SCOTUS Petition Challenges 9th Circuit Ruling re: ACPA Contributory Cybersquatting

We will be covering the Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d), in class this semester, but a new case was appealed to the Supreme Court this week that I thought might be of interest.  This blog entry will act as a bit of a preview of laws, cases, and legal terminology we will see and discuss this semester.

When a party appeals a case to the Supreme Court of the United States (SCOTUS), which is the highest Court in the United States, the appeal has a special name: “petition for writ of certiorari” also called “cert” or “cert petition.”  This petition asks the court a single question of law (or sometime several questions).

In this current case the cert petition was filed in a case titled Petroliam Nasional Berhad v. GoDaddy.com, Inc. (U.S., No. 13-1255), appealing a Dec. 4th decision by the U.S. Court of Appeals for the Ninth Circuit, related to the ACPA.

The ACPA is a 1999 federal law authorizing a trademark owner to obtain a federal-court order transferring ownership of a domain name from a “cybersquatter” to the trademark owner.

Cybersquatting is an act of reserving a domain name on the Internet and then seeking to profit by selling or licensing the name to the company, person, etc.  that has an interest in being identified with that domain name.

To prove a violation of the ACPA, the trademark’s owner must show that (1) the mark and the domain name are identical or confusingly similar; (2) the mark was distinctive when the domain name was first registered; (3) the trademark’s owner used the mark commercially before the domain name was registered; and (4) the domain registrant acted in bad faith and intended to profit from the trademark’s use.

The petitioner in the present case is Petroliam Nasional Berhad, a Malaysian corporation owned by the government, commonly known as “Petronas.” The corporation has a U.S. trademark registration on the term “Petronas” with respect to chemical products, petrochemicals, oil, gasoline and related goods.

Petronas initially objected to the owner of domain names petronastower.net and petronastowers.net redirecting users to adult-oriented content.  It blamed the domain registrar, GoDaddy.com Inc., for not taking action and filed a lawsuit alleging something called “contributory cybersquatting” under the ACPA.  “Contributory cybersquatting” expands liability for cybersquatting to persons or companies who aid and abet cybersquatters.  In this case, Petronas was stating that GoDaddy had “aided and abetted” the cybersquatters, and therefore should be held responsible for some of the wrongdoing.

The 9th Circuit affirmed an award of summary judgment (a motion that allows the speedy disposition of a controversy without the need for a long, expensive trial) in favor of GoDaddy, ruling that the plain meaning of the ACPA, the legislative history, and the goals of the law did not support the idea of an action for “contributory cybersquatting.”  The 9th Circuit court said that something called “contributory trademark infringement” was available to use as a law in this case, but not contributory cybersquatting.

GoDaddy had argued, at the lower court, that a contributory cybersquatting claim does not exist.  The 9th Circuit considered whether the ACPA allowed a claim of contributory cybersquatting.  A few prior cases had said contributory cybersquatting was valid, but only in “exceptional circumstances.”  But, after a short opinion, the 9th Circuit flatly stated the ACPA does not provide for contributory liability. The court gave two reasons for its conclusion:

1) The text of the ACPA does not expressly provide for “secondary liability” like contributory cybersquatting, where a third party, like Go Daddy, is held liable for the actions of others. The 9th Circuit said if Congress wanted to have secondary liability in a statute, it knows exactly how to include it in the language, and it declined to do so here.

2) The ACPA created a new cause of action when it was passed in 1999. The ACPA was enacted precisely because there was no common law for cybersquatting. The 9th Circuit said it’s fair to conclude, then, that the common law doctrines of contributory liability were not a part of the ACPA.

And that’s exactly where Petroliam Nasional Berhad disagreed, and filed a petition for SCOTUS to appeal the 9th Circuit court’s decision.  The question presented in the cert petition is:

“Do the normal rules for contributory trademark infringement…apply to trademark infringement by “cybersquatting” under Section 43(d) of the Lanham Trademark Act?”

Next SCOTUS term, we will have an answer.

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D.C. Appeals court strikes down Net Neutrality

We will cover Net Neutrality in class this semester, but an important case came down today that will fundamentally affect the very basis of Net Neutrality, so I was compelled to comment before our class discussion.

The basis for Net neutrality is based on an old legal concept known as “common carriage.” While it has developed to cover telecommunications, its main thrust was to ensure that the public retained access to fundamental services that use public rights of way, including, in a modern context, the Internet infrastructure used to deliver Web pages, streaming, and other Internet content, over broadband networks.

For example, the definition applied to any commercial enterprise that held itself out to the public as offering to transport freight or passengers for a fee.  A common carrier is generally required by law to transport freight or passengers, without refusal, if a reasonable fare or fee is paid.  Ferries, freight trains, commuter buses, and more have been found to be common carriers. (c.f. Massachusetts courts have held “the statutory definition of ‘common carrier’ typically applies only to private or moneyed corporations and not to public or municipal corporations or quasi-corporations,” thereby declaring the MBTA not to be a common carrier. Massachusetts Bay Transp. Auth. v. City of Somerville, 451 Mass. 80 (2008)).

In The Elements of Jurisprudence (1924), author Thomas Holland stated“[A] ‘common carrier’ is bound to take all goods of the kind which he usually carries, unless his conveyance is full, or the goods be specially dangerous; but may charge different rates to different customers.”  Throughout the development of the common law in the U.S., this concept was adapted to many technological improvements, most importantly telecommunications.  This was to similarly ensure that phone companies, which use public rights of way to string wires and cables, serve all customers equally, without refusal.

Enter broadband services: many legal experts thought why should this be regulated differently? Is it like a traditional telecommunications service subject to the “common carrier” regulation? Others thought it should be classified separately, thereby avoiding the requirements of common carriers.

In 2005, the Supreme Court issued its opinion Nat’l Cable & Telecommunications Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005) upholding the Federal Communications Commission’s (FCC) determination that cable broadband internet access service is an “information service.” (And therefore reversed the judgment of the 9th Circuit).  The reasoning was plain: Broadband is not a telecommunications service, therefore broadband providers’ infrastructure is not considered a public right of way, and should not be regulated under the common carrier concept.  Reasoning follows then that broadband providers could discriminate and block traffic, and the FCC had no authority to prevent those actions.

The FCC wasn’t about to let this go: as an independent U.S. government agency, the FCC regulates interstate and international communications by radio, television, wire, satellite and cable in all 50 states, the District of Columbia and U.S. territories; they are the U.S.’s “primary authority for communications law, regulation and technological innovation;” they were not about to sit back and let private broadband companies potentially discriminate against each other, discriminate against types of service, technologies, or uses – all to the U.S. broadband customer’s loss. [For example, Comcast could arbitrarily block transmission of any peer-to-peer and collaborative software content, such as BitTorrent, Gnutella, Lotus Notes, or Google applications]

In 2011 the FCC published the final rules for its Net Neutrality policy [which barely made it through – one of the FCC Commissioners who initially voted against the rules, stepped down and now works for Comcast <raise eyebrows here>].  The rules are intended to provide certainty and predictability to all Internet stakeholders, including content and service providers as well as consumers. They are the result of an effort to bring government policy into line with the open technology that has allowed the Internet to develop rapidly.

The three underlying principles of the Net Neutrality rules were “transparency,” “no blocking,” and “no unreasonable discrimination.” In effect, the FCC was applying the “common carrier” standards to the Broadband services through regulatory authority with these Net Neutrality rules: Broadband providers may not block lawful content, applications, services, or block applications that compete with their voice or video telephony services, and broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

Verizon challenged these rules, sued, and, after oral arguments in September, a three judge panel of the D.C. Circuit Court of Appeals today sided with Verizon, saying the FCC acted outside its authority by enacting the rules. [full text opinion].  After the oral argument (which I procured a transcript of in less than 36 hours – thanks Internet!), many commentators anticipated that the D.C. Circuit would strike down at least part of the Net Neutrality rules. However, the current opinion goes even farther than expected, throwing out both the anti-discrimination and anti-blocking provisions.  Because the FCC chose to classify Broadband Internet as an “information service” it therefore lacks the authority to impose “common carrier” obligations on it, even in the form of Net Neutrality rules.

What could happen as a result? Internet providers could soon start charging websites like Google, Facebook and Netflix to reach users. Internet providers could auction off priority traffic rights to one site over another, or impose tolls for high-bandwidth sites such as video streamers (as in: You pay more if you are streaming Netflix, Hulu, Amazon, etc.).  “Pay for Tier” service.  Discriminatory bandwidth for certain files. The destruction of collaborative software traffic (throttling BitTorrent traffic, anyone?)

I had to dig, but there may be some scraps of silver lining in the decision.  But “only for those with true grit. And we were chock full of that.”― quoting Hunter S. Thompson, Fear and Loathing in Las Vegas.  And in this case, the five current FCC commissioners are those that need to be chocked full of true grit.

hstnn

The court left part of the Net Neutrality rules intact [the transparency rules requiring disclosure of information about network management practices] saying that the FCC still has “general authority” to regulate how broadband providers treat traffic.  The D.C. court stated: “[T]he [FCC] has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure. The [FCC], we further hold, has reasonably interpreted section 706 to empower it to promulgate rules governing broadband providers’ treatment of Internet traffic, and its justification for the specific rules at issue here—that they will preserve and facilitate the “virtuous circle” of innovation that has driven the explosive growth of the Internet—is reasonable and supported by substantial evidence….”

FCC Chairman Tom Wheeler said the commission might appeal the ruling. “The DC Circuit has correctly held that ‘Section 706 . . . vests [the Commission] with affirmative authority to enact measures encouraging the deployment of broadband infrastructure’ and therefore may ‘promulgate rules governing broadband providers’ treatment of Internet traffic.'”

So the authority exists, but will require some crafty wording in the next attempt at regulation.  Because the FCC chose to classify Broadband providers as “information services” in 2005, that exempted them from treatment as traditional “common carriers” in the future.  Therefore the FCC can’t attempt regulate them with common carrier-like rules.  What new rules will the FCC be able to develop that will still serve the “no blocking” and “no unreasonable discrimination” portions of the Net Neutrality rules?  It’s hard to tell.  Regulation is coming, for sure.  The court did agree with the FCC’s opinion that without Net Neutrality rules, “broadband providers may be motivated to discriminate against and among edge providers.”

One controversial option is for the FCC to simply reclassify the broadband services as a common carriage service.  The D.C. court was clear: it is ultimately up to the FCC to make its own decision on classification.  Julius Genachowski, the FCC chairman at the time Net Neutrality was enacted, didn’t take the classification path.  Why not?  There was, at the time, some limited bi-partisan pressure from Congress on the new FCC classification.  Will present chairman Tom Wheeler want to go through the process?  Many advocate groups like Public Knowledge,

If the reclassification is done, there will definitely be another lawsuit.  But perhaps, in this scenario, the D.C. court would see this as well within the FCC’s authority to “promulgate rules governing broadband providers’ treatment of Internet traffic….”  The U.S. citizens will have to wait and see if the FCC appeals the present decision or “start over” with a new classification in the future.

Data Privacy Day

Today is Data Privacy Day, and, although we are covering privacy in later classes this semester  I wanted to share the following statement from the National Cyber Security Alliance (www.staysafeonline.org):

“Data Privacy Day is an effort to empower people to protect their privacy and control their digital footprint and escalate the protection of privacy and data as everyone’s priority.  Data Privacy Day began in the United States and Canada in January 2008, as an extension of the Data Protection Day celebration in Europe. The Day commemorates the 1981 signing of Convention 108, the first legally binding international treaty dealing with privacy and data protection.  Data Privacy Day is a celebration for everyone and held on January 28th every year.

In our online world, data is free flowing.  All of us – from home computer users to the largest corporations – need to be aware of the personal and private data others have entrusted to us and remain vigilant and proactive about protecting it.  Being a good digital citizen means being a good steward of data.  Data Privacy Day is an effort to empower people to protect their privacy and control their digital footprint and escalate the protection of privacy and data as everyone’s priority.  Data Privacy Day is led by the National Cyber Security Alliance, a non-profit, public private partnership focused on cyber security education for all online citizens.”

5th Circuit: SCA does not apply to data stored on a cell phone

A federal appeals court ruled Wednesday that federal law didn’t protect text messages and pictures stored on a Texas woman’s personal phone from the preying eyes of her employers.  The U.S. Court of Appeals for the Fifth Circuit held that the Stored Communications Act (SCA), a federal law aimed at guarding against intrusions on individual privacy, doesn’t apply to data stored on a cell phone.

The case was titled Garcia v. City of San Laredo, (full text here)and involved a former police dispatcher in Laredo, Texas, who was fired after her superiors reviewed text messages and images on her phone that revealed an extramarital affair.  The ruling held that personal cell phones are not “facilities” under text of the SCA.

As we will discuss in class, to be liable under the SCA, a defendant must have gained unauthorized access to a facility through which an electronic communication service is provided and must thereby have accessed electronic communications while held in electronic storage.  The court looked closely at persuasive authority from the 11th circuit, notably United States v. Steiger, which held that a hacker’s access of an individual’s hard drive was beyond the reach of the SCA.  The court quoted from Steiger, stating that the SCA does not “appear to apply to the source’s hacking into [a] computer to download images and identifying information stored on his hard-drive.”

We will talk more about this case and the SCA during this year, but Garcia represents a continued path of litigation for the SCA in other courts that have reached the same conclusion.

IHOP vs. Evangelical Group: A Sticky Situation

International House of Pancakes LLC (IHOP) filed a trademark infringement suit against a church in Missouri.  The complaint accuses the International House of Prayer of improperly using the breakfast restaurant’s famous acronym. IHOP alleges that the House of Prayer is guilty of dilution, trademark infringement and unfair competition in violation of the Lanham Act.  We have studied these laws in class this semester, so this is a good chance to review the trademark laws in a typical trademark case

According to the complaint, IHOP was founded in Toluca Lake, Calif., in 1958.  By1960, the company began to franchise. The complaint states that use of the “IHOP” trademark began as early as 1973.

Remember that under U.S. common law a company can claim trademark of a word, phrase, symbol, or design by being the first to use the mark in commerce.  “Use in commerce” is one of the most important aspects of trademark law.  Therefore, the lawyers who drafted the complaint carefully stated that there are 1,500 IHOP restaurants in the U.S., including at least one in every state, with 45 restaurants located in Missouri alone (where the suit was filed).

Additionally, the complaint plainly states, “Each of the IHOP marks is distinctive, strong, and widely recognized among the general consuming public as a designation of goods and services originating with, sponsored by, approved by, or affiliated with IHOP.”  Why do they include that language?  That is another important aspect of trademark law.  It is critical to trademark law the mark identifies and distinguishes the source of the goods of one party from those of others in the mind of the public consumer.  Because the public’s perception of the word, phrase, symbol, or design may be relevant to the legal dispute, attorneys will occasional use consumer surveys or public opinion polls as evidence. In trademark cases, the law will protect those marks which, in the minds of the consuming public, identify the producer of the goods.  In this case I don’t believe that IHOP will have to use such evidence – IHOP is an nationally recognized trademark.

In the present case, House of Prayer adopted the names “International House of Prayer,” “IHOP,” “IHOP-KC,” “International House of Prayer University,” and “IHOPU” to refer to House of Prayer Kansas City’s evangelical mission organization and the services it provides.  According to their website, the International House of Prayer Missions Base was founded on May 7, 1999, by Mike Bickle and twenty full-time “intercessory missionaries.”

IHOP alleges confusion based on their mark: “Several persons have either been confused by House of Prayer’s use of ‘IHOP’ or felt the need to clarify whether the “IHOP” reference was to House of Prayer Kansas City or plaintiffs.”

I am fairly sure this is a win for the Pancake IHOP (or a settlement.)

If you want to read the complaint, Justia has the docket linked online.  The case title is IHOP IP LLC et al. v. International House of Prayer et al., in the U.S. District Court for the Western District of Missouri.

 

Facebook v. Teachbook, Round 2

On May 6th, 2011, Facebook Inc. refiled its trademark infringement suit against Teachbook.com LLC, in an Illinois court. Teachbook is a social networking site for teachers. This action comes a few days after the original suit between the two companies was dismissed by a Californian court for lack of jurisdiction. The new case is Facebook Inc. v. Teachbook.com LLC, case number 1:11-cv-03052, in the U.S. District Court for the Northern District of Illinois and the complaint is available here.

Facebook filed the new suit in Illinois, where Northbrook, Ill.-based Teachbook is based. Facebook argues in the new complaint that Teachbook selected its name to capitalize on Facebook’s popularity. According to Facebook’s new suit, Teachbook offers social networking features similar to those offered by Facebook and has promoted itself as a substitute for Facebook.

Since many schools forbid teachers from having Facebook accounts due to the risk that students may learn personal information about their teachers, Teachbook allows users to manage their profile so that only other teachers may see it, the suit says.

These substantive arguments were also made in the original California complaint, but the suit was dismissed on jurisdictional grounds before the court had a chance to decide the trademark claims.

As we will discuss in class, in most internet-based cases, jurisdiction is one of the first major hurdles in any legal battle. Jurisdiction is the authority of a court to hear and decide a case.

We will discuss this in more detail in class, but the standard for what is called “long arm jurisdiction” is that there are minimum contacts with forum state such that the maintenance of the suit does not “offend traditional notions of fair play and substantial justice.”  We will also review the different types of personal jurisdiction: “general” or “specific.”

General jurisdiction arises when a defendant maintains ‘continuous and systematic’ contacts with the forum state even when the cause of action has no relation to those contacts. In contrast, specific jurisdiction exists based on isolated or sporadic contact with the forum state if the claim “arises out of” that contact.

So, the California judge ruled that the California court was the wrong venue for the suit because Teachbook does not have any members in California. The court applied the well-known “effects test” from Calder v. Jones, 465 U.S. 783 (1984), which will read in class in a couple of weeks.

Facebook is currently engaged in various pending legal battles with a number of sites that use “-book” in their names, such as Lamebook. Additionally Facebook also sued the startup travel site PlaceBook, which changed its name to TripTrace to avoid an expensive lawsuit.

This case will be important to watch over the semester, and will help settle the question: Can Facebook claim a right to the suffix “-book” on any other company with a web presence?

Tyson Face Tattoo in Hangover 2 Now a Lawsuit

Tattoo IP Litigation: Apparently, Warner Bros. failed to ask for permission from S. Victor Whitmill, or credit his creation most famously marked on Mike Tyson’s face, before it placed the image on the face the character Stu Price , played by actor Ed Helms, in its upcoming motion picture “The Hangover 2.”

Whitmill sued Warner Bros. Entertainment Inc. in Missouri on Thursday.  According to the suit, the film features an exact reproduction of the original tattoo: “The pirated tattoo is a recurring device and plays an important role in the plot of the movie.”   The suit was accompanied by a motion for an injunction blocking the defendant from infringing Whitmill’s work.

How can a tatoo designer own something that is tattooed on another face?  According to the complaint, Whitmill made the design for Tyson in 2003, and at that time Tyson signed a release form acknowledging the work was the property of Whitmill’s business, called Paradox Studio of Dermagraphics.  The contract is an exhibit in the lawsuit, and, clear enough, the clause states “all artwork, sketches and drawings related to my tattoo and any photographs of my tattoo are property of Paradox-Studio of Dermagraphics.”  Just another example of how you can contract rights to just about anything.  Coincidentally, Techdirt featured two posts earlier this month on the role of tattoos under intellectual property law. (Is the face “the place of publication?”)

I think there is a settlement in the future.  Suing a movie before its release seems to happen more frequently [Da Vinci Code, Harry Potter, and the sculptor who sued Warner Bros. for the large sculpture prominently featured in Al Pacino’s apartment (Mr. Pacino plays the Devil) in the film The Devil’s Advocate] and typically ends in either settlement or dismissal.  This one seem closer to settlement.