e-Commerce Docket Sheet

Credit card companies and payment services providers that process payments made to the operators of third-party Web sites hosting unauthorized copies of copyrighted images are not secondarily liable for copyright infringement. Perfect 10 v. Visa International Service Assn, 2007 U.S. App. LEXIS 12508 (9th Cir. July 3, 2007). The appeals court affirmed the district court's dismissal of the copyright owner's complaint for failure to state a claim, ruling that the defendants do not make a 'material contribution' to the underlying direct infringement by the third-party Web sites. The majority of the panel commented that it declined 'to create any of the radical new theories of liability advocated by Perfect 10 and the dissent.'

A Web site operator that 'induces' or pays for another to send a commercial e-mail may be enjoined under the civil provisions of the federal CAN-SPAM Act for violations of the Act its marketing affiliates committed, despite a lack of knowledge of such violations. U.S. v. Impulse Media Group, Inc., 2007 U.S. Dist. LEXIS 42230 (W.D. Wash. June 8, 2007). The court refused to grant motions for summary judgment by either the government or the operator, because there were disputed issues of fact as to whether the operator intended affiliates to use commercial e-mail in marketing the operator's Web site. The court distinguished between the intent requirement for civil injunctive relief and the knowledge requirement for criminal liability, concluding that a party is not subject to the criminal penalties of the Act unless there is a showing that the party had knowledge of an affiliate's violations of the Act.

A competitor's purchase of a company's trademark term as a search-engine advertising keyword does not constitute an actionable trademark use under the Lanham Act, where the trademark owner did not allege that the competitor placed the trademark on any product or in a sponsored search advertisement. FragranceNet. com, Inc. v. FragranceX.com, Inc., 2007 U.S. Dist. LEXIS 48373 (E.D. N.Y. June 12, 2007). The court denied the plaintiff's motion to amend its complaint to add various federal and state trademark claims based on the defendant's keyword purchases. The court noted that under Second Circuit precedent, actionable trademark use is not shown unless there is an allegation that defendant 'placed plaintiff's trademark on any goods, displays, containers, or advertisements, or used plaintiff's trademark in any way that indicates source or origin.' The court also found that defendant's placement of the plaintiff's trademark in the metatags of its Web site, which are not displayed to consumers, is not a use in commerce under the Lanham Act.

A marketer that used multiple domain names for its commercial e-mails, allegedly for the purpose of avoiding anti-spam mechanisms, but did not employ any false e-mail content or misleading subject lines, did not violate a California anti-spam statute. Kleffman v. Vonage Holdings Corp., 2007 U.S. Dist. LEXIS 40487 (C.D. Cal. May 22, 2007). The court dismissed the plaintiff's action, finding that even if the marketer intended to avoid anti-spam filters by using multiple domain names, this would not be a violation of the state statute prohibiting e-mail containing a 'falsified, misrepresented or forged header.' Regardless, the court also ruled that the California statute was pre-empted by the federal CAN-SPAM Act, as it amounted to a 'state law requiring some or all commercial e-mail to ' contain specified content' and was not a 'traditional' state law fraud prohibition permitted under the Act.

A Massachusetts district court does not have personal jurisdiction over an out-of-state online auction seller on the basis of a single transaction with a Massachusetts buyer, because such a relationship does not constitute sufficient minimum contacts with the forum state. Ginsburg v. Dinicola, 2007 U.S. Dist. LEXIS 41418 (D. Mass. June 7, 2007). In dismissing the plaintiff's complaint, the court found that the usual online auction process does not rise to the level of purposeful conduct required to assert specific jurisdiction over an out-of-state defendant. The court declined to employ the well known 'Zippo sliding scale' to determine whether a court could exercise jurisdiction over a defendant, because the scale is typically applied in cases where the issue is a defendant's conduct on a Web site that the defendant controls.

Corporate principals of an Internet marketing limited liability company that sent out allegedly questionable e-mail prize offers could be personally liable under Ohio state consumer-protection laws for participating in or directing acts that violate the statute. Ferron v. Search Cactus, L.L.C., 2007 U.S. Dist. LEXIS 44473 (S.D. Ohio June 19, 2007). The court denied the defendants' motion to dismiss, rejecting the defendants' argument that the plaintiff must not only show that the corporate officers dealt directly with the plaintiff via the subject e-mail offers, but also must meet the elements necessary to 'pierce the corporate veil.' The court found that approval of the content of the prize e-mails by the defendant's president and CEO would clearly show that the corporate officers 'specifically directed' the allegedly questionable activity, leading to potential individual liability.

The owner of the UTube.com domain name, whose Web site was mistakenly visited and disrupted by thousands of Internet users seeking the YouTube.com video site, cannot assert state law claims of trespass and nuisance against the owners of the YouTube.com site. Universal Tube & Rollform Equipment Corp. v. YouTube, Inc., 2007 U.S. Dist. LEXIS 40395 (N.D. Ohio June 4, 2007). The court granted YouTube's motion to dismiss the trespass claim on several grounds: that mistaken Internet users, not YouTube, had 'made contact' with the UTube.com Web site; that the Web site is not movable, physical, personal property that meets the definition of a chattel; and that the physical object that was 'touched' was the computers hosting the UTube site, in which the plaintiff did not have a possessory interest. The court also dismissed Universal's nuisance claims on the ground that under Ohio law, such a claim requires an allegation of interference with land. The court also dismissed Universal's negligence and RICO claims, but declined to dismiss state trademark and unfair-competition claims.

A Web site owner's delay in removing infringing photographs from his Web site, coupled with his refusal to respond to the copyright owner's infringement lawsuit, support a finding of willfulness under 17 U.S.C. '504(c)(2). Burch v. Nyarko, 2007 U.S. Dist. LEXIS 43275 (S.D.N.Y. June 15, 2007) (report and recommendation of magistrate judge). In the absence of admissible evidence from the copyright owner as to his actual damages, the magistrate judge considered damages awards referenced in reported decisions in fashioning a statutory award for the copyright owner's lost revenue. The court awarded the copyright owner $15,000 per photograph for four photographs displayed on the defendant's Web site, commenting that the enhanced award was justified to deter the defendant and others from engaging in similar conduct.

The transmission of an SMS text message to a cellular telephone is not a 'call' sent using an 'automatic telephone dialing system' within the meaning of the Telephone Consumer Protection Act ('TCPA'). Satterfield v. Simon & Schuster, 20907 U.S. Dist. LEXIS 46325 (N.D. Cal. June 26, 2007). The court granted summary judgment, dismissing the plaintiff's TCPA claim, concluding that the equipment that sent the SMS text messages at issue used a specific, finite, non-random and non-sequential list of numbers assigned to the cellular telephone company's subscribers, rather than the kind of random or sequential number generator covered by the statute. The court also granted summary judgment on the issue of consent to receive the promotional message. The court noted that the plaintiff had consented to receive promotional messages from the cellular telephone company's 'affiliates and brands,' and the message at issue carried the company's 'brand' in the form of a phrase identifying the source of the message. (See further discussion of this opinion in the Technology Law Update blog, at http://brownraysman.typepad.com/technology_law_update/2007/07/federal-court-r.html.)

Credit Card Processors Aren't Secondarily Liable for
Adult Photo Infringement

Credit card companies and payment services providers that process payments made to the operators of third-party Web sites hosting unauthorized copies of copyrighted images are not secondarily liable for copyright infringement. Perfect 10 v. Visa International Service Assn, 2007 U.S. App. LEXIS 12508 (9th Cir. July 3, 2007). The appeals court affirmed the district court's dismissal of the copyright owner's complaint for failure to state a claim, ruling that the defendants do not make a 'material contribution' to the underlying direct infringement by the third-party Web sites. The majority of the panel commented that it declined 'to create any of the radical new theories of liability advocated by Perfect 10 and the dissent.'

A Web site operator that 'induces' or pays for another to send a commercial e-mail may be enjoined under the civil provisions of the federal CAN-SPAM Act for violations of the Act its marketing affiliates committed, despite a lack of knowledge of such violations. U.S. v. Impulse Media Group, Inc., 2007 U.S. Dist. LEXIS 42230 (W.D. Wash. June 8, 2007). The court refused to grant motions for summary judgment by either the government or the operator, because there were disputed issues of fact as to whether the operator intended affiliates to use commercial e-mail in marketing the operator's Web site. The court distinguished between the intent requirement for civil injunctive relief and the knowledge requirement for criminal liability, concluding that a party is not subject to the criminal penalties of the Act unless there is a showing that the party had knowledge of an affiliate's violations of the Act.

A competitor's purchase of a company's trademark term as a search-engine advertising keyword does not constitute an actionable trademark use under the Lanham Act, where the trademark owner did not allege that the competitor placed the trademark on any product or in a sponsored search advertisement. FragranceNet. com, Inc. v. FragranceX.com, Inc., 2007 U.S. Dist. LEXIS 48373 (E.D. N.Y. June 12, 2007). The court denied the plaintiff's motion to amend its complaint to add various federal and state trademark claims based on the defendant's keyword purchases. The court noted that under Second Circuit precedent, actionable trademark use is not shown unless there is an allegation that defendant 'placed plaintiff's trademark on any goods, displays, containers, or advertisements, or used plaintiff's trademark in any way that indicates source or origin.' The court also found that defendant's placement of the plaintiff's trademark in the metatags of its Web site, which are not displayed to consumers, is not a use in commerce under the Lanham Act.

A marketer that used multiple domain names for its commercial e-mails, allegedly for the purpose of avoiding anti-spam mechanisms, but did not employ any false e-mail content or misleading subject lines, did not violate a California anti-spam statute. Kleffman v. Vonage Holdings Corp., 2007 U.S. Dist. LEXIS 40487 (C.D. Cal. May 22, 2007). The court dismissed the plaintiff's action, finding that even if the marketer intended to avoid anti-spam filters by using multiple domain names, this would not be a violation of the state statute prohibiting e-mail containing a 'falsified, misrepresented or forged header.' Regardless, the court also ruled that the California statute was pre-empted by the federal CAN-SPAM Act, as it amounted to a 'state law requiring some or all commercial e-mail to ' contain specified content' and was not a 'traditional' state law fraud prohibition permitted under the Act.

A Massachusetts district court does not have personal jurisdiction over an out-of-state online auction seller on the basis of a single transaction with a Massachusetts buyer, because such a relationship does not constitute sufficient minimum contacts with the forum state. Ginsburg v. Dinicola, 2007 U.S. Dist. LEXIS 41418 (D. Mass. June 7, 2007). In dismissing the plaintiff's complaint, the court found that the usual online auction process does not rise to the level of purposeful conduct required to assert specific jurisdiction over an out-of-state defendant. The court declined to employ the well known 'Zippo sliding scale' to determine whether a court could exercise jurisdiction over a defendant, because the scale is typically applied in cases where the issue is a defendant's conduct on a Web site that the defendant controls.

Corporate principals of an Internet marketing limited liability company that sent out allegedly questionable e-mail prize offers could be personally liable under Ohio state consumer-protection laws for participating in or directing acts that violate the statute. Ferron v. Search Cactus, L.L.C., 2007 U.S. Dist. LEXIS 44473 (S.D. Ohio June 19, 2007). The court denied the defendants' motion to dismiss, rejecting the defendants' argument that the plaintiff must not only show that the corporate officers dealt directly with the plaintiff via the subject e-mail offers, but also must meet the elements necessary to 'pierce the corporate veil.' The court found that approval of the content of the prize e-mails by the defendant's president and CEO would clearly show that the corporate officers 'specifically directed' the allegedly questionable activity, leading to potential individual liability.

The owner of the UTube.com domain name, whose Web site was mistakenly visited and disrupted by thousands of Internet users seeking the YouTube.com video site, cannot assert state law claims of trespass and nuisance against the owners of the YouTube.com site. Universal Tube & Rollform Equipment Corp. v. YouTube, Inc., 2007 U.S. Dist. LEXIS 40395 (N.D. Ohio June 4, 2007). The court granted YouTube's motion to dismiss the trespass claim on several grounds: that mistaken Internet users, not YouTube, had 'made contact' with the UTube.com Web site; that the Web site is not movable, physical, personal property that meets the definition of a chattel; and that the physical object that was 'touched' was the computers hosting the UTube site, in which the plaintiff did not have a possessory interest. The court also dismissed Universal's nuisance claims on the ground that under Ohio law, such a claim requires an allegation of interference with land. The court also dismissed Universal's negligence and RICO claims, but declined to dismiss state trademark and unfair-competition claims.

A Web site owner's delay in removing infringing photographs from his Web site, coupled with his refusal to respond to the copyright owner's infringement lawsuit, support a finding of willfulness under 17 U.S.C. '504(c)(2). Burch v. Nyarko, 2007 U.S. Dist. LEXIS 43275 (S.D.N.Y. June 15, 2007) (report and recommendation of magistrate judge). In the absence of admissible evidence from the copyright owner as to his actual damages, the magistrate judge considered damages awards referenced in reported decisions in fashioning a statutory award for the copyright owner's lost revenue. The court awarded the copyright owner $15,000 per photograph for four photographs displayed on the defendant's Web site, commenting that the enhanced award was justified to deter the defendant and others from engaging in similar conduct.

The transmission of an SMS text message to a cellular telephone is not a 'call' sent using an 'automatic telephone dialing system' within the meaning of the Telephone Consumer Protection Act ('TCPA'). Satterfield v. Simon & Schuster, 20907 U.S. Dist. LEXIS 46325 (N.D. Cal. June 26, 2007). The court granted summary judgment, dismissing the plaintiff's TCPA claim, concluding that the equipment that sent the SMS text messages at issue used a specific, finite, non-random and non-sequential list of numbers assigned to the cellular telephone company's subscribers, rather than the kind of random or sequential number generator covered by the statute. The court also granted summary judgment on the issue of consent to receive the promotional message. The court noted that the plaintiff had consented to receive promotional messages from the cellular telephone company's 'affiliates and brands,' and the message at issue carried the company's 'brand' in the form of a phrase identifying the source of the message. (See further discussion of this opinion in the Technology Law Update blog, at http://brownraysman.typepad.com/technology_law_update/2007/07/federal-court-r.html.)