e-Commerce Docket Sheet

Fair Use Defense Not Precluded By Alleged Infringer's Bad Faith

An Internet critic's use of extensive quotations from copyrighted materials obtained at a training seminar was protected by the fair use doctrine, even if the materials were obtained in violation of a nondisclosure agreement. NXIVM Corporation v. The Ross Institute, 364 F.3d 471 (2d. Cir. 2004). The circuit court upheld the lower court's refusal to issue a preliminary injunction against the posting of the quotations, finding that there was no likelihood that the copyright owner could overcome the critic's fair use defense. The court concluded that the fair use defense was not completely precluded by the critic's bad-faith conduct in obtaining the materials, and that the critic's bad faith was mitigated by the transformative use of the materials for the purpose of criticism. In a concurring opinion, Judge Jacobs agreed that the critic's use fell under the fair use doctrine, but stated his view that the critic's bad faith was irrelevant to the fair-use analysis, commenting that publication of critical works should not be “inhibited by a publisher's anxiety or uncertainty about an author's ethics if his secondary work is transformative.”

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Copying, Momentary Retention Of Web Site Pages Isn't Copyright Infringement

A rival yacht broker's copying and momentary retention of HTML-coded Web pages maintained by a competitor to extract sales listings embodied in the pages is protected by the fair use doctrine. Nautical Solutions Marketing, Inc. v. Boat.com, N0. 8:02-cv-760-T-23TGW, 2004 U.S. Dist. LEXIS 6304 (M.D. Fla. April 1, 2004). The court granted the rival yacht broker's request for a declaratory judgment of noninfringement, also concluding that the copying and posting of the sales listings themselves on the rival broker's Web site did not constitute copyright infringement, because the listings consisted of photographs and descriptions that the yacht sellers ' and not the competitor ' owned. The court also rejected the argument that the competitor had a protectible interest in the headings used in the listings and in the listing compilation.

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ISP Lacks Standing To Challenge Takedown Notice Procedure

An Internet service provider (ISP) lacks standing to maintain an action seeking a declaratory judgment that the takedown provisions of the Digital Millennium Copyright Act (DMCA) are unconstitutional. Fatwallet, Inc. v. Best Buy Enterprise Services, Inc., No. 03 50508, 2004 U.S. Dist. LEXIS 6153 (N.D. Ill. April 12, 2004). The court concluded that the ISP lacked standing because it would suffer no harm by refusing to comply with a takedown notice that would be additional to any harm it might already suffer, irrespective of the DMCA. The court suggested that posters of information subject to the takedown notices had the proper standing to challenge the law.

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Nonliability On Anticircumvention
Claim Doesn't Preclude Damages
On Other Theory

A jury's finding that a software developer did not violate anticircumvention provisions of the Digital Millennium Copyright Act (DMCA) when he installed an unauthorized server on a customer's network does not preclude an award of damages under another theory of liability. Pearl Investments, LLC v. Standard I/O, Inc., No. 02-50-P-H, 2004 U.S. Dist. LEXIS 6815 (D. Me. April 20, 2004). In denying the developer's motion to vacate the damage award, the court noted that the jury also found in the customer's favor on its claim that the developer installed the unauthorized server to run a program he developed by misappropriating the customer's trade secrets. The jury could reasonably conclude, the court held, that the customer's damages, ie, its expenditures for the correction of system bugs and slowdowns, resulted from the misappropriation of its trade secrets.

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Trademark Registration Doesn't Present
Material Fact Issue On Mark's Generic Nature

A district court's grant of summary judgment on the issue of noninfringement of a trademark by a domain-name registrant was proper where the court found that the claimed trademark was generic as a matter of law. Retail Services v. Freebies Publishing, 364 F.3d 535 (4th Cir. 2004). The circuit court concluded that summary judgment was proper even though the trademark owner held a U.S. registration for the claimed trademark. The circuit court upheld the trial court's conclusion that the existence of the trademark registration did not present an issue of material fact precluding summary judgment, even though the Lanham Act provides that the issuance of a certificate of registration of a mark constituted “prima facie evidence of the validity of the registered mark.”

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Trademark Use In Gripe Site Name
Doesn't Violate Trademark

The registration and use of an allegedly infringing domain name on a “non-commercial gripe site” does not violate federal or state trademark statutes. TMI Inc. v. Maxwell, No. 03-20243, No. 03-20291, 2004 U.S. App. LEXIS 7708 (5th Cir., as revised April 26, 2004). The circuit court held that the federal Lanham Act and the federal Trademark Anti-Dilution Act require a showing of commercial use to sustain an action for infringement. Commercial use was not shown, the court concluded, because the gripe-site operator did not charge for the use of his site, did not include advertising or links to other commercial sites and was not attempting to sell the domain name. The court also found that the “bad faith intent to profit” required under the Anticybersquatting Consumer Protection Act (ACPA) had not been shown. The court agreed with the recent 6th Circuit decision in Lucas Nursery & Landscaping v. Grosse that a gripe site's use of a domain name to inform other consumers of one's experience with a service provider is not the type of conduct the ACPA was intended to prevent.

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Maintenance Under Domains Containing
Other Party's Mark No ACPA Violation

The purpose of the fourth “bad faith” factor enumerated by the Anticybersquatting Consumer Protection Act (ACPA) ' whether the defendant made a “bona fide noncommercial or fair use” of a trademark ' was intended by Congress to protect “activities such as critical commentary.” Mayflower Transit, LLC v. Prince, No. 00-5354 (JLL), 2004 U.S. Dist. LEXIS 6908 (D. N.J. March 30, 2004). The court ruled that the fourth bad-faith factor should be considered together with the ACPA “safe harbor” language that precludes a finding of bad faith where “the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” The court concluded that the totality of circumstances showed that the defendant's purpose in registering domain names containing the plaintiff's trademarks was to express dissatisfaction as a customer of the plaintiff and its related entities. The court agreed with the recent 6th Circuit decision in Lucas Nursery & Landscaping v. Grosse that the defendant was not within the class of “cyber-squatters” that Congress intended to reach in enacting the ACPA.

For more Docket Sheet, see Docket Sheet, Part 2.

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Julian S. Millstein Edward A. Pisacreta Jeffrey D. Neuburger

Fair Use Defense Not Precluded By Alleged Infringer's Bad Faith

An Internet critic's use of extensive quotations from copyrighted materials obtained at a training seminar was protected by the fair use doctrine, even if the materials were obtained in violation of a nondisclosure agreement. NXIVM Corporation v. The Ross Institute , 364 F.3d 471 (2d. Cir. 2004). The circuit court upheld the lower court's refusal to issue a preliminary injunction against the posting of the quotations, finding that there was no likelihood that the copyright owner could overcome the critic's fair use defense. The court concluded that the fair use defense was not completely precluded by the critic's bad-faith conduct in obtaining the materials, and that the critic's bad faith was mitigated by the transformative use of the materials for the purpose of criticism. In a concurring opinion, Judge Jacobs agreed that the critic's use fell under the fair use doctrine, but stated his view that the critic's bad faith was irrelevant to the fair-use analysis, commenting that publication of critical works should not be “inhibited by a publisher's anxiety or uncertainty about an author's ethics if his secondary work is transformative.”

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Copying, Momentary Retention Of Web Site Pages Isn't Copyright Infringement

A rival yacht broker's copying and momentary retention of HTML-coded Web pages maintained by a competitor to extract sales listings embodied in the pages is protected by the fair use doctrine. Nautical Solutions Marketing, Inc. v. Boat.com, N0. 8:02-cv-760-T-23TGW, 2004 U.S. Dist. LEXIS 6304 (M.D. Fla. April 1, 2004). The court granted the rival yacht broker's request for a declaratory judgment of noninfringement, also concluding that the copying and posting of the sales listings themselves on the rival broker's Web site did not constitute copyright infringement, because the listings consisted of photographs and descriptions that the yacht sellers ' and not the competitor ' owned. The court also rejected the argument that the competitor had a protectible interest in the headings used in the listings and in the listing compilation.

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ISP Lacks Standing To Challenge Takedown Notice Procedure

An Internet service provider (ISP) lacks standing to maintain an action seeking a declaratory judgment that the takedown provisions of the Digital Millennium Copyright Act (DMCA) are unconstitutional. Fatwallet, Inc. v. Best Buy Enterprise Services, Inc., No. 03 50508, 2004 U.S. Dist. LEXIS 6153 (N.D. Ill. April 12, 2004). The court concluded that the ISP lacked standing because it would suffer no harm by refusing to comply with a takedown notice that would be additional to any harm it might already suffer, irrespective of the DMCA. The court suggested that posters of information subject to the takedown notices had the proper standing to challenge the law.

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Nonliability On Anticircumvention
Claim Doesn't Preclude Damages
On Other Theory

A jury's finding that a software developer did not violate anticircumvention provisions of the Digital Millennium Copyright Act (DMCA) when he installed an unauthorized server on a customer's network does not preclude an award of damages under another theory of liability. Pearl Investments, LLC v. Standard I/O, Inc., No. 02-50-P-H, 2004 U.S. Dist. LEXIS 6815 (D. Me. April 20, 2004). In denying the developer's motion to vacate the damage award, the court noted that the jury also found in the customer's favor on its claim that the developer installed the unauthorized server to run a program he developed by misappropriating the customer's trade secrets. The jury could reasonably conclude, the court held, that the customer's damages, ie, its expenditures for the correction of system bugs and slowdowns, resulted from the misappropriation of its trade secrets.

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Trademark Registration Doesn't Present
Material Fact Issue On Mark's Generic Nature

A district court's grant of summary judgment on the issue of noninfringement of a trademark by a domain-name registrant was proper where the court found that the claimed trademark was generic as a matter of law. Retail Services v. Freebies Publishing , 364 F.3d 535 (4th Cir. 2004). The circuit court concluded that summary judgment was proper even though the trademark owner held a U.S. registration for the claimed trademark. The circuit court upheld the trial court's conclusion that the existence of the trademark registration did not present an issue of material fact precluding summary judgment, even though the Lanham Act provides that the issuance of a certificate of registration of a mark constituted “prima facie evidence of the validity of the registered mark.”

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Trademark Use In Gripe Site Name
Doesn't Violate Trademark

The registration and use of an allegedly infringing domain name on a “non-commercial gripe site” does not violate federal or state trademark statutes. TMI Inc. v. Maxwell, No. 03-20243, No. 03-20291, 2004 U.S. App. LEXIS 7708 (5th Cir., as revised April 26, 2004). The circuit court held that the federal Lanham Act and the federal Trademark Anti-Dilution Act require a showing of commercial use to sustain an action for infringement. Commercial use was not shown, the court concluded, because the gripe-site operator did not charge for the use of his site, did not include advertising or links to other commercial sites and was not attempting to sell the domain name. The court also found that the “bad faith intent to profit” required under the Anticybersquatting Consumer Protection Act (ACPA) had not been shown. The court agreed with the recent 6th Circuit decision in Lucas Nursery & Landscaping v. Grosse that a gripe site's use of a domain name to inform other consumers of one's experience with a service provider is not the type of conduct the ACPA was intended to prevent.

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Maintenance Under Domains Containing
Other Party's Mark No ACPA Violation

The purpose of the fourth “bad faith” factor enumerated by the Anticybersquatting Consumer Protection Act (ACPA) ' whether the defendant made a “bona fide noncommercial or fair use” of a trademark ' was intended by Congress to protect “activities such as critical commentary.” Mayflower Transit, LLC v. Prince, No. 00-5354 (JLL), 2004 U.S. Dist. LEXIS 6908 (D. N.J. March 30, 2004). The court ruled that the fourth bad-faith factor should be considered together with the ACPA “safe harbor” language that precludes a finding of bad faith where “the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” The court concluded that the totality of circumstances showed that the defendant's purpose in registering domain names containing the plaintiff's trademarks was to express dissatisfaction as a customer of the plaintiff and its related entities. The court agreed with the recent 6th Circuit decision in Lucas Nursery & Landscaping v. Grosse that the defendant was not within the class of “cyber-squatters” that Congress intended to reach in enacting the ACPA.

For more Docket Sheet, see Docket Sheet, Part 2.

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