February 2009

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH and Aspen Publishers intellectual property and computer law publications.

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to john.arden@wolterskluwer.com.

COPYRIGHTS

DMCA Safe Harbor Covers Video Sharing Support Functions
Automated software functions used by Veoh Networks to support its video sharing service did not infringe a recording company's copyrights because they fell within the scope of the Digital Millennium Copyright Act (DMCA) safe harbor, the federal district court in Los Angeles has ruled. The software functions at issue were: (1) automatically creating "Flash-formatted" copies of video files uploaded by users; (2) automatically creating copies of smaller "chunks" of the original files; (3) allowing users to access uploaded videos via streaming; and (4) allowing users to access uploaded videos by downloading whole video files."

Section 512(c) of the DMCA shields service providers from liability "for infringement of copyright by reason of the storage at the direction of a user of material that resides on” their systems or networks. The controversy involved whether the phrase "by reason of storage at the direction of a user" included software functions related to the storage of user content. The court ruled that the phrase "by reason of" meant "as a result of" or "something that can be attributed to." Veoh’s software functions were covered by the safe harbor because their display of copyrighted material was "as a result of" or "attributable to" the fact that users had uploaded the content, the court concluded (UMG Recordings, Inc. v. Veoh Networks, Inc., CDCal, CCH Copyright Law Decisions ¶29,678; CCH Computer Cases ¶49,654).

Use of Sculptures in Commemorative Stamp was “Fair Use”
The U.S. Postal Service's use of an artist's sculptures in a commemorative postage stamp was a fair use, the court of federal claims held. Therefore, the Postal Service did not infringe the artist's copyright in the sculpture by issuing the stamp. Contrary to the Postal Service claim, the artist was the sole owner of the copyright in the sculptures because he performed virtually all of the artistic work on the sculptures, and the parties never intended to create a joint work. On balance, the statutory fair use factors favored the Postal Service. Although the sculptures and the stamp had the same purpose of honoring war veterans, the Postal Service’s use of the stamp was transformative because it provided a different expressive character than the sculptures. Also important was the fact that the stamp had no impact on the potential market for the sculptures (Gaylord v. U.S., CtFedCls, CCH Copyright Law Decisions ¶29,679).

Works with Similar Historical Figures Not Substantially Similar
An author's fictional two-act play that focused on the period before, during, and after the death of a pope was not substantially similar to a copyright holder's investigative book that used facts to support a theory that a pope was murdered, the federal district court in New York City held. Even though the historical facts in the book were not protectable, the selection, coordination, and arrangement was protectable. While the works shared many of the same characters, nearly all of them were historical figures that were unprotectable elements. Speculation about how different the Catholic Church would have been if the pope had not died was an issue that would arise out of any treatment of a pope's death. Therefore, the theme was not protectable. Due to substantial differences in plot and themes, as well as the different mediums used by the authors of the works, the works could not be said to be substantially similar in total concept and feel. Therefore, the play did not infringe the U.S. copyright in the book (Crane v. Poetic Products Limited, SDNY, CCH Copyright Law Decisions ¶29,692).

TRADEMARKS

ISPs Could Be Liable for Web Sales of Counterfeit Goods
Internet service providers could have engaged in contributory trademark infringement by providing hosting services to websites that allegedly sold counterfeit goods bearing marks owned by luxury goods distributor Louis Vuitton, according to the federal district court in San Jose, California. Vuitton could proceed with its claims that the ISPs were liable for the third-party website operators' direct infringement.

A reasonable jury could find that ISPs had actual knowledge that infringing websites were using their services and that the ISPs had sufficient control over the websites to be liable for contributory infringement. Complaint letters regarding sales of counterfeit merchandise on sites hosted by the ISPs could support a finding of knowledge, in the court's view. With regard to the question of control, Vuitton presented evidence that the ISPs had the ability to disable individual IP addresses and thereby remove websites using their servers. The ISPs did not merely translate domain names into IP addresses, the court said. They physically hosted websites on their servers and routed Internet traffic to and from those websites. The ISPs were analogous to flea market operators and could not remain "willfully blind" to trademark infringement taking place on their servers (Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., NDCal., CCH Trademark Law Guide ¶61,355).

Bank Entitled to Exclusive Use of Name in Iowa County
Community State Bank, N.A. was entitled to an injunction barring a competitor from using the mark "Community State Bank" in Polk County, Iowa, that state's highest court has held. "Community State Bank" had the requisite secondary meaning for common-law trademark protection, and confusion between the banks' names was likely.

The complaining bank had used the mark continuously for 12 years, the court noted. A consumer survey of banking customers in Polk County indicated that over 90 percent of respondents labeled "Community State Bank" as a brand name, not a type of bank. The complaining bank had spent over a quarter of a million dollars on advertising in the county each year from 2004 to 2006, and over two million dollars total since 1993. It had advertised its services under the name "Community State Bank" and its "CSB" logo through newspaper, radio, television, magazines, direct mail, billboards, yellow page ads, on the side of delivery vans, and yard signs for construction projects. The complaining bank also had a significantly larger market share than the competitor in the county.

The parties' marks were identical, and both banks provided similar products and services. The competing bank was located only two miles from the complaining bank. There were several incidents of actual confusion after the competitor adopted the "Community State Bank" name. Given the banks' identical names and their close proximity, even a prudent customer would be confused, the court said (Community State Bank, NA v. Community State Bank, IowaSCt, CCH Trademark Law Guide ¶61,348).

COMPUTER AND INTERNET LAW

Court Halts Kentucky’s Seizure of Gambling Domain Names
A divided Kentucky appeals court overturned a trial court’s order authorizing the Commonwealth of Kentucky to seize 141 Internet domain names owned by operators of overseas gambling websites as "illegal gambling devices" under Kentucky law. The court issued a writ prohibiting the trial court from enforcing its order and conducting a scheduled forfeiture hearing. Chapter 528 of the Kentucky Revised Statutes prohibits gambling in the state and authorizes forfeiture actions of illegal "gambling devices." The court held that website domain names did not constitute "gambling devices" under Kentucky law. "[I]t stretches credulity to conclude that a series of numbers, or Internet addresses, can be said to constitute a 'machine or any mechanical or other device...designed and manufactured primarily for use in connection with gambling.' We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices subject to forfeiture," the court said. Because the domain names were not gambling devices, the circuit court lacked in rem jurisdiction over them, the court concluded. Separate opinions were filed by the concurring and the dissenting judges on the panel (Interactive Media Entertainment and Gaming Ass'n, Inc. v. Wingate, KyCtApp, CCH Computer Cases ¶49,665).

Class Certification Denied in Domain Name Parking Case
The federal district court in Chicago denied class certification to a group of trademark owners alleging infringement, cybersquatting, and unjust enrichment claims against Google and several "parking companies" (domain name aggregators and licensors) in connection with an alleged deceptive domain name parking scheme. The putative plaintiffs alleged that Google and the parking companies received billions of dollars in ill-gotten advertising and marketing revenue by registering deceptive domain names that were similar to the plaintiffs' legitimate domain names.

Common questions of law or fact did not predominate over questions affecting individual members, the court found. Regarding the trademark-related claims, potential factual issues regarding ownership and distinctiveness of marks made a class action unfeasible. In addition, determining whether each trademark or personal name was distinctive, as required for ACPA protection, would entail discovery and separate rulings for each mark or name. A multi-state class action also was not a viable means of adjudicating the mark owners' state unjust enrichment claim (Vulcan Golf, LLC v. Google, Inc., NDIll, CCH Computer Cases ¶49,653).

Internet Retailers With New York Affiliates Must Collect NY Sales Tax
A 2008 New York law requiring out-of-state Internet retailers with New York-based affiliates to collect sales tax from New York consumers was upheld as constitutional by a New York trial court. The court dismissed separate challenges to the statute by Internet giants Amazon.com and Overstock.com. The retailers argued that the law ran afoul of the dormant Commerce Clause of the Fourteenth Amendment to U.S. Constitution because it imposed tax collection obligations on sellers with no physical presence in New York.

The court ruled that the Commission-Agreement Provision did not violate the Commerce Clause because it satisfied the substantial nexus requirement as it applied only to out-of-state sellers that benefitted substantially from sales made by New York affiliates to New York residents. In order to be subject to the Commission-Agreement Provision, a seller must enter into a contract with a New York resident whereby the seller pays the New York resident a commission or provides other consideration for soliciting referrals of potential New York customers, and the seller must receive in excess of $10,000 from New York customers referred to it through its business arrangement. In addition, if an out-of-state seller can establish that its commissioned New York agents did not engage in any solicitation, they would be exempt from tax collection (Amazon.com, Inc. v. New York State Dep't of Taxation and Finance, NYSCt, CCH Computer Cases ¶49,658; Overstock.com, Inc. v. New York State Dep't of Taxation and Finance, NYSCt, CCH Computer Cases ¶49,657).

Hot Topic of the Month

President Obama Orders Government Cybersecurity Review
President Obama has directed the National Security and Homeland Security Advisors to examine the federal government’s cybersecurity. The 60-day review will be led by Melissa Hathaway, who has been named Acting Senior Director for Cyberspace for the National Security and Homeland Security Councils during the review period. Ms. Hathaway, who serves as cyber coordination executive at the office of the Director of National Intelligence, led the Bush administration’s National Cybersecurity Initiative. "The national security and economic health of the United States depend on the security, stability, and integrity of our Nation’s cyberspace, both in the public and private sectors,” said John Brennan, Assistant to the President for Counterterrorism and Homeland Security. “The President is confident that we can protect our nation’s critical cyber infrastructure while at the same time adhering to the rule of law and safeguarding privacy rights and civil liberties," Brennan added.

Within hours of the White House cybersecurity announcement, the Federal Aviation Administration reported that identity thieves hacked into an agency computer server, stealing the personal information of more than 45,000 FAA employees and retirees. The FAA said it has identified immediate steps, as well as long-term measures, to prevent similar incidents and better protect personal information.

Wolters Kluwer Law & Business Launches Patent Law Library

New Patent Law Library
Wolters Kluwer Law & Business has launched a new electronic Patent Law Library covering all areas of domestic and international patent law practice—including prosecution, litigation, and licensing.

The Patent Law Library contains all the best Aspen Publishers' expert-authored, analytical treatises—and links to primary source material, such as cases, laws, and statutes. The library features current awareness from weekly e-mail alerts of patent cases, as well as articles from Aspen IP periodicals. Also included are the invaluable Kluwer Law International resources.

The Patent Law Library features:

(1) Current developments & current awareness, with weekly email alerts from the Federal Circuit Patent Case Review by Alston & Byrd, as well as selected articles from top intellectual property journals from Aspen Publishers, such as The Licensing Journal, Intellectual Property and Technology Law Journal, IP Litigator, and The Computer and Internet Lawyer;

(2) Primary source material from the Manual of Patent Examining Procedure and the Patent Act;

(3) Patent prosecution, litigation, licensing/transactions and forms modules with 13 popular treatise titles from Aspen Publishers, including Biotechnology and Pharmaceutical Patents: Law and Practice by Marc S. Gross, S. Peter Ludwig and Robert C. Sullivan Jr.; Business Method Patents by Gregory A. Stobbs, Esq.; Patent Practice Forms by Peter S. Canelias; Patent Claim Construction by Robert C. Kahrl; Drafting Technology Patent License Agreements by Michael J. Lennon, and Patent Disputes: Litigation Forms and Analysis by Gregory J. Grimes and Charles W. Grimes; and

(4) Kluwer Law International resources, including the Manual of Industrial Property and Kluwer EU Patent Cases database.

Further information regarding the Patent Law Library is available on the CCH Online Store .