In a case that confirms the advisability of registering your copyright in software and websites, the Ninth Circuit Court of Appeals has denied statutory damages in the context of a continuing infringement.  The copyright act does not allow statutory damages or attorney’s fees if the infringement “commenced” prior to the registration of the copyright (subject to a 3 month relation back exception for newly published works). 17 U.S.C. Sec. 412.

In Derek Andrews v. Poof Apparel, the defendant had copied the decorative tags that the plaintiff attached to its clothing items, and attached them to its own clothing line.  The tags gave rise to the copyright claim (the case also involved trademark infringement claims).  On the copyright claim, the District Court awarded the plaintiff $15,000 in statutory damages and  $296,090.50 in attorneys' fees.  The Court of Appeals stated that the Copyright Act leaves no room for discretion on this point: “in order to recover statutory damages, the copyrighted work must have been registered prior to commencement of the infringement, unless the registration is made within three months after first publication of the work.”  The court noted that other courts have construed Section 412 in a similar manner, finding that infringement commences for the purposes of § 412 when the first act in a series of acts constituting continuing infringement occurs. Accordingly, “the first act of infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under § 412.”

The case highlights the importance of registering copyrights early.  One of the most frequent areas of copyright infringement we see involves software and content from websites (or entire websites themselves).  In these situations actual damages can be very difficult to prove, and the availability of attorneys fees and statutory damages greatly enhances your case, and ability to resolve these issues quickly and on favorable terms.

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Several recent cases and events have focused significant attention on the use of the Internet for defamatory and harassing activities.  In the New York divorce case of Garrido v. Krasnansky a court has ordered that a husband stop posting inflammatory remarks about his wife on his blog.  First Amendment advocates are up in arms because the order comes not in the context of a defamation case but as part of a motion in a divorce proceeding.   The wife's defamation case would not be a slam dunk.  The husband has tried to avoid a defamation claim by calling his postings a "fictional" account of his failed marriage.   Of course the traditional truth defense presents a high hurdle as well. 

Meanwhile, on the other end of the country, an LA federal grand jury is issuing subpoenas in a  case involving MySpace postings and a Missouri teenager who committed suicide after rejection by a person she thought was a sixteen year old boy.  The poster was actually the mother of a former friend.   Prosecutors in Missouri declined to take action against the mother.  LA authorities are proceeding under a theory that the mother may have defrauded the social networking community on MySpace. 

Cases like these may raise interesting issues for ISP and web site immunity.  Section 230 of the Communications Decency Act provides immunity against an ISP being held to be a "publisher or a speaker," clearly focusing on defamation.   Does aiding a harassment claim in a divorce fall outside of those protections or chip away at them in some form?  Does a harassment claim on a social networking cite fall outside of 230? Does a criminal prosecution protecting a site against fraud frustrate any attempt to tear down immunity by the party truly harmed by the

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The lists are starting to roll in.  Check out Pogo's Chronicles of Dissent: Top Ten Privacy Breaches of 2007, and Threat Level's look at the year 2007  from a privacy/security perspective.  The Metropolitan Counsel provides us with the Advertising, Marketing And Promotions Law Year In Review,   and the USPTO Announces it's year end results, touting "historic improvement in the quality of patent and trademark reviews and subsequently the quality of issued patents and registered trademarks."  Euclid Managers offers its Predictions for 2008 Security Threats, PatentlyO offers Ten Ways to Spend your Holiday Bonus (I got the Nuvi), the TTAB Blog reports that the Leo Stoller Blog Has Returned, and Chevy Chase reports that Generalissimo Francisco Franco is Still Dead. 

Happy Holidays, and Best Wishes for a prosperous 2008 from the TechKnowledgy Blog!

Updated Oct. 26, 2007  to add a link to the document - see:  Principles for User Generated Content Services

Several of the largest media companies have agreed to use technology to eliminate copyright-infringing content uploaded by Web users and to block any pirated material before it is publicly accessible.  That is part of a set of principles designed to "offer a road map for unlocking the enormous potential of online video and user-generated content," Disney Chief Executive Bob Iger said in a statement issued by the participating companies.

Some of the other companies involved are Viacom Inc, Walt Disney Co, Microsoft Corp, News Corp's Fox and MySpace units, CBS Corp, General Electric Co's NBC Universal, and online video services such as Veoh Networks and Dailymotion.  Notably absent was Google, owner of YouTube.

Essentially, the copyright holders in the group have agreed not to pursue Internet companies for infringement claims if their sites adhere to certain principles. Those principles include eliminating copyright-infringing content uploaded by users to Web sites, and blocking any infringing material before it is publicly accessible.  The pact reportedly is not legally binding, but more of a trust-building exercise among the companies, according to the Wall Street Journal report. 

That is how Raymond T. Nimmer explains a trio of decisions by that court that have been handed down in the last several months.  Collectively, the decisions strike down arbitration clauses, class action waivers, and choice of law/forum selection clauses in various agreements. 

In Nagrampa v. Mailcoups, Inc., the Ninth Circuit, focussing on the concept of procedural unconscionability, found a mandatory arbitration and forum selection clause included in a franchise agreement unconscionable.  The reason cited by the court was that the clause lacked mutuality where the franchisor could use the judicial process in some circumstances, but the franchisee could not.  Of course, according to that reasoning, presumably each and every contract clause would have to have mirror image mutuality.  Nimmer points out that this has never been a requirement of contract law.  The court also cited as a basis for its reasoning, the conclusion that the forum selection clause had "no justification other than as a means of maximizing an advantage over [Franchisees]."  Nimmer's take on that is basically…right-so the problem with that would be?

The next case in the trio is Douglas v. U.S. District Court, where the Ninth Circuit held that an amendment of an online agreement lacked assent.  The court went on to conclude that even if there had been assent, the terms for waiver of class action rights and mandatory arbitration were unconscionable.  In doing so, the Court noted the stance it had taken in Nagrampa that the mere fact that a customer has meaningful choices as to other service providers does not defeat a claim of procedural unconscionability.  In other words, the customer is free to shop around for other service providers who may have different contractual terms.  According to the Ninth Circuit, the customer need not do so, and it can simply ignore the terms with the service provider it chooses.

The last case is Davis v. O'Melveny & Myers.  In the Davis case, the Ninth Circuit held that an arbitration clause in an agreement with an employee was unconscionable.  Nimmer explains that the Davis court found the agreement "procedurally unconscionable because the law firm did not offer the employee the option of rejecting the clause and continuing as an employee with an unmodified contract."

I guess it might be helpful to back up a bit, and talk about when an agreement, or part of an agreement, can be disregarded as unconscionable.  Historically, courts have required both substantive and procedural unconscionability to exist before striking down an agreement. In general, substantive unconscionability exists when an agreement itself is so one-sided that it shocks the senses, while procedural unconscionability focuses on the bargaining process (or lack thereof) used to reach the final agreement. The current view is that these two elements must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. 

In effect, the Ninth Circuit appears to be expanding the concept of procedural unconscionability to essentially eliminate the ability of companies to include mandatory arbitration, class action waivers, or forum selection clauses in any standard, non-negotiated contracts.  Under the views of the Ninth Circuit, companies do not have the option of presenting a take it or leave it contract to their customers (even though the customers could choose other service providers).  The Ninth Circuit, instead, is simply zapping those provisions out of standard contracts, which Nimmer argues is the kind of thing typically reserved to the legislature (and courts on the planet Xenon). 

Photo courtesy of David Darkmatter under Creative Commons

On Wednesday, a federal judge in California granted class-action status to a lawsuit against Target Corp. filed by the Baltimore-based National Federation for the Blind under the American's with Disabilities Act and two state law claims. 

"This is a tremendous step forward for blind people throughout the country who for too long have been denied equal access to the Internet economy," said Marc Maurer, president of the NFB. "All e-commerce businesses should take note of this decision and immediately take steps to open their doors to the blind."

This comes on the heels of the DOJ settlement with Sylvan Learning Centers, and bodes well for increased accessibility for blind web surfers.  Want to make your website more accessible?  Check out the World Wide Web Consortium Web Content Accessibility Guidelines.

Here's the E-Commerce Times Article with more details.

The TechLawJournal has two articles today that do an excellent job of summarizing the state of the law as it applies to web sites and the ADA, and the recent settlement agreement between the Department of Justice and Sylvan Learning Centers.  The settlement agreement imposes on Sylvan obligations of public accommodation under the Americans with Disabilities Act.  This is not necessarily consistent with the limited judicial precedent on the topic.  The articles are reproduced below with permission from the TLJ.  By the way, although much of it is subscription based, this type of excellent content is typical of what you will find at David Carney's TLJ.

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You know the Video Professor - he's the guy on those infomercials that urges you to buy his computer education programs by trying them for free.  The company even encourages consumers to search for reviews online before buying.  Problem is, lots of consumers are complaining online that they were mislead as to the "free" part, or are otherwise unhappy with the product.  Perhaps in an effort to draw more attention to the negative reviews, the Video Professor has taken to suing the bastards who are saying these bad things. 

Do you suppose the Prof. is aware of the Streisand Effect?  Or the likelihood of succeeding in stifling anonymous criticism in light of the First Amendment rights involved and other available defenses?  In any event, right or wrong, the online world does not like bullies, and the backlash has begun (see below).

On a practical note, these links provide a good tutorial and resources (including forms) for those involved, or considering getting involved, in litigation to identify anonymous internet posters.

Video Professor sues anonymous griping posters, demands their identities

Video Professor Sues Anonymous Critics

Politicians, infomercial kings try to stifle anonymous Internet speech

Letter from Public Citizen Litigation Group

The Video Professor Sues His Unnamed Critics

-Photo courtesy of Llyod Doppler under Creative Commons

Every once in a while, it's not an entirely bad thing when lawyers get sued, just to keep them honest. The case of Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey is one lawsuit that I was glad to see dismissed on summary judgment by the United States District Court for the Eastern District of Pennsylvania. Users of the popular internet archive tool the Wayback Machine , will breathe a sigh of relief. The dispute began in early July 2005, when Healthcare Advocates filed suit against the law firm of Harding, Earley, Follmer & Frailey alleging, among other things, that the law firm violated the Digital Millennium Copyright Act, protections against circumvention of a technological measure. (Section 1201(a) of the Digital Millennium Copyright Act provides "no person shall circumvent a technological measure that effectively controls access to a work protected under this title.")

In the Healthcare Advocates case, Healthcare Advocates had provided the Wayback Machine with the robots.txt code, which allowed a site to opt out of inclusion in the Wayback Machine. The Healthcare Advocates information

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ChoicePoint - the case that really started it all - announced today that it has settled with 43 states over the 2005 breach of its database that exposed mass quantities of consumer information.  A shock at the time, perhaps, but similar disclosures have become a daily occurrence.  You might recall that the ChoicePoint breach involved thieves posing as small business customers who were able to gain access to ChoicePoint's database, possibly obtaining the personal information of 163,000 people according to the FTC.

In January, ChoicePoint Settled with the FTC for approximately $15 million.  At that time, at least 800 cases of identity theft had reportedly been traced to the breach. 

Follow the money. . ..  Do you want to know how the "domainers" are making money off of the internet these days? CNN's Bu;siness 2.0 magazine has a good article about Kevin Ham, who is presumably the best at everything from typosquattintg and domain tasting, to straight domain name brokering.  The article covers some of the creative ways these folks are squeezing money out of the net these days (to the tune of perhaps $70 million a year for Ham), and it explains to some extent why the web looks more and more like an endless vista of parked pages cluttered with random ads and links.  Thanks to David Canton for pointing out that article.

Search engines and ISP's have widened the moat with this decision from the 9th Circuit, which essentially holds that Google's practice of copying thumbnail versions of photographs from third party web sites, with "in-line linking" to the full size version of those photos at their original location on the web, constitutes fair use.  Goldman's summary here.

Imagine the scene: In house counsel from Google, Microsoft, AOL and Yahoo rise to explain to the restless crowd of several hundred owners and protectors of famous trademarks, just why it is that they allow competitors to bid on those famous trademarks to trigger ads for the competitor's products. The phrase "smoothing ruffled feathers" was used more than once in the ninety minute presentation. The brave presenters were Peter Becker of Microsoft, Laura Covington of Yahoo, Lauren Fisher of AOL, and Rose Hagan of Google.

Kudos to INTA for pulling that one off, but perhaps it's not so surprising that these lawyers would face a seemingly hostile crowd. The search engines have a sizable PR and education job to do when it comes to the emotionally charged issue of keyword advertising, and what better venue than an audience of trademark holders to make their case.

In fairness, the search engines are attempting to operate within the law and balance the rights of consumers, advertisers, and trademark holders, and the law is currently evolving on the topic. And, they have some very good basic points. One common theme is that they should be able to operate under the same that apply in the brick and mortar world. Some good analogies were made (ones I've made in the past) such as the right to purchase shelf space in the supermarket next to a competitor, or the practice of printing coupons for competing products on the back of receipts at the super market (i.e., you buy some Pampers, and get a coupon for for Huggies). These things are tolerated in the "real" world, but in the intangible world of online commerce, keyword advertising draws a much more visceral response.

The most striking thing gleaned from the presentations from my perspective is just how differently the search engines treat the issue of keyword advertising as a matter of policy.  Google is clearly the most aggressive of the crew, and they allow the purchase of trademarks to trigger the ads of competitors, with the caveat that the text of the sponsored ad must not use the trademarked trigger term. The theory is, I believe, that Google thinks it has a winner on the argument that the use of trademarks to trigger ads is not "trademark use."  Because you need such trademark use, together with a likelihood of confusion to make a trademark infringement case, you can never get there with Google's approach.  If the trademark is never used in the triggered ad, and the use of the trademark as a trigger does not count for trademark purposes, no infringement issues.  It also has the benefit of being very clean, and very easy to implement.  No judgement is involved, and it can all be automated.  Very scalable.

Yahoo, AOL and Microsoft on the other hand, all take a more measured (and less scalable) approach, and allow for the purchase of trademarks to trigger ads only if the triggered ad clearly involves a fair use of the trademarked term. Yahoo (I believe) goes even further and actually requires that the trademarked term be used in the text of the sponsored ad.  The theory here is that if the ad is truly fair use (such as comparative advertising), that is most clearly demonstrated by the appropriate use of the trademark in the sponsored ad (for example "Thinking about a Dodge Durango? Compare the safety rating of the Toyota Tundra before you buy." )

In the end, it was clear that the search engines are attempting to operate within the law, or as near to the fringe as they can tolerate, and to perhaps push the line a bit. It was little solace to many in the audience, as a number of the follow up "questions" demonstrated the continuing frustration of trademark holders. They can't stand the idea that competitors can get in front of their customers by purchasing THEIR TRADEMARKS!  (even though across the hall the marketing department is probably doing the same thing to their competitors.)  If you can't beat em' . . ..

Just in case you didn't know, the International Trademark Association (INTA) is right in the middle of its Annual Meeting, which this year is being hosted in Chicago. There are oodles of good programs dealing with various aspects of trademarks, branding, and the issues that arise with them in the online marketing context.  One session focused entirely on online resources that are useful when investigating domain names and domain name holders, whether to clear domains for your own use, or track down the bad guys who are wreaking havoc with you by using domains similar or identical to your trademarks and tradenames.  Here are some of the sites mentioned by the speakers (you will want to bookmark these, or at least a link to this post!):

Alexa.com provides current and historic traffic volume data on internet sites, and allows you to compare the traffic between competing sites, which is useful in a number of contexts.

Archive.org is where you can find the "Way Back Machine", which allows you to look and see how long a site has been around, and track changes that have been made to the site over time.

BetterWhoIs.com is a comprehensive, easy to use clearinghouse for domain name WHOIS information, and is a favorite with the presenters.

Domain Tools was said to provides lots of advanced features for finding information about domains, and domain name holders, some of which is free, and some of which comes with a small fee.  For example, for a fee of about $150 per year, you can evidently access Domain Tools archive of WHOIS information, which provides a chain of title of sorts for domain names.   It also has a reverse IP search available, and typo generator, that assists in identifying domain typos on your domain.

Geektools.com provides a set of technical resources for network engineers and system administrators, which  includes whois and traceroute.

Nation Arbitration Forum provides an easy to search database of their UDRP decisions which makes it very simple to see if there have been any arbitrations involving a particular domain or party.

WIPO also provides a searchable database of its UDRP decisions, but it is not quite as user friendly.

SnapNames was identified as a favorite resource for back ordering domain names.  It is free to back-order a domain, and if it is "caught" by SnapNames, a fee of about $65 is due at that time.  Small price to pay for the benefit of eliminating potential problems with domains of interest.

SamSpade.org  is a freeware integrated network query tool for tracking down spam.

There was also an interesting discussion of the problems posed by the anonymous domain hosting services that are popping up everywhere.  Domains by Proxy was mentioned specifically as one of the more popular services. A good practice pointer - when sending out cease and desist letters to these domains, the letters should go to Domains by Proxy (or the other anonymizing registrant), because THEY ARE THE REGISTRANT and owner of the domain.  That is the way they set up their business model. They will likely respond by saying they are not the real owner of the domain, etc., but the word from the presenters was that if you persist, you can expect Domains by Proxy to respond fairly quickly by posting the actual registration information in the WHOIS record for that domain.