Jonathan M. Eisenberg          Craig S. Rutenberg          Manatt, Phelps & Phillips, LLP
 June 2005    Volume 2, Issue 2   


Legal Department "Knowledge Management" Systems
And Good Corporate Governance

By Vincent I. Polley
KnowConnect, Inc.
Houston, TX

Mr. Polley, an attorney, is cofounder of KnowConnect, which provides knowledge management implementation services to corporate and government legal departments.

The emergence of effective knowledge management (“KM”) in corporate legal departments is increasingly credited with efficiency improvements and better employee retention. In the last few years these KM systems have moved from ad hoc experiments to systematic implementations using standardized processes and elements. As KM becomes more routine, companies that ignore the subject entirely are at best missing an opportunity, and at worst might be inviting Sarbanes-Oxley (“SOX”) related questions: “If you can minimize errors, are you practicing good corporate governance if you don’t?”

KM is a system that enables sharing of expertise among distributed members in a corporate legal department through a combination of technology, process, and culture changes. KM systems preserve knowledge threatened by the loss of senior lawyers and the passage of time, and strengthen teamwork and a sense of community among department members.

Early KM systems (in the 1990s) were developed and expanded for revenue purposes in large engineering companies (e.g., British Petroleum), lured by the vision expressed by then-HP CEO Lew Platt: “If we knew what we know, we’d be three times as profitable!” As the science of KM began to emerge, various legal departments began to apply KM techniques to their own challenges: repeated errors, reinvention of the wheel, lack of consistency, and loss of senior lawyer-experts. The pioneers in legal KM (Lucent, GE, Johnson & Johnson, Schlumberger) had mixed success, but learned much from their efforts. As these lessons are digested, legal KM is beginning to mature as an accepted discipline, much as Total Quality Management (“TQM”) and Health, Safety & Environment (“HSE”) programs are de rigueur in all well-managed companies and are measurable contributors to the bottom line.

KM As An Element Of Good Corporate Operations

SOX and its ilk (e.g., NYSE and NASDAQ governance requirements) directly addressed financial practices, processes, and disclosures. But SOX continues to expand, creeping into other corners of corporate operations. For example:

  • Implementation of “internal controls” under SOX section 404 (and similar rules under the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act) increasingly is being understood to require adoption of formalized information-security practices at the highest reporting levels to ensure the continued effective operation of internal communication systems;
  • There are NYSE proposals that audit committees’ charters should specifically address oversight of risk assessment and risk management practices; and
  • “Business continuity” planning arguably requires more than mere data backup – if “expertise backup” is feasible, perhaps it should be pursued.

As companies struggle to anticipate the coming reach of SOX initiatives (watching peer companies particularly carefully), progressive general counsels and audit committees are taking no chances: where potential improvements in corporate governance or operations are spotted, they are immediately pursued.

“Never Waste A Great Mistake!”

“To err is human.” Fair enough; but twice? Three times? Responsible individuals learn from their mistakes, but organizations may not. KM systems enable the rapid sharing of lessons learned within an organization, and can dramatically reduce repeated errors. Where mistakes can literally be fatal, a Michigan hospital has adopted the captioned slogan as part of its teaching program and is working hard to change a culture that punishes (or hides) mistakes into one that has learned how to benefit from them.

As important as mistake management may be, effective KM systems also promote a separate, no less important objective: breaking down silos and lubricating information flow across divisions. This happens as a natural consequence of the sharing-lessons dimension of KM systems. In order to promote sharing (both the creation of knowledge assets by “experts,” and the use of these assets by non-experts), participants must develop trust in their peers – trust that their own contribution of effort will be rewarded, and trust in the quality of others’ work product. Much of the work in building effective KM systems revolves around nurturing this sense of trust and confidence. When it has been done well, participants come to “know” each other (even where they are separated by eight time zones, and have personally met only once three years ago), and communicate freely and often. For corporate compliance programs, the consequences are immediate: information flows much more easily across the legal department, and up and down reporting ladders. Much like the Pentagon’s Total Information Awareness initiatives, KM enables the early identification of potential problems by putting together the pieces (where individual attorneys had only a part of the picture). In many ways, KM embodies the concept that “the whole is greater than the sum of the parts.”

When the cultural issues that so frequently beset new KM systems have been properly managed, the emergent organization operates as a team. There is a dramatic increase in the sense of belonging to a community, with a common purpose, shared interests, and cooperative instinct. The effects on morale are impressive. Attrition drops, and recruiting becomes easier. And with a fall-off in unwanted departures, less of your expertise is walking out the door.

“Is KM For Us?”

KM is particularly needed (and may be more effective) in companies that:

  • are geographically distributed;
  • experience frequent personnel moves (either within the company, or into/out of the company);
  • are in changing markets; and
  • have pockets of expert lawyers.

There is no “one-size-fits-all” KM system. While earlier experiments by the pioneers offer some instruction (frequently in what did not succeed), there’s no substitute for careful planning and hard work. Today, a large company without professional risk management, TQM, and HSE programs would draw attention from shareholders and regulators. If KM would make your legal department more effective, don’t you have a responsibility to explore the possibility?

KM Resources

  • “Share the Wealth: What Knowledge Management Could Mean to Your Legal Department” (ABA’s Business Law Today, Nov./Dec. 2003) –
  • American Productivity & Quality Center –
  • Books:
    • Learning To Fly, Chris Collison, et al. (Capstone, 2001)
    • Working Knowledge, Davenport and Prushak (Harvard Business School Press, 2000)
    • Common Knowledge, Nancy Dixon (Harvard Business School Press, 2000)
    • Performance Through Learning, Carol Gorelick (Butterworth-Heinemann, 2004)

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Emerging Trademark Issues On The Internet
By Susan Progoff and Vincent N. Palladino
Ropes & Gray LLP
New York, NY

In the early days of the Internet, trademark disputes centered around domain names. The question of whether it was proper to register a domain name that included or consisted of a trademark belonging to another entity was hotly contested. Because the disputes that arose did not always fit neatly into traditional trademark theories, courts grappled with the appropriate legal test, often reaching inconsistent results. Consequently, the Internet acquired a reputation as the “Wild West” among trademark owners, with attempts to sell domain names containing well-known trademarks to the trademark's rightful owner for an exorbitant sum becoming all too common.

With the advent of an administrative forum for resolving disputes over domain names and with the enactment of the Anticybersquatting Consumer Protection Act in the United States, the law regarding domain names has become more settled. In its place, new issues have arisen that have posed novel questions for courts to resolve. This article discusses emerging Internet issues involving trademarks that are currently before the courts.


A metatag is hidden code embedded in a website. Although the code is not visible to users viewing the site, it is used by search engines to locate sites responsive to a user’s search parameters. Many search engines rank the search results based on the amount of data in a site that is responsive to the search criteria. Thus, a searcher looking for “trademark lawyers” would receive search results that rank sites in order, with the sites having the most mentions of the searched term “trademark lawyers,” whether in visible text or in metatags, appearing at the top of the search results. Because there are clear advantages to being at or near the top of the search results, many website owners embed in their sites metatags that consist of commonly searched terms. When the metatags consist of generic terms, such as “trademark lawyers,” there is no legal dispute as to the propriety of the action. When, however, websites began to incorporate as metatags trademarks belonging to others, the courts became involved.

In general, courts have prohibited the use of another's trademark in metatags. As with the use of trademarks in the brick-and-mortar world, courts consider whether the use of a trademark in metatags is likely to cause confusion, applying the traditional multifactor analysis to decide that question. There are some significant differences, however, in the way this issue is viewed with respect to metatags.

In deference to the First Amendment and the goal of allowing the free flow of information online, courts have recognized a broader right of fair use on the Internet than in more traditional business contexts. Accordingly, a metatag that consists of descriptive marks or that is being used in a descriptive manner is more likely to be found to be a fair use than the use of the same mark might be in a more traditional business setting. For example, when a former Playmate of the Year used the trademarks PLAYBOY and PLAYMATE in metatags and wallpaper on her personal website, the court found this to be a fair use that fairly and accurately described her status rather than an infringement of Playboy's trademarks. The court was untroubled by the widespread and arguably excessive use of these terms on her site and in her metatags.

Similarly, courts have accorded broad latitude to the use of trademarks on sites that criticize or otherwise comment on a trademark owner's products or services. In litigation over domain names, courts have consistently allowed the use of trademarks in domain names for "suck" sites and other sites criticizing a product or service and found such uses to be either fair use or protected by the First Amendment. Similar use has been permitted with respect to metatags.


The use of keywords on the Internet is an issue that has only recently begun to be litigated. Based upon the few court decisions to date in which this issue has been addressed, it appears that keywords will be treated in much the same way as metatags.

Search engines locate sites in response to a search inquiry by looking for the terms entered in the search criteria. The sites located in response to a search are expected to contain the term or terms that were searched, and often are ranked in order based upon the number of “hits” in the site. Some search engines will, for a fee, place a party’s site at or near the top of the search results or place a banner advertisement alongside the search results whenever a user types in a particular word. These words are known as keywords.

When the sale of keywords involved only generic terms, the practice was not controversial. More recently, however, search engines have sold trademarks as keywords. For example, if the trademark KODAK were sold as a keyword to a competitor and an Internet user searched for KODAK film, the search results might list the competitor’s site at or near the top of the search results or might have a banner advertisement for the competitor’s product prominently displayed with the search results, even though the competitor may not carry KODAK film.

Many trademark owners believe this practice to be unfair because it allows a competitor to benefit from the trademark owner’s goodwill. It was only recently, however, that courts have been faced with the issue. In Playboy v. Netscape, several search engines were selling Playboy’s trademarks PLAYBOY and PLAYMATE as keywords to the owners of other adult sites. The entry of the keyword PLAYBOY on a search engine triggered a banner advertisement for other adult sites, some of which contained hard-core pornography. Some of the banner advertisements identified the advertiser while others did not. The court of appeals distinguished between the advertisements that identified the sponsors and those that did not, and found that at least where it was unclear whether the banner advertisements were sponsored by Playboy, there might be a claim for trademark infringement or unfair competition.

More recently, in Google v. American Blind and Wallpaper Factory, the court refused to enjoin the sale of descriptive trademarks as keywords. In that case, American Blind claimed rights in the unregistered terms AMERICAN BLIND and AMERICAN BLINDS and in the registered trademarks AMERICAN BLIND & WALLPAPER FACTORY, AMERICAN BLIND FACTORY and DECORATE TODAY. Distinguishing this case from the facts in Playboy v. Netscape, the court refused to enjoin the use of American Blind’s trademarks as keywords because in the court’s view they were not sufficiently distinctive to warrant protection against this type of activity.

Since these decisions, a number of companies have brought suit against Google over the sale of trademarks as keywords. A federal court in Virginia recently refused to dismiss claims for trademark infringement in such a suit brought by GEICO, holding that the complaint alleged facts sufficient to allow the case to proceed to trial. It remains to be seen how the law develops in this area, although it seems clear that owners of less distinctive marks may have a more difficult time preventing the use of their marks as keywords.


Pop-up advertisements have been the subject of recent conflicting court decisions. A pop-up is an advertisement that “pops up” when an Internet user accesses a particular website. Many pop-ups are triggered by adware that the computer user installs, either intentionally or unwittingly, when downloading other software with which the adware is bundled. The adware generates pop-ups that are targeted to the user based upon the types of sites the user visits.

In late 2003, U.S. district courts in Virginia and Michigan issued decisions in separate cases in which U-Haul and Wells Fargo sued over WhenU’s sale of pop-up advertisements that appeared on U-Haul’s and Wells Fargo’s websites. The pop-ups, which were generated by WhenU’s adware downloaded on users’ computers, promoted the products or services of companies that compete with the owner of the site on which the pop-ups appear. In both cases, the courts denied claims that the pop-ups violate the trademark laws. The courts reasoned that the pop-up advertisements were not likely to cause confusion because they did not use the plaintiff’s trademarks; the only trademarks that appeared in the pop-ups were the trademarks of the company sponsoring the pop-up. In addition, the courts reasoned, the pop-ups did not interfere with consumers accessing plaintiff’s site.

Shortly after decisions issued in the U-Haul and Wells Fargo cases, a U.S. district court in New York found the identical conduct to constitute trademark infringement and unfair competition. In 1-800 Contacts, Inc. v. and Vision Direct, the court issued a preliminary injunction prohibiting defendants from triggering pop-up advertisements when users access plaintiff’s website. The court, relying on evidence that nearly 60 percent of consumers believed that pop-up advertising was placed by the owner of the website on which the advertising appears and more than 50 percent believed the pop-ups were pre-screened and approved by the website owner, reasoned that consumers are likely to be confused, at least initially, into believing that the pop-ups were endorsed, sponsored or authorized by the owner of the site. This harms the owner of the site because it creates the possibility that, through the use of pop-ups, the party placing the pop-up “would gain crucial credibility during the initial phases of the deal.” The decision in the case has been appealed and the appeal is currently pending.

Since the decision in 1-800 Contacts, a number of companies have brought suit to enjoin the use of pop-ups on their sites. Many of these cases have settled, with the advertisers discontinuing their use of pop-ups. Some of these settlements have been reported to include a payment by the advertiser to the owner of the site. It remains to be seen whether a consensus will develop among courts as to whether this type of advertising is actionable. To date, no appeals court has ruled on the issue.


Linking allows Internet users to move from one section of a site to another, or from one site to another, by clicking on buttons or text on a site. Links enable a user to move from one web page to another with the simple click of a mouse and facilitate the dissemination of information over the Internet. The issue has arisen as to whether a link from one website to another creates the false impression that the owner of one site sponsors or endorses the other or that the sites are connected in some way or that the link is authorized. In the few cases in which courts have considered this issue, they have recognized the importance of linking to the use of the Internet and as a means of making information readily available online. In view of these important considerations, and in view of the courts’ recognition that Internet users are accustomed to linking from one unrelated site to another, courts thus far have declined to hold that linking violates the trademark or unfair competition laws.

Courts have also considered whether “deep linking” is an act of trademark infringement or unfair competition. Deep linking occurs when a link takes the user to an internal page of another’s website rather than linking to the home page. This type of linking allows the user to bypass advertising and other material on the home page. The issue of whether deep linking violates the trademark laws was raised in Ticketmaster v., where the court held that deep linking, without a showing of likelihood of confusion, was not necessarily an act of unfair competition, although it might, in appropriate circumstances, be an act of passing off or false advertising.


Framing occurs when one website retrieves content from another site and incorporates the content of the second site into the first site. The border, or frame, of what appears on the screen is from the first site, whereas the inset, or framed page, is from the second site. The frame may consist of tool bars, graphics and text. Frequently, the viewer of a framed page will see the trademark of the framing page in combination with the content from a second, often unrelated, site. The inset will often have no identifying information. By displaying the trademarks of one source with the content of another, however, the argument could be made that consumers are likely to be confused into believing that the framed content is produced, sponsored or authorized by the party whose trademarks appear on the frame around the content.

To date, no court has issued a decision regarding the trademark issues raised by framing, although it has been found to be a violation of the copyright law. Owners of websites have attempted to address the issue by prohibiting framing in the terms and conditions agreements governing the use of the site. Whether such terms will be effective in controlling unwanted framing remains to be seen.


As the Internet matures, the law in this area will undoubtedly grow with it. As the law developed with respect to domain name disputes, it will similarly develop, and ultimately become settled, regarding the issues discussed in this article. It is also safe to say that new issues will certainly emerge in the future regarding the use and protection of trademarks on the Internet.

(Originally published in IP Value 2005. Republished with permission. The authors thank Carla Sereny for her help in the preparation of the article.)

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Selected 2004 Cyberspace Intellectual Property Cases
By Prof. Eric Goldman
Marquette Law School
John Ottaviani
Edwards & Angell, LLP

Mr. Goldman is an assistant professor at Marquette Law School in Milwaukee, WI.
Mr. Ottaviani is a partner at Edwards & Angell in both Providence, RI and Boston, MA.


Last year we prepared a list of the top 2003 cases involving intellectual property on the Internet. You can find that list at This article presents our collective opinion (as of January 2005) about the top 2004 cases, with particular emphasis on significant developments regarding fair use, third-party liability and the Digital Millennium Copyright Act (“DMCA”). No list like this is or could be comprehensive, and we have not made any attempt to rank-order the cases. Instead, we offer this list to provoke discussion and to help readers make sure they saw the cases we subjectively think were most interesting from 2004.

  1. Unlabeled Banner Ads Keyed To Mark May Constitute Initial Interest Confusion
  2. Playboy Enters., Inc. v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004). Netscape’s and Excite’s sale of a list of “key word triggers,” which included the registered trademarks “Playboy” and “Playmate,” to advertisers may create “initial interest confusion” and infringe registered trademarks on the list. The U.S. District Court granted summary judgment to search engine companies. The U.S. Court of Appeals for the Ninth Circuit reversed, finding: (1) analysis of eight-factor likelihood-of-confusion test raised genuine issues of material fact on the issue of actual confusion and precluded summary judgment; (2) search engines’ practice of keying banner ads to Playboy’s trademarks created “initial interest confusion” by confusing Internet users into thinking that unlabeled banner ads appearing on search pages are sponsored by Playboy so as to invoke users to click through ads; (3) disputed issues of fact as to fame of marks and search engines’ commercial use of marks precluded summary judgment; (4) “fair use” defense could not be used because there remained an issue of likelihood of confusion; and (5) “nominative fair use” defense does not apply because banner ads came up if any name on the list was typed in, not just Playboy or Playmate. Judge Berzon, in a concurring opinion, questions viability of Brookfield Communications, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999), holding as to “initial interest confusion” and suggested it be revisited en banc.

  3. Court Sinks Copyright Claims Against Yacht Broker Website
  4. Nautical Solutions Mktg., Inc. v., No. 8:02-CV-760-7-23TGW, 2004 WL 783121 (M.D. Fla. Apr. 1, 2004). owned and operated, an Internet website on which subscribing yacht brokers post listings of yachts for sale. NSM started a competing website with two services to which objected: (1) NSM used a “spider” to visit targeted public websites, extract the facts concerning yacht listings and put them in a searchable database on its own website; and (2) NSM also, on behalf of yacht brokers who owned a yacht listing on another website, would copy, modify and paste the pictures and text of the listing onto NSM’s website. The U.S. District Court found that the momentary copying of the HTML code to extract the facts unprotected by copyright constitutes “fair use” (citing Ticketmaster Corp. v. and Assessment Tech. v. Wiredata, Inc., both of which appeared on our 2003 list!) and thus was not an infringement. The copying of the pictures and the text of the listings did not infringe any copyright, because the brokers owned the copyright in the text and the pictures.

  5. DMCA Safe Harbors Are Not Exclusive
  6. CoStar Group Inc. v. Loopnet Inc., 373 F.3d 544 (4th Cir. 2004). CoStar operated a database of commercial real estate in the United States and the United Kingdom. Loopnet’s web hosting services allow subscribers (generally real estate brokers) to post listings of commercial real estate on the Internet. CoStar sued for copyright infringement. The U.S. District Court found no direct infringement. On appeal the U.S. Court of Appeals for the Fourth Circuit affirmed, holding that the DMCA safe harbor provisions (with which Loopnet did not comply) do not preempt the Netcom holding (an ISP serving only as a passive conduit for copyrighted material is not liable as a direct infringer). Stay tuned, though, because the Fourth Circuit held open the possibility that an ISP could become liable indirectly upon a showing of additional involvement sufficient to establish contributory or vicarious violation of the Copyright Act. In that case, the ISP could still look to the safe harbor in the DMCA section 512(c) if it fulfilled the conditions set forth there.

  7. You Say “Scholastica.” I Say “Escolastica” — But No One Will Be Confused
  8. Scholastic, Inc. v., 100 Fed. Appx. 152 (4th Cir. 2004). Escolastica sells an Internet-based application to private schools in Mexico, where teachers and students can communicate outside school via password-protected web pages. Scholastic is a leading seller of educational materials and books in the United States and worldwide, and offers a similar service on its website. The Fourth Circuit affirmed the lower court’s finding that there was no likelihood of confusion (using the eight-part test in the Fourth Circuit), given: (1) the differences in the marks themselves; and (2) the substantial differences in the appearances of the websites. In effect, this is a traditional likelihood-of-confusion analysis, applied to two websites offering similar services, but to completely different audiences (Spanish-speaking students and parents in Mexico vs. English-speaking parents and students in the United States).

  9. Gripe Sites Suck, But They Don’t Infringe — No Likelihood Of Confusion With Registered Trademark
  10. As we found last year, there are two more cases where the courts find that gripe sites do not infringe trademarks. Viva la First Amendment!

    • TMI, Inc. v. Maxwell, 368 F.3d 433 (5th Cir. 2004). Individual set up website complaining about homebuilder’s practices, using the homebuilder’s trademark in the domain name. The U.S. Court of Appeals for the Fifth Circuit reversed the lower court and held that the Anticybersquatting Consumer Protection Act (“ACPA”) and the antidilution provisions of the Lanham Act require “commercial use” for liability and that the individual did not engage in commercial use. In this case, the individual did not accept payments for listing other vendors, had no intent to charge money for using the site, had no advertising or links to other websites, did not engage in the business of selling domain names, and had no bad faith intent to profit.
    • Lucas Nursery and Landscaping, Inc. v. Grosse, 359 F.3d 806 (6th Cir. 2004). Former customer of a landscaping company set up a gripe website on which she detailed her complaints about bad service. The U.S. Court of Appeals for the Sixth Circuit reviewed the “bad faith” factors in the ACPA and affirmed the lower court’s finding that the customer did not act in bad faith within the meaning of the ACPA.

  11. Strike Two! Recording Industry Gets Groked Again! Grokster Still Not Liable For Contributory Or Vicarious Copyright Infringement
  12. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 380 F.3d 1154 (9th Cir.), cert. granted, 125 S. Ct. 686 (2004). The lower court decision made our list last year, and we are now guaranteed a “three-peat” by the U.S. Supreme Court’s granting of certiorari. The lower court found that the distributors of Grokster peer-to-peer software are not liable for contributory or vicarious copyright infringement, because (unlike Napster) the Grokster defendants had no knowledge of and did not assist any specific acts of infringement, and had no right or ability to supervise users of the software. This year, a panel of the Ninth Circuit affirmed unanimously. The Ninth Circuit decision arguably creates a conflict with the Seventh Circuit as to how the Betamax case should be interpreted. The Ninth Circuit says that in order for limitations of liability in Betamax to apply, the product need only be capable of substantial noninfringing uses. The U.S. Court of Appeals for the Seventh Circuit says that an important additional factor is how “probable” the noninfringing uses are. STAY TUNED! This one is likely to top the 2005 list!

    [Editors' Note: While this issue of CIPerati was being prepared, the U.S. Supreme Court announced its unanimous decision reversing the Ninth Circuit's decision in Grokster, and holding that distributors of "peer-to-peer" network software can be held secondarily liable for the copyright-infringing acts of individual network users, if the distributors had the intent to induce third-party infringement of copyrighted material, as shown by "clear expression or other affirmative steps taken to foster infringement."]

  13. When Will It All End? — Napster Investors Face Possible Liability For User Downloads
  14. UMG Recordings, Inc. v. Bertelsmann AG, 222 F.R.D. 408 (N.D. Cal. 2004). Music recording companies have now brought their copyright infringement claims against the former owners of Napster, alleging the investors engaged in vicarious and contributory copyright infringement. The U.S. District Court refused to dismiss the claims, because the recording companies accuse the defendants of assuming control over Napster’s operations and directing the infringing activities that gave rise to Napster’s liability.

  15. Use Of Trademark In Metatags Does Not Cause Initial Interest Confusion
  16. Bijur Lubricating Corp. v. Devco Corp., 332 F. Supp. 2d 722 (D.N.J. 2004). Bijur is a manufacturer of lubricating systems and replacement parts for those systems. Devco competes with Bijur in the sale of lubricating parts, components and services. Devco used Bijur’s trademark in its metatags, such that an Internet search would return results that included a Devco web page under the title “Bijur replacement lubrication parts by Devco.” The U.S. District Court used a fairly traditional analysis to conclude that: (1) the “first sale” doctrine permits Devco to use Bijur’s trademark to resell genuine Bijur replacement parts; and (2) the “nominative fair use” doctrine permits Devco to use Bijur’s trademarks to sell replacement parts manufactured by third parties. The court also found that the use of Bijur’s trademarks in metatags was not confusing, because Devco used the marks truthfully to describe Bijur’s products.

  17. Perfectly Wrong — Twice!
    • Perfect 10, Inc. v. Visa Int’l Service Ass’n, No. C 04-0371JW, 2004 WL 1773349 (N.D. Cal. Aug. 5, 2004). Publisher of pornographic magazine and website sued Visa, MasterCard and other financial institutions, claiming that they have knowingly provided transactional support services for the sale of millions of stolen photos and film clips by other websites, and thus have committed contributory and vicarious copyright and trademark infringement. The U.S. District Court dismissed the copyright claims because: (1) the defendants do not materially contribute to infringement, because they are concerned solely with the financial aspects of the websites, not the content; and (2) the defendants had no right and ability to control the infringing activity. The court also dismissed the trademark infringement claims because: (1) the defendants did not induce the infringing websites to use Perfect 10’s marks; and (2) the defendants had no control over the infringing websites.
    • Perfect 10, Inc. v. CCBill, LLC, 340 F. Supp. 2d 1077 (C.D. Cal. 2004). Here, Perfect 10 sued a payment processing service and an age verification service for copyright infringement. The defendants claimed that their actions fell within the DMCA “safe harbors” such that they were not liable. The U.S. District Court agreed. The lengthy decision contains discussions of the requirements for DMCA notices under Section 512(c)(3); the reasonable implementation provisions under Section 512(i); the “provision of a connection” provision under Section 512(e); termination policies under Section 512(i); and the safe harbor provisions of Sections 512(a), (c) and (d). The court also found that Section 230(e) of the Communications Decency Act shielded the defendants from liability for state unfair competition and false advertising claims, but not for wrongful use of registered trademarks.

  18. Good News! We Just Saved A Lot On Our D&O Insurance! Or Did We?
  19. Government Employees Ins. Co. v. Google, Inc., 330 F. Supp. 2d 700 (E.D. Va. 2004). Google’s sale of keywords linked to advertising constituted a commercial use of GEICO’s marks such that the U.S. District Court refused to dismiss a trademark infringement claim. Note: subsequently the court has orally ruled that Google’s practice of selling the keywords does not infringe GEICO’s trademarks, but that the practice of allowing the advertisements to use GEICO’s trademarks may infringe. No written ruling has been issued yet, and the court has urged the parties to settle the case. Second note: A French court in January 2005 found Google liable for trademark infringement in France for essentially the same practice.

Here are some other cases that we considered for the top 10 list:

DeGidio v. West Group Corp., 355 F.3d 506 (6th Cir.), cert. denied, 124 S. Ct. 2842 (2004) (owner of the website domain name has a descriptive mark in “law offices” that has not acquired secondary meaning for trademark protection).

Retail Servs., Inc. v. Freebie’s Publ’g, 364 F.3d 535 (4th Cir. 2004) (the term “freebie” as used in the domain name is generic and thus a trademark claim against the domain name owner could not stand because the mark had not acquired secondary meaning).

In re Oppedahl & Larson, LLP, 373 F.3d 1171 (Fed. Cir. 2004) (U.S. Court of Appeals for the Federal Circuit upheld Trademark Trial and Appeal Board's decision to affirm refusal to register the mark PATENTS.COM; the court held that addition of the top-level domain indicator “.com” to the term “patents” did not make the otherwise descriptive term registrable. The court left open the possibility that in unique circumstances the TLD could perform a source-indicating function and that the addition of a TLD to an otherwise descriptive term could affect the registrability of a mark).

New Sensor Corp. v. CE Distrib. LLC, 303 F. Supp. 2d 304 (E.D.N.Y.), affirmed, 121 Fed. Appx. 407 (2d Cir. 2004) (vacuum tube seller’s use of competitor’s “ZVETLANA” mark on its website did not infringe the trademark, nor did it constitute false advertising, where all the vacuum tubes offered by seller under the trademark name had been acquired by seller from a supplier).

I.M.S. Inquiry Management Sys., Ltd. v. Berkshire Info. Sys., Inc., 307 F. Supp. 2d 521 (S.D.N.Y. 2004) (unauthorized use of a valid password to access website did not constitute a violation of the anticircumvention provisions of the DMCA).

Argos v. Orthotec LLC, 304 F. Supp. 2d 591 (D. Del. 2004) (foreign entity’s use of its trademark as part of its domain name constitutes “use in commerce” under the Lanham Act, sufficient to confer standing for bringing a claim under the ACPA).

Welte v. Sitecom Deutschland GmbH (LGMünchen, May 19, 2004) (General Purpose License used in providing open source software is legally valid and enforceable under German copyright law).

Disney South Africa copyright infringement suit (Disney motion to dismiss denied in lawsuit filed by local Zulu family for royalties from the hit song “The Lion Sleeps Tonight.” The family of the late Solomon Linda, who composed the original Zulu tune for the song, is claiming 10 million rand (about $2.7 million) in damages from Disney. The court ordered that Disney’s trademarks in South Africa can be attached to obtain jurisdiction and can be sold to collect damages. The allegation is that under South African copyright law, Mr. Linda’s assignment of the copyright expired in 1987, and Disney’s subsequent sale of “The Lion King” videos and CDs in South Africa infringed the copyright. (Order handed down June 29, 2004.) (A total of 240 South Africa trademark registrations, including Mickey Mouse and Donald Duck were cited in the order.)). (The case is still in the discovery stage and is not expected to go to trial before July 2005.)

Telewizja Polska USA, Inc. v. Echostar Satellite Corp., No. 02 C 3293, 2004 WL 2367740 (N.D. Ill. Oct. 15, 2004) (archived copies of web pages taken by the Internet Archive as they appeared in the past are admissible under the Federal Rules of Evidence, and do not constitute hearsay or “an unreliable source”).

Corbis v. Amazon, 351 F. Supp. 2d (W.D. Wash. 2004) (copyright holder in photographs and posters brought action against, claiming that Amazon directly and vicariously infringed its copyrights by permitting third parties to publish photos in Amazon’s zShops platform. Court held that DMCA section 512(c) safe harbor protects Amazon from liability for copyright infringement for images displayed by third-party vendors. Discussion includes: (1) what is a “service provider” under Section 512(k)?; (2) what does it mean to “reasonably implement” a user policy under Section 512(i)?; and (3) the safe harbor conditions under Section 512(c)).

Rossi v. Motion Picture Ass’n of Amer., 391 F.3d 1000 (9th Cir. 2004), writ denied, 125 S. Ct. 1977 (2005) (operator of website that offers downloadable movies brought tort suit against MPAA for tortious interference with contractual relations after MPAA threatened Rossi’s ISP with copyright infringement. Good discussion of “good faith belief” under Section 512(c)(3)(A)(v)).

Batesville Servs., Inc. v. Funeral Depot, Inc., No. 1:02-CV-01011-DFH-TA, 2004 WL 2750253 (S.D. Ind. Nov. 10, 2004) (Funeral Depot used copyrighted pictures of Batesville caskets on website that also sold other products from other companies. Court granted Batesville’s motion for summary judgment of Funeral Depot’s fair use defense. Court said it is difficult to prove copyright infringement or contributory infringement from use of hyperlinks, but refused to make it a per se rule).

Nissan Motor v. Nissan Computer Corp., 378 F.3d 1002 (9th Cir. 2004), cert. denied, 125 S. Ct. 1825 (Apr. 18, 2005) (auto manufacturer sued North Carolina computer store for trademark infringement and dilution in connection with website. Issues include discussion of dilution in the Internet context and whether or not the court could enjoin links to gripe sites).

(Originally published by the American Bar Association. Reprinted with permission.)

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