ࡱ> #` Rtbjbj5G5G .xW-W- ?W0xxx8y|0BfҀ"$h ~CC!!!n!!! lxi6:d0B * tn !6lYCCɱXB000;4@80004@000 Internet Commerce Outline INTRODUCTION Internet business models ( See Michael Rappa on digitalenterprise.org purely on the internet, entirely implemented on the internet Hybrid ( Lands End selling hard goods through online medium Digital goods vs. hard goods ( ITunes/software/online publication vs. things you have to ship (books) Types of business models Merchant Business models Amazon Lands End (pioneer is transferring to web manufacturer direct sales (Dell) Advertising business model ( Google, Portal websites, Match.com or swinger websites Subscription ( pay to use services, may overlap with merchant model ( Salon.com, NetFliks, Wall Street Journal, New York Times, Pornography Brokerage ( selling other peoples products on commission. A lot of brokers have been put out of business by websites; trading websites ( day traders Affiliates ( Try to pass onto friends and get points for it Internet gambling Demographic data ( info-mediary network effects facilitates success; Importance of Branding 2 positions on Internet regulation (2 positions) Cyber utopians or cyber-anarchists ( cant regulate; internet is global, nations are sovereign, etc Just another issues of conflict of laws; weve been dealing with this since the telegraph Top-down ( Global Issues regulation is usually top down Bottom up ( network code ( architecture, use TPMs (technological protection measures) Hybrid ( organization that regulates the domain name TRADEMARKS Definition: a word, name, symbol or device that identifies goods in commerce, which owners may use exclusively in commerce. Purposes: to protect consumers from confusion & to protect owners investments. Trademark law is generally geographically fragmenteddifferent people can use the same trademark in different places. Internet is changing this. To qualify for trademark protection, a mark must be: Distinctive Inherently distinctive: arbitrary (APPLE for computers), fanciful (EXXON) (not a real word), or suggestive (THE MONEY STORE; EVERREADY) Acquired distinctiveness: becomes distinct in the market Cannot protect generic terms (APPLE for apples), even if they were once distinctive (ASPIRIN) (generecide); Some trademarks become generic; fear of Xerox, Google, Kleenex, Teflon; must diversify Start-up companies: (i) make a good-faith search but problem of non-registered marks and (ii) find a an arbitrary name Used in Commerce Affixed or otherwise associated with goods or services ( NO NAKED TM Protection Signify the source or origin of the goods and services with which it is associated. Trade dress, packaging protection Registration. Application ( Use-based, Intent-to-use TM Revision Act 1988 Statutory bars Immoral, deceptive or scandalous Insignia of the US Name portrait or signature of a living person w/o consent Word, name or other designation which is confusingly similar Descriptive Generic or functional items Exception to the statutory bar Section 1052(f). Surnames who acquired secondary meaning Opposition Advantages of registration 1115(a) ( prima fascia evidence of a valid trade mark and ownership Federal Jurisdiction Constructive notice basis for registration in foreign countries Registering with Customs use of symbol Register Principal Supplemental ( If dont qualify for Principal Register, may be registered on Supplemental, if mark is capable of acquiring secondary meaning. Geographical and market segmentation ( same mark may be used in for different things in different markets and/or areas By Industry -( Apple Bank, Apple Computers, Apple Records, Apple Insurance. Multi-part balancing tests about expanding into different industries By Geography ( Pizzaz Coffee Shop in NY, and Pizzaz in New York Prior User exceptions to what national registration will cover Will geography become irrelevant because of the internet? Traditional Trademark infringement: Senior user of a mark sues that junior user of a mark claiming consumer confusion: source/origin of the products, affiliation/sponsorship between the two companies. Must prove: valid trademark, likelihood of confusion: Likelihood of confusion test considers (Polaroid test): Strength of trademark Similarity of marks Similarity of goods Channels of trade Sophistication of consumers Actual confusion Wrongful intent Whether the challenged use is within the senior users zone of natural expansion ( important factor Passing Off ( Pretending " s goods are really made by . Reverse Passing Off  when D sells P s goods, representing their source as from D (plagiarism-ish). Test for passing off varies from  bodily appropriation to mere  consumer confusion depending on the Circuit Continued use of traditional interpretation ( Playboy v. Tel-a-talk ( Adult-sex.com Offers subscription called Playboys Private Connection, hyperlink to playboy.com, Email address ( playboy@adult-sex. Court found infringement for use of playboy name, and link to playboy might make people think theres an affiliation. Internet Related Changes: also consider whether the defendant uses the internet for commercial purposes Two most important points are now similarity of marks and simultaneous use. (Planned Parenthood v. Bucci, S.D.N.Y., plannedparenthood.com is actually anti-abortion; Goto.com v. Disney, 9th Cir.,  used a stoplight sign similar to  s) Initial Interest Confusion ( much more important in internet context Permits a finding of a likelihood of confusion even if there is only a bit of confusion if consumer decides to purchase the goods from compeititor (Brookfield v. West Coast, consumers intending to get to  s site but got to  s first because of  s use of the domain name and metatags) But, most cases require that the companies be directly competing. If two parties are not competing, there can be no interest confusion (Bihari v. Gross, bad interior designer,  s use of  s trademark in his metatags OK because he was not competing with her, she has no website). Brookfield communications v. West Coast Entertainment Corp (9th Cir. 1999) ( Brookfield has Moviebuff TM for computer software with database; West Coast Video had TMs with moviebuff in them. Court found initial interest confusion when West coast used moviebuff (w/o space) in its metatags Initial Interest Confusion ( p. 85, diversion of consumers initial interest. ( Divert people looking for Brookfield to West Coast; trades on Brookfields goodwill Billboard analogy ( Like posting a sign w/ competitor s TM in front of your store. Say blockbuster posted a sign saying  West Coast Video exit 7. In reality, there s a Blockbuster there. Criticisms (See Playboy concurrence): No misdirection: It doesn t say get off here and show "; shows you how to get to both No transaction costs of switching: on internet, its quicker to get another wesite. you just click back ( its not like you just pulled off the highway Playboy v. Netscape ( By Keying advertisments, to Playboy TM, netscape is profiting from PEI TM by selling placement of banner ads keyed to searches for playboy, etc. Majority ( will be OK by putting in disclaimers Concurrence ( this doesnt fit with Brookfields initial interest confusion 1-800 Conatacts vs. WhenU.com ( Users Downloaded software that gives you a pop-up ad. WhenU has directory of words, and sellsl advertisers right to be associated with these words Internal utilization of TM in way that does not communicate it to the public is analogous to individuals private thoughts about a TM Holding: WhenUs pop-up ads dont display trademark. They arent selling specific terms; they do matching of terms to ads themselves. Legislative alternatives Utah anti-spyware Act (p. 114, n.2) Illegal to have triggering mechanism that displays an ad partially or wholly covering paid advertising or other content on internet website NOTE: 1-800 contacts was heavily lobbying the act Utah court issued preliminary injunction against enforcement based on dormant commerce clause( WhenU vs. Utah GEICO v. Google( Google is selling right to show a sponsored link if you enter a companys trademark Case not dismissed ( Google is actually selling the mark to competitors; Sale of search term could falsely imply a relationship At trial ( GEICO failed to show any likelihood that a Google user would be confused by sponsored links displayed in response to users search on GEICOs TM term Trademark Dilution: The lessening of the capacity of a mark to identify and distinguish good or services regardless whether consumer confusion exists. Dilution is all about TM preservations, NOT about the consumer. State Law Dilution Blurring ( Typically  has very strong marks, and " uses the same or highly similar mark on different goods or services. Blurs the distinctiveness of a mark by trying to disconnect association between product and source. Based on property law (value of association). Factors include: Similarity of the marks Similarity of the products covered by the marks Sophistication of consumers Predatory intent Renown of the senior TM Renown of the junior TM Tarnishment (Disparagement) ( Creates negative image of TM through an association with unsavory, unrelated goods. No need to show confusion. May be a way to prevent people from parodying your stuff! (Debbie does Dallas, Enjoy Cocaine). Federal TM Dilution Act 1995 created 43(c) of the Lanham Act Requirements -- Owner of a famous TM can enjoin anothers commercial use if: Famous TM Use causes dilution to the distinctive quality of the mark (actual harm) Famous factors -- 43(c)(1) Degree of inherent distinctiveness Duration and extent of use of TM in connection with goods/services The duration and extent of advertising and publicity Geographical extent of the trading area Channels for trade used The degree of recognition of the TM in the channels of trade Nature and extent of use of similar TMs by 3rd parties Whether the TM was federally registered NOTE: can bring state dilution claims against non-federally registered TM Penalties: Injunction subject to equity and commercial reasonableness, Willfulness as a factor 125(c)(4) 4) ( dilution defensesdefenses (ends up including sucks websites) fair use noncommercial use news reporting and news commentary Dilution on the internet -( Dont have to show actual confusion, jus blurring and Tarnishment Topin invented new form of dilution: dilution by cybersquatting ACPA made cybersquatting illegal in itself Dilution claim is not longer so important; instead its Cybersquatting as it applies to domain names Fame does not require that a trademark be a household name/nationally recognizable ( Hasbro v. Internet Entertainment Group, Candyland mark is famous since 95% of mothers with small children know it,  cannot use mark as its porn site URL; Teletech v. Tele-Tech,  s mark is famous in a Niche market,  cannot use it as its URL Conflict as to whether dilution covers famous marks that are not inherently distinctive 2nd Circuit in TCPIP v. Harr/7th Circuit 9th Cir has narrower view of famousness Selling a domain name qualifies as a commercial use under the dilution act (Panavision v. Toeppen) Avery Dennison v. Sumpton( requirement of significant use: " acquired a bunch of .net domains corresponding to surnames, including avery.net and dennison.net. Avery-Dennison objected already had .com domain names no confusion, so went for dilution District court was sympathetic to plaintiffs; thought there was bad faith Court of appeals holds for Sumption Moseley v. V Secret Catalogue ( USSC requires showing of actual dilution Statute says causes dilution of distinctive quality Backlash ( Statutes afoot to reverse this case. 2nd Circuit interpreted court to believe that identical mark is per se dilutive, but if its not identical, need to show real harm First Amendment Concerns: Use of another entitys mark is entitled to First Amendment protection when his use of that mark is part of a communicative message, not when Traditional test ( p. 73 ( 10 factors Defenses: TM is invalid Merely descriptive, not distinctive yet Generic ( includes genericide (Xerox, Asprin) Merely functional Not infringing (fair use) Not TM use Not in commerce No likelihood of confusion Dilution defenses Not famous Not commercial No actual dilution Affirmative defenses Fair use Nominative use First amendment Genericty ( Association between goods and category. Look to see if the primary significance of the TM to the public is the common name of the product or service. Does everyone need to use the word to compete? Factors: Competitors use of the mark Plaintiffs use of the mark Dictionary definitions Media usage Testimony or persons in the trade Consumer surveys ( Look at how many people identify TM vs. how many of those folks can identify the source (or at least know that its from one source) A finding of genericty isnt necessarily the end of the line. Might still have a passing off claim! May be subject to labeling remedies. Trademark holders cannot prevent internet search engines from linking advertisements to searches on particular terms that are words in the English language and not simply a trademark, especially when others beside the  have trademarks involving a set of words (Playboy v. Netscape,  cannot stop  from matching advertisers when users search the terms  playmate or  playboy because those terms do not refer exclusively to  s product). Abandonment 1127 Mark is assumed abandoned if not use for 3 years. Discontinued Use with no intent to resume. 3 year hiatus = prima facie abandonment. TM holder can rebut presumption by offering evidence of intent to resume. Loss of Distinctiveness protects public because it assures that marks send consistent messages Naked Licensing (without goodwill attached) ( License TM without adequate supervision no assurances that product/services will retain original characteristics, and risk consumer confusion. To protect against this, assignor must make routine inspections or have some other quality control system in place. Dawn Donut. Policy ( consumer will benefit by lower pricing. First Sale Doctrine ( Authorized initial sale exhausts right to maintain control over resale, and thus exhausts protections of the Lanham Act. Origin has not changed, and customers should not be confused. Fair use / Nominative Use use of a mark that is used fairly and in good faith only to describe the goods or services of the owner of the mark. Often found in Parody, Comparative Advertisement, etc. Nomative Use identifies self by having to talk to TM Fair Use is comparing self to TM product. Bottom Line for protection of website: disclaimer, comparisons, good faith use, non-commercial The 3 Factor Test - 1115(b)(4) . " must prove Used in non-TM capacity Descriptive of goods or services Fairly and in good faith only The NKOTB Nominative Use Test: Product service not readily identifiable w/o naming TM use only as much as reasonably necessary to ID good/service cant do anything that would suggest affiliation/sponsorship endorsement FACTS of that case: Newspaper contest for favorite boy band. Court said allowed to mention NKOTB, even though theyre using it to sell papers First Amendment Issues ( NKOTB has 1st Amend issues; commercial vs. non-commercial use Fair Use Under Dilution Claims: Nominative use does not per se dilute trademarks and may constitutes a fair use West Coast Entertainment: Moviebuff without a space is NOT fair use; Movie buff would be OK. Metatags were not fair use, but banner was. " attracted people to its website for economic benefit. Bihari v. Gross: " puts up gripe site to criticize " s interior business. Fair use because  could not have described his website without using  s name. Distinctions: good faith ( indicated by disclaimer comparison non-commercial ( Bihari is a protest website Gross discusses Bihari floors, but West Coast doesnt discuss moviebuff Playboy v. Welles (Terri Welles, PMOY) Can use TM simply to ID as long as no implication of sponsorship. Welles use of PEIs TMs were all nominative uses (Except for use of PEIs mark in the wallpaper of her site). Should would be unable to ID herself as a past Playmate of the Year if she couldnt use the phrase. Simply descriptive of past sponsorship, not current. And she had a disclaimer on there. Nominative uses do not dilute. Different from NKOTB in that Welles was describing herself as TM, newspaper was not Policy Issue ( contracting around fair use Rights ( Could Playboy contract with its Playmates to not identify themselves, or to use trademarks (but still allow some description), etc.? Make it look most like a one on one transaction, instead of right against the world. Domain Names (subset of TM) Basics Registering InterNIC ( company contracted to govern domain name system NSI ( Netsol had rights and had internic running things ICANN ( international body, experiment in governance. Weak and nebulous ties to US. Accused of being US dominated If experiment fails, telecoms are set to take it over Controls internets technical infrastructure( root file in charge of internet for certain TDLs (.com, .net, .org) Adhesion contracts for top level domains Registrars have to give contracts to registrants Registrar Accrediation Agreement Contract on p. 277 Verisign Service Agreement (p. 279) If you want to be in the system, you need to agree to this Registrars and Registries Registrant ( person who registers second-level domain name Registrar ( grants registrant right to sue SLD. Must impose certain contracts on registrants ICANNs UDRP (must follow to get on internet) promise not to spam submit to jurisdiction of courts and ICANN guidelines for administrative proceedings Private governance ( to a certain extent its all governed by contract Harms of taking a URL w/ TM Increased consumer search costs Consumer confusion Efficiency losses (diminished capacity of TM Harm to companies identified by TM Free speech and Domain names Name.Space, Inc. v. Network Solutions, inc. ( Name.Space wants NSI to authorize TLDs that are last names, e.g. .kaplan, or .kaplanformayor, but NSI wont do it  complains that this is a violation of first amendment Court: First Amendment doesn t infiltrate here existing TLDs are not expressive, BUT not foreclosing possibility of DNS becoming expressive; Cites Bucci NOTE:used to be that NSI was only registrar, Planned Parenthood v. Bucci ( anti-abortion activist registers  HYPERLINK "http://www.planedparenthood.com" www.planedparenthood.com to do protest, " claims first amendment Court: more analogous to source identifier than communicative message. DNS not in 1st amend territory here If Bucci registered plannedparenthoodsucks.com, would the case have come out the other way? Probably yes after Taubman .sucks sites Taubman v. Webfeats ( " registers shopsatwillbend.com and taubmaksucks.com.  (who owns The Shops at Willow Bend) sues for dilution. Court ruled that website was no commercial, and there wsa not likely to confuse. Notes on Sucks sites ICANN policy is Less solicitous of sucks cites US courts are more protective What can the real company do? buy it? link to it and say you like free expression? Linking and framing No cases in book ( all cases brought and settled Could owner bring action against people for linking? What about deep linking to page w/in cite that is not front page? Could you protect by putting up disclaimer? There are people who put signs on website saying that you disallow linking, and you have to agree to terms What about framing ( your website has some other website around it? Cybersquatting problem Speculators Generic name speculation (cars.com, caf.com, sex.com, etc.) Speculation on business names (eddiebaur.com, ) Labeling people cyber-squatters in effect decided the question Toeppen v. Panavision ( Toeppen was registering various domain names, including Panavision.com with.arial pictures of Pana, IL Personal jurisdiction ( " was in IL, and  was in CA; 9th Cir grants jurisdiction under  effects doctrine Case expanded dilution beyond tarnishment and blurring domain name is a valuable corporate asset domain name identifies entity that owns the website puts reputation at website owners mercy (p. 186) ( could be associated with unimaginable amount of messages Commercial use ( Offering domain name for sale is a commercial use; Preventing panavisions own commercial use Naked TM problem: Doesnt matter that he didnt attach the use to a product McCarthy (p. 200) ( poor fit between actions of cybersquatter and dilution law offering to sell domain name identical to TM is commercial use, but mere registration has never been held to be commercial use Reverse Domain Name Hijacking ( somebody tries to take domain name from somebody who does have a right to it (e.g., Amazon bookstore) Protest Site Cases PETA case (4th Cir) ( People Eating Tasty Animals registering peta.org was violation. Bosley Medical Institute v. Kremer ( Kremer doesnt like services he gets, sets up website criticizing them at bosleymedical.com (hair replacement case ( baldfaced effort to get even) Consumer commentary for non-commercial use does NOT constitute infringement Court disagrees with 4th Circuit dangers Lanham Act was designed to address are not at play: not misleading consumers about source, not capitalizing on goodwill no commercial links Harm is in parody, not in diluting distinctive impact of TM Footnote 2 ( not official at odds with Panavision, but in tension; Ty, Inc. v. Perryman ( Bargainbeanies.com: selling second-hand beanie babies (the aftermarket), but also selling other stuffed toys; Ty sues for dilution; Website had disclaimer saying not affiliated with TM owner Court reverses summary judgment for , and gives summary judgment to " Posner ( Ty is being overzealous in trying to police mark against becoming generic p. 189 ( producers don t own their after-markets Contrast with p.102, n.1 ( Promatek v. equitruck: company may not use metatags of its website the TM of competitor, even where company services products made by competitor and identified by TM Generic Domain Names vs. TM domain names( Policy questions If you register a generic mark, you can keep it for $50 If you register a TM, you have to give it to owner Why should people who get there first profit? Would it be OK for first come TM owner (e.g., Apple Records) to sell domain to someone with same TM (e.g., Apply Computers)? Is it antiquated to think people will search for things by typing in random URLs? Why allow generic Domain names, if no generic TMs? s? Domain names are source indicators BUT no domain name exclusivity ( unique addresses; only one company can have them; no genericity Should we forbid giant speculation in generic domain names? What if two TM owners want the same domain name? Virtual Works ( Volkswagen wanted vw.com ( mixed motive of good faith and profit seeking Madonna " had a TM in Tunisia Court held that TM was registered in bad faith. No reason to register Madonna ACPA (Anti-cybersquatting Consumer Protection Act) (p. 201) Elements Bad Faith intent to profit Registration domain name that is identical or confusingly similar to somebodys trademark. Gives some rights to people using own name in good faith In Rem action if you cant find person, or dont have personal jurisdiction Statutory Damages 1117 of up to $100k Defenses:r use and Free speech 3 issues: What is bad faith intent to profit? Not always clear In rem actions How do you prove Bad faith for in rem actions? Is there adequate notice? Is it constitutional? How is US interacting with UDRP and ICANN Electronics Boutique v. Zuccarini (EDPA 2000) ( FACTS: " registered different misspelling of eb s name. Suit brought under ACPA  type-squatting or  mousetrapping ( Not classic cybersquatting but Legislative history indicates that was the concern behind the act Definitely bad faith intent to profit EB wins ( $500k damages P. 224, n.2 ( pure heart and empty head defense Statute ( bad faith intent will not be found in any case in which court determines person believed and had reasonable grounds to believe use of DN was fair use or otherwise lawful Court will probably not let guy off if they think he is nasty TMI v. Maxwell ( registered trendmakerhome.com (no s). When registration ran out, " re-registers .info website Court ( can t sue for dilution, because not commercial use Conclusion ( noncommercial grip cite violates none of the statutes Gripe Site Immunity Disclaimer Avoid anything that looks commercial No advertising links (especially advertising for competitors) No selling anything Put sucks or is bad in the domain name Best bet ( Show youre in good faith, and convince the judge youre a good guy NOTE: ACPA applies to non-commercial Use: See P. 229, n.12 ACPA and Registrar liability ( see N.3 on p. 224 APCA tries to limit registrar liability to narrow circumstances based on its refusing to register, removeing from registration, transferring, temporarily diabling, or permanently canceling a domain name. Damages liability only if Registrar has bad faith Subject to injunctive relief only if it fails to tender control of domain name to court, modifies status of domain name except pursuant to court order, or fails to comply with court order Hawes v. NSI ( sued NSI for transferring control of DNS to French Court (where LOreal was suing him) ( 4th dismissed claim Kremer v. Cohen ( Sex.com (9th Cir 203) (  stated claim for conversion under CA law against registrar that transferred ownership of sex.com in response to forged authorization letter Case seems to say that domain names can be property rights w/ 3 part test interest capable of precise definition capable of exclusive possession or control putative owner must est. legit claim to exclusivity Radin ( this should be like a service, not a lease on property UDRP Proceedings Overview WIPO ( world Intellectual Property Organization UN administered in Geneva Panels are sponsored by WIPO Is WIPO interfering with national law (when national laws differ)? Tunisian TMs are easier to get US requires use in commerce (or bonafide intent) What about competing identical marks from different companies? Use of IP assets has become more international than the enforcement provides for? UDRP Proceeding Requirements: Registeration in bad faith hard to say if you have valid TM somewhere Use in bad faith Contrast with US standard ( Bad Faith Intent to profit Procedure Convene panel (arbitration) Domain name will either be cancelled or transferred 10 days to appeal decision to national court Arbitrators are retired judges, attorneys, etc. Clashes of values ( free speech values tend to protect sucks sites under US law and with US arbitrators If you lose a sucks case in front of WIPO panel under UDRP, bring a review claim to American court IP lawyers are gnereally corporate; they might favor the corporate claimant over individual Madonna v. Dan Parisi (WIPO 10/12/04) ( " bought domain name for $20K ( Registered Madonna TM in Tunisia; argued that he was donating TM to Madonaa hospital Real TM in Tunisia is NOT dispositive Everybody could get around UDRP by registering in Tunisia P. 264 (  ICANN procedure would be registered useless Barcelona (4th Cir. 2003) ( relationship between US and UDRP proceedings Spanish citizen registers US TM of Barcelona and opens Barcelona.com. City council goes after him through UDRP/WIPO US Court ( we take precedence over UDRP; We have jurisdiction and will practice de novo review Is this an unstable situation? Copyrights Basics of law ( Protecting expression Five basic rights Reproduction/Distribution: how fixed must a copy be? How similar must a copy be? Adaptation (derivative works) ( own everything based upon original work: What is based upon? Broad control of futre markets Patent law has improvement patents, but improver needs rights from original and vice-versa; facilitates bargaining in a way copyright does not Publication Performance Display ( Whats public? Whats private? Moral Rights are a problem in the US Rights for authors that go beyond economic rights Natural rights concept US needs this for Byrne convention; claim that we have it in some form Visual Artists Rights Act ( only applies to recognized works of fine art Duration ( 70 years after the death of the author Works made for hire ( 95 years after publication Expressive elements of things that count as works of authorship No functional items (patents) ( Exception for Computer programs No Facts or ideas ( 18th century view that facts are out there waiting to be found Originality requirement ( Supreme Court requires that the work of authorship be slightly original ( see Feist p. 466 independently created by the author some minimal degree of creativity NOT novelty ( original as long as resemblance to something else is not result of copying (CLEAN ROOM DEFENSE) Idea/expression dichotomy ( grey area right at the heart of copyright Fixation requirement No longer need the symbol and date (formalities) tangible medium of expression ( Infringement Prove you own copyright Prove copying (which elements were infringed?) substantial similarity access to the work Unauthorized ( implied license, does putting something on the web imply that people have license to copy? direct infringement ( innocent/OK? Indirect vicarious contributory know or should have known proof of copying Defenses Authorized Idea/expression merger doctrine (expression is copied because its inseparable form the idea) Fair Use ( affirmative defense, unpredictable Copyright misuse ( looks like anti-trust (anti-competitive behavior) note: antitrust/IP overlay still about competition policy Work is not covered non-public display method of operation (Lotus) implied license ( internet requires you to make copy to use Copied ideas, but not expression of ideas Remedies (often puts people out of business) Can be done ex parte Copies can be destroyed Prelminary/permanent injunctions Damages: lost profits, infringers profits, statutory damages (per copy) Licensing ( Longer copyright lasts, more difficult it is to figure out whose permission you need Orphaned works ( What do we do when we cant find the owners? Re-registration schemes ( property interests Fight over this with old owners who dont want to pay fees Termination of Transfer Provision ( Author who licenses out work can take back work for a window of opportunity (years 35-40) No regulation on what you can charge, other than unconscionable claims (that agreement is contrary to public policy) No compulsory licensing ( American ideology: takes away owners property rights What is a copy? Statute: Work is fixed in tangible meaning of expression distinguished from phonorecords ( phono-protection came into being later Sufficiently permanent and stable, more than transitory duration MAI v. Peak (9th Cir 1993) ( Service outfit (Peak) turns on computer in order to service it. MAI claims this is copyright violation because Running program copies it into computers RAM Holding: loading program into RAM results in a copy. Unauthorized copy: computer programs are licensed, NOT sold. Effect ( greatly expands definition of copy. Computer makes copies all the time A lot of courts rely on this, but no supreme court ruling and no legislation Galoob Toys v. Nintendo ( Nintendo challenges Game Genie as making unauthorized derivative works Holding derivative work has to be in a concrete and permanent form Doesnt use word fixation? Game Genie is useless by itself doesnt contain or produce game in concrete or permanent form doesnt supplant demand for Nintendo game Economics: Nintendo wants to stop Game Genie to keep control of their own games/cheating and information about it Possible Trademark Cause of action modifies how game is played Is this dilution? source confusion of product Dilution/tarnishment ( games are less fun, less challenging NOTE: Game Genie didnt produce a copy ( it was fleeting. As soon as you unplug the videogame, it doesnt exist Galoobs conclusion cant be reconciled with House Report that derivative work doesnt have to be fixed Micro Star v. FormGen, Inc. ( Duke Nukem 3D maker allows people to make new level and Encourages them to post on internet. " burns 300 levels onto CD and sells in packaging with screen shots Declaratory judgment action ( wanted court to declare that product was infringing. KOZINSKI ( infringing derivative work; Distinguishes from Galoob This is  concrete and transportable File is still there after you turn the game off Sheet music analogy Pop up Ads ( p488, note 2 3 district courts have rejected claims by website owners that pop-up ads are copyright infringement Copyright owners argument that its a derivative work Creating derivative work by putting something over original design Changing how the screen looks Arguments against: You can get rid of it ( Its ephemeral Its a separate work Legal realist tendency ( this is about allowing When U to keep the market Public performance and display 109(c) exceptions ( can display your own copy in public place to viewers present at the time (museum, art gallery) Liability for public display is really limited to things you transmit Playboy v. Frena (M.D.Fla. 1993) ( Frena ran website where users could upload pictures and share them. People uploaded Playboy pictures. Frena claimed he didnt know, and he removed the pictures once notified. He started monitoring the website Distribution ( He supplied a product containing unauthorized copies. It doesnt matter that he didnt make the copies himself Public display rights ( Transmission is public ( Audience consisted in a number of persons outside normal circle of family and acquaitances NOTE that statute says is gathered Marjie ( This seems more like secondary liability. Public display analysis is incomplete ( people arent all in one place. Fair Use After 1976, it was codified as an affirmative defense Burden on " to prove it Seems they had to put something in because of judicial rulings Four Factor Test found in 107 The purpose and character of the use  Private, non-commercial use is more likely fair use than commercial use. Not whether the sole motivation is monetary gain, but whether user stands to profit from exploiting copyright without paying for it. The nature of the copyrighted work Fact-based works more susceptible to fair use than works of fiction. The amount and substantiality of the portion used The less thats copied w/o permission, the more likely its fair use. Need not be a % analysis; taking the heart of work will not be fair use (unless its a parody). The market effect on the copyrighted work If market value is destroyed by fulfilling demand, etc. then no fair use. Seemingly Most important factor. . Test is uncertain. Dont advise your client to bet the company on their fair use (which is unpredictable) Parody Campbell v. Acuff-Rose Music (2 Live Crew Big Hairy Woman) 2LC took first line of orig. and then used different lyrics. Not a case of mere duplication for commercial purposes; transformative. Harm unlikely when parody and original serve different market functions Overturn summary judgment and remand to determine if there was market for rap version of Pretty Woman. Distinguish between criticism that suppresses market demand and a market substitute which usurps it. The Folsom/Acuff Parody Test Can we reasonably perceive parodic character? How much is necessary for parody to conjure up original? May only take what is necessary so that audience knows what you are parodying. What is the value of materials used? Acuff virtually ignored this portion Are the quantity and value of materials used more than necessary for parody? How substantial was copying? Verbatim? Parodic works must be able to take heart of original to make its point. Kelley v. Arriba ( Photgrapher action against Arriba search engine; search engine brought up pictures as thumbnails Court ( thumbnails was fair use Issue of full size images was not argued, so that protion of opinion was withdrawn The inline linking portion of the opinion was withdrawn. Feb. 2002 ( 9th Cir ruling on full size images ( Arribas activities are unauthorized public display Policy First amendment Transaction Costs Economics ( Market Failure Theory Not a fair use if there could be a licensing market Fair use allows people to avoid the high transaction costs in certain instances, but more social value if people make deals BUT danger to fair use ( internet facilitates bargaining for even small amounts LA Times v. Free Republic ( Website allows users to post articles and comments. People are posting whole articles. Holding ( not fair use Factor 1 ( purpose and character of us is not transformative, even though non-profit Factor 2 ( nature of coyrighted work is factual, but editorials are expression Factor 3 ( amount and substantiality of portion used taking whole article Harper & Row ( factor 3; copied the heart of the work even though it was a small amount Factor 4 ( effect of market ( replaces market for L.A. times website, which generated revenue from advertising First Sale Doctrine (Exhaustion) 109 ( After something is sold the initial owner retains no rights (hostility to restraints on alienation form property). Record Rental amendments of 1984 ( exception to the for sale doctrine prohibited buying phonorecords and renting them out Computer Software Rental Amendments of 1990 ( Parallel amendment for computer software grey areas about first sale on p. 51 Software companies started licensing instead of selling ( deliberately blurs the distinction so that you cannot transfer the software to anyone else and they hope that this cuts off downstream markets. No first sale doctrine for digital works ( too easy to forward There are two types of rights: rights in the tangible object, which can be a vehicle for the expressive work rights in the expressive work Linking and Framing is complicated (p.517). Inline linking pulls things from another site to your site. Out linking takes you to another site. Ticketmaster v. Microsoft ( Ticketmaster doesnt want a link that by-passes their homepage because they lose advertising money. The case was eventually settled ( had to link to homepage The copyright claim stemmed from public display (they imported into Microsoft's site something that was owned), the TM copied works were distributive, Defense of factual information fails: your computer has to make copies to show you that stuff. Music Copyright on the Internet The Basics Songs have 2 copyrights: Musical work ( music and lyrics (composer) Sound recording ( the rendition by the performer (performer) Until 1970s there was no separate right for sound recording, which now has fewer rights than right in musical work Rights that inhere in musical works Reproduction Public performance Distribution (not on Reeses chart) Display (not on Reeses chart Other stuff is possible Downloading is digital phonorecord delivery Streaming is public performance See Reeses Charts Reproduction RightPublic Performance RightMusical WorkGeneral exclusive Right of copyright owner Compulsory mechanical license available for digital phonorecord deliveryGeneral exclusive right of copyright owner Blanket License available through ASCAP, BMI, and SESACSound RecordingGeneral Exclusive right of copyright owner No compulsory licenseNo general exclusive right in copyright owner Limited to right to public performance by digital audio transmission (next table) Musical works: Reproduction Rights If you want to make a recording, you have to go to musical publisher Compulsory mechanical license for digital phonorecord deliveries Cant refuse a right to do a cover usually deal with the Harry Fox Agency Musical Works Public Performance Rights Copyright owner has right to prevent Blanket License Pay the collecting society ( give you a rate depending on the nature of your enterprise License is NOT compulsory., BUT they cant refuse to deal with you because of anti-trust consent decrees from long ago Sound Recording Reproduction Right Exclusive license and no compulsory license You have to pay the record label to make copies Type of TransmissionPublic performance Right by means of Digital Audio Transmission Noninteractive TransmissionsNonsubscription Broadcast transmission Exempt from exclusive rightCompliant Subscription Transmissions Compliant eligible Nonsubscription transmissions  Compulsory License availableAll other Noninteractive transmissionsExclusive right of copyright ownerTransmisison by interactive serviceExclusive Rigth of copyright owner Sound Recording: Public Performance right No public performance right in legislation Can pay recordings as a general matter, but you do have to pay for underlying musical work New legislative exception ( Limited right to charge for some digital transmissions (Table 2 on p. 549) Interactive transmission ( transmits particular recording or program requested by user; e.g., celestial jukebox. Must pay for both musical work (ASCAP) and sound recording (Artist) Noninteractive Transmissions nonsubscription broadcast ( no longer includes radio station simulcasts thanks to RIAA; no payment for sound recording, but pay for musical work (ASCAP) compliant subscription (and eligible nonsupscription) transmissions ( WebJazz web radio station that streams jazz like a radio station for subscription ; also includes web sumulcasts of FM and AM radio: compulsory license for sound recordings and musical works site owner (not listener) determines programs No advance notice of which songs are to be transmitted Program restrictions: During a 3 hour period no more than 3 songs from one CD, no more than 4 tracks by same artist Technology: must identify song title, alum title, artist; limit subscribers ability to copy songs, etc. other nonineractive transmissions: exclusive right of copyright owner when dont meet conditions for compulsory license (e.g., play too much of one artist Problems w/ licensing regime: technology changes, which affects the value of the legislation and the deals Should businesses get to negotiate the terms for their problems? Cross-border stuff is complex, because there are different organizations with whom you must deal in different countries Why are sound recording and musical work rights structured differently? More of a free market for musical works Sound recordings are swallowed up by big companies, with more negotiating power ( Lower transactions costs?? Copyright is defended as good for artists, but in reality it seems good for record companies BUT Business is dying, so they probably wont give any more to artists Is the problem the scheme of rights, or just the bargaining power? Record labels have enough market power to contract around artists rights Could we have a compulsory license for music downloading? Options: Celestial Jukebox ( Monthly fee with unlimited listening and downloading Pay per listen Universities pay a fee with their web servers Tax Solutions Taxing blank media and players I-Pod ( should there be a tax now that people are downloading illegally onto their IPods? TiVo ( what should we do? FCC member called it Gods maching What about small artists? Will they get any benefits? Audio Home Recording Act (AHRA) Must use Serial copy Management System (SCMS) Pay royalty to companies for uses to which player may be put NOTE: courts interpreted legislation narrowly: only applies to DAT players, which never took ovv Conflixt : Northern CA (device manufacturers) vs. Southern CA (entertainment industry) Could we tax: Hardware providers (computers) What about other types of storage devices (MP3 Players) Internet service providers (ISPs)? Online file sharing services? Are Taxes efficient? One time tax would be incredibly high that it would discourage purchase of certain electronic goods. Does a monthly tax for ISPs make more sense? No price discrimination ( Dont force people who value goods the most to pay for them Diamond Rio ( MP3 player allows you to download from computer to memory card in player. Didnt have SCMS and royalties to record companies required by AHRA Bottomline ( Rio doesnt qualify because its copying from a computer, and computers are excluded from the act Primary purpose was not to make copies; it was to space shift Rio by itself couldnt copy to other machines Computer was doing recording and copying. UMG Recordings v. MP3.com -( If you can prove that you own the CD, you can get access to the song anywhere through " s service.  s Theory of infringement ( Reproduced copies of the songs, Distributed copies of the songs " ( even if it is infringing (which we don t admit), then it s fair use Court ( Infringement: s own rights for all possible markets (Factor 4 of fair use test) Radin: Strong, far out interpretation of the copyright Act Radin: This opinion is flawed. It should have been narrower. Need to allow opening new markets for creativity Secondary Liability Usually manufacturer of a device that is used to do bad things is let off (e.g., cars, guns, etc.) Exceptions to the rule Contributory liability ( Knows of activity, induces, or materially contributes to it: knowledge and substantial participation Vicarious liability ( profiting from infringement: right and ability to control, direct financial benefit RTC v. Netcom ( scientology case. Erlich posted RTC documents to Usenet newsgroups RTC sued ISP for not shutting Erlich down, or shutting down whole newsgroup Netcom is NOT a direct infringer, but Could be a contributory infringer no vicarious liability: requires someelement of volition or causation, which is lacking if system is merely a conduit ( Has to be some copying activity Netcom could be liable for contributoryinfringement, but didnt issue a preliminary injunction Case later codified in DMCA Case Settled Sony-Betamax: TV makers use manufacturers of VCRs over contributory liability: Time shifting, Making a personal library, Fast forwarding through commercials STEVENS MAJORITY: Merely capable of substantial non-infringing usages. Capable of commercially significant non-infringing uses Time shifting was fair use Imported contributory liability from Patent Act ( If theres only infringing use, then you can infer knowledge Punted on skipping commercials ( big issue later on (TiVo) BLACKMUN DISSENT ( Needs to be broader than merely capable Standard: significant non-infringing use If a significant portion of the products use is non-infringing, then no contributory liability If nobody would buy it for things other than infringement, then liability If used almost exclusively for infringement then there could be liability. Aimster ( POSNER Wants to adopt the dissent, but says hes adopting sony Dissent would require too much economic balancing So 9th Cir was about majority in Sony, and 7th Cir was more like dissent (but wouldn t admit it) Grokster ( " argued for bright line rule and not changing it  we re capable and that s that! In the end the court thought they could have done more to control it. Grokster argued that no central server meant no control over system, so no liability. Court split into three groups GINSBURG, KENNEDY, REHNQUIST (concurring) BREYER, STEVENS, O CONNOR (concurring) SOUTER for the court (SCALIA AND THOMAS) s wanted to revise Sony: ( Principal use for infringing, or non-infringing use not substantial in light of infringement Holding its not about Sony; its about active inducement. Active inducement ( Brought into copyright law by grokster Database Portection Basics Lack of such protection leads to use of other doctrines: Contract Unfair competition Trespass to chattels What is a database? EU definition ( any collection with separate items that you can access separately Different types of information: scientific information, collection of independent works of authorship, A bunch of facts that people discovered Electronic or on paper Thin Copyright ( Feist Publications v. Rural Telephone Svc. (Feist copied 1,300 name from Rurals phone book) Protection of a factual work extends only to its original selection or arrangement. An alphabetical listing of telephone subscribers and numbers not nearly original enough. Court rejected the sweat of the brow doctrine We dont protect facts Thin copyright ( only the original selection and arrangement of the data Congress cannot overrule Feist ( constitution requires we dont copyright facts Constitutional amendment? Other options ( Sui generis protection. Different propositions Pre-emption problems ( Supremacy Clause, Federal law must govern Direct conflict ( CA patent statute cant be different Field Preemption ( Congress didnt say anything that is directly on point, but they meant this to be an exclusively federal field Copyright 310 ( pre-emption statute says states cant have their own copyright law Can you close the holes in tort law with other doctrines? Trade Secrets In order to be trade secret, you have to keep it secret Stealing customer list would be actionable Cant take action for stuff you expose on your website Computer fraud/abuse (hacking) Misappropriation may survive if draw narrowly INS v. AP ( hot news exception was federal common law (pre-Erie doctrine); not formally surviving today Tresspass to Chattels ( has an extra element, but the element seems to be somewhat mythological Contract ( state law in U.S. Database Protection in the EU 15-year term for database ( Renewable if database keeps changing (Broad) Definition ( collection arranged systematically or methodically with individual pieces accessible US approach HR 354 (ICAA) ( property rights; dont think we could enact EU ( property rights HR 1858 ( unfair competition, Much narrower model Cant duplicate something that belongs to competitor Has some exceptions FCC would take charge Not enforced against people who abuse rights Benkler ICAA is unconstitutional (property right) everything that touches IP has to be under clause Facts arent protectable Looks too close to copyright First amendment limitations HR 1858 is probably OK under commerce clause (and Benkler says probably would be OK) NOT ownership right looking too much like copyright DMCA Overarching questions about DMCA Does the DMCA take away any user rights that are granted by copyright? Is it unconstitutional? Will we have weaker locks thanks to restrictions on tinkering. Safe Harbors 512 ( Safe Harbor provision maps opinion in RTC 2 effects: No monetary relief for passive, automatic acts Clearer criteria for contributory infringement or vicarious liability 2 elements for safe habor: service provider Adopt and reasonably implement a policy to protect against infringement Ellision v. Robertson ( AOL changed the e-mail address for reporting and didnt announce the change Service provider ( 512(a) provider of online services or network access or operator of facilities therefore entity for transmission, routing, or providing of connections for digitail online communications material of users choosing, w/o modification to the content of material as sent or received Which communications are transitory? 512(c) ( Notice and takedown Not liable if you take it down as soon as youre notified Elaborate procedure for listing a counter-notice to get it back up 512(d) ( Linking: Not contributorily liable for linking in some circumstances Intellectual Reserve v. Utah Lighthouse ministry ( Mormons claim infringement when Website says I cant post it myself, but here are websites that have it Court findings ( contributory infringement: Person who browsed was making copies (MAI), and posting links was inducing anti-circumvention and anti-trafficking provisions Anti-circumvention ( Prohibition on a certain kind of conduct Circumventing technology measure so you can get at something deCSS is a prefect example Trafficking ( buying, selling, making circumvention programs available Prohibition on technology NOT a prohibition on some conduct Access controls vs. use control Access control ( gets you into something Use control ( what you can do with it once you can see it Some narrow exceptions Rulemakings by library of Congress( havent made much headway Dongles can be circumvented to connect things to a computer 1201(a) ( manufacturers of VCRs and camcorders have to use Macrovision Corp controls 1201(c) ( shall not have any affect on rights, remedies, limitation or defenses (including fair use), not alter secondary liability Streambox ( Program that emulated Real Player. Could gain access to RealNetwork files, but save a copy (instead of just streaming). Straightforward DMCA violation Professor Felton ( wins RIAA decryption contest. Wanted to publish present at conference, and RIAA threatened with lawsuits (C&D). Brought declaratory judgment action (said violated his 1st Amendment rights). RIAA backed off, and suit dismissed as moot Skylink and Lexmark ( Interoperability cases Lexmark printers and Chamberlain garage door openers Control of replacement market, replacement parts, etc. ( implement tying Problem ( the devices had embedded computer programs (which are copyrightable). Had to circumvent protections to get to copyrighted software Appellate opinons ( not what DMCA is for; we need to find a way out of it. Coming out the other way, could have affected tons of products! Trafficking ( Universal City studies v. Reimerdes ( Distribution of DeCSS via 2600 Club website. Corley is linking to DeCss download from his website. Is this trafficking? Rule: have to know that offending material is on the linked-to site, that it is circumventing technology, and intend for people to get to the technology First Amendment ( prohibition on linking is OK; linking is dissemination (as applied analysis) Bookstore analogy doesnt work ( newspaper can publish list of places to get illegal material w/o liability, but government can still stop dissemination of materials if people know where they are. Proposed amendments Not putting TPMs on mission critical machines (e.g., heart monitors) Misuse ( garage door opener cases Fair use Will we get weaker locks from the DMCA? Policy Issues with DMCA ( Fred Von Wolman of EFF Thesis: copyright law is becoming innovation law Secondary Liability Sony ( just because your technology is capable of infringement, you arent liable Grokster ( inducement as new flavor of secondary liability; active inducement will be forbidden additional legal restraint on innovators: In the wake of Grokster, you need to demonstrate that every use that you promote is non-infringing Chilling effect on technology where its uncertain whether or not use will be infringing. Will people invest in sling box if they dont know if use is infringing If I turn out to be wrong about nature of use, am I then liable? Vicarious liability ( Never been decided. No ability to control in Grokster, Sony Doctrines are in flux ( creates uncertainty, makes it harder for VCs to take risks on these front Larger companies will take the risks, because they can afford to Grokster could have been worse: Copyright owners were arguing for extension of Sony. The inducement decision seems to be a punt ( not giving stamp of approval to P2P file sharing, but not extending Sony to help right holders Direct Regulation of Technology 1201(k) Macrovision mandate. In 1998 ( Congress decided to require Macrovision technology that prevented VCR to VCR dubbing (kills quality). Macrovision didnt create clever protection; exploited flaw in VCR works. Law forbids VCR makers from fixing that flaw in technology Audio Home Recording Act (DAT recorders) Manufacturers had toinstall SCMS and pay a small tax on each recording device and blank cassettes, but DAT never took off Epilogue ( CD-R ( Some CDR are labeled audio/music CDRs ( AHRA tax is paid on them. no ability to make copy of a copy. As long as youre burning onto a royalty-paid blank, its legal! Is the DMCA Working? Banned the use of circumvention technologies -( Copying is so easy that its virtually impossible for copyright owners to protect their rights. We need protection DMCA is a speedbump ( people wont do file share because its illegal and its hard to get the technology. Like cable black boxes, technology will be expensive, hard to find and illegal Problems with rationale Hacking ( Every DRM system will be broken Copying ( People now have and will increasingly have the ability to make perfect digital copies Sharing ( people will be able to share in fairly unregulated manner smart cow problem ( only one cow needs to lift the latch for all of them to get out; people download pre-decrypted things Interests of Big companies ( lock content anybody who wants to play content will have to go through them No innovation without permission Example: the DVD Player copyright owners knew that DMCA was coming, so they encrypted their DVDs DVDCCA ( licenses makers of DVD players Relatively little innovation for DVD players compared to CDs DMCA is about controlling innovation: Looking for a well-mannered market, desire to constrain disruptive innovation to make market orderly and predictable Argument against regulation of innovation ( capitalism and innovation Controlling the market prevents adding value to technology Market innovation adds social value over all, which is good. iPods ( Market wouldnt exist without original digital markets Failure of DMCA ( Benefits dont exist, and costs are enormous Review and new exceptions every year Constrains fair use Research is now a trip wire for computer security researchers Contracts General Two basic questions of analysis: Is there a contract formed? Do we want to enforce this type of contract? Limits of Contract Duress Incapacity Fraud Illegal contract Unconscionability (see adhesion contractions Uniform Computer Information Transactions Act (UCITA) failed only passed in VA or MD, 3 states passed laws against it (thought not consumer friendly) Types of Contract in Internet context Rolling Contracts ( Money now, terms later (what is binding?) Shrinkwrap of the second kind (issue is ability to negotiate) Clickwrap ( click something to agree to terms Browsewrap ( terms of use on a website Automated or machine to machine contracts (privity problems) ( Human wrote the terms originally, but No immediate presence of a human Viral Contracts ( Terms running with the digital object. Contracts that inhere obligations that promulgate themselves warranty in reverse ( creates obligations on the part of the user instead of obligations on the part of manufacturer/seller reverse engineering context: Whomever comes into contact with this software cant reverse engineer Adhesion/standard form/mass market contracts (opportunity to negotiate) Legal Issues: Role of Judges: Do we want the judges looking into the economics of each case? Should they be deciding these cases based on efficiency concerns?? IP Pre-emption ( Do we want people to be able to contract around limitations of IP rights? Liberty to contract: inhibited by companies ability to keep dropping additional terms on us? Adhesion Contracts: Policy Issues ( Unconscionability Discretion to rule that contract shocks the conscience of the court Procedurally bad ( one party didnt realize consequences Substantively bad ( nobody in their right would have gotten into this if they understood; society cant condone this Procedural ( the following are NOT necessary Large print All caps Call section something other than miscellaneous Unable to print Substance ( the following do NOT matter: Geographical distance Failure to provide class action Cost prohibitive arbitration Radin: Unconscionability doesnt seem to be a good way of dealing with adhesion contracts. Remedies are inadequate: Delete offending clause and rely on default rule ( wants this ( gets to sue) Rewrite clause to make it reasonable arbitration (still can t sue) Invalidate the entire contract UCC 2-202 ( Remedy is whatever judge think is equitable Adhesion Contract Alternatives Argument: FTC should make a list of suspect clauses Counter- Argument: its not the American way ( resistance to regulation Market selection ( arbitration clauses are workable in most cases, and People will vote with their feet! If we assume a competitive market, at least 1% will read it and decide clause is worthwhile Pragmaticly ( when will this happen? Promulgate a good contract and get it standardized. Why hasnt this happened? collective action problem Make the right inalienable Court wants legislature to do this make it non-waivable, which implies a property right Court is reluctant to look at industry-wide practice Radins view ( should be able to argue that legislature wants you to have right for class action and cant waive in adhesion contract, but courts dont seem to want o take up that argument Other Policy Issues: Should terms be on websites? Should there be consumer education? Could we design applications that filter out downloads with arbitration agreements? Does it make a difference if we require things be in capital letters? What if those clear terms are two clicks away? Possible regulatory approach (not taken in US): certain things are presumptively reasonable, and other are presumptively unreasonable How much precaution do we need? eBay wants to contract out of fraud liability to users, so they Make people click boxes have links to further text that explains agreement have phone number to call for explanation Binding arbitration Companies prefer arbitration as a means of dispute resolution Cheaper and faster No precedent in the system (no common law) Arbitrators may be more friendly to companies thank juries No class actions makes it harder for people to sue Arguments against arbitration Preventing development of law Creating collective action problemsDue process argument ( people want their day in court Economic argument ( wont pass on savings on litigation; will keep extra profits Holding that everyone in the market knows that extra terms are coming - Should they have to read a statement over the phone? EASTERBROK might go with we all know this by now. Should standard of unconscionability be lower because people dont read these things thinking they wont ever apply? Is this really about substantive unconscionability for arbitration clauses? U.S. Courts seem to favor binding arbitration, but there are some ADR scholars arguing against it Exam strategy ( write about the fact that people know about and expect this stuff right now Radin Article on p. 837 ( Breakdown of the distinction between text and technology Contract as part of the product vs. contract as consent Lay conception of contract as negotiated text will be eroded in online environment for 2 reasons: More standardized transactions. Nature of transaction is more transparent, because product comes with the fine print; fine print is accessible to everybody. Avenue through which you buy product is same avenue through which you get the terms of the contract. (you have to read and click to buy, and you have to read and click to look at contract) The package ( it seems arbitrary to call one set of programming statements a functional product and another set of programming statements a text [context seems to be software]. Product and contract become one and the same Exploration of machine to machine contracts and viral contracts ( Is this good or bad??? Shirnkwrap NOTE: shift of contract law: Contracts used to be about meeting of the minds. Were now at a place when people just expect boiler plate terms come with a purchase meeting of the minds is a legal fiction now!! Carnival Cruise Lines (USSC) ( clause in consumer contract for cruise tickets, saying claimants would litigate in Carnivals state, not the claimants home state. BLACKMAN said it was OK, because Carnival would pass on costs saved on litigation. Cost savings from standardization and adhesion contracts are good. ProCD v. Zeidenberg:  sold phone listing software/database to consumers with Standardized terms making customer promising not to use commercially. " buys ProCD and starts charging for access to database via his own website, competes with hourly subscription service licensed to AOL. Economics ( Price discrimination/market segementation Captures surplus in certain markets, prevents deadweight loss Makes product affordable to consumers Court: contract is enforceable Contract formation ( UCC 2-204. behavior that shows theres a contract implies a contract. Opporutnityto see terms and reject them (i.e., send product back) There was a notice on the outside, and the exact terms were available when you ran the software Open issues ( what is a reasonable opportunity to reject? Zeidenberg is NOT battle of the forms (Step Saver) ( There was only one form. Idea that consumer is not a merchant so 2-207 doesnt apply: Hill v. Gateway: binding arbitration clause is binding upon Gateway purchasers. Terms were inside the box. Claimed terms would be binding if they kept computer for over 30 days.  brings court action but " wants arbitration Court: clause is binding: Consumers expect that there will be terms in the box If we didn t hold this binding then we couldn t hold gateway to service agreement either. 3 reasonable ways to check terms in this case: ask the vendor, consult public sources, read documents Rejected arguments for distinguishing ProCD Limit to software Limit to executory contracts Limit rule to merchants (Zeidenberg was a merchant, Hill was not) How does notice outside box that there were terms inside the box affect the case? Klocek v. Gateway, Inc. ( exception to ProCD v. Zeidenberg Same binding arbitration clause. Court holds that 2-207 is applicable Court ( Consumers must explicitly agree to the terms. Keeping for 30 days is not explicit agreement Require expression of acceptance or written confirmation with deviant terms 2-207 causes deviant terms to drop out Return to statutory default (allowing litigation) P. 812, n. 3 ( New UCC 2-207 (2003) carefully avoids taking a position on skrinkwrap licenses; specifically says they wont decide between Hill and Klocek Clickwrap and Browsewrap In general: click wrap is much more enforceable than other methods Davidson & Acssoc. v. Internet Gateway ( Warcraft Case "s click on terms in EULA to use game in CD Rom and TOU to use internet features. Battle.net allows you to play games with other users over internet, but you need to log in with your key from CD ROM. "s reverse engineered to create another online system that allows interaction, and breach EULA. Is EULA binding? Court: valid contact formation; distinguishable from Klocek (p. 821) Had notice of terms Clicked and assented This is a license, NOT a sale, which allows them to get around the First sale doctrine in copyright Specht v. Netscape Communications (Primary browsewrap case) Downloading Netscape: Regular download had a clickwrap but Smart download had NO clickwrap ( would have to scroll down the screen and click on a link that says please read terms .  sware they didn t look at terms Even if s scrolled down, they would have to click twice to find the proper agreement (click agreements site ( click proper product) s sue based alleging that collection of data from computers running downloaded software violates federal privacy legislation; " tries to enforce binding arbitration clause NOTICE Case ( There has to be sufficient notice of terms that people should view. Holding: ( reasonably prudent user would not have known the terms because there was no reasonable notice. Act of downloading did not unambiguously indicate assent to arbitration terms In re Real Networks (2000) ( Upholds Clickwrap contract with RealPlayer and RealJukebox that agrees to exclusive jurisdiction to state and federal courts sitting in Washington Procedural ( the following are NOT necessary Large print All caps Call section something other than miscellaneous Unable to print Substance ( the following do NOT matter: Geographical distance Failure to provide class action Cost prohibitive arbitration Grower v. Gateway ( court upholds binding arbitration clause to dismiss class action regarding service when you need guarantee. Binding arbitration terms include ICC arbitration (filing in Paris, Arbitration is in Chicago. Costly procedure: $4000 in advance ($2k non-refundable), Travel costs, Loser pays rule (for attorneys fees. Limited rewards: attorneys fees for winners, $1000 damages per person Procedural ( not a problem, even though fees are not disclosed Substantive Chicago is OK Excessive costs are a concern, BUT Gateway has put in a new clause that substituted the AAA as a new agent Pre-emption and Licensing In General Fedearlism( IP is federal law, should trump contract, which is state law Federal public policy, NOT pre-emption Pre-emption complications: ( Constitutional pre-emption (supremacy clause) conflict pre-emption Field Pre-emption: Congress doesnt say it explicitly, But Congress meant to occupy the entire field of IP Copyright Act 301 ( cant enforce things under state law that are equivalent under general rights of federal law Lots of ways to argue pre-emption Not directly in copyright act Copyright act is field pre-emption ProCD Part II (p. 932) EASTERBROOK: Copyright is a right against the world. Contracts only affect parties; strangers can do what they want Contract cant be pre-empted, because it is not a property right. Contracts are in personum; copyrights are in rem Contracts are essential to efficient markets. NOT all contracts are automatically outside pre-emption clause, but in general shrinkwrap contracts are fine Radins argument: Easterbrook focuses on the two parties, but not on the aggregate effects. What happens when everyone contracts out of the regime? Does the balance of the regime fail? Copyright as solution to coordination problem People who write these contracts are defecting from the regime they signed onto Radin likes this argument, but she hasnt seen it written down Some argue that ProCD part 2 doesnt get to Constitutional pre-emption (as suggested by Amicus briefs) Bowers v. Baystate Technologies (Fed. Circ. 2003) FACTS: Bowers created program (Cadjet) to improve CADKEY programs. Ford gave bowers exclusive license to market his stuff (Geodraft). Bowers sold software together as Designers Toolkit shrinkwrap that prohibited reverse engineering Baystate rejected Bowers offers to bundle DT w/ Draft Pak. Instead it made its own templates and worked them inte DT, version 3. Baystate purchased CADKEY and revoked its agreement with Bowers Baystate files for declaratory judgment, saying that it did not infringe, and that patents are not valid Bowers countersues for copyright, patent infringement and breach of contract Bowers wins! ( Copyright does NOT pre-empt the contract!; Contract is broader than copyright (extra elemenet) Court found there was an opportunity to negotiate DYK (Dissent) ( assertion of difference between private negotiations and situations in which there is no negotiation (p. 941) State law cannot place a total ban on reverse engineering would be against copyright act Sate can permit parties to contract away fair use defense, or agree not to engage in uses of copyrighted material otherwise legal if the contract is freely negotiated Giving effect to shirkriap licenses is not different then a blanket ban of reverse engineering of products labeled with a black dot No opportunity to negotiate = no contract There is no logical stopping point for the majoritys reasoning. Patents: Test for preemption should be if state law substantially impedes public use of otherwise unprotected material (p. 941) Understanding the case through servitudes to Chattel You cant do it for books, but it seems you can do it for CDs and e-books We seem to disfavor restraints on alienation for physical objects, but maybe its OK in this form. Market arguments vs. personal freedom arguments against servitudes Personal freedom ( More that you allow people to do, better you can tailor market to meeting preferences Market arguments ( servitudes create too many transactions to undo ORourke ( Negotiated and non-negotiated licenses should be viewed differently Uphold licensing unless doing so would allow the licensor to expand its copyright monopoly beyond the market to which that monopoly was intended to apply Problem: courts (even judges on same court) think differently about whether there was negotiation Cohen v. Paramount Pictures (1988) ( Paramount granted rights to distribute in theaters and on TV, but are videos (invented after contract) by means of television?. Court says NO! License must be construed in accordance with purpose underlying federal copyright law P. 908 ( Go against purpose of copyright act if we were to construe license as granting right in medium that had not been introduced into the market at time of contract Black letter rule: dont automatically get rights that dont exist yet, unless you include specific language saying so: Disney gets out of this by adding ( by any means now known or hereinafter discovered. Random House v. Rosetta ( Random House wants to read e-books into book distribution deal so it can sue Rosetta Court ( contract doesnt cover e-books ( Cant prevent e-book competition NOTE: This favors authors over Random House (Not RH over Rosetta) Tassini ( could writers limit NY Times rights to republish on line? Writers win ( have right to limit online publication of their articles BUT Times uses new contract to cover rights to distribute online Summary affimrance on appeal Policy Questions now: Can we let people put all means now known of unknown into contract? Is there a difference between personally negotiated contracts and ones that are not really negotiated? Thomas Smedinghoffs Strategy Transactions on the internet ( What do we need to worry about? Movement towards paper transactions being done electronically Quicker, easier, cheaper Insurance, bank loan transactions, loan interests How do we do negotiate paper transactions electronically? NOTE on e-commerce law global development family law, real property law, etc. all developed separately by country based on individual cultures. E-commerce law has developed in a different way: more standardization; everybody is talking to everybody Issue #1 ( Is it legal? Can I do this type of transaction in electronic form? Statute of Frauds ( does it need to be in writing? Certainty ( are people comfortable with this? Even if its legal. Most laws simply say e signatures are OK, but thats it! Typically have some exclusions (e.g., family law) But generally designed to make it legal across the board Issue #2 ( Make sure PROCESS produces enforceable contract Methods: exchange of emails (just like paper mail) EDI system ( back and forth process in which companies fill in blank fields Click on I Accept tab (website) ( user-friendly Browsewrap ( just put terms on page 3 standard things you need for BINDING CONSENT: FAIR NOTICE ( must know contract is there OPPORTUNITY TO REVIEW CONTRACT make the contract available up front problem ( dealing with tiny screens (cell phone, PDA) even if you know people wont review it ADEQUATE NOTICE OF WHAT CONDUCT CONSTITUTES ACCEPTANCE consumer must know how to accept, and what Acceptance must be affirmative conduct Importance ( avoiding class action lawsuit through binding arbitration clauses Issue #3 ( Information disclosure Not in all statutes ( found in EU directive, CA law Addresses Information asymmetries in electronic environment Requirements to disclose certain information as part of contract Who is the other party Address, business, etc. UN doesnt require disclosure per se; it defers to applicable local law Two opposing views U.S. position ( let the parties experiment and work it out (especially in B2B context), so you dont stifle ecommerce EU view ( need fundamental rules to keep bad things from happening CA has picked up on this idea for consumer protection Standardization problems Least Common denominator ( differing requirements lead businesses to comply with strictest standards (CA becomes law for all) Clients will often have to hire local counsel to determine compliance with rules Issue # 4 ( Record-Keeping Records must be accessible to both party Must have ability to download and print Problematic scenario ( scroll box with 57-page contract Companies should make sure users can print and save contract Ability to cut and paste may not be enough Issue #5 ( Valid Electronic Signature Virtually nothing written about law relating to paper signatures Need for signature: Indication of intent Law may require it Security ( how to protect signature Intent ( ideally, the context of the document will indicate intent (text above the signature, label next to, above, or below signature line) U.S. requirements for a signature: sound, symbol, or process attachment (or electronic link) of signature to document Intent EU requires that you use a method for two things Establish identity Indicate intent Has to be as reliable as appropriate for transaction EU signature directive authorizes two types of signature Regular e-signature advanced e-signature Legal presumption that the document was validly signed by person whose identity corresponds with that signature Three factors for authentication: Something you know (pin) Something you have (card) Something you are (biometrics) Issue # 6 ( Trust In any transaction: Do you trust the other party? Do you trust the transaction? E-commerce is about trusting transaction Who sent the document? Document integrity? Preventing false denial of signature, false denial of contents Issue #7 ( Record-keeping UEDA and ESIGN allow electronic storage 2 requirements: Integrity ( make sure document stays intact Accessibility Regulatory agencies can add more Privacy Online Background on Information Privacy in General Information Privacy p. 391 ( right of groups to determine when and how information about them is transferred to others Sectoral Approach ( Important in certain area, Ignored in some areas Argument ( historical accidents of information privacy Video Rental Privacy act ( during Borks nomination hearings, video rental records came out Financial privacy, Medical privacy, Telecommunications-related privacy, Most protected are Cable TV records Federal statute ( Childrens Online Privacy Protection Act State Laws ( CA law requires websites to post privacy policy Security Breach laws in states ( over 20 states have laws that you must notify victims if their data is compromised Congress still dealing with security breaches State Torts with online privacy breach ( unclear if cause of action Whats different in the online context? Data collection is faster and cheaper ( More will be collected, More will be used Pre-transactional Data ( clicks before your purchase can be tracked by the website. Internet browsing is different form offline browsing in store [Lack of] Anonymous Payment Mechanisms; Shipment of purchase reveal address (and email for SPAM) Collection of information from Children is easier online In sum ( Certain differences seem pretty clear; others do not! Leary ( Should we treat online privacy different (FTC Dissent Paper) FTC is going about this the wrong way Differences between new and old are not such a big deal Same technology is used Can put together dossier offline If we have too much privacy online, it will hurt ecommerce If you cant track on line, youll want to stay offline Sellers need to be able to market more Opposite view: ( Online book purchases are subject subpoena by feds. Customers were skiddish about buying online, so Some online bookstores are not keeping purchase records Posting privacy policies on websites( Learys level playing field Websites should post privacy policies, BUT privacy policies arent posted in offline world Some websites are posting brief policies Will having a stronger privacy policy actually provide anybody any benefit NOTE ( There is no legal duty of notice (except in CA), so there can be no action for lack of notice. If you dont say anything, you cant have violated any promise. Is there a market failure? Consumers dont have good information about policies and their impact People dont think about consequences until their identity is taken Libertarian Argument Choice between buying in person (people see you) and buying online nobodys there, but theres a record (digital trail?) Response: Information asymmetry people are not making informed choices. They dont know whats going on Response #2: we may want to promote online commerce. We want to eliminate barriers and regulate privacy measure so people will buy online More efficient than leaving to private choices Fair information Practice Principles Notice ( How much notice do you need to give people? Will too much notice be detrimental? Tell consumers what is going to be collected about them before the information is actually collected. Tell consumers who is collecting the information, how they plan to use it, who will receive it, the consequences of refusal to provide the information, and the steps taken to insure confidentiality. Reality of the situation: most privacy policies tend to be written at such a level that the average person could not understand them. Choice How much choice do people need if they have notice? Opt-in vs. opt-out regimes marketers prefer opt-out. This puts the burden of action on the consumer. Making it opt in would provide less data. 10th Circuit has held that an FCC law requiring opt-in consent was an unconstitutional burden on free speech. U.S. West v. Federal Communications Commission. Access ( How much access to provide Individual should be able to view the information collected about him/her and correct any mistakes Costs of providing access Does it create more privacy issues for others in database Security ( how to maintain private data security. How much do information holders have to spend? Enforcement/Redress: Possible enforcement mechanisms: Self-regulation: Should include both mechanisms of enforcement and of redress. Private remedies: Create private rights of action for consumers. Government enforcement: Civil or criminal penalties. Another method of third party enforcement. EU Directive: Limits the quantity of personal data that is collected. Collectors have to keep the data in a form that allows people to identify the data subjects for as limited a time as possible. Certain types of data is strictly off limitsthat pertaining to race or ethnicity; political, religious, or philosophical beliefs; trade union membership; data relating to health or sex life. Technology Cookies: Gives you a unique identification codethe website can they collect your click stream data when you visit it. If you provide personal information on the website the website may associate your click stream data with you in particular. Web bugs: Instruction that pretends to be fetching an image to display on the web page (or in an email) but actually serves to transmit information from your computer. These are powerful because they can collect information from you when you when you are not browsing on their websitesallow for more aggregate data. Piercing the Veil of online privacy Often hard to file a lawsuit stemming from online injuries because the defendants in such suits may be anonymous. As such, courts may allow pre-service discovery to ascertain the defendants identity. Generally, three standards. Point of the standards is to keep plaintiffs from abusing pre-trial discovery. Columbia Insurance Co v. Seescandy.com (424)(someone is using plaintiffs trademark, plaintiff wants to sue but defendant has concealed his identity) standard for pre-service discovery: identify the defendant with sufficient specificity so court can determine its a real person or entity who could be sued in federal court. Show good faith effort to find the defendant and serve him. Prima facie case that will withstand the defendants motion to dismiss. request for discovery ( file a statement of reasons justifying discovery AOL v. Anonymouse Publicly Traded Co. (VA. 2001 Good faith) legitimate, good faith basis to contend that it may be the victim of conduct actionable in jurisdiction where wsuit was filed subpoenaed identity information is centrally needed to advance claim Dendrite v. Doe Standard (prima facie case) (p. 429, n.1-b) attempt to notify defendants of the pending suit. demonstrate actionable speech provide prima facie evidence to support each claim balance defendants right to anonymous free speech against the strength of the plaintiffs case. Doe v. Cahill ( defamation  must present enough evidence to show that claim would withstand summary judgment Melvin v. Doe Standard: Discovery is allowed unless the defendant can show that the plaintiff cannot make out a prima facie case against him. To beat a defendant s claim of no prima facie case, plaintiff need to show either: statements made were false and support recovery of damages Or, plaintiff could go on the stand, claim that the statements are not true and claim emotional distress. Anonymous plaintiffs: sometimes courts will permit anonymous plaintiffs to prevent irreparable harm. Balance  s need for privacy against presumption that parties identities should be public Models for protecting privacy online: Model 1: Industry self-regulation ( Every time there has been a threat of government regulation, the industry has stepped-up and begun to regulate itself. Model 2: Privacy seals: TRUSTe ( Most popular method. Requires disclosure of certain information: What info a website collects How the info is used Who the info is shared with Choices available to users Security procedures How users can correct their information Provide consumers with a simple way to complain about the privacy policy Monitors to insure that sites are actually abiding by their privacy policies. Also has a watchdog report form. Violation procedure: Notify website of consumers complaint Notify the consumer of the resolution or relevant findings If nothing happens, may revoke the TRUSTe trademark Problems with this program: Microsoft example. Did not find a violation against Microsoft since the one violating the privacy policy was not Microsoft.com, but rather the Microsoft Corporation. Model 3: Technological solutions (p. 439) Encrypting emails Anonymous surfing ( use intermediaries to prevent transfer of information about you while you surf Pop-up blockers Cookie manaters Anonymous remailsers Firewalls Spam filters Spyware protectors P3P ( automated interaction between web server and client browser concerning privacy preferences browsers can set to deal with only P3P-compliant sites little motivation to comply, since P3P not part of default settings, and re-setting browser will deny access to much of the web Model 4: EC directive and US safe harbor (see below) EC Directive ( Limits the processing of personal data General Provision: restricts options of data controllers (people who determine purposes and means of collecting data Limits purposes for which data may be collected and amount of data consent requirement to collect data. Exceptions data is necessary for performance of a contract to which subject is a party compliance with legal obligation protect data subjects vital interests Further the public interest achievement of data controllers legit interests are not outweighted by subjects fundamental rights and freedoms Prohibits collecting certain types of information: that pertaining to race or ethnicity; political, religious, or philosophical beliefs; trade union membership; data relating to health or sex life Exceptions here as well. disclose information about the collector: Whos collecting it Why its being collected Anything else to guarantee that the processing is fair. Disclose how their data is being processed. assure confidentiality and security notify the government before automatically processing data Limits a collectors ability to transfer the data to country outside EU Can only transfer to a third country if the third country in question ensures an adequate level of protection to the data Safe harbor to prevent liability for parties in countries that are not in the EU Safe harbor ( non-EU party can get safe harbor status if they comply with guidelines: Notice: Purpose of info, contact info for the collector, who the info is going to, how to limit collection Choice: must offer the ability to opt-out; for sensitive information, people must give explicit consent Onward Transfer: Must use notice and choice to disclose information to a third party but may disclose information to its agent without these procedures if the agent is in privity Security Data integrity: may not process info in a manner that is incompatible with the purposes for which is had been collected. Access Enforcement: must include mechanisms for insuring compliance that are: (1) Readily affordable, (2)Follow up procedures Companies that use TRUSTe are entitled to display the Safe Harbor seal. How should we view privacy? Laudon: Individuals receive no compensation for privacy invasion. Price of collecting information is so low for companies that they dont have to be efficient in what they gather. Impose a cost to make collection of information more efficient Litman: Exchange identities for discounts on online services. People dont realize what theyve given up until its almost too late. Radin: Can look at this either from a human rights basis or a property rights basis. The US looks at it from property basisprivacy is alienable and people can choose to sell it. Childrens Online Privacy Protection Act: More stringent disclosure requirements when dealing with children. Gives parents the opportunity to delete their childrens information Make reasonable efforts to get parental consent Give the parent the opportunity to review information collected about the child May not condition a childs participation in online activity on the childs disclosure of information Maintain reasonable procedures to protect confidentiality Jurisdiction jurisdiction Personal Jurisdiction is most difficult problem Website is accessible everywhere If we allow jurisdiction everywhere, then youre open to lawsuit just by putting up a website Conflicts of law ( what youre doing could be legal in host country, but what if its illegal in other places? Legal background Abilty to assert jurisdiction is dependent upon due process ( Constitutional Issue Law of the state ( long arm statutes Minimum Contacts ( standard for  fair play and substantial justice Effects Test ( Calder v. Jones, Keaton v. Hustler express aiming of allegedly tortuous actions knowing that the brunt of damage will be felt by " in forum state Defamation cases ( looked like there were reasons to give defamed individuals more leeway Haven t decided if this test could be used: outside of defamation, in claims of harm to corporations (s are not individuals) Purposeful availment ( Burger King v. Rudzewicz, Bensusan Cause of action is related to whatever the company did w/ respect to forum state Has to be something that looks purposeful for conducting activities (usually business) in the state WW Volkswagen, Asahi ( More than mere foreseeability; Not enough if " could foresee that his product would come into the state. Contracts with residents are usually enough (McGee) ( negotiations leading up to it, etc. Realist, standard-like test Declaratory judgments present a problem Zipo Mfg v. Zippo Dot Com ( tri-partite classificaition FACTS Manufacturer sues Dot Com, because " registered zippo.com, zippo.net Dot com operates website with internet news subscription service Manufacturing (PA corp) brings suit in PA against Dot Com (CA company) Court ( Manufacturer wins: used lower court cases on internet jurisdiction; didnt look at due process jurisprudence Tri-partite analysis ( Scale of interactivity Clearly doing business ( repeated knowing transmissions of files easy to establish jurisdiction This is like purposeful availment (p. 332) Interactive websites ( user can exchange information with owner interactive websites where a user can exchange information with the host computer Jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information. middleground ( kind of fuzzy test Merely a Passive website ( simply making information available no jurisdiction; no availment Critiques of test: Interactivity doesnt seem like a good measure; could have passive website that advertises for businesses Discounts what happens offline Nobody knows how this got to be the leading case, but its cited everywhere gtRevell v. Lidov ( 5th Cir. Rejects argument to abandon test Legal Realism ( these cases are mostly based on how bad the court thinks the " is, Seems that there s no real rule Cybercell v. Cybercell (  something more jurisprudence FACTS: AZ co sues FL co in AZ for using its TM. FL claims no personal jurisdiction in AZ Court ( dismisses need something more than just using a website It would not comport with rules of fair play and substantial judgment No contact with AZ other than maintaining a website accessible to Arizonans something more jurisprudence Notes 340-341 Now passive website cases are generally dismissed. Courts have not always been so strict about something moreas in Cybercell Early cases more readily found jurisdiction Inset Systems ( 1-800 number can be purposeful availment (use local number); Hasbro v. Clue Computing ( " s website said it had done work for a company in forum state, didn t try to block contacts from forum state (site owner s e-mail hyperlink) Maritz v. Cybergold ( accesses 131 times by residents of forum state go jursidcction ALS Scan v. Digital Service Consultants: 4th Circuit reformulation of juris standard: direct electronic activity into the state manifested intent to engaged in business or other interactions w/in the state activity creates a potential cause of action cognizable in the States courts claimed to adopt Zippo model Panavision v. Toeppen (9th Cir) -( Toeppen was a huge cybersquatter. Took Panavision.com and offered to sell it. " has passive website in IL. Only Contacts with CA was sent letter offering to sell domain name for $10,000 Court ( folds Calder  effects test into purposeful availment. Brunt of harm is felt by Panavision (in CA  entertainment industry) Elements of effects test: Intentional actions Expressly aimed at forum state Causing harm, the brunt of which is suffered in forum state " knows it will be felt in forum state Arguments for " Course of action in IL  is a corporation, NOT an individual (precedent deals with individuals) Mere residence of  in forum state is not enough (5th Cir.) " has to know and intend that the harm will fall on  in forum state Revell v. Lidov ( :  brings suit in TX against Columbia U and Lidov, who published an editorial on a website maintained by Columbia school of journalism Court ( TX is not focal point of article. Need something more than  being located in TX " Doesn t know that  resided in TX Even under Calder, need something more Lower (distict) court said Zippo passive, but Cir. Court says this is interactive website (p. 349) Bottom Line ( Effects test requires more than victim in a state a more direct aim is required here Seems in tension with Toeppen Declaratory Judgment puzzle Is threat of being sued a proxy for harm under the effects test? Declaratory judgments and jurisdictions when company has agent in forum state, " can be sued in state where they have an agent, because they re physically located there Minimum contacts ( location of defendant is the key! Effects test ( used in defamation cases with individual s purposeeful availment Internet tests the limits of minimum contacts Declaratory judgment really tests limits of tests Never defamation ( newspapers dont bring declaratory judgment actions to protect themselves If you broaden effects test to IP, then you gets lots of declaratory judgment People want to protect their businesses; Want to choose the forum themselves Goldsmith ( its not so hard; rules are not about ideal forum, just permissible forum Will internet commerce make us change our jurisdiction tests? Yahoo en banc ( broadens jurisdiction, but dismissed for ripeness What should the courts do? try the whole case to determine jurisdiction? Make s go to "s jurisdiction to bring declaratory judgment? Bancroft v. Augusta National, Inc.  registered masters.com. They are anticipating lawsuit by Masters Golf Tournament, so they file for declaratory judgment Court ( There is PJ ANI acted intentionally when it sent a letter to NSI letter was aimed at the CA company and felt in CA NOTE: Must suppose that Bancroft had the right to website, and that Augusta National was trying to steal it Top of p. 353 ( works if Augusta National was attempting conversion, BUT court was skeptical Yahoo! v. La Ligue Contre le Racisme et lAntisemitisme FACT: League got judgment in France saying that Yahoo! was acting illegally in France by allowing sale of Nazi Memorabilia Yahoo complied with French Law Brought declaratory judgment action Argued that League couldn t force the point in America, because of 1st amendment rights Court ( No wrongful conduct by French "s Only harm is that Yahoo! has to wait for French "s to come to U.S. to enforce this judgment Making Yahoo! wait to claim 1st Amendment is not harm enough for jurisdiction Affirmed En Banc on other grounds ( 8 judges for jurisdiction (but 3 thought case wasn t ripe); 3 judges against jurisdiction so 6 for dismissal (3 on jurisdiction, 3 on ripeness) Shouldnt rush to a decision on inadequate information Would find jurisdiction Wont find ripeness Where this leaves us ( 8 judges on 9th Cir have interpreted effects test more loosely Sticky situation ( Is this American cultural imperialism? NOTE the Catch 22 ( have to determine case before they can determine jurisdiction. Compuserve v. Patterson ( Limits of jurisdiction and contracts ( P. 357 FACTS: patterson was a customer of compuserve; sold software through them. Patterson was threatening to serve them on common law copyright infringement (arguing they were using shareware that belonged to them) Court: He was selling through compuserve and sending information computer systems located in the forum Compuserve was based in OH He knew he was dealing with OH ( originated and maintained contracts with OH party Compuserve is clear, but would a mere single transaction be enough? P. 365, n.3; case law is unclear Location of computer equipment ( Is that location in a state? What if you send stuff there? See p. 368 ( Location of computer or hosting service is not usually enough on its own, but unclear JOD, Carefirst ( server location is not enough 3Do v. Opotop seems to say location of serr is enough Preskap ( location of computer holding database is NOT enough Realist Margie ( one transaction would be enough if you thought the person was bad enough and deserved to be sued Long Arm Statues and Computer Equipment ( 379-380 ( location as a factor for state long arm statutes Krantz v. Air Line Pilots Ass n(VA case) ( need an action in VA TELCO communications ( jurisdiction because "used AOL. AOL is located in VA VA amended staute (p. 380) ( using a computer or network located in commonwealth shall constitute an act in the commonwealth. using a computer includes attempting to cause or causing a computer or network to perform or stop performing computer operations NOTE: AOL located in VA, and has a VA choice of forum cause VA has UCITA, which is favorable to enforcement of clickwrap, etc. NOTE: State statutes control limits that states are willing to exercise as jurisdiction. They are limited by due process rights not to be hauled into courts Court hung their hat on the idea that Patterson sent lots of data to computers ( he s doing repeated transactions into Ohio Choice of la Rothschild ( p. 382 Limits of Utopianism Talking about choice of law ( Lots of questions Locations of parties? Place where  acted Place where  received representations Place where " made representations Residence and nationality of parties Place where subject of contract is located Place where  was to render performance under fraudulently induced contract Performance with sale of digital goods? Place of contract Negotiation Performance Location of subject matter of contract Location of parties Why dont courts revert to USSC jurisprudence? Understandable early on, but not clear why they dont do it now Goldsmith ( 383 Theres not really a problem Weve always had problems with choice and weve always found ways to solve them. We figured it out before well figure it out now Problems of complexity and situs are genuine, but not unique to cyberspace. Look at the factors and make a choice P. 385 ( unilateral method vs. multilateral method Multilateral methodology ( figure what law is best to apply Unilateral methodology( decide whether local law is OK if it is, try the case if not ( dismiss the case reification ( looking at something as a physical thing and giving it those attributes exceptionalism ( Location is now arbitrary because of reification Goldsmith ( we always had problems with this, and we Can we fix problems with declaratory judgments by rolling back the harm in US test ( dont need a tort to get declaratory judgment; can be pre-emptive Back to Contractual Choice of Law and Choice of forum P. 898 ( chapter 10 ( II-B Attempt to avoid PJ issues by contracting for choice of law Company wants to do this, because they dont want to get sued all over the place Consumers dont think theres a real probability of lawsuit, so they dont care about the choice of forum clause (perfectly liquid market). Companies want to avoid transacgtions Carnival Cruise Lines ( Court said they like contract, and they like the efficiency of doing this: company will pass savings on, and Consumers will benefit in the aggregate! EU Approach (p. 904) ( Consumers get to sue in their home jurisdictions U.S. Courts are divided about this CA would not enforce FL will not enforce Exam question: Which portions of a contract are illegal, and which are legal (look at AOL)?? Depends on jurisdiction!! See cases on p. 899!! Groff ( citing Bremen applied 9 factor test, and upheld AOL choice of law clause. RI court enforces AOL v. Superior Court ( CA court upholding clause would make CLRA irrelevant (statute protects consumers from deceptive facts AOL charged $8.95/month, and they took way too long to cancel subscriptions. Justice in CA vs. justice in VA Should it make a difference if youre an individual or class action? EU consumer protection ( p.903 Consumers can sue in their own forum in EU There is class action in certain member states However, more limited definition of consumer contracts in the State of the consumers domicile the conclusion of contract was preceded by a specific invitation addressed to him or by advertising Class actions Judge has to sign something to certify each . Judge can give a certain amount to each individual who shows up for payment Open Source contracts are these contract enforceable? licenses expanding user rights Creative Commons Open Source Source code ( what the programmer writes in whatever language they are using Programmer puts notes in source code Said to be creative ( can write things in different ways Object code ( translation of source code into binary (1s and 0s) Compiler ( turns source code into binary Copyright ( USSC wouldnt patent computer programs, so in 1970s ( commission made programs copyrightable Apache ( open source program that helps run webpages. About half of all websites use this Open source Is license enforceable? Computer programs are copyrightable Can foreclose all subsequent people from making derivative works Can prohibit copying In the public domain ( anybody can create derivative work and copyright that. This means what you wanted to leave public is made private property License agreement ( Can take an improve Can make derivative works If you do, you have to give the source code to everybody Origins ( Richard Stallman MIT scientist Couldnt fix printer because he couldnt get access to the source code, and he was angry LINUX operating system Competition with Windows and Mac (more users than Mac) Operating system is free Can re-vamp it; change the source code Yohai Benkler ( Coases Penguin (Harvard Law Journal) Service companies ( cant sell open source operating systems, but they can provide support 2 branches of thought: Economically efficient Gets people things faster and quicker Car analogy Big companies (like IBM) have gotten into this Social Theory culturally important to have software creativity be free freedom to Tinker detractors say this is Communistic Evan Mogler ( Columbia prof. who helped write GPL Main negative ( GPL contamination programmers and engineers are using open source they may accidentally put open source product into something your company is developing. That would require the whole product to be open source Companies are now disclosing risks SCO v. IBM ( pending litigation SCO = Santa Cruz Operations SCO mounting frontal attack on LINUX claims they own some copyrighted code that is in LINUX therefore LINUX violates their rights want to stop distribution of LINUX IBM put money into LINUX to try and compete with Microsoft NOTE: Microsoft is funding SCOs legal campaign If SCO wins, it could hurt open source SCO is filing thousands of pages, but it could be nothing Bottome line ( This whole thing is important to IBM and Microsoft (wants to control who fixes windows) Questions on p. 947 strip away freedom by copyrighting derivative of something in the public domain. Everybody will have to license that from you if they want it. Copyleft ( cut down on restrictions on users freedom Dont have to worry about getting copyright Reproduction without permission risks liability License reproductions and derivatives BUT if you restrict use of your derivative works, you are in violation of copyright GPL conditions: pass on derivative works Pass on source code of what you reproduce Loophole ( companies retool Apache for their own needs, but never release it beyond their own servers. NOTE: Economists and social idealists fight Question 4: Are licenses contracts or property? Contracts ( agreement to do things (develop something) require consideration Property ( open source people want to claim property think property rights will endure more robustly through trains of transfer Contractual promises may go away; need privity for contract Defesable fee ( you have black acre so long as cows dont walk on it. But if cows walk on it, then you lose your rights Convenants running with the object ( right was altered in initial deal, and that servitude stays. You have an obligation and whoever gets the property after you has that limitation. Problems with property theory Common law restrictions on covenants Restraints on alienability Who are the parties if theres a breach? Works better if you say all rights remain with the original grantor Havent seen any suits over this ( seems to be organizing a community NOTE: Is it strange to organize a community with copyright? Copyright creates the opposite of what theyre trying to do. Could the people on top retract their license? Would that be a breach of the licensing contract? Problems: ownership would be fragmented. More secure, but incredibly hard to change anything (would have to consult every person. Creative Commons About works (law review articles, etc), not software Make copyright looser, but not giving it up entirely Write license in consumer language, have logos that show you what to do Goal: make it easier to find the type of work you need and ascertain the types of rights running with the works Major law reviews have signed on to make law reviews available through certain licenses ( some profs have signed a pledge to submit only to these law reviews Concerns Authors want to have people read works Right of attribution (no moral rights in US copyright information required any more) Want to preserve derivative right Still legally questionable ( affects the future too much Compare Patent Threat to GPL You cant patent the code statements Can patent your method for business model NetFlix is suing Blockbuster for this Can an outsider with a patent destroy open source? New version of GPL ( if you bring patent infringement act, you will be out of the open source license Algorithms are patentable (including business models) Primary legal issue ( are contracts binding on successors of people who receive the works? SPAM Basics Spam costs money. Someone must be responding, or advertisers would stop using it. Defining SPAM Mass marketing emails DE Act ( message sent by human being doesnt count CAN SPAM Act tries to define ( If SPAM is unsolicited, is email you consent to really SPAM? What to do about it? Regulation ( we have Can SPAM act, but nobody follows it. How do you make it work? Banning it completely ( What can/should you outlaw? Legal questions: Outlawing everything could be going too far against commercial speech Federal vs. state regulation? Other common law attempts ( torts Permission marketing ( organizations only send with your permission. Make you check a box to get it (or uncheck a box not to), and give you link to unsubscribe. Costs of SPAM Fraud ( Difficult to identify phishing vs. legitimate advertisements Scams to get personal information BUT phishing/Nigerian scam isnt from legit advertisers Fly-by-night businesses disappear after you send money Sexual content Time and annoyance ( have to clear inbox, differentiate between real content Contracts ( Ticketmaster policy requires agreement to receive spam for the rest of your life. Regulatory costs Technical resources ( bandwidth, server space Slow delivery could cause you to wait when theres a ton of spam in the way Benefits of SPAM Information on products we want Information about products we dont know about before Pro-competitive ( Allows small companies to enter the market at low costs Free Speech/Advertising ( ban on all unsolicited e-mail could impinge on free speech Issues for regulating: Competition policy Free speech Information needs Putting codes in titles of email that lets you filter out what you dont want Dormant commerce clause problems Spam ,etc. Bad Transaction costs Bandwidth costs Causes confusion; may result in missing Annoyance Fraud Privacy sexually explicit e-mails Competition Policy and commercial speech How do we separate the good from the bad? Provides information and easy access to markets! Practical considerations People move e-mail addresses Hard to find offenders "s are judgment proof Substantively ( competition policy, first amendment CAN SPAM Act Is it working? Are substantive concerns properly balanced? Why do people hate Spam so much more than other unsolicited things Junk snail mail need to dispose of it no filter environmental effects ( waste of paper postal system BUT quality tends to be higher Spam filters take out good stuff and lets through spam messes up hard drive frequency! content ( Snail mail is higher quality trickier than junk mail ( looks like a real message tele-marketing people think this is the worst most intrusive hard to give up your telephone more time consuming BUT ( National Do Not Call List; no National Do Not email list! telephone is more fixed and indispensable easier to change email email address automatically gets out there pain to change How should we regulate Spam Regulation Theory ( choke point find place where everybody passes through, and charge there Should we tax email? Bulk email purposes Advertisers get a special rate on snail mailings Require permits for SPAM Problem ( still hard to find and prosecute Costs of regulatory appartus EFF Objections ( may make email more expsnsive Prevent bulk-remailers Private hunting license ( Creates incentives for private action reward people who report them Problem ( still hard to locate Tracing sources of email Can tell where spam really came from Problem ( requires technology, other side effects Facilitate self help and filtering with regulation Require commercial messages to have ADV in subject line EU Directive ( Opt-in approach ( No Spam w/o consent Opt-out approach for Pre-existing relationships ( can opt out of mailing list Problem ( hitting unsubscribe often just proves you are a real email address. Australia ( Put in contact information of person who authored the email Compliance is expensive Fines for non-compliance Gives users a recourse Allows users to sort emails themselves Problem ( difficult to enforce ISPs can become large compositories of compulsory licensing?? Charge for urgent messages Leave it to ICANN has no free speech restrictions Let them run things Adhesion contract to customers through ISPs( punish through black list General Problems with regulation Free Speech Concerns Charging for email makes it harder to send political e-mails BUT USPS costs something; isnt that a restriction on speech Culture ( Is this cultural? Are we willing to put up with SPAM rather than have to pay for email? Anonymity (Tons of anonymous email servers. maybe we dont allow that Categorizing ( How do we identify spammers? Number of messages ( what about political parities Jurisdiction ( people will just leave the U.S. SPAM vs. Freewheeling Environment Can Spam ( p 1033 Excludes transactional or relationship messages I.e., if you bought something No multiple commercial solicitations from or through another partys computer w/o permission No false information Label sexually explicit messages ( does anybody do it? People ignore this ( dont identify themselves so as not to be caught P. 1039, n4 ( early results not encouraging Can Spam rejection options: Bounties Opt-in approach Way to identify sender Labels explanation( dont want legitimate advertising to go away. Fraud and sex ads arent going to go away anyway, because they wont comply. They would affect the wrong people. NOTE: enforcements there have been successful impositions of fines in Australia There have been prosections and jail time in US FTC hearings P.1030 First Amendment ( about state action Government regulation of speech Media Abuse Prevention System is a private party Private regulation ISPs try to keep people out Courts will say this is private action NOTE: No free speech rights for corporations See Media3 Tech LLC v. Mail Abuse Prevention System LLC Mail abuse protection system tries to punish SPAM Media3 wants injunction against MAPS for putting them on a black list Tort Claim: interference with business practices, unfair trade practices MAPS won ( no state action Rachael ( Look harder for ways to get private sector to help Target the sale of mass e-mail lists. Set treble damages to attract attorneys Put it under bounty hunter idea Self Help User filtering ( not so accurate, false positive, false negative interfering server ( puts SPAM into a central server, and everybody with technology will block that stuff service provider contracts Cases you accused me of spamming and it cost me or Your spam damaged me See Media3 Tech LLC v. Mail Abuse Prevention System LLC Mail abuse protection system tries to punish SPAM Got sued, but they won ( no state action Media3 wants injunction against MAPS for putting them on a black list Tort Claim: interference with business practices, unfair trade practices Court: This isnt a tort Hall v. Earthlink Peter Hall wants to use email account to promote independent film mail service provider thinks hes a spammer Earthlink ( retracted, but failed to forward messages for months Contract Cause of Action ( breached service contract film would have been more successful Court ( damages are too speculative Margie ( breach of contract might work if the damages werent so speculative Claim ( Electronic Communications Privacy Act (ECPA) offense to eavesdrop and catch some peoples emails Court ( doesnt apply here, ISPs may need to hold messages for different reasons Blue Mountain v. Microsoft ( p. 1051, note 2 Free online greeting cards provider sued Microsoft for maliciously filtering its cards claimed filter on Internet Explorer put it in commercial junk-mail folder Court ( Blue Mountain wins preliminary injunction NOTE: Is BM using this to gather lists of valid email addresses? say they wont give out your email, but do they give out recipients addresses? once they sell, all bets are off value is information attached to email addressed (marketing profile) Case Settled Legal Realism ( Court liked the business model AOL v. LCGM ( p. 1024 AOL tried to prevent spam through Lanham Act AOL claimed that sending porno w/ email address ending in aol.com, makes people think AOL supports Spam Court: AOL is tarnished by Spam Computer Fraud and Abuse Act ( broke it in 2 ways intentionally accessing system w/o authorization thereby obtaining information Impaired computer facilities ( accessed and causes damage Compuserve v. CyberPromotions s claim ( " was using system to benefit self at compuserve s expense Significant burden on access Slows down system Compuserve billed by hour back then Subscribers are bearing the costs, and receiving lower quality Sympathetic to s Trespass to Chattel ( you mistreat property and damage it Example given (  PULLING A DOG S EARS de minimis Vs. conversion ( taking Vs. trespass to land ( physical invasion (nominal damages if you don t harm the land, but strict liability) Court ( must show that theres no tacit consent Mass mailer was violating user agreement Court emphasizes self help What is the chattel? Server/computer Invasion ( information Damage ( messes up the system by slowing it down Margie -( couldve invented new tort: flooding me with information I dont want Next week: Trespass to chattels Tresspass to Chattels doctrine resurrected from long ago Compuserve ( sending SPAM through server damages server Similarity between chattels and land trespass Both involve physical world Trespass to land ( touching land with physical object Trespass to chattels ( touching something physical dont need physical dispossession conversion Difference between chattels and land Land is automatic no matter what you do. land ownership is important liability w/o actual damage to property dignitary harm ( damages can be $1 Can get injunction Chattels ( physical element, but requires dispossession, or damage, or depriviation of use for substantia time, or bodily harm to possessor (or thing in which possessor has legally protected interest) Exhaustion of self help Negation of tacit consent ( inferred from fact of In this case ( physical damages to servers Are electronic signals really tangible/physical? Can we prove that there was harm to computer system? Is it harm to system, or harm to business? Why not just invent a new tort? Can federal courts do this after Erie? They lack precedent ( our system prefers precedent Policy question ( not clear what the scope of the harm is Why isnt this nuisance? Why trespass to chattels? Nuisance requires balance of harms Dont have to show physical invasion to physical object Do we want such a broad question of value of equipment?? Making a new product that makes your equipment go down in value is not a tort invites further thought eBay v. Bidders Edge FACTS: Bidders edge sent out bots to auction websites They were surveying auction websites and gathering data on auctions Put up own cite with listing of all the auctions that were going on Give customer to look at auctions across websites Business model was probably advertising Possible causes of action IP violations ( copyright ( cant copyright facts Unfair competition ( would probably fail Misappropriation ( Need to completely eliminate incentives to make the product?? Trespass to chattels ( Physical invasion of physical object invasion ( sending the robot; consists of signals (electrons); opposite of SPAM case ( taking data away; do we care about that?? physical object ( eBay computers are being damaged Harm ( cumulative; if we let everybody do this, it will cause lots of harm by slowing things down Realist point ( never argue the real problem, unfair competition Too much focus on whether or not there is harm to computer P. 1058 ( BE has deprived eBay of small amount of property BUT doctrine seems to say no harm, no foul USSC disavows this view in Hamidi Is this an injunction against copying? Bidders edge was copying listings Seems to be an end-run around Feist Radin ( This is a silly way to accomplish all of this. We should argue about the real stuff!!! Policy Issue ( Do you own the right to prevent people from accessing your computer, even if youre on the internet? See Intel Position endorsed by academics and judges; is it CA position as of now? Register.com v. Verio FACTS: Verio is ISP and Register.com is a registrar Both fall under ICANN ( must make contact info for website owners available online Competitor used bots to get data for marketing purposes Main wrinkle ( ICANN requires you to have info out there Court ( trespass to chattels Like eBay, court seems to hold that you cant use anybodys computer for anything Realism ( courts are ready to expand the doctrine to prevent what others think is unfair competition Intel v. Hamidi FACTS: Intel had fired Hamidi. He puts up website in protest, got email list over 2 years he sent 6 messages to everybody in company (made it possible to opt-out) Intel ( employees spend time reading email BUT they dont keep out anything but business-like emails basically, they dont like the content of the message seems like a labor law issue Would they have done the same thing if he sent flyers into the mail room? CA statute requires you to let labor law people in Free speech ( this is a corporation, NOT the government Shelly v. Kraemer (restrictive covenants)( early take on state action; if Court is going to enforce it, court involvement is state action State action has changed over time NO Trespass to Chattel ( sending in of pesky electrons has damaged our computer and diminished its value. In aggregate thousands of messages CA supreme court says youll have to show some harm court has fallen into desmitude and been reserected Intel relies on eBay, but we disawov that dictum (1078-79) Essentially disavows point that you can keep anybody out of your computer Must be damage to find trespass to chattel Dissent ( there is trespass to chattel. In aggregate, sent hundreds of thousands of e-mails to be server. Opportunity costs of deleting all the emails What s the right position on trespass to chattels? Will collective harm work in this situation?  s lawyers like trespass better Less prima facie hurdles The problem could be harm Why doesn t court go over to nuisance? Nuisance doesn t require that you say its physical But Extent of botheration is higher First amendment defenses ( but state actions problems might take care of this Three Positions: Server owner has the right to absolute control of the servers (Richard Epstein) ( everything requires consent, which could be broad or narrow server owner has the right to control only if incoming messages/data acquisition programs (DAPs) cause harms current Trespass to chattels doctrine define harm Narrow ( only if it causes crash and slowdown; must amount to denial of service attack Denial of Services Attack( take over a bunch of computers that are left on, and you use them to bombardment servers with request in order to make them crash Broadest ( any damage to profit-potential of business (reputation, goodwill, employee time) Sliding scale How do we account the network value (to everybody) vs. harm to the server? Plane-flights analogy( If everybody can control their own fly-over rights, then there are too many people to negotiate with Can we passively infer permission?? Would this fall under browsewrap agreement? Can robot exclusion headers be effective contracts? We dont want robot, but robot cant read it! Server owner has NO right to control incoming messages/data acquisition programs under certain circumstances because of other important policies public utility harm to competition IP statute pre-emption Other factors in trespass to chattels: reasons wed want to limit the torts Content-based information exclusion Anti-competative stuff Evading the holes in copyright Employers ( What rights do they have to exclude certain content from mail servers? Is this best implemented by saying they own their computers Ron: distraction may be a good nuisance claim, not trespass Defamation In General Provably false assertion of fact that causes injury (contempt, hatred, or causes to be shunned or hurt in career) Published or communicated to a third party who understand the defamatory meaning Defenses: truth, opinion, others Plaintiffs Burden: malice w/public figure, or negligent Defamation lawsuits are expensive so they can be difficult to bring and its also not easy to prove. Barrett case is still pending is CA. (p. 1129) Significance It bucked the trend of immunizing intermediaries and said they should be liable. This caused a big ripple through the community of ISPs and service providers. Its a big deal whether or not this case is upheld. FACTS: This was an online dispute in which a doctor accused an alternative medicine woman of not being competent. She retaliated by saying that the doctor had bunches of money coming to him from the industry to run his website. It was her opinion. The appeals court said it could count as defamation since it was a statement made by the defendant and the fact that the doctor scared a radio personality by emailing him the details of her stalking. Claimed that she sought police protection and was assigned two officers. Sullivan the court said the only way to square defamation with the First Amendment is to require some degree of fault. There must be clear and convincing evidence that the person knew the statement was not necessarily true. Plaintiffs in public debate have to show a high level of fault in order to show defamation because they have inserted themselves into the public debate. To get the benefit of being talking about you have to bear the burden that it wont all be completely true. The original publisher has responsibilities and people who re-publish information to defame can also be liable. There court functionally divides people into categories for their role of defamation Primary publishers (book publisher, newspaper) ( subject to the same liability standard as the original publisher. The high level employees that make the decision about what to published entertained serious doubts as to truthfulness or knew it was false, then they are liable. The publisher is expected to review so they are more likely to notice red flags. Distributor (book sellers, libraries) ( they are liable only if they knew or should have know that they were distributing defamatory materials. (Not reasonable to expect them to review all the material that they distribute.) Distributor does not have the same expectation to review. Conduit ( no liability (It would be absurd to hold a telephone liable for example. What is the phone company supposed to do, anticipate that someone will gossip and cut their line?) Should ISPs be immune from distributor liability? This is a very old-fashioned tort that has fallen out of favor. Some of the early cases find defamation if you say that someone has a contagious disease. Note: Margie says the case law is totally screwed up and it confuses distributor and publishers. The two clear cases both of which were decided before the immunity provision of 1996 (230) Cubby ( Is Compuserve liable for information published in one of its forums? Compuserve is not the original publisher, they are just the ISP hosting the information. If they are classified as a primary publisher then they would have the burden of reviewing everything before its posted online. 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The court agreed and said that was right. Distinct from Cubby ( Prodigy is different from Compuserve because it engages in censorship (advertises self as family friendly) Worried about encouraging the censorship because Prodigy promotes itself as a family friendly and has guidelines for deleting non-family friendly text. Since Prodigy gets credit for filtering, they should have the responsibility for filtering. The court wants them to be liable then they do a poor job of filtering. The court was hostile to what Prodigy was going and its a case of bad facts make bad law. The court does not want you to get the benefits but not the burdens. The case ended here because it ended up settling. Problem: Stratton creates disincentives to self-monitor Reno v. ACLU There have been several efforts by Congress to impose dramatic liability on purveyors of indecency. In 1996, it was a criminal offense with a $250,000 fine and as part of this law they posted an immunity provision. The criminal provisions were struck down as violating the First Amendment, but the immunity provision was ok. 230 (p. 1103) Post-Stratton-Oakmont, ISPs feared they would face liability as a primary publisher if they took steps to clean up otherwise they would not clean up for fear of liability. 230 said they should not treat the internet intermediary as being a primary publisher. Zeran v. AOL ( t-shirts that made fun of the Oklahoma City bombings, with very offensive statements, falsely attributed to . As a result, Zeran was subject to threatening calls and radio shows were encouraging people to call him. He sued AOL and the radio show. Court: NOT defamation because there was no indication that posting your information affects the understanding of who you are. It only said Ken and gave contact info, did not make clear it was Ken Zeran. Zeran said repeatedly he was not trying to sell the t-shirts and when he told AOL to take it down, it took them a week to do it. They would not issue a retraction. He says he had death threats and was seriously injured. He could not go after the poster because he didnt know who the person was and AOL had messed up the records. Zeran wants AOL to be held to the distributor standard because they knew or should have known. Court ( if you hold ISP liable for distribution, then they still have to have published so that makes them a publisher, which the immunity clause affects. This is ridiculous and makes no sense whatsoever. take down nightmare ( if you apply the distributor standard then they will immediately take anything down that gets a complaint, which will result in a contraction of online speech, which is a bad result inconsistent with what Congress intended. Blumenthal v. Drudge Court refused to find that AOL was the employer of Drudge, which would have been a simple route. The court said they didnt know what to do, but they decided to follow Zeran and claim that it was precluded by Section 230. The court makes it clear they arent sure this is the right answer. If they get the credit for having the gossip site, then they should get the burden of defamation. This is bizarre because Zeran is a 4th circuit case and the Drudge court is hardly bound by this. This is a weird quid pro quo with Congress because immunity goes to online intermediaries even if they do not help filter. It seems odd that they did not demand that the ISPs filter Batsel v. Smith Bob Smith sent defamatory information about a woman with alleged Holocaust paintings to a museum network and they decided to publish it even though he did not intend for this to be done. only immunity if a reasonable person in the position of the poster would have reason to believe that that information was provided to go online. The court is trying to get at whether it was an independent act by Kramers or whether there was more involved. There is no immunity if it was your individual decision to put the information up online. CDA immunizes a defendant only when they had no active role in selecting the material to be published. dissent ( took issue with the idea that he was putting up the information provided by another, and that it was information he himself found, choose and posted. The majority dismisses this. Is it starting to show hostility toward the broad immunity Congress provides? It says that letting ISPs off the hook for distributor liability is just wrong. Rationales for Immunizing Distributors Section 230 (p.1103) says that no ISP shall be treated as the publisher or speaker of information provided by another. One issue under the DCMA is that the person might have a license to do this. Under the DCMA though it should be clear when there is a good faith claim of copyright. Who counts as an intermediary? People forwarding emails? Its worrisome for the little guys and the idea that this could be taken to far. Another idea is to create a statute that removes any element of discretion. It could definite ISP and define the occasions in which it should be taken down. Patents Basic Patent Requirements (p. 956 Patent eligible subject matter (statutory) Patentable subject matter: business methods, algorithms (margie thinks that printed matter and mental steps will also be patentable soon) Non-patentable: products, law of nature, abstract theories, math formulas, printed matter?, mental steps? Utility (outside the US this is called industrial applicability) Novelty (not-anticipated) You cannot wait more than a year to file for a patent. Non-obviousness ( If anyone could have come up with this then theres no need to incentivize by providing a patent. Legally sufficient disclosure ( Both the source and object code can be patented. The patent claims delineate what is covered by a patent. These are the operative part. The 5 exclusion rights are: make, use, sell, offer for sale, and import. NOTE: You can keep patented technology dormant and sit on it. The attitude towards business method changed because people computerized business processes. Patent law has transitioned from physical to technical. The court is now looking at b-methods in terms of obviousness. Litigation These factors determine whether a patent can be issued in the first place. Both infringement and validity are important in litigation. You first argue that you do not infringe and then argue that even if you did infringe, the other patent was not valid. These suits are extremely expensive. Infringemen Indirect infringement consists of contributory and active inducement. These were imported into copyright through Sony and Grocster, but they came from patent. There are two ways to find infringement: Infringement by the doctrine of equivalents (Finds infringement without meeting the terms precisely to avoid cheating the patent holder of protection due to insubstantial details Literal infringement (Ds method comes with what the claim of the patent says.) Patent people say it reads on the method of the D. ( Margie says that most things won at trial are from the DOE. ( It is the words of the claim that provide the legally actionable property right. For a device to be literally infringing it must incorporate every element of the claim although it does not need to be equal to a clone copy. Doctrine of Equivalents usually covers trivial claims and after-arising technology cases. Interpretation is key to every case. A defendant can win by claiming: They did not infringe (this aims for a narrow interpretation with a lot of detail, although, the D could accept an overly broad interpretation which could cover something in the prior art and invalidate it) The patent was not valid (argue for a broad interpretation that would be covered by the prior art) The court has to interpret the claim (matter of law for the judge) and decide whether the claim covers the device or method (matter of fact for the jury). These two things are not as separate as the court claims. de novo review because its a matter of law (gets no deference) at the appellate level. There are no interlocutory appeals so the entire issue has to be redone. This can cost upwards of $5 million. Business Method Patents Business Method Patents Policy: A flurry of debates and big verdicts Anecdote ( eBay vs. MercExchange eBay paid Wolfson untold millions ($35 million) general counsel ( didnt want to let the guy win! Patent Trolls ( build up patents for simple things and wait to sue people with a good business model Policing the system ( innovators who are getting whats due to them State Street Bank ( lays to rest the ill-conceived business method exception Aftermath ( lots of people were keeping trade secrets that they could now patent; worried other would beat them to the punch 1999 Amendments: 273 and the Prior Use Defense. Elements: reduced to practice and used at least 1 year before effective filing date of such patent commercially used before the filing date Peculiarities 273(a)(3) method ( method of doing or conducting business Right now applies to business method Hard to tell difference between business method or other method, so State Street court dropped it BUT in effect this resects the distinction that state street tried to get rid of What does this give to the prior user? It should (but it doesnt) invalidate the patent (been in use previously) give patent to prior users (interference) Instead gives right to use Why doesnt prior user get the patent? VERY NARROW DEFENSE Reduction to practice ( GET it when you know it works!! Dont get it when you think of it Dont get it when you write it down Filing application is a constructive reduction to practice ( so that is latest date you could call reduction to practice Purpose ( protect business method users who didnt apply for patent because of Bus Meth Exception Policy ( No longer necessary. Disrupts the balance of trade secrets Patenting Computer Implemented Inventions Computer Programs (software) or Hardware Want to write patent so it could be implemented through software or hardware Computer Programs (source and object code) were brought under copyright act as literary works Historical anomaly Copyright excludes all other things that are functional or practices See Note on 978 eCommerce has a lot of patents ( many pending patents (cant tell whats pending only 18 months before if its a foreigner) When NetFlix sued Bolckbuster, had to dislose One click by Amazon Reverse auctions by Priceline Priceline business model is patenting these things Copyright vs. patent Copyright is written work (actual code) ( idea/expression dichotomy structure, sequence, and organization can be covered lasts for a long time (life + 70) Have to prove copying ( BUT clean room defense can get around this Zero Costs ( obtained the minute you fix it More Defenses: independent creation functional/facts Fair Use Damages ( statutory damages are high, criminal penalties NOTE: If you copyright it only protects your code, not the way you do business Patent relates to what program does, NOT to code statements, structure, sequence, etc, could be covered but for different reasons A computer that does a task could be patented ( A Programmed computer is a new machine, and machines are patentable (Alapac) IBM tried to patent software on a floppy disk! Incomprehensible guidelines to address this problem Only lasts 20 years (except for some drugs) Dont have to prove copying ( if you are too late, you are an infringer! Expensive to obtain ( must hire someone to write it (Patent prosecutor), and it take time Scope can be broader ( look at Priceline Method for suing computers, Sending messages to people to find out what theyre willing to sell for how much Defenses ( must prove patent invalid or prior use Damages ( high for willful infringement Maintenance Fees to keep patents alive NOTE: IF youve got an online business model, you should patent it! Problems with Patents Patents are more strategic Very expensive to litigate People get patents and then go around and sue for infringement Its rational for companies to pay royalties than to litigate ($200,00 for license vs. $5 million to litigate) Cold War Strategy ( write a lot of patents; threaten to sue somebody back if they sue you Costs: Creates barriers to entry, Puts limits on innovation VCs want to see a lot of patents Creates lots of work for lawyers expensive for engineers How could you fix the system? Make patent examiners be more careful in granting patents? Alter compensation? now compensation is based on how many you can approve maybe have correction for errors? Have federal Circuit exercise less power? Make obviousness a higher standard (FTC)? (Look at APLA) Problem: Underfunded civil servant vs. phalanx of smart people! Second-tier patent proposal: you can register it for a short time (10 years), and somebody else can contest it later Problem ( nobody knows if any given patent will hold up. Its a crap shoot. Need to look at patents one by one and interpret a claim Do we need a legislation to fix the patent cold war?? Momento Patent ( patent a method of relaying a story Jay Thomas (GW) ( Tell examiners not to grant patents on something thats not technology. Storylines are not technology. Trying to get literature students to apply to be inspectors Wants to see business people become inspectors Would you be litigating a ton about whether something is really technology? Would people just cave in certain situations? Litigation Suggestions: Make obvious stricter Limit to technology Burden shifting ( take presumption of validity Eliminate the distinction between arts ( why are computers separate from business?? The distinctions seem to be arcane! Patent bounty hunters ( people who find prior art in order to block competitors patents; send information to examiners Cost/Benefit analysis of patents ( very hard to do accurately One study shows that we dont know if this really works Another study shows that companies (except pharmaceuticals) dont rely on patent protection to keep their products profitable What are the costs of portfolio racing in e-commerce, superconductors, and biotech?? Can we have industry-specific limitations?? Is the patent incentive needed for e-commerce? Is it needed for anything? Indirect Infringement through inducement Can you get sued for telling somebody to ignore something Are there free speech issues involved? BUT there are speech issues in everything (trade secrets, collusion) Radin ( Where does IP bump against free speech policy and competition policy? Moral limitations on Patents ( US law limits patents on surgical procedures. Is this legal under TRIPS? Can patent radar detectors! Priceline Claim for Reverse Auctions 46 claims Claim 1 ( usually the broadest claim Covers all types of computer programs that would implement this particular algorhythm ( Using a computer to facilitate a transactoin A court could narrow the claim! Inputting in a payment identifier specifying a credit card account What if you use a debit card? credit cared would have to be a limitation or an element BUT you could come back to infringement by doctrine of equivalence IF you amended with credit card to replace financial payment instrument, then you gave up everything else! Could expand the patent by proving that nobody wouldve known to write financial payment instrument! Argument chain: Different ( BUT doctrine of equivalence Invalid ( BUT then you argue validity! (5 things to argue) anticipation obviousness disclosure utility subject matter Amazon.com v. Barnesandnoble.com (2001) One click ordering ( can order based on saved information for your account. Consumers dont have time to hesitate; dont have to. Cures abandoned shopping cart problem. BN puts in Express Lane, and Amazon sues Patent Claim ( P. 984 method of placing an order comprising: Displaying information of an item, and taking order based on single action Service system Receives the request; retrieving additional information for purchaser that was previously stored Generates an order Computer Implemented Invention, but very broad mentions client and server, but you could use hardware BN code doesnt matter; only protocol Preliminary injunction arguments: didnt infringe, Patent wasnt valid BN didnt get non-ingrngement: BN Tries to say this is not a single action because they had to do all that before ( judge didnt buy it. Tried to argue around the limitations of the claim, but it didnt work BN did get validity ( Only have to cast substantial doubt under validity. anticipation obviousness disclosure utility subject matter BNs validity claim Anticipates Non-obvious ( can combine references 4 References: Compuserve system for ordering stock charts (for 50 cents). BUT no transmission of claim identifier We can solve this at trial WebBasket ordering system ( Olivers Market Webpage ( a single click is all it takes to order an item NOTE: " s counsel probably had to find all these different items Patent examiners probably didn t have this stuff. 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Kaplan Joshua M. Kaplant                     Oh+'0 $ D P \hpx 01/11/06 Joshua M. KaplanNormal Joshua M. Kaplan42Microsoft Office Word@/@Ąci@`KU7Root Entry F<ţData =1TableE WordDocument.x՜.+,D՜.+,P  hp   New York University Law School%=  01/11/06 Title 8@ _PID_HLINKSA|CZ!http://www.planedparenthood.com/  !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~      !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~      !"#$%&'()*+,-./0123456789:;<>?@ABCDFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~      !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~SummaryInformation(DocumentSummaryInformation8CompObjq  FMicrosoft Office Word Document MSWordDocWord.Document.89q