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e-Commerce Docket Sheet
Single-Use Restriction on Patented Toner Cartridges Constitutes Conditional License
The doctrine of exhaustion of patent rights does not render unenforceable a true conditional license containing a single-use restriction imposed by a toner cartridge manufacturer on its patented toner cartridges. Arizona Cartridge Remanufacturers Association, Inc. v. Lexmark International, Inc. (N.D. Cal. Sep. 30, 2003). The plaintiff, a toner remanufacturer trade group, claimed the restrictions were an unenforceable post-sale condition barred by the doctrine of patent exhaustion. The court disagreed, concluding that the license was a valid conditional license because the consumers had notice of the post-sale conditions and had an opportunity to reject them, and the toner cartridges were offered at a special price in exchange for the conditions.
Personal E-mail Created, Stored on Govt. Computers Not Always Public Records
Personal e-mails are not considered public records by virtue of their placement on a government owned computer system. State of Florida v. City of Clearwater, No. SC02-1694 (Fla. Sept. 11, 2003). The Supreme Court of Florida affirmed the lower court's judgment that a city government did not have to turn copies of e-mail correspondence between two city employees conducted over the city's computer network over to a newspaper. The court held that personal e-mails were not “made or received in connection with official business,” and thus fell outside the scope of Florida's public records law. The city's “Computer Resources Use Policy,” which expressly disclaimed a user's expectation of privacy, could not be construed as expanding the scope of the public records statute. Further, the court distinguished automatically created e-mail headers from “purposely compiled and maintained” mail logs and phone records, which arguably qualified as public records.
Cybersquatting Complaint Alleges 'Advertising Injury' for Purposes of Insurance Coverage
For purposes of determining an insurer's contractual obligation to defend, a trademark complaint based on the defendant's allegedly improper domain name registration and use alleges an “advertising injury” as defined in the policy. State Auto Property and Cas. Ins. Co v. Traveler Indem. Co. of Amer., No. 02-2069 (4th Cir. Sept. 4, 2003). Under the policy, advertising injury included the “misappropriation of advertising ideas or style of doing business.” The policy provided coverage only for advertising injuries caused by offenses committed in the course of advertising the insured's own goods, products or services. Reversing the District Court, the Fourth Circuit held that the cybersquatting complaint did in fact allege an advertising injury because, inter alia, a trademark was an advertising idea, and much of the advertising on the insured's Web site was for its own goods and services.
The “virtually limitless” number of potential customers on the Internet supports a court's imposition of a large damages award against an Internet vendor of counterfeit goods. Tiffany (NJ) Inc. v. Luban, No. 03 Civ. 2824 (S.D.N.Y. Sept. 11, 2003). The District Court awarded the plaintiff $550,000 in damages under the Lanham Act. The defendant was a Web site that sold 28 identified counterfeit items infringing upon at least four of the plaintiff's trademarks. Although the court could not determine actual sales made by the Web site, it noted that “by selling over the Internet, [defendant] had access to a 'virtually limitless number of customers,'” and that sales under such a circumstance were presumptively high.
Assessing Confusion Likelihood, Court Finds Users Less Likely to be Confused
Internet consumers are likely more educated and affluent than other consumers, and more likely to be able to differentiate between two companies that use similar marks. Commerce Bancorp, Inc. v. Bankatlantic, Civ. No. 02-4774 (D.N.J. Sept. 25, 2003). The District Court granted summary judgment dismissing the plaintiff's Lanham Act claims relating to its slogan, “America's Most Convenient Bank.” Assessing the likelihood of confusion between this slogan and the defendant's slogan, “Florida's Most Convenient Bank,” the court held that Internet banking consumers ' including many of the plaintiff's customers ' exercised extreme care in choosing their banking services and would likely differentiate between the two companies. The court credited the defendant's expert's conclusions that costly high-speed Internet access was important for conducting banking online, and that Internet banking customers “tended to be comfortable if not enamored with technology.”
Domain Name with 'Descriptive Connotation' Likely to Divert Internet Users
Even though a domain name has a descriptive connotation, it may be used to divert Internet users seeking another party's Web site. Mentor ADI Recruitment Ltd v. Teaching Driving Ltd., Case No. D2003-0654 (WIPO Sept. 29, 2003). The WIPO Panelist transferred the domain name “letsdrive.com” to the Complainant, a driving school that owned a trademark based on the words “Let's Drive.” Although the Panelist noted, in its “bad faith” analysis, that the words had a descriptive connotation, it also found that the URL was “unlikely to be keyed in except by a person seeking information about the Complainant.” Thus, it was likely that some users were confused into believing the Web site was connected to the complainant, and respondent was not entitled to divert Internet users by means of such confusion.
Web Activities of Catalog Retailer Support General Personal Jurisdiction
An out-of-state retailer that operates a “sophisticated virtual store” in the forum state is subject to general personal jurisdiction within the forum state. Gator.com Corp. v. L.L. Bean, Inc., No. 02-15035 (9th Cir. Sept. 2, 2003). The Ninth Circuit noted that there was a high standard governing whether general jurisdiction may be asserted over a company that does business on the Internet, but that the standard was met in this case. The retailer operated a “highly interactive and very extensive” Web site, driven by a “sophisticated” sales effort involving direct e-mail solicitations to forum residents. Large numbers of forum residents regularly made purchases and interacted with sales representatives through the Web site. The court reversed the District Court's dismissal of the case for lack of personal jurisdiction.
Personal Jurisdiction over Web Operator Supported by Four Sales to Forum Residents
Evidence of four sales made to forum residents is sufficient for a court's exercise of specific personal jurisdiction over a nonresident Web site operator. Brach's Confections, Inc. v. Keller, Case No. 03 C 2032 (N.D. Ill. Sept. 24, 2003). The defendant operated a Web site that offered candy for purchase that allegedly infringed the plaintiff's trademarks. Users could click on a link that automatically generated an e-mail that allowed an order to be placed, but purchasers made payment either through an off-site Internet payment service or by mailing a check. The District Court held that evidence of four sales made in this manner to forum residents was sufficient to establish minimum contacts and support the court's exercise of personal jurisdiction over the site's operator.
Court Won't Assert Jurisdiction over Site Based on Minimal Contacts with Forum State
Absent evidence that a Web site targeted forum residents or that forum residents actually accessed the site, a minimally interactive Web site does not have the minimum contacts with the forum state necessary to support personal jurisdiction over the site's operators. Pound v. Airosol, Inc., Civ. No. 02-2632-CM (D. Kan. Sept. 21, 2003). The defendants' Web sites offered advertisements, a telephone number to place orders of the allegedly infringing products, and access to e-mail communication with the defendants. However, there was no evidence showing that a single forum resident had placed a telephone order, or even that a forum resident had ever visited the sites. Furthermore, the court noted the lack of evidence that the defendants specifically targeted forum residents.
Injunction Against Posting Trade Secret Does Not Violate Free Speech Clause
A preliminary injunction prohibiting a Web site operator from posting the DeCSS DVD-copying code online did not violate the operator's free speech rights. DVD Copy Control Ass'n, Inc. v. Bunner, No. S102588 (Cal. Aug. 25, 2003). The California Supreme Court reversed the Court of Appeal's holding that the preliminary injunction, even if justified under California's trade secret law, violated the First Amendment. In its review, the Supreme Court assumed without deciding that the injunction issued by the trial court was warranted under trade secret law, and found in this regard that it was neither unduly burdensome on the Web operator's speech nor a prior restraint. The content of the posted code, the Court held, did not involve a matter of public concern, and it did not implicate the core purpose of the First Amendment.
Internet Matchmaking Service Afforded Immunity Under CDA
A commercial Internet dating service is statutorily immune from liability for false content in a dating profile provided by someone posing as another person. Carafano v. Metrosplash.com, Inc., 02-55658 (9th Cir. Aug. 13, 2003). Affirming the judgment of the District Court on other grounds, the Ninth Circuit held that the dating service qualified as an “interactive computer service” under '230(c)(1) of the Communications Decency Act. Although the service provided structure to a user's profile through a questionnaire and other means, the court found that it did not function as an “information content provider” under the statute because a dating profile had no content until a user created one.
Docket Sheet was written by Julian S. Millstein, Jeffrey D. Neuburger
Single-Use Restriction on Patented Toner Cartridges Constitutes Conditional License
The doctrine of exhaustion of patent rights does not render unenforceable a true conditional license containing a single-use restriction imposed by a toner cartridge manufacturer on its patented toner cartridges. Arizona Cartridge Remanufacturers Association, Inc. v.
Personal E-mail Created, Stored on Govt. Computers Not Always Public Records
Personal e-mails are not considered public records by virtue of their placement on a government owned computer system. State of Florida v. City of Clearwater, No. SC02-1694 (Fla. Sept. 11, 2003). The Supreme Court of Florida affirmed the lower court's judgment that a city government did not have to turn copies of e-mail correspondence between two city employees conducted over the city's computer network over to a newspaper. The court held that personal e-mails were not “made or received in connection with official business,” and thus fell outside the scope of Florida's public records law. The city's “Computer Resources Use Policy,” which expressly disclaimed a user's expectation of privacy, could not be construed as expanding the scope of the public records statute. Further, the court distinguished automatically created e-mail headers from “purposely compiled and maintained” mail logs and phone records, which arguably qualified as public records.
Cybersquatting Complaint Alleges 'Advertising Injury' for Purposes of Insurance Coverage
For purposes of determining an insurer's contractual obligation to defend, a trademark complaint based on the defendant's allegedly improper domain name registration and use alleges an “advertising injury” as defined in the policy. State Auto Property and Cas. Ins. Co v. Traveler Indem. Co. of Amer., No. 02-2069 (4th Cir. Sept. 4, 2003). Under the policy, advertising injury included the “misappropriation of advertising ideas or style of doing business.” The policy provided coverage only for advertising injuries caused by offenses committed in the course of advertising the insured's own goods, products or services. Reversing the District Court, the Fourth Circuit held that the cybersquatting complaint did in fact allege an advertising injury because, inter alia, a trademark was an advertising idea, and much of the advertising on the insured's Web site was for its own goods and services.
The “virtually limitless” number of potential customers on the Internet supports a court's imposition of a large damages award against an Internet vendor of counterfeit goods. Tiffany (NJ) Inc. v. Luban, No. 03 Civ. 2824 (S.D.N.Y. Sept. 11, 2003). The District Court awarded the plaintiff $550,000 in damages under the Lanham Act. The defendant was a Web site that sold 28 identified counterfeit items infringing upon at least four of the plaintiff's trademarks. Although the court could not determine actual sales made by the Web site, it noted that “by selling over the Internet, [defendant] had access to a 'virtually limitless number of customers,'” and that sales under such a circumstance were presumptively high.
Assessing Confusion Likelihood, Court Finds Users Less Likely to be Confused
Internet consumers are likely more educated and affluent than other consumers, and more likely to be able to differentiate between two companies that use similar marks. Commerce Bancorp, Inc. v. Bankatlantic, Civ. No. 02-4774 (D.N.J. Sept. 25, 2003). The District Court granted summary judgment dismissing the plaintiff's Lanham Act claims relating to its slogan, “America's Most Convenient Bank.” Assessing the likelihood of confusion between this slogan and the defendant's slogan, “Florida's Most Convenient Bank,” the court held that Internet banking consumers ' including many of the plaintiff's customers ' exercised extreme care in choosing their banking services and would likely differentiate between the two companies. The court credited the defendant's expert's conclusions that costly high-speed Internet access was important for conducting banking online, and that Internet banking customers “tended to be comfortable if not enamored with technology.”
Domain Name with 'Descriptive Connotation' Likely to Divert Internet Users
Even though a domain name has a descriptive connotation, it may be used to divert Internet users seeking another party's Web site. Mentor ADI Recruitment Ltd v. Teaching Driving Ltd., Case No. D2003-0654 (WIPO Sept. 29, 2003). The WIPO Panelist transferred the domain name “letsdrive.com” to the Complainant, a driving school that owned a trademark based on the words “Let's Drive.” Although the Panelist noted, in its “bad faith” analysis, that the words had a descriptive connotation, it also found that the URL was “unlikely to be keyed in except by a person seeking information about the Complainant.” Thus, it was likely that some users were confused into believing the Web site was connected to the complainant, and respondent was not entitled to divert Internet users by means of such confusion.
Web Activities of Catalog Retailer Support General Personal Jurisdiction
An out-of-state retailer that operates a “sophisticated virtual store” in the forum state is subject to general personal jurisdiction within the forum state. Gator.com Corp. v. L.L. Bean, Inc., No. 02-15035 (9th Cir. Sept. 2, 2003). The Ninth Circuit noted that there was a high standard governing whether general jurisdiction may be asserted over a company that does business on the Internet, but that the standard was met in this case. The retailer operated a “highly interactive and very extensive” Web site, driven by a “sophisticated” sales effort involving direct e-mail solicitations to forum residents. Large numbers of forum residents regularly made purchases and interacted with sales representatives through the Web site. The court reversed the District Court's dismissal of the case for lack of personal jurisdiction.
Personal Jurisdiction over Web Operator Supported by Four Sales to Forum Residents
Evidence of four sales made to forum residents is sufficient for a court's exercise of specific personal jurisdiction over a nonresident
Court Won't Assert Jurisdiction over Site Based on Minimal Contacts with Forum State
Absent evidence that a Web site targeted forum residents or that forum residents actually accessed the site, a minimally interactive Web site does not have the minimum contacts with the forum state necessary to support personal jurisdiction over the site's operators. Pound v. Airosol, Inc., Civ. No. 02-2632-CM (D. Kan. Sept. 21, 2003). The defendants' Web sites offered advertisements, a telephone number to place orders of the allegedly infringing products, and access to e-mail communication with the defendants. However, there was no evidence showing that a single forum resident had placed a telephone order, or even that a forum resident had ever visited the sites. Furthermore, the court noted the lack of evidence that the defendants specifically targeted forum residents.
Injunction Against Posting Trade Secret Does Not Violate Free Speech Clause
A preliminary injunction prohibiting a Web site operator from posting the DeCSS DVD-copying code online did not violate the operator's free speech rights. DVD Copy Control Ass'n, Inc. v. Bunner, No. S102588 (Cal. Aug. 25, 2003). The California Supreme Court reversed the Court of Appeal's holding that the preliminary injunction, even if justified under California's trade secret law, violated the First Amendment. In its review, the Supreme Court assumed without deciding that the injunction issued by the trial court was warranted under trade secret law, and found in this regard that it was neither unduly burdensome on the Web operator's speech nor a prior restraint. The content of the posted code, the Court held, did not involve a matter of public concern, and it did not implicate the core purpose of the First Amendment.
Internet Matchmaking Service Afforded Immunity Under CDA
A commercial Internet dating service is statutorily immune from liability for false content in a dating profile provided by someone posing as another person. Carafano v. Metrosplash.com, Inc., 02-55658 (9th Cir. Aug. 13, 2003). Affirming the judgment of the District Court on other grounds, the Ninth Circuit held that the dating service qualified as an “interactive computer service” under '230(c)(1) of the Communications Decency Act. Although the service provided structure to a user's profile through a questionnaire and other means, the court found that it did not function as an “information content provider” under the statute because a dating profile had no content until a user created one.
Docket Sheet was written by Julian S. Millstein, Jeffrey D. Neuburger
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
'Huguenot LLC v. Megalith Capital Group Fund I, L.P.': A Tutorial On Contract Liability for Real Estate Purchasers
In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
CoStar Wins Injunction for Breach-of-Contract Damages In CRE Database Access Lawsuit
Latham & Watkins helped the largest U.S. commercial real estate research company prevail in a breach-of-contract dispute in District of Columbia federal court.