Ninth Circuit holds that Computer Fraud and Abuse Act does not require $5000 floor on damages to be met by a single unauthorized
by Lauren Gelman, posted on November 3, 2004 - 11:59am
The Ninth Circuit considered whether the Computer Fraud and Abuse Act (18 U.S.C. Sec. 1030) requires plaintiffs to prove at least $5000 of damages or loss resulting from a single unauthorized computer access by defendants in order to establish a cause of action under the statute. The statutory definition of damage had been amended between the time of offense and the time of trial. The court also considered the meaning of the statute’s limitation for awarding only “economic damages.”The issue arose in a suit between two rival web sites used by the trucking industry to locate hauling jobs. Getloaded.com repeatedly (1) improperly accessed restricted portions of Creative's site, (2) improperly accessed and examined Creative's source code, and (3) accessed Creative's confidential customer information through improperly obtained computer files. Getloaded.com argued that Creative could not bring suit under the Computer Fraud and Abuse Act because no single unauthorized access led to damages of over $5,000.
Decision by British court orders ISP to disclose identity of file sharers
by Lauren Gelman, posted on November 3, 2004 - 11:57am
Following a policy similar to that employed in the U.S. by the RIAA, the British Phonographic Industry (BPI) decided to sue individuals offering large number of copyrighted songs for uploading. Via these lawsuits, the BPI hoped to starve P2P networks of the music files downloaders find attractive. In a decision on October 15th, Justice Blackburne of the U.K. Court of Chancery ruled that ISPs could be required to reveal the names and addresses of 28 people that are allegedly large sharers who have made several thousand music files available over P2P networks. According to Justice Blackburne, “on the face of it this appears to be a powerful case of copyright infringement”.
Illinois District Court Holds that a Mere Registration of Domain Name by a Third Party Not Sufficient to Establish Trademark Rig
by Lauren Gelman, posted on November 3, 2004 - 11:56am
Plaintiff Pure Imagination, Inc. filed suit against defendant Pure Imagination Studios, alleging trademark infringement and cyberpiracy for defendant’s use of the marks “Pure Imagination Studios” and “pureimagination.com.” The plaintiff incorporated in Illinois in 2000 and advertises over the Internet. It showed use of the trademark “pure imagination” in 1999. In 2002, the plaintiff registered the trademark with the U.S. PTO. The defendant, which provides services worldwide, incorporated in Illinois in 2001 and first used “pure imagination” in interstate commerce that same year. The defendant obtained state trademark registrations for “pure imagination” and “pureimagination.com” in 2001. The domain name “www.pureimagination.com” was first registered by third parties in 1998. The defendant bought ownership of the domain name from the third party in 2001. The plaintiff filed a motion for summary judgment on all claims. The US District Court for the Northern District of Illinois addressed three issues: (1) whether the third party’s registration of the domain name www.pureimagination.com gave the defendant trademark rights; (2) if not, whether the defendant had any trademark rights associated with its use of the "pure imagination" mark prior to the plaintiff’s federal registration; and (3) whether a likelihood of consumer confusion exists between the plaintiff’s and defendant’s uses of the marks. Finding that questions of fact exist regarding these issues, the court denied summary judgment in part as to the claim of trademark infringement and denied summary judgment as to the claim of cyberpiracy.Regarding the first issue, the court held that a third party’s mere registration of a domain name is not sufficient to establish trademark rights for a subsequent user of the domain. Under 15 U.S.C. § 1060, a party may "tack" trademark rights to an earlier use by a third party only if it can show that the earlier user did not abandon the mark and that the earlier user assigned the goodwill associated with the mark as well as the mark to the subsequent user. In the case of a domain name, mere registration does not constitute a trademark use. In the present case, the defendant did not offer any additional evidence showing the nature of the third parties’ use as a trademark use and that the third parties did not abandon the mark. In addition, the defendant did not provide evidence that the third parties assigned the goodwill associated with the mark when it assigned ownership of the domain name to defendant. As a result, the court held that the defendant cannot rely on the third parties’ earlier registration to establish its first use of the trademark.
For the First Time, a Federal Court Finds Misuse of the DMCA’s Notice and Take Down Procedures
by Lauren Gelman, posted on November 3, 2004 - 11:54am
During early 2003, unknown persons leaked or intercepted an archive containing thousands of emails exchanged between employees at Diebold, a company that makes e-voting machines. Some of the emails exposed e-voting insecurities, already the subject of considerable public controversy. To promote further public discussion, Plaintiffs Nelson Chu Pavlosky and Luke Thomas Smith, Swarthmore College students, and other individuals, reproduced the email archive on their websites, which in turn were linked to by additional sites. To prevent the public viewing the archive, Diebold sent cease and desist letters to multiple internet service providers (ISPs), including Swarthmore College, the non-profit Online Policy Group (“OPG”), and its upstream OSP, Hurricane Electric. Diebold claimed the emails were copyright protected and invoked the DMCA’s notice and take down procedures. 17 U.S.C. § 512. Swarthmore required Pavlosky and Smith to remove the archive from sites it hosted and Hurricane indicated it might terminate OPG’s service if a link to the archive was not removed from a site hosted by OPG. Pavlosky, Smith, and OPG subsequently brought suit alleging that Diebold had tortiously interfered with their contractual relations with their ISPs, misused copyright, and violated § 512(f) of the Copyright Act, which prohibits knowing and material misrepresentation under the DMCA that content is infringing. They requested damages, injunctive relief, and a declaratory judgment that publishing, cohosting, or providing services to websites that linked to the email archive were noninfringing.
District Court Finds Use of US Registered Trademark to Sell Gray Market Goods Violates Lanham Act
by Lauren Gelman, posted on November 3, 2004 - 11:51am
Plaintiff Bayer LLC is the United States distributor of the “ADVANTAGE” line of flea control preparations. Bayer LLC holds trademark protection for the term “ADVANTAGE” in the US flea-and-tick market. Bayer LLC sells the products under authorization from German-based Bayer A.G., the worldwide parent of the Bayer family. Bayer A.G. licenses other subsidiaries to sell the line of products in other countries. Defendant Nagrom Inc. purchased the “ADVANTAGE” products from the licensed United Kingdom distributor and imported them into the United States. Nagrom used several websites, including tjspetshop.com, to market and sell the products directly to consumers in the United States under the “ADVANTAGE” name. Nagrom included the “ADVANTAGE” name in the meta-tags for the site and purchased at least one paid search placement for the term “ADVANTAGE” such that consumers who searched for “ADVANTAGE” products would be given a link to Nagrom’s site.
Sixth Circuit vacates preliminary injunction against SCC; finds possible merger of idea and expression in Lexmark’s computer pro
by Lauren Gelman, posted on November 3, 2004 - 11:47am
In Lexmark v. Static Control Components, Lexmark, plaintiff-appellee, sought preliminary injunction against Static Control Components (SCC) defendant-appellant, in the U.S. District Court for the Eastern District of Kentucky, to prevent SCC from distributing its SMARTEK computer chips. Lexmark, a manufacturer of laser and inkjet printers and toner cartridges, designed its toner cartridges with an embedded chip that notifies the printer if the cartridge was refilled by Lexmark. If not, then the printer is designed to reject the cartridge. This dispute involves two computer programs. The “Toner Loading Program,” coded into Lexmark’s toner cartridge chip, calculates toner levels. The “Printer Engine Program,” coded into the memory in the printer itself, controls various printer functions. The Loading Program contains minimal code (only about 45 commands, using 55 bytes of memory). SCC designed its SMARTEK chip such that it mimicked Lexmark’s chip and could be embedded in remanufactured toner cartridges. Lexmark was granted a preliminary injunction in district court on two main theories of liability: (1) SCC’s chip copied the Loading Program in violation of the federal copyright statute; and (2) SCC’s chip violated the Digital Millennium Copyright Act (DMCA) by circumventing a technological measure designed to control access the to the Engine Program. The Sixth Circuit vacated the judgment, finding that Lexmark did not establish a likelihood of success on its copyright infringement claim or on its DMCA claim.The Sixth Circuit applied an abuse-of discretion standard in reviewing the district court’s preliminary injunction. In applying this standard, the Sixth Circuit considered: (1) Lexmark’s likelihood of success on the merits; (2) the possibility of irreparable harm to Lexmark in the absence of an injunction; (3) public interest considerations; and (4) potential harm to third parties. In the context of copyright, the court places particular emphasis on the first factor, “because irreparable harm is presumed once a likelihood of success on the merits has been established.” The Copyright Act, 17 U.S.C. Section 102, grants copyright protection to “original works of authorship fixed in any tangible medium of expression,” including “literary works.” Computer programs are generally entitled to copyright protection as literary works under 17 U.S.C. Section 101. In a suit for copyright infringement the plaintiff (Lexmark) must show (1) ownership of a valid copyright, and (2) that the defendant copied protectable elements of the work. The copyright statute states that “In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of … form….” 17 U.S.C. Section 102(b). According to the court, “this provision embodies the common-law idea-expression dichotomy that distinguishes the spheres of copyright and patent law.” Copyright protection is only extended to the expression of the idea, not the idea itself. The related doctrine of merger states that where there is a very limited number of ways to express an idea, “copyright protection does not exist because granting protection to the expressive component of the work necessarily would extend protection to the work’s uncopyrightable ideas as well.” The doctrine of “scenes a faire” similarly states that when external constraints limit the options for expression, copyright protection is precluded. “In the computer-software context, the doctrine means that the elements of a program dictated by practical realities… may not obtain protection.” The Sixth Circuit has previously held that efficiency represents an external constraint in the context of copyrightability of computer programs.
New York Civil Court Finds Forum Selection Clauses for Online Service Invalid
by Lauren Gelman, posted on November 3, 2004 - 11:45am
America Online moved to dismiss a claim against it in New York City Small Claims Court because the plaintiff had expressly agreed to exclusive jurisdiction in Virginia in the terms of service agreement. The judge applied the law that forum selection clauses are prima facie valid if actually consented to unless enforcement is unreasonable or unjust, the agreement was reached by fraud or overreaching, or going to the agreed-upon jurisdiction is so onerous that the plaintiff will not have the opportunity to “have his day in court” Scarcella v. America Online Inc., N.Y. Civ. Ct., No. 1168/04, N.Y. Slip Op. 51021(U). 9/09/04. Actual consent to jurisdiction by signature on paper is usually given effect because the signatory is presumed to know the contents of what was signed. British West Indies Guar. Trust Co., Ltd. v. Banque Internationale a Luxenbourg, 567 N.Y.S.2d 731 (1991). However, this Court found that the mode America Online used to elicit agreement to jurisdiction was deceitful and should thus invalidate the forum selection clause. The user was enticed to skip reading the online contract by the statement “Because [the agreement is] lengthy, and while we encourage you to take the time to read [it] now, we understand if you are eager to just go on and explore the service.” Scarcella v. America Online Inc., supra. If one did not click, “I Agree” and wanted to read the agreement, another enticement was given to not read it. While the judge did not find that deception or fraud was involved, her tone indicated that she did not think highly of the manner in which America Online obtained consent.
Court of Appeals for the District of Columbia Circuit refuses to quash FCC’s interim rules
by Lauren Gelman, posted on November 3, 2004 - 11:44am
In an order dated October 6, 2004, the D.C. Circuit refused to rule on a a writ of mandamus filed by the United States Telecom Association seeking to invalidate interim rules that had been issued by the Federal Communications Commission (FCC) in August, 2004. The D.C. Circuit gave the agency until January 4, 2005 to draft permanent rules that conform to an earlier decision of the court overturning the agency's previous effort to implement the Telecommunications Act of 1996. The Telecommunications Act of 1996 (the Act) sought to foster a competitive market in telecommunications by helping new entrants in the field to compete against incumbent local exchange carriers (ILECs). In order to achieve this objective, the Act gave the FCC broad powers. These powers included requiring ILECs to make "network elements" available to other telecommunications carriers and the competitive local exchange carriers (CLECs). Congress delegated to FCC the authority to decide which elements to unbundle, based on the agency’s determination that the failure to provide access to a particular network element would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer (47 USC § 251(d)(2) (articulating the “impairment” standard)).