Last week, Abercrombie & Fitch CEO Mike Jeffries admitted he didn’t make A&F clothes in larger sizes. His reasoning: beautiful thin people attract other beautiful people to wear A&F’s clothing; and unattractive fat people detract from his stores. Then came the immediate firestorm of fury on social media sites like Twitter and Facebook, encouraging people never to shop there. One consumer even bought A&F merchandise and handed it out to the homeless (his idea of a brand readjustment).

For A&F’s part, it remained silent. No doubt Mr. Jeffries got a tongue lashing lecture on tact from his board of directors, but nary an official comment came from HQ, and Mr. Jeffries is now noticeably out of the press. Regardless of what can be gleaned from the company’s silence, it probably did the right thing. A brand owner’s response to its detractors can become part of the brand if not deftly handled. Worse, attacking the messengers, no matter how unfair the criticism, is liable to bring out the worst in all of us. Amy’s Baking Company learned that lesson this week.

Like thousands of people across the country, many at this law firm were riveted this week by the story of Amy and Samy Bouzaglo, whose bizarre television appearance and on-camera behavior on Gordon Ramsay’s Kitchen Nightmares catapulted them to infamy overnight. Although the buzz on the couple has not died down, and the lessons learned are still trickling in, one thing is sure: in the social media age, more than ever, a brand embodies the personality of those at the helm, and social media magnifies their warts and, thereby, those of the brand. How you respond in a digital world is as important as the product you put out.

Amy and Samy Bourzaglo appeared on an episode of Kitchen Nightmares, asking for help from television chef and restaurant turnaround king, Gordon Ramsey, to rejuvenate their failing restaurant. At the outset, the couple believed all their problems stemmed from some unfair and vicious reviews on Yelp! It didn’t take long, however, for the cameras and Ramsey to light on the real problem: poorly prepared – and often bizarre – food, a painfully slow kitchen, abusive owners who admit to stealing tips from the wait staff and serving store-bought food, and who verbally abuse and eject customers who complain about undercooked pizza or long wait times.

Watching the married restaurateurs make one public relations blunder after another on national television, in newscasts, and on social media sites made most of us wince and laugh at the same time. No doubt, the Bourzaglos episode will be among the highest rated. Yet, it’s not likely the couple or their brand will recover from it, largely because in the face of harsh criticism it chose to lash out. Here’s what their gaffes can teach us.

Social Media Is Difficult To Control: Companies cannot always control the messages of consumers and should not try.

Numerous websites and news organizations have covered what has now become known at “The Meltdown, ” in which Samy and Amy, owners of Amy’s Baking Company, lash out at Facebook users’ messages that take issue with them for bad food and stealing their servers’ tips. In response, Samy and Amy hurl vitriol at their users, calling them losers, haters, morons, and liars, hurling epithets, and using profanity and shouting (through the use of ALL CAPS) to punctuate their points.

When it became clear they were on the losing end of a media battle, the couple removed their vitriolic postings (which also removed the 10,000-plus comments), and claimed their page had been hacked. This significantly slowed down the hate-traffic on Facebook, but it did something worse, it moved people to Yelp!, where Samy and Amy could not manually remove the posts.

While Facebook has some tools that allow internal management of one’s online presence, other sites, such as Twitter (in which individual users can aggregate tweets using hashtags) do not allow for interference from third parties. Companies should recognize the potential damage that can be caused to a brand before trying to quash bad press with censorship attempts. In the end, it could leave them playing “whack-a-mole” with other, less controllable sites. And leave them explaining not only their comments, but their attempts at censorship.

The Dog Catcher Shouldn’t Call the Vet a “Hairball:” People will stop at nothing to undermine your message if you undermine them, so don’t.

When Abercrombie’s CEO dipped his foot in the holier-than-thou water of beauty, he probably realized people would call out his own lack of attractiveness, but people dug deeper still to hurt the brand that hurt them. For example, former employees responded by revealing A&F’s policy to intentionally damage clothes with scissors rather than make them a available for donation to the poor.

Similarly, when Amy Bourzaglo began a flame-throwing digital tirade against the criticism she received for stealing her employees’ tips, calling online fans fakes, morons, frauds, and thieves, they struck back with a vengeance. It didn’t take long for the public to learn she was the fraud. The deep-digging public was quick to disclose Amy (her real name, Amanda) was convicted of using a fake social security number and sentenced to 14 months in prison. Soon after that revelation, likely in response to Amy’s continuing sound-off,, one concerned member of the public started an online petition to have the federal government investigate her for illegally taking the tips of her waitstaff. Query whether a simple apology from Amy for her objectively bad behavior rather than an attack might have left her in a better position.

Perhaps Amy should have taken a page from the PriceChopper book. In 2010, a shopper at Price Chopper sent out a negative tweet and photo when she saw a pile of garbage in one of the aisles. The PriceChopper social media employee might have replied to the tweet with an apology about the store’s condition, but instead, in a move that makes one wonder whether Amy was at PriceChopper at the time, called the tweeter’s employer and demanded disciplinary action. Unthinkable. Finding itself in the midst of a customer relations nightmare entirely of its own making, the company got wise and issued an apology, going so far as to agree to participate in a social media conference to discuss how the situation escalated. Amy has yet to have such a revelation and make any attempt to make up for her objectively inappropriate actions.

The digital age, the easy availability of decidedly personal and embarrassing information, all coupled with the ability to disseminate the information through social media should be warning enough that defending oneself online by attacking the messenger is a bad idea.

Whoever is at the Helm is at the Heart: Social Media Means Every Action Affects the Brand.

There was a time when a comment from a spokesperson might be isolated to a tiny news story that only a handful of people saw. The scuttlebutt about “last night’s comments” would end at the water cooler, and at worst, the company could issue a statement distancing itself from whatever embarrassment happened the day before. In all likelihood both would go unnoticed.

Today, a company spokesperson IS the brand and the likelihood than anyone will not have heard whatever faux pas he or she uttered is zero. Moreover, because social media has the tendency to amplify a statement, perhaps beyond its original intent, a brand can quickly go from riches to rags over the smallest infraction.

Consider the 2010 case of the Susan G. Komen Foundation, in which Karen Handel became the face of the organization after she announced the Foundation’s decision to defund Planned Parenthood. Although it was a decision she was not solely responsible for making, she became the brand identity overnight. Against a stream of bad press, Handel was forced to resign in order to offer the brand any hope of rehabilitation. 20 years ago, her comments might have been a blip on the radar. Social Media has changed the intensity of the spotlight.

Mike Jeffries’ recent statements are not likely to destroy the Abercrombie brand, largely because his brazen manner and off-the-cuff remarks are not foreign to consumers and Abercrombie has not fanned the social media flames to push consumers away. Some might argue his comments which were global in nature and not personal attacks are even consistent with a brand whose goal is to remain patrician and elite. Amy and Samy may not be so lucky. Amy’s Baking Company – through its owners’ words and actions – is now synonymous with deceit at best and mental illness at worst, forcing would-be restaurant patrons to consider whether a visit is worth the predicted abuse. If the company is to come back from the disaster the coupled fomented, their contrition should come quickly.

The World Loves a Comeback: Social Media Can Be a Brand’s Salvation.

Contrition goes a long way. Just ask Gilbert Gottfried who got a second chance after a heartfelt apology for making insensitive jokes about the Japanese after its horrific earthquake. While AFLAC quickly terminated his duck-spokesperson contract after the incident, his apologies got his fan base to urge the insurance company to bring him back.

Similarly, when a rogue tweet made the Red Cross appear as if its volunteers were drinking on a disaster site, the Red Cross took quick action. The company’s quick response (which included a humble note that it had confiscated the keys) was so heartfelt and human, the guffaw went from a PR nightmare to a compassionate call to action, with consumers using social media to call for and collect donations to support the nonprofit’s mission.

Time will tell whether Amy and Samy will admit their mistakes – social media and otherwise – and seek forgiveness from their fan base. That the company claimed the horrific comments made on their Facebook page were the result of being hacked when clearly they were not does not bode well for their turnaround. That said, if they decide on brand rehab, the very tools that brought them down could make them stars.

After filing over 275 lawsuits in almost 18 months, it seems as though Righthaven, LLC (“Righthaven”) may have run out of steam.

Righthaven, a Nevada holding company, was founded in early 2010, for the sole purpose of filing copyright lawsuits on behalf of its clients, news content owners (such as Stephens Media).  Its methods involved Righthaven scouring the Internet for republication of news articles and photos, suing the website hosting the infringing content (seeking monetary damages and the transfer of the infringer’s domain name), and then extending a settlement offer. Lawsuits filed by Righthaven have been brought against a wide variety of online publishers, including bloggers, political campaigns, nonprofits, and website operators — almost always without notice or DMCA takedown. Many cases settled swiftly, totaling an estimated $400,000 in aggregate settlement payment.  Righthaven’s founders claim they created the company in order to fight and deter “copyright theft” by bloggers and news aggregators online. Their aggressive enforcement strategies, including suing noncommercial bloggers and nonprofits who cannot afford to litigate, have also garnered much criticism, particularly from the Electronic Frontier Foundation. The critics have described the company as a “copyright troll” and a “settlement factory.”

In the past few months, Righthaven has suffered serious setbacks in the courts. In Righthaven v. Realty One Group, Inc. (D. Nev. Oct. 19, 2010), Righthaven sued a blogger for republication of 8 sentences from a 30-sentence Las Vegas Review-Journal article.  In a rare decision, the court granted the blogger’s fair use defense on a motion to dismiss.  The court noted that the blogger quoted a small percentage of the source article and his “use of the copyrighted material was likely to have little to no effect on the market for the copyrighted news article.” Another example is Righthaven v. DiBiase (D. Nev. April 15, 2011) in which Righthaven sought to have DiBiase’s domain name transferred to them.  In this case, the Court rejected transfer of the domain name stating that “Congress has never expressly granted plaintiffs in copyright infringement cases the right to seize control over the defendant’s website domain.”

Most notably, Righthaven suffered a particularly hard blow recently in Righthaven v. Democratic Underground (D. Nev. June 14, 2011).  In that case, the agreement between Righthaven and its clients, called a “Strategy Alliance Agreement,” was unsealed.  The agreement purported to assign copyrights to Righthaven for the purpose of filing infringement lawsuits, while exclusively licensing back all rights to the client, with Righthaven maintaining no rights, except the right to use. The judge dismissed the lawsuit on the ground that Righthaven had no standing to sue, stating that a “copyright owner cannot assign a bare right to sue,” essentially rejecting Righthaven’s business model. Over three-dozen other cases filed by Righthaven are being held up on appeal over the same issue.

Is it the end of Righthaven?  Most signs point to yes.  In the past two months, Righthaven has stopped filing new lawsuits, let cases lapse due to procedural defects and laid off a number of employees. Steve Gibson, CEO of Righthaven, stated they are awaiting the outcome of numerous appellate rulings in the Ninth Circuit Court of Appeals before resuming their efforts.

Regardless of what happens to Righthaven, this line of cases is particularly instructive in at least three ways:  first, they have allowed the emergence of blog-specific copyright cases and an expansion of the fair use doctrine, which Righthaven intentionally helped create (See Cobalt’s prior post on the topic: The Emerging Blog Specific Copyright Cases). Second, these cases are illustrative of how copyright owners from the traditional news world are continuing to struggle over how to best protect and monetize their content. Finally, the cases raise particularly interesting questions of copyright law relating to standing to sue and the validity of copyright assignments, for which we are awaiting clarification from the Ninth Circuit

Last March, ICANN voted to approve .XXX as a new Sponsored Top Level Domain (sTLD) for the adult industry. The registry responsible for operating and managing the new sTLD is ICM Registry.

During the Sunrise Period (known as “Sunrise B”), which will be open from September 7 to October 28, 2011, owners of registered marks in current use can apply to opt-out of the .XXX process and reserve names in order to ensure that those names are not registered as .XXX domain names by others. At the close of the Sunrise Period, if no conflicting application by an adult-industry applicant has been made, the reserved name(s) will be removed from the pool of domain names available for registration. The opt-out fee is approximately $400.

Sunrise Period B is the only opportunity for trademark owners to proactively block .XXX domains containing their marks and we recommend clients consider it. It’s an easy and relatively inexpensive process that could save your company much hassle and legal fees in the long run, particularly if your trademark is well-known and attractive to cyber-squatters.

In a decision handed down by the Court of Justice of the European Union on July 12, 2011, eBay has been found to be potentially jointly liable for trademark infringement along with individuals selling infringing goods on the eBay auction site because it had prior knowledge of the infringement.  Paris-based cosmetics company L’Oréal brought the complaint against eBay arguing that it is liable for trademark infringement because it is involved in the pre-sale, sale and after-sale processes of selling infringing products.  The Court agreed and held that an operator of an electronic marketplace that has provided active assistance in the sale of products rather than just taking a neutral position between the buyer and seller cannot be protected by the European Union’s e-commerce law exemption which applies only to parties playing a neutral online role.

eBay purchased keywords from online advertising services, such as Google Adwords, that included registered trademarks in order to direct potential customers seeking to purchase those goods to its website.   However, the goods being sold included both legitimate goods as well as counterfeit and unpackaged goods from non-European Economic Area (EEA) countries thereby infringing upon L’Oréal’s trademarks.  eBay implemented its own precautions against infringement by incorporating a take-down notification system and operating a Verified Rights Owner Program (VERO), however L’Oréal was not a member of the VERO program and rather turned directly to eBay for assistance with handling the infringing goods.  However, unsatisfied with eBay’s response, L’Oréal pursued its action before the High Court of England and Wales which referred several questions to the European Court.

In addition to joint liability, the Court considered the extent of injunctive relief that intellectual property owners could obtain against online intermediary websites, such as eBay, whose services are used as tools to infringe upon the IP of others.  The Court found that it could impose injunctions against online marketplaces requiring them to suspend accounts of those utilizing the site to sell fraudulently-marked goods or to employ measures which would make it easier to identify infringers.  However, the injunction would not require the website to actively monitor all activity of the website or prevent the sale of all goods bearing a particular trademark.

By finding eBay liable for joint liability, the European court differs from cases upheld in the United States.

In the Tiffany (NJ) Inc. v. eBay, Inc., cases in the federal district courts in New York, the federal courts rejected Tiffany’s argument that an intermediary website may have secondary liability thrust upon it if it has “generalized” information that its website was being used to sell infringing merchandise.  The court deduced in Tiffany that even though eBay had general knowledge of infringement by various sellers, it did not require eBay to prevent the same sellers from selling goods via their eBay accounts because general knowledge of infringement is insufficient to determine that actual infringement occurred.  eBay would have been liable, based upon Inwood Labs., Inc. v. Ives Labs., Inc. 456 U.S. 844 (1982) if it continued offering its services to sellers it knew or had reason to know were infringing on the mark’s holder’s marks.

Practical Considerations

What does this decision mean for clients who operate websites used or accessed from the European Union?

This decision suggests that, in the E.U., website owners might consider taking a more active role in addressing and preventing infringement upon learning of potential infringement from a trademark holder.  Indeed,  although an exemption from liability exists under the European E-Commerce Directive, any active role by the website owner in promoting items for sale by users may negate this exemption.

The California State Senate votes today on the passage of SB761, introduced by State Senator Alan Lowenthal (D-Long Beach), that would require the state attorney general to adopt regulations allowing users to opt-out of programs that track online information and identifying user behavior on computers, smartphones, tablet computers, and any other device that accesses the Internet.  Under SB761, any Internet user can send a message to a website doing business in California requesting that their online activity not be monitored.  The bill would allow consumers or the state attorney general to file a civil lawsuit against a company or website that ignores or violates this law. This law would be the first one of its kind nationwide and is based upon a similar federal bill introduced into Congress by Rep. Jackie Speier (D-CA).

Specifically, the proposed law prohibits any software to be copied onto a computer, without the prior approval of the user, and using the software to:

1. take control of the computer;
2. modify certain settings relating to the computer’s access to or use of the Internet;
3. collect, through intentionally deceptive means, personally identifiable information;
4. prevent, without authorization, an authorized user’s reasonable efforts to block the installation of or disabling of software;
5. intentionally misrepresent that the software will be uninstalled or disabled by an authorized user’s action; or
6. through intentionally deceptive means, remove, disable, or render inoperative security, antispyware, or antivirus software installed on the computer.

Although, at first glance, this proposed bill seems to benefit all Internet users, there lies the risk that this is the first step towards a user-fee-based Internet.  The business model of many of today’s websites is based upon advertising sales and the sale of personal data collected from users accessing their sites.  Advertisers seek this personal data in order to better understand the behaviors of their target audience resulting in enhanced access to their potential consumer base through a more strategic placement of ads.  Without the sale of this collected data as well as reduced advertising sales, websites will begin to see a decline in revenue and will require a new method of generating funds in order to replace these financial losses.  Therefore, we anticipate that websites will begin require users to pay a fee for the privilege of accessing websites and information that they were accustomed to access for free and, in exchange, websites would not collect or disseminate any user data.  This type of behavior will result in a “digital divide” in which those who have the financial means to pay for access will have better choices for an enhanced ad-free and tracking-free online experience.  Those without will have no choice but to give-up personal data in order to access lower quality websites or potentially not be allowed to access these websites at all.  By limiting Internet access to those that have the financial means to pay for services, there lies the question of whether Internet access is an inalienable right thereby allowing this type of digital divide without violation of any federal law.

On the flipside, without the passage of SB761, websites will continue to track user behavior and collect highly-invasive psychographic data resulting in an invasion or privacy.  As seen by the recent fury directed at Apple for tracking and storing the location of iPhone users, consumers need to have some type of protection against websites or option to restrict data collection from websites that will take advantage of unwitting Internet users without some type of restriction.  Therefore the passage of the law is the appropriate first step towards providing online users with appropriate options.

Practice Tips

While the public is rightfully concerned about online data collection and the sale of information to advertisers, companies need to be able to protect themselves and continue to generate revenue while still balancing the needs of the online consumer.  Companies with an online presence, especially start-up companies, need to determine the types of safeguards needed to be incorporated to protect themselves and their users and still succeed in generating revenue.  If companies engage in tracking practices and behavior, it is important to determine how to incorporate such practices and divulge this information in the privacy policies.  Disclosure is key but the ramifications of not being tracked needs to be divulged as well.

Kenneth M. Stern v. Does, et al., C.D.Ca., No. CV 09-01986 DMG (April, 2011)

A single sentence sent to a list serve formed the basis of the copyright infringement action in this case.

Specifically, an attorney sent a single sentence seeking information regarding a certified public accounting firm which he suspected had over-billed his client. One of the recipients of the single sentence email forwarded it to the CPA firm in question. The author lawyer took umbrage that his under cover effort was revealed; filed and obtained a copyright registration and filed a copyright infringement action naming the ‘Does’ of the entire list serve as the defendants.

The single sentence, in its entirety, is this: “Has anyone had a problem with White, Zuckerman . . . CPAs including their economist employee, Venita McMorris, over-billing or trying to churn the file?”

The court in the Central District of California held that the single sentence was uncopyrightable; and went further to say that if it had been copyrightable, then the forwarding of the email would have been protected by the Fair Use Doctrine.

“This is unsurprising. In an age of blogs, listservs, and other online forum, a person’s short comment in cyberspace is frequently quoted in its entirety as others reply or forward it elsewhere. It would be strange, dangerous even, if such quotation subjected the copier to liability and a federal lawsuit. Such heavy-handed tactics are akin to using a cannon to kill a mosquito; they carry the same attendant risk of collateral damage by chilling free speech. A free and vibrant democracy depends upon the unfettered exchange of ideas.”

Agence France Presse v. Morel, (Jan. 14, 2011, S.D.N.Y.)

Agence France Press, Turner Broadcasting/CNN, ABC, Getty Images and CBS are suing Daniel Morel after Morel claimed that the news sites stole his images from Twitter immediately after the Haiti earthquake.

Twitter’s terms of service granted a license to use content only to Twitter and its partners. Moreover, AFP and TBS failed to establish that they were intended third-party beneficiaries of Twitter’s terms of service. Morel’s allegations that AFP knew that the images were his, disregarded his rights, and licensed Morel’s images to third-parties were sufficient to plead knowledge and inducement of infringement. Morel never uploaded images on Twitter. Instead, he used a third-party service called TwitPic, which says in its terms and conditions that the images posted remain the property of their owners. Morel used Twitter only to post a link to his TwitPic images. However the court held that Morel failed to allege facts supporting his claim that CBS had a direct financial interest in its affiliates’ exploitation of Morel’s images.

The Digital Millennium Copyright Act (DMCA) prohibits anyone from knowingly providing or distributing false copyright information with intent to “induce, enable, facilitate or conceal infringement.” Morel claims that AFP falsified and removed his copyright information from his images.

“Morel set forth a factual basis for alleging that AFP knew the copyright management information was false and intended to facilitate infringement,” Pauley wrote. In particular, an AFP editor viewed Morel’s images before AFP took identical images from Suero’s Twitpic feed. AFP also knew Morel was a professional photographer “and had no reason to believe Suero took the photos. However, AFP credited Suero without inquiry,” District Court Judge Pauley explained.

The court rejected AFP’s argument that it didn’t remove copyright management information (CMI) in violation of the DMCA. AFP says the DMCA stipulates that CMI must be removed from the photograph itself. But the DMCA “imposes no such requirement,” Pauley said. CMI includes information conveyed in connection with the work in question, and not just information on the work itself.

“It is implausible that a viewer of Morel’s photos would not understand the designation ‘Morel’ and ‘by photomorel’ appearing next to the images to refer to authorship,” Pauley wrote. Regarding Morel’s claim for violation of the Digital Millennium Copyright Act, the notations “Morel,” “daniel morel,” and “photomorel” fell within the scope of copyright management information under the plain language of the statute.

https://wiki.mozzilla.org/Drumbeat/Attribution_generator.

Mozilla (noting that people who want to do the right thing and give attribution should be able to easily) has launched “OPEN ATTRIBUTE” which is a free and easy suite of tools that makes giving attribution easy and fast. It is only available for Creative Commons’ licensed content, but it’s so deliciously easy and straightforward that we may expect to see it expand to a wider category of works.

Another demonstration that people really do understand the incentive that drives some authors the right to be acknowledged; to have their work attributed to them and not someone else.

Hard to believe that the last California statute prohibiting impersonation dates back to 1872. SB 1411, a bill passed last June, updates the law and makes malicious “e-personation” a misdemeanor punishable by up to a $1,000 fine and a year in county jail. It is codified at Penal Code Section 528.5.

More specifically, the new law makes unlawful to “knowingly and without consent credibly impersonate another actual person through or on an Internet Web site or by other electronic means … for purposes of harming, intimidating, threatening, or defrauding another person.” Emphasis Added. In addition to criminal penalties, the law expressly provides ground to bring a civil suit for compensatory damages, injunctive relief or other equitable relief to anyone who suffers damage or loss as a result of the online impersonation. Other states (like New York and Texas) already have similar laws on the books.

Practice Note: Attorneys who represent celebrities and victims of online harassment and identity theft will particularly want to know about this law, which adds to the arsenal of remedies against California impersonators. Also good to know: If you are dealing with imposters on Facebook, MySpace, Twitter, eBay or other prominent sites, you can usually get the fake account deleted fairly expeditiously by using the site’s take-down mechanism. Many sites now have such procedures in place, not only for DMCA purposes, but also to request deletion of abusive or fake pages.

Finally, it is important to note that the new California law only targets “credible” impersonators of an “actual person.” @ChuckNorris_ and @drtobiasfunke are probably safe.

Oracle v. Rimini Street, USDC D. Nevada 2:10-CV-00106-LRH-PAL

Oracle sued Rimini, a third party support and maintenance service provider, for having illegally downloaded Oracle’s software and support materials by logging on to Oracle’s password protected web-database using an Oracle customer’s individual login credentials, and downloading support materials in excess of that customer’s authorized license agreement. Rimini is owned by Seth Ravin, who is a top executive at TomorrowNow, another cut-rate provider of Oracle support services, until SAP acquired the company in 2007.

The much bigger issue here is whether the decades-old enterprise software model can hold up against the forces of upstart competition and price arbitrage; and, of course, copyright is the first beachhead in resolving that controversy. Really what has Oracle riled up is the challenge that Rimini and others (SAP for one) are threatening to eat the 80 plus percent profit margin that Oracle has in those yearly maintenance and support fees.

Rimini defended claiming that Oracle is using its existing software copyrights to unlawfully leverage a monopoly in its uncopyrightable after-market support services. Specifically, Rimini Street claims that Oracle prohibits the use of automated tools which effectively prevents customers from accessing large volumes of Oracle’s support materials which are integral to the licensee having the ability to make changes related to the technical design.

The court evaluated Rimini’s defense of copyright misuse; a powerful defense when effective as it halts the plaintiff’s case against that defendant. The equitable defense of copyright misuse “forbids a copyright holder from securing an exclusive right or limited monopoly not granted by the Copyright Office” by preventing “copyright holders from leveraging their limited monopoly to allow them control of areas outside the monopoly.”

Breaking the defendant’s claim into two parts, the court identified the two specific aspects of the alleged copyright misuse to be:

1) Oracle imposed limits on download, specifically the technical design of the Oracle website that licensees must access to get information, prohibits the licensee from accessing and differentiating the additional support information that is needed from that which is superfluous; and,

2) Oracle prohibits and literally stops any use of automated tools (bots) on its website with the result that customers are prevented from downloading large volumes of Oracle’s support material and collecting copyrighted content.

As to both aspects that Rimini claims comprised copyright misuse, the court “finds that the licensing restrictions alleged by Rimini Street are well within Oracle’s statutory rights as a copyright holder and therefore do not constitute copyright misuse.”

Nothing says “economic depression” so much as when scam artists run con-games on the weakest citizens: the infirm, the old, and now, unemployed students and recent graduates without money.

The FTC issued a release last week, suggesting confidence games against unemployed students are back in vogue, in the form of “secret shopper” scams. Sites, similar to this Mystery Shopper site, entice students by touting an hourly wage in excess of $20.00/hour, “just for shopping and dining out” and writing reviews (the foregoing site has not been targeted by the FTC and the author makes no claims as to the legitimacy or illegitimacy of the site; this site serves as example only).

Here’s the catch: in order to start collecting money, students have to either pay a membership fee, or deposit a bogus check sent to them (as “advance”). In the former case, the membership fee is collected, but no money is forthcoming (“No one wants your review. Sorry.”). In the latter scenario, the company’s check bounces, and gets returned with the depositer’s account information on it, and money is removed from the account. The FTC found that Independent Marketing Exchange, Inc. engaged in such fraudulent business practices.

Working as a bone fide “secret shopper” is a legitimate undertaking and some companies are actively seeking — and paying — shoppers for real reviews. The money, however, is typically not of the sort that will net anyone a full time income. Moreover, according to the FTC, legitimate “secret shopper” companies do not ask for money up front and do not ask members to deposit checks prior to conducting any work. While not dispositive of a bogus company seeking to defraud people, these “red flags” should be heeded by those looking into this line of work.

Practice Note: Advise clients who run such a business to steer clear of deceptive business practices such as charging membership for a secret shopper program, even if the business is a legitimate one. Such practices may subject a business to FTC investigation and complaints.

Like Verizon did last year on the same day, Google has announced that it is changing its company name to Topeka. From a trademark law perspective, Google is acutely aware that the public must be educated on proper use of its new mark, so as to lower the risk that TOPEKA might become generic and lose its trademark status as so many marks have before it (such as cellophane, escalator or aspirin). To that end, the Google has posted these helpful trademark usage guidelines:

Further information about the TOPEKA re-branding effort is available here.

Ephemera is by definition written and printed matter that not intended to be retained or preserved. But six years ago the San Francisco couple, Rick and Megan Prelinger, dedicated a new library to ephemera of all kinds and descriptions in the Soma District of their city.

In their webpage, the open handed, unguarded access policy is startling for its clarity and brevity:

“We plan at first to open our library to others when we are there, and develop a model of service based on what we learn of other people’s needs. It will be an appropriation-friendly setting. Scanners, digital cameras, and CD/DVD burners will be available so that visitors can make digital copies of items of interest and take them home. There will be no charge for using the collections, though we are exploring charging for commercial reuse of the materials so as to recover some of our expenses.”

This is an amazing project for many reasons, including the fact that it has such an ‘appropriation friendly’ useable collection.

Rick Prelinger comments that “We have found that the divide between the digital and analog camps is real, but highly exaggerated by the media and by overeager analysts; and that print and electronic materials are evolving in tandem with one another, and that this evolution is retroactive as well.”

Making a home for the unwanted paper text has been the work of Aaron Lansky in salvaging Yiddish language publications at the National Yiddish Book Center in the 1980′s. His book “Outwitting History” is an engaging tale of how the acquisition program was born and evolved.

One wonders if the Google Library Project has plans to help these who are rescuing ephemera print from destruction.

We learned yesterday in the New York TImes written by Miguel Helft that Google is harvesting metadata and data from the Google Library Project to create the largest translation engine in the world. As Google has an edge of pattern recognition software to generate metadata, perhaps we will see the next Google project to expand to these libraries of salvaged analog text.

“Like its rivals in the field, most notably Microsoft and I.B.M.,
Google has fed its translation engine with transcripts of United
Nations proceedings, which are translated by humans into six
languages, and those of the European Parliament, which are translated
into 23. This raw material is used to train systems for the most
common languages.”

Netflix, the web based DVD rental service, launched as contest in 2006 offering a 1 million dollar prize to team that develops a recommendation algorithm that is shown to be 10% better that Netflix’s current recommendation engine. To those in the programming community, the challenge has been compared to scaling Mount Everest. Has the summit been reached?

It seems the two contest front runners, Team Pragmatic Theory and Team Bellkor in BigChaos, have joined forces and submitted an algorithm that was 10.05 percent better than the one Netflix uses to recommend movies to its subscribers. The result was published on the Netflix Prize leader board on June 26, 2009.

From a promotion law point of view, the contest winner must grant to Netflix, an irrevocable, royalty free, worldwide non-exclusive license under the contest entrant’s copyrights, patents or other intellectual property rights in the winning algorithm. In addition, a description of the algorithm, but not the source code, will be published on the Netflix site. I.e., the winners will “describe to the world how [they] did it and why it works.” Like all well conceived contests, the official rules provide a mechanism for determining the contest entrants actually created the entry submitted. It appears however, that the winners are not prohibited patenting their entry and winners are not prohibited from charging others for the use the algorithm.

This contest, where competitive incentives are offered as an alternative to in-house research and development, looks like a new, workable model to foster innovation.

In a long and hard fought battle, the Second Circuit Court of Appeals has given renowned fashion designer, Joseph Abboud, a chance to reclaim his name.

Issuing a sweeping injunction in June 2008, a Southern District of New York court enjoined Abboud from using his name to sell, market or promote his own business, goods and/or services, finding Abboud’s intended use constituted a breach of contract and would constitute trademark infringement. The Second Circuit, in J.A. Apparel Corp. v. Abboud, et al No. 08-3181-cv (Second Cir.) found here reversed and remanded.

J.A. Apparel Corporation (“JA”), a former joint venture of Joseph Abboud, sued the designer in federal court alleging breach of contract, trademark infringement, and related claims over Abboud’s plans to use his name in the marketing and advertising of his then new JAZZ line, which he intended to promote using with such phrases as “a new composition by designer Joseph Abboud.”

Underlying the dispute, in 2000 JA entered into a sales agreement with Abboud, paying Abboud 65 million dollars for the exclusive rights to the ABBOUD label and related JOSEPH ABBOUD trademarks. While Abboud claimed the agreement only transferred rights in the ABBOUD trademarks but not the rights in his name, JA asserted the contract sold both the trademarks and the exclusive rights to use the Joseph Abboud name for commercial purposes. The district court ruled Abboud had unambiguously conveyed to J.A. all of Abboud’s rights to use his personal name, trademarks, and trade names for commercial purposes and also found Abboud’s planned use of his name would constitute trademark infringement, as it was likely to cause consumer confusion.

Vacating the injunction, the Second Circuit remanded the case, ruling the district court: 1) erred in ruling the sales agreement unambiguously conveyed all of Abboud’s rights to use his name commercially; and 2) erred in rejecting Abboud’s fair use claim as a defense to trademark infringement. The appellate court specifically found that given the conflicting interpretations of the sales agreement, the district court should have considered the parties’ extrinsic evidence to more fully understand the parties’ intent and that the district court should have examined Abboud’s actual or proposed use to resolve his fair use defense.

COMMENTARY: This case highlights the risks inherent in licensing or selling a brand name which also happens to be an individual’s name. Because the parties failed to clearly and precisely define the scope of their agreement, Joseph Abboud stands to lose the right to his very valuable name. Granted, he was paid 65 million dollars, which may seem like more than adequate compensation….but how much is your name worth, and what would it take for you to sell it? As some might say, “priceless.” Take the time to get it right.

St. Louis Cardinals manager Tony La Russa has sued Twitter, the popular micro-blogging service in San Francisco Superior Court alleging: Trademark Infringement, False Designation of Origin, Trademark Dilution, Cybersquatting, Misappropriation of Name, and Misappropriation of Likeness. In the Complaint, Mr. La Russa states the defendant owns the domain name twitter.com, and pursuant thereto, twitter.com/TonyLaRussa. Mr. La Russa contends an unknown user, pretending to be La Russa, began posting updates as Mr. La Russa. One line of the “profile” suggested it was all a fake: “Bio Parodies are fun for everyone.”

According to the San Francisco Chronicle, La Russa’s attorney tried to contact Twitter before filing the lawsuit, but got no response. Hours after the lawsuit was filed, Twitter removed the fake La Russa page and its postings. It is being reported that the case has already settled. “La Russa said Friday [6/5/09] that Twitter has agreed to pay legal fees and make a donation to his Animal Rescue Foundation. The organization is likely to take control of the name www.twitter.com/TonyLaRussa. However, the Wall Street Journal is reporting the opposite.

The truth is out there.

Trademark Note: Using a trademark and then simply claiming “parody” is not a “get outta jail free card.” In trademark cases, when a parody defense is raised, the defendant justifies his use on the grounds of humorous social comment. Funny or not, a defendant’s use may still be enjoined if it is likely to cause confusion with plaintiff’s trademark. Courts must balance the public interest in poking fun at trademarks and the institutions they represent, with the trademark owner’s investment and good will. Courts must also protect consumers from likely confusion.

As of last Saturday, Facebook users have been able to register personalized URLs of their choice for their Facebook home page (e.g., facebook.com/myusername). Approximately 5.75 million users signed up for their own URL over the weekend (also called “Vanity URLs”).

These new usernames could potentially be anything, including someone else’s trademark. To help trademark owners prevent hijacking of their marks, Facebook put in place a temporary procedure for trademark owners to “reserve” their registered trademarks with Facebook in advance and prevent the creation of URLs associated with those marks. Facebook has now closed this reservation period.

So what can trademark owners do who did not register their trademarks with Facebook and discover unauthorized URLs? They can request removal by contacting Facebook via this notice form. The procedure is fairly straightforward. You do not need to be registered on Facebook to use it.

So go to Facebook, check possible URLs containing your marks and, if you discover unauthorized uses, take action sooner rather than later.

Linden Labs, the host of the immensely popular site Second Life, an online virtual world, has been sued in an Arizona district court for trademark infringement and unfair competition. The complaint, filed by Taser International, makers of non-lethal (and sometimes lethal) weapons, claims Linden Labs allows third parties to sell TASER guns inside the virtual world.

Just so we’re clear, no one on Second Life is actively selling real TASER guns; rather Taser is suing Linden (who doesn’t sell anything), for letting people sell virtual (digitally created) guns that look like TASER weapons, and that use the TASER brand. The suit also alleges unfair competition, trade dress infringement, and false designation of origin, among other claims.

For those uninitiated few, users of the Second Life world can use their credit card to buy digital currency (“Linden Dollars”). They can then use that currency to make purchases in Second Life. For instance, if a user would like to dress up his/her avatar in a ball gown, s/he can use the Linden Dollars to shop at a virtual prom store. Similarly, if a user wants “protection” (you know, from digital thugs), s/he can buy a virtual weapon. Linden gets its revenue from a small percentage taken during the currency exchange.

It’s not the first time a company has sued Linden; neither is it the first time a company has sued a hosting site for trademark infringement by third parties (think: Google). It may, however, be the first time a company has sued another company for hosting a site where third parties selling products that aren’t even real. Is it time for a Digital Millennium Trademark Act?

Practice Note: Notwithstanding the fact that there is no DMTMA, companies may want to consider adopting a policy that allows them to stay an arms length away from disputes between users when it comes to trademarks. It’s not a fail-safe method of safe harbor protection, but it may make would-be plaintiffs feel they have an option short of filing a lawsuit, for getting hard-to-find users to stop using their marks.

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The Coalinga Recorder and the local namesake high school were vindicated after the Court of Appeals in the Fifth District ruled that the paper’s reprinting of a tirade from a “MySpace” page was not an invasion of the page owner’s privacy. The court found that “the article was available to anyone with Internet access.”

Turns out Cynthia Moreno wanted the world to know how much she despised her home town of Coalinga, a small rural city in the Central Valley area of California. Moreno’s “Ode to Coalinga” was posted on her MySpace page after she graduated high school and was attending UC Berkeley.

Cynthia’s high school principal happened upon it during the Ode’s 6-day reign of terror on her MySpace page and immediately forwarded it to an editor at the Coalinga Recorder. It was subsequently published in the Letters section.

The Ode did not sit well with the local folks who, according to the complaint filed by Moreno and her parents, began their own reign of terror on the Morenos (who still lived in Coalinga), threatening death, and firing shots at the house. Hatred was so fierce, the Moreno family business had to shut down because no one would patronize it. In fact, they had to leave town, and subsequently sued the paper, the parent publisher, and the school district for invasion of privacy and intentional infliction of emotional distress.

In affirming the lower court’s decision to dismiss the “invasion of privacy” portion of the complaint, the Court noted, “Cynthia’s affirmative act made her article available to any person with a computer and, thus, opened it to the public eye. Under these circumstances, no reasonable person would have had an expectation of privacy regarding the published material.” The court found unpersuasive Moreno’s argument that the girl never fully identified herself on the MySpace page in question, noting that her photograph and first name were sufficient to identify her as the author.

Practice Note: Increasingly, we are seeing postings on social networking sites being used in various ways in litigation. We are aware of several cases wherein a party has used a witness’ MySpace or FaceBook postings to impeach testimony. Companies may wish to consider policies regarding employee use of social media. As recently as today, according to CNET news an employee was fired for calling in sick (saying she needed to be in a dark room away from her monitor) and subsequently “FaceBooking” on the computer.

Personal Note: Mama, don’t let your babies grow up to be (irresponsible) Tweeters! In addition to litigation, increasingly, college admissions directors are surfing the Internet to see if there are vast distinctions between what they are reading in applications and the actual person. Social networking is a fine way to stay connected and show one’s unique personality, but parents must teach their children to be responsible about what they post and who they befriend. Children should be advised that digital information doesn’t disappear simply because it’s old, or because they remove it. A screen shot can easily be taken of anyone’s public information, without knowledge of the posting party. What happens in cyberspace really does stay there forever.

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The attached is a presentation I gave at the Food Marketing Association Legal Conference in San Antonio.

We had a good time and covered lots of topics. At the end of the day, we hit upon a few important take-away pieces of information:

1. The Social Networking/Social Media (“SM”) boom is not going away. People are going to find more ways to communicate digitally, and as the world’s psychographic changes (younger people start coming into adulthood), vendors who don’t assimilate SM into their plans are going to be left behind.
2. Currently, the legal issues are the same ones we’ve been addressing for the past few years with regard to blogging, domain hosting and user-generated content (third party trademark use; defamatory statements, hijacking of profiles, etc.).
3. In the long run, current law is going to require some tweaks, and we’re beginning to see them (be patient):
— The FTC has already come out with new “affiliate marketing/testimonial” guidelines (clear response to “fake” social networking sites).
– Likely change in SM sites will be clear disclosure of company-sponsored social sites (right now, if you get “busted” for fabricating a site, you’ve just got egg on your face). Legislation likely coming relating to origin.
– Affiliate SM sites likely to have to disclose that they have been paid for their testimonials. This is consistent with existing law regarding testimonials, but not currently enforced.
4. As technology advances, a greater burden will be placed on ISPs to protect against access by children; on the flip-side, parents are going to have to take more responsibility for what their kids are doing online.
The sky is not falling (see my last slide of “babies-booze-betamax”):
– People still (generally) make babies the same way, so online social networking will not replace direct communication.
– Young people will quickly learn how to interact, and in a difficult job market, interpersonal skills will separate out those who don’t have them.
– When new technologies are brought forth, some folks imbibe to excess. Much like the steep rise in alcoholism after prohibition, social mores and legislation over time made most folks use alcohol sensibly; the same thing is true for technology.
– Lawyers out there: relax and take a philosophical view: the fear that everything as we know it will change is unfounded (remember, we thought that the BetaMax would make real-time TV and advertising obsolete). Things will change slowly and over time, but companies will be able to get out their message.

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