Stanford Center for Internet and Society

Defendant Thomas Millot worked for Aventis Pharmaceuticals as a systems analyst in the company’s information security department. Among other duties, Millot was responsible for the administration of computer user accounts at Aventis’s Kansas City, Missouri facility. This responsibility included oversight of the company’s SecureID card system—a two-factor authentication system which allows an employee to remotely access the company network when she inputs her secret personal identification number and the time-sensitive code generated by a small SecureID card in her possession.In October 2000, Aventis outsourced its security functions to IBM. Although several members of the information security department were subsequently hired by IBM, Millot was not offered a job with IBM, and he left Aventis in September 2000. Before he departed, Millot took a former employee’s SecureID card which he had upgraded to the highest possible remote access level. He then kept the card active by periodically accessing the network.

This decision granted a motion by intervenor the United States to reconsider a motion to dismiss granted on December 21, 2004, in the United States District Court for the Central District of California by the late Judge William Rea. Plaintiffs' claim that defendants violated 17 USC § 1101(a)(3), an anti-bootlegging statute (“the Statute”) with no durational limit on its protection, had been dismissed because the court found that the statute was “copyright-like” and therefore unconstitutional because it violated the "for limited Times" requirement of the Copyright Clause of the Constitution. By way of background, “’[b]ootlegging’ is ‘the making of an unauthorized copy of a commercially unreleased performance,’ and is distinct from ‘piracy,’ which is an unauthorized duplication of an authorized recording.” Moghadam, 175 F.3d at 1272 n.3 (citation and internal quotation marks omitted). The Court granted the motion to reconsider because it found proper Constitutional authorization for the statute in the Commerce Clause, and, since the statute is authorized by another part of the Constitution, there is no need for this admittedly "copyright-like" statute to conform to the "limited Times" requirement of the Copyright Clause. The Court vacated the previous order finding the statute unconstitutional and denied defendants' motion to dismiss the claim based on the anti-bootlegging statute.In this decision affirming the statute's constitutionality, the Court relied on the research and reasoning provided in two conflicting opinions from other jurisdictions concerning a related criminal statute, United States v. Moghadam, 175 F.3d 1269 (11th Cir. 1999) and United States v. Martignon, 346 F. Supp. 2d 413 (S.D.N.Y. 2004). Moghadam found the criminal anti-bootlegging statute constitutional, while Martignon found the criminal anti-bootlegging statute unconstitutional. The Court organized its analysis into two separate questions: "(a) did Congress have the power to enact the anti-bootlegging legislation? and (b) if so, is the legislation ‘fundamentally inconsistent’ with the Copyright Clause?”

The California Court of Appeals for the Second Appellate District found that the forum selection clause in defendant EarthLink, Inc.’s (“EarthLink”) membership contract, which would have required consumers (in this case, putative class plaintiff California residents), to travel 2,000 miles to Georgia in order to recover claims of $40 to $50, is unenforceable because it is unreasonable as a matter of law. Additionally, the Court held that the contract’s class action waiver was procedurally unconscionable because it took the form of an adhesion contract with no opportunity to opt out, and also substantively unconscionable, because, if the allegations were found to be true, EarthLink would have been cheating numerous customers out of small sums of money. The case arises out of a class-action suit brought by plaintiff Ozgur Aral (“Aral”), who alleged that EarthLink began charging him for his DSL line on the date that he ordered the service, even though he did not receive the equipment necessary to utilize the service until five weeks afterwards. As part of his user agreement with EarthLink, Aral agreed that any claim related to the agreement would be adjudicated in arbitration, governed by Georgia law and held in Atlanta, Georgia. The agreement also contained a clause that precluded class action suits.

The United States District Court for the District of Utah, Central Division recently granted defendant Furnace Brook LLC’s (“Furnace Brook”) motion to dismiss plaintiff Overstock.com’s (Overstock) declaratory judgment action for lack of personal jurisdiction. Relying on Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), the Court held that cease-and-desist letters sent by Furnace Brook from its New York headquarters were not sufficient to justify personal jurisdiction in Utah and that Furnace Brook had not performed the necessary “other activities”—such as negotiating license agreements or collecting royalty payments—required in order for a patentee to be subject to personal jurisdiction in the forum. Although the Court found that the jurisdictional question was “clear,” it observed that the defendant was a “patent troll,” or a person who tries to make money off of a patent he is not practicing and has never practiced by threatening out-of-state companies with expensive litigation. Furnace Brook, a New York-based company, owns a patent on software and computer systems that facilitate internet purchases. The company purchased its patent at a bankruptcy auction and has used it to threaten several prominent retailers, including the plaintiff, with patent infringement suits. Unwilling to comply with Furnace Brook’s repeated cease-and-desist letters, Overstock, which is based in Utah, filed an action in Utah seeking a declaratory judgment that “Furnace Brook’s patent was invalid, or, if valid, that Overstock’s technology d[id] not infringe it.” In response, Furnace Brook filed a motion to dismiss the action for lack of personal jurisdiction because Furnace Brook’s only contacts with Utah were the aforementioned cease-and-desist letters.

In March 2005, the Electronic Privacy Information Center (EPIC) filed a request under the Freedom of Information Act (FOIA) for documents pertaining to the U.S. Justice Department’s administration of the USA PATRIOT Act of 2001. Specifically, EPIC requested information about how the Justice Department had used its investigatory powers under the Foreign Intelligence Surveillance Act (FISA), which were temporarily expanded by the PATRIOT Act. These provisions were scheduled to sunset, or lapse, on December 31, 2005, unless they were extended by Congress. EPIC sought expedited processing of the documents so that it could have information to present before Congress at hearings on the PATRIOT Act’s renewal.The Justice Dept. granted EPIC’s request for expedited processing, but after no documents were produced, EPIC filed suit in the District Court for the District of Columbia. EPIC moved to compel expedited processing of its FOIA request on June 14. After a status conference on November 8, the court ruled in favor of EPIC and ordered the parties to submit a timeline for the processing of the remaining documents. However, after the parties failed to reach an agreement, Judge Gladys Kessler issued an order establishing a timeline.

Plaintiff Michael Price, the head coach of the University of Alabama's football team, sued Time Inc., the publisher of Sports Illustrated, and a writer named Don Yaeger for libel, slander, and outrageous conduct for an article Yeage wrote in Sports Illustrated. The article alleged that Price had paid for and engaged in "aggressive sex" with two strippers in a Pensacola hotel room. The lawsuit was filed in state court and removed to federal court based on diversity jurisdiction.PROCEDURAL POSTURE

In its first set of interrogatories, plaintiff asked defendants to reveal the source of information about the Pensacola incident. Defendant objected, relying on both an Alabama statute (Ala. Code § 12-21-142) that shields reporters from being compelled to reveal their sources and the First Amendment. Plaintiff then moved to compel the information and the district court granted plaintiff's motion because magazines are not newspapers and plaintiff had sufficiently overcome the First Amendment privilege protecting reporters' sources. The court may also have been skeptical of Yaeger’s fact-checking, as during his deposition, Yaeger testified that there was merely a “pretty solid chance” that his source’s information was completely accurate. The court then sua sponte reconsidered the motion and certified the motion to compel for interlocutory appeal to the Alabama Supreme Court. The Alabama Supreme Court declined to hear the case and the district court allowed plaintiff's motion to compel. The district court then granted defendants’ motion to certify for interlocutory appeal. The Eleventh Circuit determined that the Alabama shield statute does not cover newspapers but that plaintiff had not made a sufficient showing to overcome the privilege granted to reporters by the First Amendment.

Plaintiff-appellant IPXL Holdings, L.L.C. (“IPXL”) holds a patent for an “electronic fund transfer or transaction system” that stores user information, displays that information to the user in a single screen, and allows the user to select a transaction. The goal of the patented system is to allow users to execute financial transactions in fewer steps.

Defendant-appellee Amazon.com, Inc. (“Amazon”) uses a “1-Click system” that enables users to purchase goods on its website. The system allows customers who have previously stored information, including credit card numbers and shipping addresses, to place an order without having to re-enter the stored information.

The United States Court of Appeals for the Federal Circuit upheld a preliminary injunction granted by the United States District Court for the District of New Jersey enjoining defendants Teva Pharmaceuticals and Ranbaxy Pharmaceuticals from selling a generic version of Accupril, a patented drug manufactured by plaintiffs Pfizer, Inc. and Warner-Lambert Company, LLC. The patent covered a pharmaceutical composition containing ACE inhibitors and other chemicals (claim 1) and their methods of manufacture (claim 16). This new composition/manufacturing process helped minimize cyclization (reaction between parts of compound causing compound to degrade), hydrolysis (reaction with water causing the compound to degrade), and oxidation (reaction with oxygen causing discoloration) of the ACE inhibitor. The Federal Circuit held that plaintiffs were likely to prevail on the merits of their claim under the district court’s construction of “saccharides.” The Federal Circuit also upheld the district court’s ruling that plaintiffs were likely to prevail under the doctrine of equivalents. In so doing, the Federal Circuit rejected defendants’ arguments that the plaintiffs had dedicated the use of microcrystalline cellulose (used by defendants) to the public by disclosing but not claiming it in the patent. The Court held that before an unclaimed subject matter can be dedicated to the public, it must be identified as an alternative to a claim limitation. The Federal Circuit also upheld the district court’s rulings that infringement of the patent was likely to cause plaintiffs irreparable harm, that the defendants’ possible loss of market share and customer relationships did not outweigh the potential harm to the plaintiffs, and that the public interest was best served by enforcing the temporary injunction.The Federal Circuit first addressed whether the district court had correctly found plaintiffs likely to prevail on their allegations of patent infringement. The Federal Circuit considered the district court’s construction of the patent claim—defining “saccharides” as all mono- and polysaccharides, not just “sugars” (polysaccharides with up to ten monosaccharides). The Federal Circuit rejected all of defendants’ arguments that this construction was inappropriate. Defendants’ claim that language in the patent stating “saccharides (i.e. sugars)” was controlling was rejected because another section of the patent formally defined saccharides more broadly. The defendants’ reliance on a construction of the patent’s use of saccharides from previous litigation was also rejected because the parties to the previous litigation specified that construction was for the purposes of the previous litigation only. The Federal Circuit also rejected defendants’ claim that the broad construction of saccharides would render the claims invalid because not enough evidence was presented that the Patent and Trademark Office would have refused to grant the claim under the broad construction. In addition, the district court’s reliance on the testimony of an expert that one of skill in the art would interpret saccharides as more than sugar was appropriate.

In a case before the United States District Court for the Southern District of New York, plaintiffs, major recording industry members including BMG Music, Virgin Records, Sony Music Entertainment, and UMG Recordings, among others, sued the Internet music company Launch Media, Inc. (“Launch Media”), alleging that Launch Media’s customized music services were not entitled to a license because they are "interactive" within the meaning of the Digital Millennium Copyright Act of 1998.The dispute concerned Launch Media’s “LAUNCHcast” music service, which enables users to listen to radio broadcasts and create customized music play lists using the service’s computer software.

This is a recently published opinion in a trademark case involving a dispute over the use of the name “Jupiter Hosting” by Santa Clara, California-based Internet firm Jupiter Hosting, Inc. The name “Jupiter Hosting” is similar to the trademark “JUPITER” registered with the U.S. Patent and Trademark Office (PTO) by Jupitermedia Corporation, an Internet research company based in Darien, Connecticut. On May 7, 2004, Jupiter Hosting filed a complaint in U.S. District Court for the Northern District of California seeking a declaratory judgment that it was not violating Jupitermedia Corp.’s intellectual property rights by conducting business under the name “Jupiter Hosting” and maintaining the website “www.jupiterhosting.com.” On July 16, 2004, Jupitermedia filed a motion for a preliminary injunction against Jupiter Hosting, alleging its use of that name violated the Lanham Act, the Anticybersquatting Consumer Protection Act (ACPA), and California’s Unfair Competition Law. The court denied the motion, finding that Jupitermedia did not have a high probability of success on the merits and that it failed to show it would suffer irreparable injury without the injunction.To obtain a preliminary injunction, the court stated, a party must show either (1) probable success on the merits and the possibility of irreparable harm or (2) serious questions on the merits and a showing that the balance of hardships weighs heavily towards the moving party. The court then analyzed whether these criteria could be met under the Lanham Act, the ACPA, or California’s Unfair Competition Law.