e-Commerce Docket Sheet

An e-mail prepared for attorneys in anticipation of litigation does not necessarily lose its work-product protection when it is forwarded to a close family member. United States v. Stewart, No. 03 Cr. 717 (S.D.N.Y. Oct. 20, 2003). After her criminal investigation began, Martha Stewart forwarded an e-mail containing her recollections of the events for which she was indicted to her daughter ' “the closest person in the world” to her, and “a valued confidante and counselor.” The District Court held that this disclosure did not constitute a waiver of work-product protection, as it did not increase the risk of adversarial intrusion into an attorney's “zone of privacy.” Addressing the issue of fairness, the court held that the disclosure affected neither side's interests in the litigation, did not evince Stewart's intent to relinquish work-product protection, and did not prejudice the government by giving Stewart a litigation-based advantage.

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ISPs Not Liable for Hosting Hidden-Camera Video-Sale Sites

Internet service providers (ISPs) that provide Web-hosting services to sites that sell unauthorized hidden-camera videos are not liable to the individuals depicted in the videos. Doe v. GTE Corp., No. 02-4323 (7th Cir. Oct. 20, 2003). The District Court dismissed the plaintiffs' claims against two ISPs, relying on section 230(c) of the Communications Decency Act (CDA). The Seventh Circuit affirmed the dismissal. The court noted that section 230(c) of the CDA was open to several different interpretations that would provide varying degrees of immunity for ISPs vis-a-vis their obligations to protect third parties. In this case, however, the Seventh Circuit found it unnecessary to decide the exact contours of the CDA immunity, because the plaintiffs failed to assert any cause of action, or to cite any case that required the ISPs to protect third parties who may be injured by material posted on their services.

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CDA Immunizes Web Site Owner from Liability in Defamation Case

Section 230(c)(1) of the Communications Decency Act (CDA) immunizes a Web-site owner from defamation and false-light liability for posting disparaging articles created by another information-content provider. Barrett v. Ponorow, No. 2-02-0886 (Ill. App. Ct. Oct. 28, 2003). The court affirmed the trial court's dismissal of the defamation and false-light claims against a Web site that posted the disparaging articles as the site received them. The fact that the defendant chose certain articles for publication over others, and may have known, or had reason to know, that the articles were defamatory, did not alter the court's holding that the defendant was covered by CDA immunity. The appeals court held that “perfectly uniform” case law compelled the conclusion that section 230 applied to publishers and distributors. However, the court also noted that commentators have vigorously criticized such an interpretation, and affirmed the trial court's refusal to sanction the plaintiff for arguing for distributor liability against the site owner.

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CDA Immunity for Newsgroup Distributor Rejected in Defamation Case

The immunity provided to a “provider or user of an interactive service” by section 230(c)(1) of the Communications Decency Act (CDA) does not abrogate the common-law principle of distributor- or knowledge-based liability. Barrett v. Rosenthal, No. A096451 (Cal. Ct. App. 1st Dist. Oct. 15, 2003). On appeal of an order striking a libel complaint pursuant to California's anti-SLAPP statute, the appeals court held that the trial court erred in finding that section 230 of the CDA shielded a newsgroup poster from defamation liability. The poster allegedly distributed to various Internet newsgroups a defamatory e-mail message that she received from another defendant, and then refused to remove and, in fact, repeatedly reposted the message after being informed of its defamatory nature. Contrary to the trial court (and the leading case of Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997)), the appeals court held that section 230 of the CDA does not restrict distributor liability under the common law, and the plaintiff's defamation claim was not barred by the statute.

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ACPA Claims Not Barred if Predicated on Conduct that Postdates Prior Action

A claim of unlawful registration of a domain name under the Anticybersquatting Consumer Protection Act (ACPA) is not necessarily barred by res judicata if the claim is based on events that postdate the prior related action. Storey v. Cello Holdings L.L.C., No. 02-7281 (2d Cir. Oct. 9, 2003). The Second Circuit reversed the District Court's holding that the trademark owners were barred, on res judicata grounds, from asserting their ownership rights to the cello.com domain. The District Court dismissed with prejudice the trademark owners' prior cybersquatting action after a tentative settlement concerning the domain name was reached. Shortly thereafter, the registrant sent a letter offering the cello.com domain for sale, and the trademark owners commenced a successful administrative proceeding under the Uniform Domain-Name Dispute-Resolution Policy to obtain transfer of the domain, which the registrant challenged by means of a declaratory ACPA action. Whereas the District Court held that the trademark owners could not claim ownership of the domain given the prior dismissal, the Second Circuit remanded for consideration of whether the offer letter constituted the basis for a new cause of action for cybersquatting premised on the registrant's ongoing use of the domain name.

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Court Rejects Hits as Evidence of 'Internet Initial Interest Confusion'

A statistic representing a single month's “hits” on a trademark defendant's Web site is too speculative to raise a material issue of fact as to consumer confusion. Savin Corp. v. The Savin Group, No. 02 Civ. 9377 (S.D.N.Y. Oct. 28, 2003). The plaintiff argued that the 48,949 hits that the defendant's Web site received in March 2003 was a “disproportionately high” number for a small engineering firm, and served as circumstantial evidence that consumers searching for plaintiff's similarly named site were diverted. The court rejected this argument, holding that the evidence was too speculative to satisfy prevailing standards for imposing liability based on “Internet initial interest confusion.” The court granted summary judgment to the defendants.

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Use of Trademark in Domain Name, but Not Metatag, Found Confusing

Even in a case where a competitor's use of a company's trademark within its domain name is likely to cause consumer confusion, it's possible that use of the same trademark as a metatag does not add to this confusion. Johnny's Fine Foods, Inc. v. Johnny's Inc., No. 1:01-0107 (M.D. Tenn. Oct. 2, 2003). Finding a general likelihood of confusion, the District Court enjoined the defendant's use of the plaintiff's trademarks Johnny's and Johnny's Gourmet in a variety of commercial contexts, including its domain name and text. The court, however, specifically excluded from this injunction any use of these marks as metatags. Noting that searches on the term Johnny's (and to a lesser extent Johnny's Gourmet) returned many thousands of results, the Court held that the term was “so generic and ubiquitous on the Internet that any additional confusion caused by its use by both of these parties would be negligible at best.”

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Third Circuit Upholds Copyright Office Rule on Net Streaming Radiocasts

The Copyright Office rule that Internet streaming of AM/FM radio-broadcast programming is not exempt from the digital audio transmission performance right described in Section 106(6) of the Copyright Act was a valid exercise of its rulemaking authority. Bonneville v. Peters, No. 01-3720 (3d Cir. Oct. 17, 2003). The Copyright Office rule interpreted the statutory term “non-subscription broadcast transmissions” to exclude simultaneous Internet streaming of musical programming by radio broadcasters, and, thereby, to exclude such streaming from the statutory exemption. The Circuit Court held that the Copyright Office rule was entitled to judicial deference as a proper exercise of its delegated authority under the statute, and that it was also a legally correct interpretation of the statute in which the court concurred, even if it was not entitled to judicial deference.

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Under Michigan law, the “fair reporting privilege” shields a party from libel damages for its publication on the Internet of an actual court filing, such as a complaint. Amway Corp. v. The Procter & Gamble Co., No. 01-2561 (6th Cir. Oct. 8, 2003). The Sixth Circuit affirmed the District Court's grant of summary judgment dismissing plaintiff's libel-based claims against the defendants, who filed a complaint against the plaintiff in federal court, and then published the complaint on a third-party Web site. The court held that even assuming that some allegations in the complaint were libelous, the libel was included in the complaint itself, and the defendants did not add any statements when they published it on the Internet. Thus, Michigan's statutory fair-reporting privilege covered the publication of the complaint in its entirety.

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Problems Caused by AOL 5.0 Not 'Tangible Property' Damage

Complaints alleging that an Internet service provider's access software altered users' existing software, disrupted their network connections, caused the loss of stored data and caused their operating systems to crash do not allege “tangible property” damage so as to obligate the provider's insurer's duty to defend the lawsuits. America Online, Inc. v. St. Paul Mercury Insurance Co., No. 02-2018 (4th Cir. Oct. 15, 2003). America Online sought a declaratory judgment that its insurer had a duty to defend and indemnify it against class-action lawsuits filed after its release of Version 5.0 access software. The Sixth Circuit affirmed that the underlying suits did not allege “physical damage to tangible property” as covered by the policy. Instead, the court compared the damage alleged in the suits to a lost combination that renders a combination lock inoperable, but not physically damaged.

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Personal Jurisdiction Over Trademark Defendant Allowed

Personal jurisdiction may be exercised over an out-of-state defendant based on its interactive Web site that is accessible in all states, if the “target” of the defendant's alleged trademark infringement is located within the forum state. Venture Tape Corp. v. McGills Glass Warehouse, No. 03-CV-11045-MEL (D. Mass. Oct. 20, 2003). The defendant allegedly embedded the plaintiff's trademarks invisibly (white-on-white) within its Web site's HTML code, thus diverting Internet searchers. The District Court held that while personal jurisdiction over the defendant could not ordinarily be constitutionally exercised on the mere basis of its interactive Web site made available around the globe, the fact that the “target” of the alleged trademark infringement was a company located within the forum state provided the “something more” that satisfied the purposeful-availment requirement.

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Julian S. Millstein Edward A. Pisacreta

Martha Stewart e-Mail To Daughter Maintains Work-Product Protection

An e-mail prepared for attorneys in anticipation of litigation does not necessarily lose its work-product protection when it is forwarded to a close family member. United States v. Stewart , No. 03 Cr. 717 (S.D.N.Y. Oct. 20, 2003). After her criminal investigation began, Martha Stewart forwarded an e-mail containing her recollections of the events for which she was indicted to her daughter ' “the closest person in the world” to her, and “a valued confidante and counselor.” The District Court held that this disclosure did not constitute a waiver of work-product protection, as it did not increase the risk of adversarial intrusion into an attorney's “zone of privacy.” Addressing the issue of fairness, the court held that the disclosure affected neither side's interests in the litigation, did not evince Stewart's intent to relinquish work-product protection, and did not prejudice the government by giving Stewart a litigation-based advantage.

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ISPs Not Liable for Hosting Hidden-Camera Video-Sale Sites

Internet service providers (ISPs) that provide Web-hosting services to sites that sell unauthorized hidden-camera videos are not liable to the individuals depicted in the videos. Doe v. GTE Corp., No. 02-4323 (7th Cir. Oct. 20, 2003). The District Court dismissed the plaintiffs' claims against two ISPs, relying on section 230(c) of the Communications Decency Act (CDA). The Seventh Circuit affirmed the dismissal. The court noted that section 230(c) of the CDA was open to several different interpretations that would provide varying degrees of immunity for ISPs vis-a-vis their obligations to protect third parties. In this case, however, the Seventh Circuit found it unnecessary to decide the exact contours of the CDA immunity, because the plaintiffs failed to assert any cause of action, or to cite any case that required the ISPs to protect third parties who may be injured by material posted on their services.

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CDA Immunizes Web Site Owner from Liability in Defamation Case

Section 230(c)(1) of the Communications Decency Act (CDA) immunizes a Web-site owner from defamation and false-light liability for posting disparaging articles created by another information-content provider. Barrett v. Ponorow, No. 2-02-0886 (Ill. App. Ct. Oct. 28, 2003). The court affirmed the trial court's dismissal of the defamation and false-light claims against a Web site that posted the disparaging articles as the site received them. The fact that the defendant chose certain articles for publication over others, and may have known, or had reason to know, that the articles were defamatory, did not alter the court's holding that the defendant was covered by CDA immunity. The appeals court held that “perfectly uniform” case law compelled the conclusion that section 230 applied to publishers and distributors. However, the court also noted that commentators have vigorously criticized such an interpretation, and affirmed the trial court's refusal to sanction the plaintiff for arguing for distributor liability against the site owner.

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CDA Immunity for Newsgroup Distributor Rejected in Defamation Case

The immunity provided to a “provider or user of an interactive service” by section 230(c)(1) of the Communications Decency Act (CDA) does not abrogate the common-law principle of distributor- or knowledge-based liability. Barrett v. Rosenthal, No. A096451 (Cal. Ct. App. 1st Dist. Oct. 15, 2003). On appeal of an order striking a libel complaint pursuant to California's anti-SLAPP statute, the appeals court held that the trial court erred in finding that section 230 of the CDA shielded a newsgroup poster from defamation liability. The poster allegedly distributed to various Internet newsgroups a defamatory e-mail message that she received from another defendant, and then refused to remove and, in fact, repeatedly reposted the message after being informed of its defamatory nature. Contrary to the trial court (and the leading case of Zeran v. America Online, Inc. , 129 F.3d 327 (4th Cir. 1997)), the appeals court held that section 230 of the CDA does not restrict distributor liability under the common law, and the plaintiff's defamation claim was not barred by the statute.

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ACPA Claims Not Barred if Predicated on Conduct that Postdates Prior Action

A claim of unlawful registration of a domain name under the Anticybersquatting Consumer Protection Act (ACPA) is not necessarily barred by res judicata if the claim is based on events that postdate the prior related action. Storey v. Cello Holdings L.L.C., No. 02-7281 (2d Cir. Oct. 9, 2003). The Second Circuit reversed the District Court's holding that the trademark owners were barred, on res judicata grounds, from asserting their ownership rights to the cello.com domain. The District Court dismissed with prejudice the trademark owners' prior cybersquatting action after a tentative settlement concerning the domain name was reached. Shortly thereafter, the registrant sent a letter offering the cello.com domain for sale, and the trademark owners commenced a successful administrative proceeding under the Uniform Domain-Name Dispute-Resolution Policy to obtain transfer of the domain, which the registrant challenged by means of a declaratory ACPA action. Whereas the District Court held that the trademark owners could not claim ownership of the domain given the prior dismissal, the Second Circuit remanded for consideration of whether the offer letter constituted the basis for a new cause of action for cybersquatting premised on the registrant's ongoing use of the domain name.

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Court Rejects Hits as Evidence of 'Internet Initial Interest Confusion'

A statistic representing a single month's “hits” on a trademark defendant's Web site is too speculative to raise a material issue of fact as to consumer confusion. Savin Corp. v. The Savin Group, No. 02 Civ. 9377 (S.D.N.Y. Oct. 28, 2003). The plaintiff argued that the 48,949 hits that the defendant's Web site received in March 2003 was a “disproportionately high” number for a small engineering firm, and served as circumstantial evidence that consumers searching for plaintiff's similarly named site were diverted. The court rejected this argument, holding that the evidence was too speculative to satisfy prevailing standards for imposing liability based on “Internet initial interest confusion.” The court granted summary judgment to the defendants.

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Use of Trademark in Domain Name, but Not Metatag, Found Confusing

Even in a case where a competitor's use of a company's trademark within its domain name is likely to cause consumer confusion, it's possible that use of the same trademark as a metatag does not add to this confusion. Johnny's Fine Foods, Inc. v. Johnny's Inc., No. 1:01-0107 (M.D. Tenn. Oct. 2, 2003). Finding a general likelihood of confusion, the District Court enjoined the defendant's use of the plaintiff's trademarks Johnny's and Johnny's Gourmet in a variety of commercial contexts, including its domain name and text. The court, however, specifically excluded from this injunction any use of these marks as metatags. Noting that searches on the term Johnny's (and to a lesser extent Johnny's Gourmet) returned many thousands of results, the Court held that the term was “so generic and ubiquitous on the Internet that any additional confusion caused by its use by both of these parties would be negligible at best.”

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Third Circuit Upholds Copyright Office Rule on Net Streaming Radiocasts

The Copyright Office rule that Internet streaming of AM/FM radio-broadcast programming is not exempt from the digital audio transmission performance right described in Section 106(6) of the Copyright Act was a valid exercise of its rulemaking authority. Bonneville v. Peters, No. 01-3720 (3d Cir. Oct. 17, 2003). The Copyright Office rule interpreted the statutory term “non-subscription broadcast transmissions” to exclude simultaneous Internet streaming of musical programming by radio broadcasters, and, thereby, to exclude such streaming from the statutory exemption. The Circuit Court held that the Copyright Office rule was entitled to judicial deference as a proper exercise of its delegated authority under the statute, and that it was also a legally correct interpretation of the statute in which the court concurred, even if it was not entitled to judicial deference.

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Under Michigan law, the “fair reporting privilege” shields a party from libel damages for its publication on the Internet of an actual court filing, such as a complaint. Amway Corp. v. The Procter & Gamble Co., No. 01-2561 (6th Cir. Oct. 8, 2003). The Sixth Circuit affirmed the District Court's grant of summary judgment dismissing plaintiff's libel-based claims against the defendants, who filed a complaint against the plaintiff in federal court, and then published the complaint on a third-party Web site. The court held that even assuming that some allegations in the complaint were libelous, the libel was included in the complaint itself, and the defendants did not add any statements when they published it on the Internet. Thus, Michigan's statutory fair-reporting privilege covered the publication of the complaint in its entirety.

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Problems Caused by AOL 5.0 Not 'Tangible Property' Damage

Complaints alleging that an Internet service provider's access software altered users' existing software, disrupted their network connections, caused the loss of stored data and caused their operating systems to crash do not allege “tangible property” damage so as to obligate the provider's insurer's duty to defend the lawsuits. America Online, Inc. v. St. Paul Mercury Insurance Co., No. 02-2018 (4th Cir. Oct. 15, 2003). America Online sought a declaratory judgment that its insurer had a duty to defend and indemnify it against class-action lawsuits filed after its release of Version 5.0 access software. The Sixth Circuit affirmed that the underlying suits did not allege “physical damage to tangible property” as covered by the policy. Instead, the court compared the damage alleged in the suits to a lost combination that renders a combination lock inoperable, but not physically damaged.

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Personal Jurisdiction Over Trademark Defendant Allowed

Personal jurisdiction may be exercised over an out-of-state defendant based on its interactive Web site that is accessible in all states, if the “target” of the defendant's alleged trademark infringement is located within the forum state. Venture Tape Corp. v. McGills Glass Warehouse, No. 03-CV-11045-MEL (D. Mass. Oct. 20, 2003). The defendant allegedly embedded the plaintiff's trademarks invisibly (white-on-white) within its Web site's HTML code, thus diverting Internet searchers. The District Court held that while personal jurisdiction over the defendant could not ordinarily be constitutionally exercised on the mere basis of its interactive Web site made available around the globe, the fact that the “target” of the alleged trademark infringement was a company located within the forum state provided the “something more” that satisfied the purposeful-availment requirement.

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Julian S. Millstein Edward A. Pisacreta New York Brown Raysman Millstein Felder & Steiner LLP