Want to Engage in Anti-Competitive Trademark Bullying? Second Circuit Says: Great, Have a Nice Day!–1-800 Contacts v. FTC

16 06 2021

Technology & Marketing Law Blog
Eric Goldman
June 14, 2021

Starting in the mid-2000s, 1-800 Contacts sought to control how its competitors bought search engine advertising triggered by its (so-called) trademarks, a process I call competitive keyword advertising. To do this, 1-800 Contacts typically sued its competitors and then quickly entered into a no-money settlement agreement that required each party to stop bidding on each others’ trademarks.

To property maximalists, 1-800 Contacts’ efforts may sound like run-of-the-mill trademark enforcement. However, the scheme was actually extremely unusual (few, if any, other trademark owners did anything similar), and it had several pernicious effects. The settlements deprived consumers of additional helpful information from competitive advertising. The settlements distorted the keyword ad auctions that the search engines were trying to conduct. Most importantly, the settlements helped 1-800 Contacts avoid competing on price, which has allowed 1-800 Contacts to systematically charge higher prices to consumers (a point 1-800 Contacts freely admits).

1-800 Contacts’ competitors “voluntarily” entered into the settlement agreements, but they were goaded in part by 1-800 Contacts’ threat to wage lawfare against them if they didn’t. This threat wasn’t idle. 1-800 Contacts likely spent $1M+ suing a holdout to its settlement “deal,” Lens.com, even though Lens.com made only $21 of profit from competitive keyword advertising. (Lens.com claimed it incurred at least $1.4M of defense costs). In other words, 1-800 Contacts proved to the industry that it would engage in economically irrational litigation to punish any competitors who tried to compete against it on price.

Five years ago, the FTC initiated an administrative complaint against 1-800 Contacts. The FTC won at the initial administrative hearing and then at the Commission level.

Last week, the Second Circuit reversed and dismissed the FTC’s administrative complaint, saying that the FTC misapplied the applicable antitrust standard and did not make a strong enough evidentiary showing of an antitrust violation. This opinion is mostly antitrust inside-baseball, but I want to highlight a few things.

Case citation: 1-800 Contacts, Inc. v. Federal Trade Commission, 2021 WL 2385274 (2d Cir. June 11, 2021)

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District Court in 3rd Circuit Sides with 9th Circuit: §230 Protects Social Platforms from State Law Intellectual Property Claims

4 06 2021

LexBlog/99 Park Row
Evangeline Phang
August 17, 2020

It is another win for social media platforms in the realm of the Communications Decency Act’s Section 230. In a case of first impression within the Third Circuit, the Eastern District of Pennsylvania in Hepp v. Facebook ruled that social media platforms are immune under the Communications Decency Act for right of publicity violations under state law by users of such platforms.

Karen Hepp, a television news anchor for FOX 29 News, filed a complaint against several social media platforms, including Facebook, Imgur, Reddit, and Giphy (collectively, “social media defendants”), alleging that the social media defendants violated Pennsylvania’s right of publicity statute and Hepp’s common law right of publicity, based on such defendants’ “unlawful use of her image.”

Two years before filing her complaint, Hepp discovered that a photograph of her was taken without her consent by a security camera in a New York City convenience store. The photograph was subsequently used in online advertisements for erectile dysfunction and dating websites. For example, Hepp’s photograph was featured: (a) on Imgur under the heading “milf,” and (b) on a Reddit post titled “Amazing” in the subgroup r/obsf (“older but still $#^able”). Hepp alleged that, as a public figure, she suffered harm from the unauthorized publication of her image on the platforms hosted by the social media defendants, but she did not allege that such defendants created, authored, or directly published the photograph at issue.

In response to Hepp’s complaint, each social media defendant filed a motion to dismiss, asserting, among other things, immunity under Section 230 of the CDA. As we have noted in prior articles, Section 230(c) provides a federal safe harbor for internet service providers against liability for content originating from third-party users and content creators. This safe harbor is not boundless, however. For example, Section 230(e)(2) carves out causes of action “pertaining to intellectual property.” Hepp attempted to use this exception to get around the Section 230 immunity afforded to the social media defendants, but the court was not convinced. Ultimately, the court sided with the social media defendants and granted their motions to dismiss.

In reaching its decision, the court acknowledged the circuit split between the Ninth Circuit and several district courts over whether the CDA preempts state intellectual property claims.

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The content in this post was found at https://www.lexblog.com/2020/08/17/district-court-in-third-circuit-sides-with-ninth-circuit-section-230-protects-social-media-platforms-from-state-law-intellectual-property-claims/ Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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Three Keyword Advertising Decisions in a Week, and the Trademark Owners Lost Them All

4 06 2021

Technology & Marketing Law Blog
Eric Goldman
August 17, 2020
If you are a trademark owner suing over competitive keyword ads, you are almost certainly making a bad business decision, and your attorney might be milking your bank account. If you are an attorney representing a trademark owner in a competitive keyword ad lawsuit, please reexamine your professional decision-making to ensure that you are, in fact, prioritizing the best interests of your clients.

This is my first time blogging keyword ad cases in almost a year. However, in an odd coincidence, we got three rulings in the same week. When it rains, it pours. This post rounds up how trademark owners are doing in these cases (TL;DR: they lose). I don’t have a conclusion at the end of this post because, honestly, what’s left to say? If the conclusion to this post isn’t obvious after reading it, take off your plaintiff-colored glasses.

Passport Health, LLC v. Avance Health System, Inc., 2020 WL 4700887 (4th Cir. Aug. 13, 2020). Prior blog post.

Smash Franchise Partners LLC v. Kanda Holdings Inc., 2020 WL 4692287 (Del. Ct. Chancery Aug. 13, 2020)

Sen v. Amazon.com, Inc., 2020 WL 4582678 (S.D. Cal. Aug. 10, 2020). Prior blog post; and also referenced here.

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The content in this post was found at https://blog.ericgoldman.org/archives/2020/08/three-keyword-advertising-decisions-in-a-week-and-the-trademark-owners-lost-them-all.htm Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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The Supreme Court’s Holding that Generic Terms Can Be Trademarks Is Not Fair to Struggling Startups

4 06 2021
IP Watchdog
Loletta Darden
August 17, 2020

At a time when small businesses are reeling, the Supreme Court decided to make life even more challenging for startups and mom and pop shops. The Court recently decided that a generic term combined with “.com” or “.net” could be registered as a federal trademark. If that sounds like no big deal to you, you have not thought it through. Based on the Court’s decision in United States Patent and Trademark Office et al. v. Booking.com, someone could register a trademark for autorepair.com. That would mean that Joe of Joe’s Auto Repair would have to get permission, and likely pay a licensing fee, to use the name Joe’s Auto Repair on his website and marketing materials. Multiply that by thousands of other generic business categories and the reality becomes clear.
 

The content in this post was found at https://www.ipwatchdog.com/2020/08/17/supreme-courts-holding-generic-terms-can-trademarks-not-fair-struggling-startups/id=124084/ Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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Ninth Circuit Affirms Dismissal of Copyright Infringement Claim Against Disney’s Inside Out Movie

4 06 2021
On August 3, the United States Court of Appeals for the Ninth Circuit, in Masterson v. Walt Disney Company, affirmed a district court’s dismissal of Carla Masterson’s copyright infringement claims against The Walt Disney Co. The infringement claim was based on Masterson’s allegation that Disney’s Inside Out (the Movie) violated her copyrights in her book of poetry, What’s On the Other Side of the Rainbow? (A Book of Feelings) (the Book) and her movie script, The Secret of the Golden Mirror (the Script). Masterson’s Book was a collection of poems featuring a cloud-like character, Mr. Positivity, and anthropomorphic doors representing different feelings. The Script is about Mr. Positivity and the anthropomorphic doors helping a child cope with a difficult situation. In contrast, Disney’s Inside Out is about an eleven-year-old girl and the anthropomorphized emotions that control her brain from her brain’s “Headquarters.” The district court held that the literary works were not substantially similar and granted Walt Disney’s motion to dismiss.
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Easier Copyright Registration Coming for Blogs and Social Media Posts

3 06 2021

LexBlog/99 Park Row
Jason Mueller & Robert Hough
August 10, 2020
Starting this month [August 2020], social media influencers and other authors of online content can take advantage of a new group copyright registration option for short online works such as blog entries, social media posts and web articles. Authors could even register their own comments to a social post as separate copyrightable works in certain situations.

The U.S. Copyright Office announced that the new registration option allows applications covering groups of up to 50 literary works if those works meet the eligibility requirements. Most notably, each separate work must contain between 50 and 17,500 words, and all works in a single application must be created by the same individual, or jointly by the same group of individuals (although there is no limit on the number of applications that can be filed). In addition, all works must have been first published as part of a website or online platform, such as an online newspaper, social media website or social networking platform, and all works in a single application must have been first published within the same three calendar month period. Copyright claims in the selection, coordination or arrangement of the group as a whole will not be permitted. Resulting registrations will cover each work as a separate work of authorship.

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Internet Archive Responds To Publishers Lawsuit: Libraries Lend Books, That’s What We Do

3 06 2021

Tech Dirt
Mike Masnick
Jul 31st 2020
Last month, we wrote about the big publishers suing the Internet Archive over its Controlled Digital Lending (CDL) program, as well as its National Emergency Library (NEL). As we’ve explained over and over again, the Internet Archive is doing exactly what libraries have always done: lending books. The CDL program was structured to mimic exactly how a traditional library works, with a 1-to-1 relationship between physical books owned by the library and digital copies that can be lent out.

While some struggled with the concept of the NEL since it was basically just the CDL, but without the 1-to-1 relationship (and thus, without wait lists), it seemed reasonably defensible: nearly all public libraries at the time had shut down entirely due to the COVID-19 pandemic, and the NEL was helping people who otherwise would never have had access to the books that were sitting inside libraries, collecting dust on the inaccessible shelves. Indeed, plenty of teachers and schools thanked the Internet Archive for making it possible for students to still read books that were stuck inside locked up classrooms. But, again, this lawsuit wasn’t just about the NEL at all, but about the whole CDL program. The publishers have been whining about the CDL for a while, but hadn’t sued until now.

Of course, the reality is that the big publishers see digital ebooks as an opportunity to craft a new business model. With traditional books, libraries buy the books, just like anyone else, and then lend them out. But thanks to a strained interpretation of copyright law, when it came to ebooks, the publishers jacked up the price for libraries to insane levels and kept putting more and more conditions on them. For example, Macmillan, for a while, was charging $60 per book — with a limit of 52 lends or two years of lending, whichever came first. And then you’d have to renew.

Basically, publishers were abusing copyright law to try to jam down an awful and awfully expensive model on libraries — exposing how much publishers really hate libraries, while pretending otherwise.

Anyway, the Internet Archive has filed its response to the lawsuit,

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The content in this post was found at https://www.techdirt.com/articles/20200730/23251945010/internet-archive-responds-to-publishers-lawsuit-libraries-lend-books-thats-what-we-do.shtml Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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Section 230 Doesn’t Protect Repeating Rumors–La Liberte v. Reid

3 06 2021

Technology & Marketing Law Blog
Eric Goldman
July 30, 2020
La Liberte spoke at a city council meeting. A photo of her speaking went viral because a “social media activist” posted the photo with a caption that she said racist things about a minority teenager in the photo. That turned out to be false. Nevertheless, MSNBC TV host Joy Reid retweeted the initial post (which is not at issue in this case); then she made two separate posts about the photo, each of which made the claim that La Liberte was making racist statements about teen. La Liberte sued Reid for defamation.

Reid invoked Section 230, but the issue is pretty straightforward. Reid solely authored the two posts repeating the claims she saw elsewhere, so she’s the ICP in the equation.

To get around this, Reid argued that her post “merely repeated what countless others had previously published before her, including Vargas and at least eight other individuals who specifically stated that La Liberte made racial slurs at the Council Meeting.”

Not surprising, the Second Circuit shreds this:Case citation: La Liberte v. Reid, 2020 WL 3980223 (2d Cir. July 15, 2020)

The post Section 230 Doesn’t Protect Repeating Rumors–La Liberte v. Reid

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The content in this post was found at https://blog.ericgoldman.org/archives/2020/07/section-230-doesnt-protect-repeating-rumors-la-liberte-v-reid.htm Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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Print-on-Demand Vendor Doesn’t Qualify for DMCA Safe Harbor–Feingold v. RageOn

2 06 2021

Technology & Marketing Law Blog
Eric Goldman
July 24, 2020

This case involves two copyright-protected photos that users submitted to the RageOn print-on-demand service. Among other defenses, RageOn invoked the DMCA safe harbor. The Greg Young v. Zazzle case held that Zazzle qualified for the 512(c) safe harbor for displaying user-supplied photo on its site, but not for manufacturing and shipping the physical items contain the photos. This court says that RageOn disqualified for several of the DMCA safe harbor’s elements.

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The content in this post was found at https://blog.ericgoldman.org/archives/2020/07/print-on-demand-vendor-doesnt-qualify-for-dmca-safe-harbor-feingold-v-rageon.htm Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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A Case Where The Courts Got Section 230 Right Because It Turns Out Section 230 Is Not Really All That Hard

2 06 2021

Tech Dirt
Cathy Gellis
Jul 21st 2020

Having just criticized the Second Circuit for getting Section 230 (among other things) very wrong, it’s worth pointing out an occasion where it got it very right. The decision in Force v. Facebook [ed: a case about using social media to encourage terrorism] came out last year, but the Supreme Court recently denied any further review, so it’s still ripe to talk about how this case could, and should, bear on future Section 230 litigation.

It is a notable decision, not just in terms of its result upholding Section 230 but in how it cut through much of the confusion that tends to plague discussion regarding Section 230. It brought the focus back to the essential question at the heart of the statute: who imbued the content at issue with its allegedly wrongful quality? That question is really is the only thing that matters when it comes to figuring out whether Section 230 applies.

This case was one of the many seeking to hold social media platforms liable for terrorists using them. None of them have succeeded, although for varying reasons. For instance, in Fields v. Twitter, in which we wrote an amicus brief, the claims failed but not for Section 230 reasons. In this case, however, the dismissal of the complaint was upheld on Section 230 grounds.

The plaintiffs put forth several theories about why Facebook should not have been protected by Section 230. Most of them tried to construe Facebook as the information content provider of the terrorists’ content, and thus not entitled to the immunity. But the Second Circuit rejected them all.

Ultimately the statute is simple: whoever created the wrongful content is responsible for it, not the party who simply enabled its expression. The only question is who created the wrongful content, and per the court, “[A] defendant will not be considered to have developed third-party content unless the defendant directly and ‘materially’ contributed to what made the content itself ‘unlawful.'” [p. 68].

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The content in this post was found at https://www.techdirt.com/articles/20200720/09205544934/case-where-courts-got-section-230-right-because-it-turns-out-section-230-is-not-really-all-that-hard.shtml Clicking the title link will take you to the source of the post and was not authored by the moderators of freeforafee.com

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