e-Commerce Docket Sheet

The District Court in Maryland refused to extend an injunction issued against D-Squared, a company that sends pop-up advertising via the Windows messenger utility. Federal Trade Commission v. D Squared Solutions LLC, No. 03 3108 (D. Md. Dec. 12, 2003). The ruling dissolved the temporary restraining order obtained by the FTC in November in response to the agency's allegations that the company's pop-up ads constituted a deceptive practice.

The Digital Millennium Copyright Act (DMCA), '512(h), does not authorize issuance of a subpoena to an Internet service provider (ISP) that transmits infringing materials but does not store any such materials on its servers. Recording Industry Assoc. of America, Inc. v. Verizon Internet Services, Inc., No. 03-7015, -7053 (D.C. Cir. Dec. 19, 2003). The Recording Industry Association of America (RIAA) has used the DMCA's subpoena provisions to compel ISPs to reveal names of subscribers suspected of sharing and trading copyrighted music files over peer-to-peer (P2P) networks. In this case, the ISP successfully challenged this practice, arguing that '512(h), by its terms, precluded issuance of a subpoena to an ISP that merely acted as a conduit for P2P communications, as the ISP can neither “remove” nor “disable access to” infringing material that is not stored on its servers. A panel of the District of Columbia Circuit remanded the case to the District Court to vacate its order enforcing one subpoena and to grant the ISP's motion to quash another subpoena.

An award of attorney fees and costs in an action brought under the Digital Millennium Copyright Act (DMCA) for falsifying, altering and removing copyright-management information should be judged by the same criteria applicable to a fee award for infringement of copyright. Medical Broadcasting Co. v. Flaiz, No. 02-8554 (E.D. Pa. Nov. 25, 2003). The district court ruled that the factors guiding the court in exercising its discretion to grant such an award should include, among other things, the frivolousness of the action, the party's motivation, the objective reasonableness of the case, and the need to advance considerations of compensation and deterrence. The court also ruled that the reasonableness of any award should be judged by factors that include the complexity of the case, the relative financial strength of the parties, the size of the damages award or the amount at stake, as well as any bad faith.

The privilege conferred on the owner of copyright in a collective work by Section 201(c) of the Copyright Act, for the “revision” of the original work, applies to a digital archive of a magazine in which individual contributions are arranged and presented to the viewer in their original context. Faulkner v. National Geographic Society, Nos. 97 Civ. 9361, 99 Civ. 12385, 99 Civ. 12488 (S.D.N.Y. Dec. 11, 2003). The plaintiffs, freelance photographers and writers, alleged that the defendant infringed the copyright in their works of authorship by the creation and marketing of a digital archive of the magazine in CD-ROM and DVD formats. The district court dismissed these claims, holding that the archive “contain[ed] substantially everything that made the Magazine copyrightable as a collective work ' the same original collection of individual contributions, arranged in the same way, with each presented in the same context.” Noting that the Supreme Court's intervening decision in New York Times, Inc. v. Tasini substantially altered the applicable law in this area, the district court refused to give collateral estoppel effect in this case to an Eleventh Circuit decision that found against National Geographic on very similar facts.

The Ninth Circuit Court of Appeals denied a rehearing and rehearing en banc of its June 2003 decision in Batzel v. Smith, in which a split panel extended immunity under Section 230(c) of the Communications Decency Act (CDA) to an Internet listserv moderator and Web site operator who selected, altered and posted an allegedly defamatory e-mail authored by a third party. Batzel v. Smith, No. 01-56556 (9th Cir. Dec. 3, 2003). In a thorough dissent, Judge Gould, joined by two judges, expressed the view that Congress did not intend Section 230(c) immunity to be available to a party who selectively edited defamatory material provided by another party.

When a plaintiff elects to claim statutory damages for alleged cybersquatting under the federal Anticybersquatting Consumer Protection Act, 15 U.S.C. '1125(d), the complaint may not be dismissed on the theory that the cost to litigate the action would far exceed the statutory damages. Fieldturf, Inc. v. Triexe Management Group, Inc., No. 03 C 5704 (N.D. Ill. Dec. 10, 2003). The court concluded that although the plaintiff's recovery of statutory damages might ultimately be de minimis compared to the cost of litigation, there was no authority for dismissal of such claims.

A district court ruling that the use of a domain name identical to a registered trademark was likely to dilute the mark should be reconsidered in light of last year's landmark U.S. Supreme Court ruling construing the Federal Trademark Dilution Act (FTDA). Visa International Service Association v. JSL Corp., 2003 U.S. App. LEXIS 26129 (9th Cir. Dec. 22, 2003) (unpublished). The circuit court remanded the case to the district court, noting that in Mosely v. V. Secret Catalogue, 537 U.S. 418 (2003), the Supreme Court held that the FTDA requires proof of actual dilution, not merely the likelihood of dilution, to sustain a claim. The opinion is available at www.brownraysman.com/InternetLawUpdate/VisaRemand.pdf.

A domain-name registrant who was locked out of registering generic domain names in the new .info domain does not have tortious interference with contract or cybersquatting claims against the start-up registry that did the lock out. Davies v. Afilias Ltd., No. 6:03-cv-301-Orl-31JGG (M.D. Fla. Dec. 2, 2003). Exploiting what could be seen as a loophole in Afilias' new registration system for .info domains, the plaintiff registered several dozen generic domain names (including, for example, hotel.info) after successfully challenging their prior registration by owners who did not own trademark rights. When Afilias learned that the defendant also did not own trademark rights to the generic domains, it “locked” the domain names to prevent defendant's further use. The district court granted Afilias' motion for summary judgment on the plaintiff's claim that Afilias tortiously interfered with its contract with its registrar, finding that any “interference” was justified by the plaintiff's subversion of the rules. The court also granted summary judgment to Afilias on the plaintiff's cybersquatting claims, holding that reverse domain-name hijacking provides a remedy against an overarching trademark holder ' not a registry.

Microsoft Corp. is the assignee of a patent issued on Dec. 9, 2003, for launching HTML applications in a window independent of the browser that invoked the HTML code that launches the independent window. U.S. Patent No. 6,662,341 (Dec. 9, 2003). According to the patent, the independent window created by the HTML code is not limited by the user interface elements of the original browser window and may run as “trusted code” on the computer system on which it was invoked, thereby operating outside the “security model” imposed by the original browser from which the code was invoked.

Belated E-mail Production Precludes Trial, Prep Use

Parties that belatedly produce e-mail records without explanation for the prior nonproduction are precluded from introducing those records into evidence, using them to prepare their witnesses for testimony or using them to cross-examine witnesses at trial. Thompson v. U.S. Dept. of Housing and Urban Development, No. NJG-95-309 (D. Md. Dec. 12, 2003). The potential sanction of precluding testimony of the party witnesses whose e-mail was belatedly produced was rejected by the federal magistrate because such a sanction would completely deprive the nonproducing parties of the opportunity to defend themselves on the merits of the litigation. An adverse inference instruction was also rejected as a sanction because the case was being tried before a judge rather than a jury, and the trial judge, the magistrate found, would be able to draw “reasonable inferences” from the belated production of the e-mails.

A party may disavow an electronic signature on the ground that it is not his act, therefore it is not attributable to him. In re Piranha, Inc., (Berger v. Newhouse), No. 03-10710 (5th Cir. Dec. 9, 2003) (unpublished). The submission of a form to the Securities and Exchange Commission referencing a corporate director's resignation, and containing an electronic signature purporting to be that of the director, did not effectuate the director's resignation because he did not execute, adopt or authorize the signature. The circuit court noted that under the Uniform Electronic Transactions Act, while the validity of an electronic signature cannot be denied solely on the ground that it is in electronic form, it can be denied on the ground that, based on the “context and surrounding circumstances,” it was not such an act.

A Web site-hosting company's e-mail to a customer stating that failure to reply to the e-mail within 5 days constituted acceptance of its terms of service, which included an arbitration clause, is enforceable only if a jury finds that the customer intended nonresponse to constitute acceptance. SmartText Corp. v. Interland, Inc., No. 03-2392 (D. Kan. Dec. 19, 2003). The district court ruled that under the Restatement (Second) of Contracts, silence is deemed an acceptance only where the offeree has a reasonable opportunity to reject the offered terms. Because there was a factual issue concerning the customer's opportunity to reject the terms within the stated period of time when online customers were automatically redirected to the hosting company's servers, the court ruled that a jury must determine whether the arbitration clause in the agreement was enforceable.

The forum-selection clause in America Online's subscriber agreement is enforceable even though the plaintiff subscriber may be forced to litigate in two different courts. Freedman v. America Online, Inc., No. 3:03cv1048 (D. Conn. Dec. 5, 2003). The district court held that under Connecticut law, forum-selection clauses are presumptively enforceable unless enforcement would be “unreasonable and unjust,” or would contravene strong public policy, or the clause is invalid due to “fraud or overreaching.” Although the plaintiff may be inconvenienced by the need to bring an action against America Online in Virginia, while maintaining an action against other defendants in Connecticut, such circumstances do not present an exceptional case that would justify clause nonenforcement.

An employer's access to employee e-mail stored on the employer's communications system does not violate the Electronic Communications Privacy Act. Fraser v. Nationwide Mutual Insurance Co., No. 01-2921 (3d Cir. Dec. 10, 2003). The circuit court concluded that: “Every circuit court to have considered the matter has held that an 'intercept' under the ECPA must occur contemporaneously with transmission.” The court added that even though the statutory definition of “intercept” is not consistent with the overall Congressional intent to extend protection of electronic communications, it should be left to Congress to overrule the consistent interpretation of the term by federal circuit courts.

Judge Declines to Extend FTC Injunction Against D-Squared Pop-Up Ads