E-Commerce Law

E-Commerce Law Briefs: Week of January 22, 2007

This week’s E-Commerce Law Briefs focus on social-networking giant MySpace. Previous posts on E-Commerce Law have detailed the actual and perceived dangers associated with use of MySpace by minors and the resulting harm to MySpace’s reputation amongst potential advertisers. Months ago, we outlined the economic forces which would and have forced MySpace to develop more sophisticated safety measures so as to fully realize the revenue potential of the MySpace phenomenon.

In a microcosm, this week’s news demonstrates the evolution of the entire MySpace controversy, from danger through image repair to monetization:

Danger

"Four families have sued News Corp. and its MySpace social-networking site after their underage daughters were sexually abused by adults they met on the site . . . ." A lawyer for one of the families says that "MySpace waited entirely too long to attempt to institute meaningful security measures that effectively increase the safety of their underage users." The lawyer says that he hopes the suits will encourage the social-networking site to focus more on safety and prevent similar abuse in the future and the families are seeking millions of dollars in damages.

(Families of abused daughters sue MySpace at boston.com)

Image Repair

On the heels of those lawsuits, MySpace has announced that it will team with the National Center for Missing and Exploited Children to distribute Amber alerts.

(MySpace to distribute Amber alerts at SilliconValley.com)

As an aside, MySpace has also "sued a Colorado man once accused of being one of the world's top three spammers, saying the man gained access to MySpace profiles using stolen passwords and used the information to send spam bulletins."

(MySpace sues Colorado man for sending millions of spam messages at MercuryNews.com)

Monetization

MySpace has also inked a deal that will permit it to sell music from certain independent record labels.

(Independent record labels sign MySpace deal at washingtonpost.com)

E-Commerce Law Briefs is a weekly feature appearing each Friday afternoon on E-Commerce Law. Each week, E-Commerce Law Briefs will provide a brief summary and commentary on recent legal news affecting e-commerce businesses.

Technorati Tags:  MySpace

E-Commerce Law Briefs: Week of January 15, 2007

The Recording Industry Association of America (RIAA) has obtained a $30,750 default judgment for copyright infringement against a 20-year old woman after a similar case was dismissed against her mother. The case is one of 18,000 piracy suits filed in federal courts across the country, many against minors.

(Judge orders daughter of N.Y. defendant to pay in music-piracy case at SilliconValley.com)

AOL has signed Napster as its exclusive online music subscription service. "Once synonymous with piracy in online music, Napster was forced to close in July 2001 after a series of legal battles over piracy and copyright infringement. Software company Roxio later bought Napster and relaunched it as a legal site in 2003. Roxio renamed itself Napster, and shares began trading in January 2005."

(AOL signs Napster as music subscription service at washingtonpost.com)

E-Commerce Law Briefs is a weekly feature appearing each Friday afternoon on E-Commerce Law. Each week, E-Commerce Law Briefs will provide a brief summary and commentary on recent legal news affecting e-commerce businesses.

Technorati Tags:  RIAA, music sharing, copyright infringement

Court Holds that Purchase of Trademarked Keywords is a Use in Commerce Under the Lanham Act but No Confusion is Likely

On January 4, 2007, the United States District Court for the Eastern District of Pennsylvania issued its opinion granting the motion to dismiss filed in J.G. Wentworth v. Settlement Funding, LLC, 2007 WL 30115 (E.D. Pa. 2007). Plaintiff alleged causes of action for trademark infringement based upon Defendant’s use of Plaintiff’s trademarks in Google’s AdWords program and in the meta-tags for Defendant’s website. Defendant filed a motion to dismiss, arguing that Defendant’s use of the marks was not a "use in commerce" under the Lanham Act and challenging Plaintiff’s claim on "likelihood of confusion" grounds.

Use in Commerce

Defendant argued that the alleged use of the marks for the purpose of triggering Internet advertising through Google’s AdWords program amounted to the sort "pure machine-linking function," detailed in U-Haul Int’l, Inc. v. WhenU.com, Inc., 279 F.Supp.2d 723, 725-36 (E.D. Va. 2003), a non-trademark use of another’s mark that does not identify the source of a product. In rejecting this argument, the Court relied upon the decision in Buying for the Home, LLC v. Humble Abode, LLC, 2006 WL 3000459 (D.N.J. 2006) in which that court held that, though participation in the AdWords program is not a traditional "use in commerce," it still satisfies the Lanham Act’s "use" requirement.

The Court specifically rejected the Second Circuit’s holding that such use was "analogous to ‘an individual’s private thoughts about a trademark.’" See 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400, 409 (2d Cir. 2005). Instead, the Court held that "[b]y establishing an opportunity to reach consumers via alleged purchase and/or use of a protected trademark, the defendant has crossed the line from internal use to use in commerce under the Lanham Act."

Likelihood of Confusion

The concept of "initial interest confusion" applies where similar marks allow the defendant to lure potential customers away from a producer by initially passing off its goods as those of the producer, even where confusion as to the source of the goods is ultimately dispelled. In keyword trademark cases, attorneys often rely upon an initial interest confusion theory to establish the likelihood of confusion element of a trademark infringement claim.

In J.G. Wentworth, the Court rejected the initial interest confusion argument, noting that "initial interest confusion must create in consumers confusion as to the source of the goods or services or a misunderstanding as to an association between the mark holder and the mark user." The Court held that, since the Defendant’s use of the Plaintiff’s marks in the AdWords program created "separate and distinct" links "on any of the search results pages in question, potential consumers have no opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of plaintiff." After noting that "no reasonable factfinder could find a likelihood of confusion under the set of facts alleged by plaintiff," the Court granted the motion to dismiss.

For more information on trademark infringement claims based upon keyword advertising programs, see Jonathan D. Frieden and Sean Patrick Roche, E-Commerce: Legal Issues of the Online Retailer in Virginia, 13 RICH. J.L. & TECH. 5 (2006), http://law.richmond.edu/jolt/v13i2/article5.pdf.

Technorati Tags:  Google, keyword advertising, trademark infringement

E-Commerce Law Briefs: Week of January 8, 2007

In November, Google displaced Yahoo as the world’s second-most-visited website. "Visitors to Google’s sites rose 9.1 percent, to 475.7 million in November from a year earlier, while those to Yahoo sites rose 5.2 percent, to 475.3 million, the [market] researcher, ComScore Networks, said. Both sites trail Microsoft, which had 501.7 million visitors, ComScore said."

(Google Passes Yahoo in Tally of Visitors at NYTimes.com)

A Louisville judge has ruled that wineries may ship wine directly to Kentucky residents who order by telephone or over the Internet. The ruling represents a departure from the state’s existing laws for alcohol sales. "Those requirements, which date to the end of Prohibition, created a three-tier system in which producers sell to distributors who then sell to retailers. [The] ruling [last month] by Judge Charles R. Simpson III covers a new law [which took] effect Jan. 1."

(Judge rules Kentuckians can buy online from small wineries at courier-journal.com)

"Hitwise, which tracks online traffic trends, reported this week that use of iTunes was up 413 percent on Christmas Day compared with the previous year, beating Microsoft’s new Zune service by 30 to 1."

(No. 1 With a Bullet at NYTimes.com)

E-Commerce Law Briefs is a weekly feature appearing each Friday afternoon on E-Commerce Law. Each week, E-Commerce Law Briefs will provide a brief summary and commentary on recent legal news affecting e-commerce businesses.

Technorati Tags:  Google, Yahoo, iTunes

E-Commerce Law Briefs: Week of January 1, 2007

As expected, the holiday season has demonstrated that e-commerce is alive and well. In fact, it is thriving.

"Amazon.com Inc.'s 2006 holiday season peaked with more than 4 million orders placed on December 11, the Web retailer said Tuesday. . . . In its 12th holiday season, Amazon.com said it again had its ‘best ever’ sales . . . ."

(Amazon has ‘best ever’ sales at CNN.com)

"Swarms of online shoppers armed with new iPods and iTunes gift cards apparently overwhelmed Apple's iTunes music store over the holiday, prompting error messages and slowdowns of 20 minutes or more for downloads of a single song."

(Music denied -- shoppers overwhelm iTunes at CNN.com)

E-Commerce Law Briefs is a weekly feature appearing each Friday afternoon on E-Commerce Law. Each week, E-Commerce Law Briefs will provide a brief summary and commentary on recent legal news affecting e-commerce businesses.

Technorati Tags:  Amazon, iTunes