Packets: Vol. 3, No. 1

The Sixth Circuit Court of Appeals vacated a permanent injunction granted to Gibson Guitar Corp. preventing Paul Reed Smith Guitars (PRS) from manufacturing, selling, or distributing their “Singlecut” line of guitars. Gibson brought suit against PRS claiming that their Singlecut guitars infringed on the trademarked body shape of Gibson’s Les Paul guitar line. Although they conceded that no purchaser would be confused at the point of sale, Gibson argued that either the doctrine of initial-interest confusion or post-sale confusion, or a combination of the two, should be allowed to substitute for the point-of-sale confusion requirement.Initial-interest confusion involves the improper use of a trademark to create initial customer interest in a product and applies even if the customer realizes the product is not manufactured by the trademark holder prior to purchase. This doctrine has mainly been applied in the context of Internet domain names, but Gibson argued that it should apply here on the trademark of their guitar shape because a customer entering a guitar store might see PRS guitars on the far side of the room and approach them thinking they were Gibson guitars, thereby diverting potential Gibson customers to PRS. The court refused to apply the initial-interest confusion doctrine to product-shape trademarks, holding that because many consumer products would look alike if viewed at a sufficient distance, such an extension of the doctrine would have severe anti-competitive effects.

The opinion addresses whether an Internet service provider can be held liable for transmitting third party information through software it provides to customers. Associated Bank-Corp sued Earthlink in the US District Court for the Western District of Wisconsin after the Earthlink anti-phishing software ScamBlocker re-directed users trying to access the bank’s web page to a “potentially fraudulent web site alert” screen despite the fact that Associated Bank-Corp’s web site was and is a legitimate financial services site. A phishing site is one that mimics a legitimate business for the purpose of collecting credit card or other personal information.

Stephen Sotelo has brought a class action complaint alleging trespass to personal property, consumer fraud, unjust enrichment, negligence, and computer tampering against a cluster of spyware producers: DirectRevenue LLC, DirectRevenue Holdings, BetterInternet LLC (collectively known as “Direct Revenue”), Byron Udell & Associates Inc. doing business as AccuQuote, and aQuantitive Inc. The complaint alleges that spyware deceptively installs itself on users’ computers by being surreptitiously bundled with legitimate software, reports tracking data to defendants which causes users’ computers to be "bombarded" with pop-up advertisements, parasitically exhausts system resources, and is difficult for the user to remove.The court denied defendant Direct Revenue and AccuQuote’s motion to stay litigation in favor of arbitration because the End User License Agreement (EULA) containing the arbitration agreement was not displayed to the user before or upon installation of spyware. Direct Revenue claimed that users could not download software without viewing the EULA, but plaintiff alleged that he downloaded Direct Revenue’s software from a third-party distributor and was never presented with the EULA. This was adequate to survive a motion to dismiss. The court also rejects defendant’s claim that each advertisement sent to the plaintiff contains another fair opportunity to view the EULA because the opportunity consists of “a small button with a question mark in the corner of the pop-up advertisements” and “does not indicate that it links to information regarding the source of advertisements or to any kind of user agreement.”

In a case of first impression, the Arizona Court of Appeals, Division One, ruled that the term “call,” as used in the Telephone Consumer Protection Act (“TCPA,”) is broad enough to encompass emails sent to cellular phones via Short Message Service (“SMS”). SMS messages are text of up to 160 characters that are sent to cellular phones and pagers. Many cellular carriers allow emails sent to an address containing a phone number (such as 1234567890@phonecompany.com) to be transmitted to the cellular phone customer as an SMS message. In 2001, defendant Acacia Mortgage Corp. (“Acacia”) used its computers to randomly generate these types of email addresses and sent out solicitations about low mortgage rates. Plaintiff Rodney L. Joffe (“Joffe”) received Acacia’s SMS text messages on his cell phone and sued Acacia, alleging violation of the TCPA. The TCPA prohibits, in part, any person from making “any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system…to any telephone number assigned to…a cellular telephone service…or any other service for which the called party is charged for the call.” The lower court granted partial summary judgment in favor of Joffe, rejecting Acacia’s claim that it could not have violated the TCPA since it did not make a traditional voice call to Joffe’s cell phone. The Court of Appeals affirmed, addressing and rejecting three separate arguments by Acacia: (1) that emails sent via SMS to cellular phones are not “calls” made with an “automatic dialing system”; (2) that because the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) and implementing regulations against email solicitation govern SMS messages, the TCPA cannot be construed to apply to them; and (3) that the TCPA is an unconstitutional abridgement of Acacia’s First Amendment rights.

Philips filed a complaint with the International Trade Commission alleging that several CD manufacturers were importing into the United States certain CD’s that infringed Philip’s patents. In the course of the proceedings, the defendants raised patent misuse as an affirmative defense, alleging that Philips had improperly forced them, as a condition of licensing patents that were necessary to manufacture CD’s in accordance with the industry standard, to take licenses to other patents that were not necessary. The ITC affirmed the findings of an administrative judge that the package licensing constituted illegal tying arrangements under antitrust law and thus rendered the subject patents unenforceable. The ITC relied on the per se analysis and, as an alternative ground, on rule of reason analysis.Because Philip’s package licensing agreements do not compel the licensees to use any particular technology covered by any of the licensed patents (nor do they foreclose a licensee from licensing a competitor’s alternative technology), and because there was no evidence that the hypothetical licensee fee would have been lower if Philips had offered to license the patents on an individual basis or in smaller packages, the Federal Circuit held that the ITC was wrong as a matter of law in ruling that the package licensing agreements were per se illegal.

In this case before the United States District Court for the Northern District of California, plaintiff Digital Envoy, Inc. (“Digital”) unsuccessfully moved for partial summary judgment against defendant Google, Inc. (“Google”). Digital had licensed its geo-targeting technology to Google and claimed that Google improperly but effectively “licensed” the technology to third parties by utilizing the technology in its AdSense program. Thus, Digital argued that Google provided such third parties with “access” to that technology, in violation of Digital’s and Google’s license agreement. By way of factual and legal background, the Court referenced its previous order of May 20, 2005 in its opinion. In that order, the Court explained, in part, that Google’s AdSense program allowed third party websites to earn revenue by displaying targeted advertisements selected by Google’s algorithms. Digital moved for summary judgment on two issues: first, that the Digital/Google agreement did not permit Google to license Digital’s technology to third parties, and second, that Google had violated this prohibition by effectively licensing and providing access to the technology to third parties through its AdSense program.

From April 2003 to May 2004, Bonnie Werner-Masuda served as the Secretary-Treasurer for a local lodge of the International Association of Machinists and Aerospace Workers (IAM). In her capacity as an officer, Werner-Masuda was granted access to IAM’s secure, proprietary website (“VLodge”) on which she could view IAM’s confidential membership list. In order to obtain a user identification number and password, Werner-Masuda signed a registration agreement which stated that she would not use the information provided through VLodge for any purpose contrary to the IAM constitution.

In August 2004, IAM filed a lawsuit in the U.S. District Court for the District of Maryland against Werner-Masuda and an entity recently created to challenge IAM’s union representation of certain flight attendants. Among other things, IAM claimed that Werner-Masuda used her access to VLodge to identify and recruit IAM members for the purpose of organizing a rival union. To support this claim, IAM alleged that Werner-Masuda’s identification number was used to click on the VLodge member search tool approximately 10,000 times between March and May 2004 in order to search the names and addresses of members in four different IAM local lodges targeted by the defendants. IAM’s complaint stated that this access violated the federal Stored Communications Act (SCA) and the federal Computer Fraud and Abuse Act (CFAA) because it exceeded Werner-Masuda’s authorization under the registration agreement she had signed.