that the defendant had downloaded over 200 sound recordings during 2005, those requested damages will probably be substantial. Statutory damages under the Copyright Act can go as high as $150,000 per work infringed, in the most egregious cases.

In reaching its decision to enter default against the defendant, the court exercised its inherent power to do so, making a note of its obligation to act with “restraint and discretion.” It found that the defendant had acted in bad faith. That bad faith was exacerbated – and the default was further warranted – by the fact that the defendant herself was responsible for the destruction of evidence, that the deletion of the files destroyed the strongest evidence relevant to the plaintiff’s infringement claims, and that less drastic sanctions would not be appropriate.

Not only was the sanction intended to dissuade the plaintiff from destroying evidence in the future, it was intended to make an example out of her. Merely awarding the plaintiffs their attorney’s fees or giving the jury an adverse inference instruction at trial would not have been enough to remedy the situation. Given the defendant’s “blatant contempt” for the court and a “fundamental disregard for the judicial process,” only default would be an adequate punishment and deterrent to others considering similar conduct.

[Hat tip to Techdirt for posting on this case.]

Arista Records, LLC, v. Tschirhart, No. 05-372 (W.D. Tex., August 23, 2006).

August 24, 2006 Anonymity

Federal court adopts Cahill standard for unmasking anonymous defendants

Plaintiffs seeking to unmask an anonymous defendant will often need the court’s assistance in the discovery process. Most ISPs or website owners will not turn over the name and contact information associated with a particular IP address without having received a subpoena or a court order requiring it to do so.

In federal litigation, the need to serve a subpoena so early on in the case puts a plaintiff in a Catch-22 situation: Rule 26(d) says that discovery cannot occur without the parties having first conferred as required by Rule 26(f). But how can the parties confer if the plaintiff cannot first conduct some discovery to find out who the defendants are? The process of asking the court for leave to serve subpoenas before the Rule 26(f) conference can set the stage for an interesting balancing act.

Courts have recognized the conflicting interests at stake. There is a well-established constitutional right to speak anonymously. McIntyre v. Ohio Elections Com’n., 514 U.S. 334 (1995). But that right is not absolute. An aggreived plaintiff has the right to seek redress from one who has done harm by, for example, defaming the plaintiff online. A court that indiscriminately allows an anonymous speaker to be identified without a sufficient showing that the complained-of speech is prohibited runs the risk of violating the anonymous poster’s First Amendment right.

In light of the conflicting interests at stake, courts have implemented varying approaches to ensure that those interests are properly balanced. The cases establish a certain threshold of a showing that a plaintiff has to make before discovery can occur. For example, in the case of Columbia Ins. Co. v. Seescandy.com, 185 F.R.D. 573 (N.D. Cal. 1999), a trademark infringement plaintiff was required to support its claim with facts sufficient to defeat a motion to dismiss before it could obtain the identity of an anonymous defendant. A New Jersey state court in a case called Dendrite Int’l, Inc. v. Doe, 775 A.2d 756 (N.J. Super. Ct., App. Div. 2001), applied the same standard.

Other courts have set the bar higher. In Doe v. Cahill, 884 A.2d 451, (Del. 2005), the Delaware Supreme Court held that an anonymous blog commenter could not be identified in a defamation suit where the plaintiff had not come forth with evidence to support a motion for summary judgment. In the recent case of Best Western v. Doe, the U.S. District Court for the District of Arizona adopted the Cahill standard.

In the Best Western case, the plaintiff filed suit against several John Doe defendants alleging a number of causes of action, including breach of contract, unfair competition and defamation. The alleged offending content had been posted to a message board online. The plaintiff asked the court to allow it to serve subpoenas on the Internet service providers of the unknown anonymous posters before the required Rule 26(f) conference. The court denied the motion.

In its analysis, the court covered the number of First Amendment concerns at stake. It noted that although the constitution protects anonymous speech on the Internet, the prospect of a civil subpoena to destroy that anonymity places that right in jeopardy. Nonetheless, the court observed, the right to speak anonymously is not absolute, and such discovery will be permitted in the appropriate circumstances.

And the appropriate circumstances are when a plaintiff can produce sufficient evidence as it has to establish a prima facie case of the claims asserted in the complaint. The court held that it “must examine facts and evidence before concluding that a defendant’s constitutional rights must surrender to a plaintiff’s discovery needs. The summary judgment standard will ensure that the Court receives such facts and evidence.” The court went on to note that the plaintiff’s complaint – devoid of specific facts supporting its claims – provided an example of why the summary judgment standard is appropriate.

Best Western Int’l v. Doe, (Slip Op.) 2006 WL 2091695 (D.Ariz. July 25, 2006).

August 22, 2006 Defamation

An interesting application of Section 230 and a long arm statute

Plaintiff Whitney Information Network sued the owners of the infamous Ripoffreport.com and other sites over some negative postings about Whitney appearing online. In July 2005, the U.S. District Court for the Middle District of Florida dismissed Whitney’s complaint, holding that the defendants were immune from defamation liability under provisions of the Communications Decency Act found at 47 U.S.C. §230. [Read more about that decision.]

Apparently recognizing the challenges presented by Section 230, which provides that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” Whitney filed an amended complaint. This time it alleged that the defendants played an active role in generating the complained-of content by revising benign third party postings to add words like “ripoff,” “dishonest,” and “scam.”

The defendants moved to dismiss, arguing a lack of personal jurisdiction for Whitney’s failure to satisfy the requirements of Florida’s long arm statute (Fla. Stat. §48.193). That statute provides, among other things, that a Florida court can exercise personal jurisdiction over an out of state defendant if that defendant commits a tortious act within the state. This can be done, for example, through electronic communications into the state. Wendt v. Horowitz, 822 So.2d 1252 (Fla. 2002).

The defendants did not dispute that the amended complaint successfully alleged active participation on their part in generating the alleged defamatory content. But in connection with their motion to dismiss, they submitted a couple of affidavits, including one from a technological consultant named Smith, which they claimed controverted the plaintiff’s allegations supporting jurisdiction.

These affidavits tended to support the defendants’ argument that they were not responsible for modifying any postings made to their sites. If they were merely the provider of the interactive computer service, and not the actual content provider, so they argued, Section 230 immunized them from tort liability. Without tort liability, there could not be any tortious conduct directed to the state. No tortious conduct directed to the state, no personal jurisdiction under the long arm statute.

The district court bought this clever argument, holding that the affidavits put the burden back on the plaintiff to come forward with more evidence supporting the exercise of personal jurisdiction. In the district court’s mind, the plaintiffs failed to meet that burden, so it dismissed the case.

But the Eleventh Circuit disagreed. It reversed and remanded the lower court’s dismissal, holding that the defendants’ affidavits, with which they tried to make themselves something other than content providers, were insufficient to shift the burden in the first place.

For example, although Smith (the technological consultant) stated that none of the postings’ IP addresses were associated with the defendants’ computers, he conceded that he was unable to obtain IP addresses for three of the complained-of postings. The defendants were trying to show that they were not responsible for tampering with any of the content. But the court saw through that argument, observing also that it was unclear whether the defendants’ own IP addresses would have shown up had they merely modified any of the postings, rather than create them.

For these reasons, the appellate court held that the defendants had not successfully rebutted the plaintiff’s allegations supporting the exercise of jurisdiction pursuant to the Florida long arm statute. It remanded for further proceedings on the question of whether the exercise of personal jurisdiction would comport with constitutional due process.

Whitney Information Network, Inc. v. Xcentric Ventures, LLC (Slip Op.) 2006 WL 2243041 (August 1, 2006).