TLJ News from October 11-15, 2007

9th Circuit Addresses Doctrine of Primary Jurisdiction in Trademark DJ Action

10/15. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Dean Rhoades v. Avon Products, a trademark declaratory judgment action.

The plaintiff (Dean Rhoades) filed a complaint in U.S. District Court (CDCal) seeking a declaration that several trademarks did not infringe on the defendant's (Avon Products) registered marks. There was also a related proceeding before the Trademark Trial and Appeal Board (TTAB).

The District Court, Judge Manuel Real, dismissed for lack of jurisdiction, invoking the doctrine of primary jurisdiction, without hearing from the plaintiff's counsel. The Court of Appeals vacated the judgment of the District Court, remanded, and ordered the reassignment of the case. Judge Real has difficulty performing his judicial responsibilities.

The Court of Appeals followed the approach of the 2nd Circuit in Goya Foods, Inc. v. Tropicana Prod., Inc., 846 F.2d 848 (1988).

It wrote that "Allowing the district court to decline a declaratory relief action on a primary jurisdiction rationale is sensible only if the agency is better equipped to handle the action. Here, however, Congress has not installed the PTO as the exclusive expert in the field. As noted, parties may litigate these issues in federal court without previously exhausting their claims before the TTAB."

It added that "where, as here, there is a potential infringement lawsuit, federal courts are particularly well-suited to handle the claims so that parties may quickly obtain a determination of their rights without accruing potential damages."

The Court of Appeals held that the District Court abused its discretion in declining to hear the case. It wrote that "some situations might justify deferring a declaratory judgment case when related TTAB proceedings are pending; specifically, where the ``district court action involves only the issue of whether a mark is entitled to registration,´´ it might make more sense to resolve the registration claims at the TTAB first." (Quotation from Goya Foods.)

On the other hand, this Court of Appeals added, if, as here, a potential infringement claim requires the District Court to resolve much or all of the registration issues, it would waste everyone's time not to settle the registration issue now, in District Court. The Court of Appeals wrote that "The deciding factor should be efficiency".

This case is Dean Rhoades and Dermanew, Inc. v. Avon Products, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 05-56047, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-05-02169-R.

Google Announces YouTube Video Identification Policy

10/15. Google, owner of YouTube, published a statement in its web site regarding its efforts to limit use of YouTube for copyright infringement. It announced that it has launched "in beta form, YouTube Video Identification". See also, web page titled "YouTube Video Identification Beta".

YouTube enables its users to publish, among other things, copyrighted content, such as songs and portions of TV programs, movies, and sports events. Google's advertising revenues are increased as a result of its users' infringement of copyrighted works.

Content owners have sued Google for this. See for example, story titled "Viacom Files Complaint Against Google and YouTube Alleging Violation of Copyright Law" in TLJ Daily E-Mail Alert No. 1,551, March 13, 2007, and March 12, 2007, complaint [PDF] filed in U.S. District Court (SDNY). The six count complaint alleges direct infringement by public performance, direct infringement by public display, direct infringement by reproduction, inducement of copyright infringement, contributory copyright infringement, vicarious copyright infringement.

Also, on March 6, 2007, Thomas Rubin, Microsoft's Associate General Counsel for Copyright, Trademark and Trade Secrets, gave a speech in which he stated that Google systematically violates copyright, both with respect to books, and user posted works. See, story titled "Microsoft Counsel Says Google Systematically Violates Copyright" in TLJ Daily E-Mail Alert No. 1,547, March 6, 2007.

Google wrote that "Video Identification is the next step in a long list of content policies and tools that we have provided copyright owners so that they can more easily identify their content and manage how it is made available on YouTube."

Google stated that it has developed a "technology that can recognize videos based on a variety of factors".

It also stated that "We take a unique ``hash´´ of every video removed for copyright infringement and block re-upload of that exact video file prospectively."

However, it provided little other explanation, and added that this technology is new, and will be refined.

Google continued that the system requires "the cooperation of the content owners themselves", and that copyright holders must "identify their works", and must make their "preference" known to Google.

Google describes this as "choice". It wrote that "The best we can do is cooperate with copyright holders to identify videos that include their content and offer them choices".

The Copyright Act imposes no obligation upon copyright holders to cooperate with infringers, or vicarious infringers, as a precondition to enforcement of their copyrights. Google seeks to create such a obligation. Under such a regime, large content companies might have the resources to participate in such programs with Google and other web sites that enable user posting of infringing copies. Smaller content companies, and individual copyright owners, would not.

Google also wrote that "Our strict repeat-infringer policy, which has been in place since our launch, terminates accounts of repeat infringers based on DMCA notices." It also stated that "We require a 10-minute limit on the length of content uploaded to the site." Moreover, "We provide content owners with an electronic notification and takedown tool, to help them more easily identify their material and notify us to take it down with the click of a mouse."

Ed Black, head of the Computer and Communications Industry Association (CCIA), complained in a release that "This service goes above and beyond what companies such as YouTube are legally required to do. This service could harm the dynamic and democratic flow of information on the Internet if implemented without due regard for the interests of consumers and other authors and artists."

He continued that "Despite numerous good faith efforts by YouTube, content owners have pressed for still more concessions. As a result of this new policy, Internet users who post video clips to YouTube will now have their submissions subject to the views of content oligopolies that have consistently stretched the limits of copyright beyond what the law actually says."

He continued that this will affect the "citizen journalist". He asked rhetorically, "what of political content? Will copyright holders use these procedures to suppress speech of which they disapprove?"

Gigi Sohn, head of the Public Knowledge, stated in a release that "It's a shame that Google was pressured by the entertainment industry into devoting resources to a limited system that could restrict the free flow of information while increasing the control content companies have over otherwise lawful uses of material."

She added that "we don’t think that any automated process will be able to determine whether a consumer’s fair use rights are being violated".

Antitrust Division to Host Symposium on Telecommunications Issues

10/15. The Department of Justice's (DOJ) Antitrust Division announced that it will host a day long symposium titled "Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers". It will run from 9:00 AM to 5:30 PM on November 29, 2007.

The DOJ's notice states that the issues covered will include "The introduction of new facilities-based competition providing a bundle of voice, video and broadband services to consumers; The effects of such competition on price and the quality and diversity of services; and The existence of regulatory and other potential barriers to entry."

With respect to competition analysis of triple play discount bundling, see story titled "9th Circuit Rules on Application of Antitrust Law to Bundling Discounts" in TLJ Daily E-Mail Alert No. 1,635, September 6, 2007. That story is about a recent antitrust ruling involving bundling discounts in the health care sector, rather than telecommunications. See also, September 4 opinion [58 pages in PDF] of the U.S. Court of Appeals (9thCir) in McKenzie v. PeaceHealth.

The event is free and open to the public, but the DOJ requests pre-registration by November 16. Also, written comments are due by November 13. The DOJ states that "Studies, surveys, original research and empirical data are especially useful".

For more information, contact the DOJ's Ashley Becker at 202-514-5835 or Carl Willner at 202-514-5813. The symposium will be held in the Horizon Room, Ronald Reagan Building, 1300 Pennsylvania Ave., NW.

The DOJ's Antitrust Division often co-hosts events with the Federal Trade Commission's (FTC) Bureau of Competition. This is solely a DOJ event.

Supreme Court Lets RICO Class Action Proceed Against Microsoft and Best Buy

10/15. The Supreme Court of the US (SCUS) denied certiorari in Microsoft v. Odom, a case in which the Court of Appeals held that RICO claim based upon a marketing agreement between Microsoft and Odom survives a motion to dismiss for failure to state a claim.

See, Orders List [9 pages in PDF], at page 8. See also, SCUS docket.

This is a victory for the class action plaintiffs bar.

James Odom alleged in his class action complaint that Microsoft and Best Buy entered into a marketing agreement under which Best Buy would market Microsoft's MSN internet access service. When customers bought certain products at a Best Buy store by credit or debit card, Best Buy would forward their purchase and credit card information to Microsoft. Microsoft would provide them a limited time free MSN internet access account, and thereafter charge the customers' accounts for monthly internet access service, without the customers' knowledge or consent.

Odom alleged that this violated the Racketeer Influenced and Corrupt Organizations Act (RICO), at 18 U.S.C. §§ 1962(c) and (d), and wire fraud (with RICO as the predicate offense) in violation of 18 U.S.C. § 1343. The RICO provides a civil cause of action, with treble damages.

The District Court dismissed for failure to state a claim pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure. It held that Odom had failed to allege associated-in-fact enterprise within the meaning of the RICO under Rule 12(b)(6), and that he failed to plead wire fraud with particularity under Rule 9(b).

Section 1962(c) provides that "It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt."

The U.S. Court of Appeals (9thCir), en banc, reversed the District Court. See, May 4, 2007, en banc opinion [28 pages in PDF], and story titled "9th Circuit Rules on Civil RICO Actions in in Odom v. Microsoft" in TLJ Daily E-Mail Alert No. 1,576, May 7, 2007.

It held that that a complaint that alleges violation of the federal civil RICO statute based upon the factual allegations that that two companies conspired through a marketing agreement to fraudulently charge for services not ordered by customers survives a FRCP Rule 12(b)(6) motion to dismiss. It held that "associated-in-fact enterprise under RICO does not require any particular organizational structure, separate or otherwise."

That is, the Court of Appeals allowed the case to proceed in the District Court. And now, the Supreme Court has let stand the judgment of the Court of Appeals.

This case is Microsoft Corporation and Best Buy, Co. v. James Odom, Sup. Ct. No. 07-138, a petition for writ of certiorari to the U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 04-35468. The Court of Appeals heard an appeal from the U.S. District Court for the Western District of Washington, D.C. No. CV-03-02976-MJP.

More News

10/15. Pfizer, a pharmaceutical company, and Sermo, a networking web site for doctors, issued a release that announces "a strategic collaboration designed to redefine the way physicians in the U.S. and the healthcare industry work together to improve patient care". The release adds "Sermo's community of physicians will have access to Pfizer's clinical content in tangible ways that allow for the transparent and efficient exchange of knowledge". It also states that the two will "Engage with the FDA to define guidelines for the use of social media in communications with healthcare professionals".

10/15. The Securities and Exchange Commission (SEC) filed a civil complaint [57 pages in PDF] in U.S. District Court (SDNY) against Nortel Networks Corporation, and a subsidiary, alleging violation of federal securities statutes, and rules promulgated thereunder, in connection with their alleged filing of misleading financial statements. This pertains to Nortel's recognition of revenue in 2000 and 2001. The SEC simultaneously announced in a release that the SEC and Nortel settled the matter. Nortel admitted to no wrongdoing, but agreed to pay a fine of $35 Million. Nortel is a Canadian manufacturer of telecommunications equipment. This case is SEC v. Nortel Networks Corporation and Nortel Networks Limited, U.S. District Court for the Southern District of New York, D.C. No. 07-CV-8851.

9th Circuit to Rehear Section 230 Case En Banc

10/12. The U.S. Court of Appeals (9thCir) issued an order [2 pages in PDF] that states that the Court of Appeals will rehear en banc FHCSFV v., a Section 230 immunity case.

The Court wrote that "Upon the vote of a majority of nonrecused regular active judges of this court, it is ordered that this case be reheard by the en banc court pursuant to Circuit Rule 35-3. The three-judge panel opinion shall not be cited as precedent by or to this court or any district court of the Ninth Circuit, except to the extent adopted by the en banc court." (Footnote omitted.)

On May 15, 2007, a three judge panel of the Court of Appeals issued its opinion [23 pages in PDF] eroding Section 230 immunity by creating an exception for user content that the online service helps to develop.

See, story titled "9th Circuit Holds May be Liable for Speech of Users" in TLJ Daily E-Mail Alert No. 1,581, May 15, 2007.

47 U.S.C. § 230 provides that "No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

It defines "interactive computer service" as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions".

The opinion of the three judge panel invites government regulation of internet speech, and private litigation to suppress internet expression. Section 230 immunizes interactive computer services from liability for the speech of those who use their services, just as phone companies and package carriers are not liable for what people say over the phone, or in letters. Until the three judge panel issued its opinion the federal and state courts had been consistent in their rejection of efforts by plaintiffs' bar to obtain money judgments from companies like AOL, and would be censors of internet based speech.

Section 230 is based in part on the premise that without this immunity companies will be less likely to provide internet based services that promote expression and exchanges. The three judge panel's opinion threatens both this industry sector, and internet based speech.

The facts underlying this case involve individuals searching for roommates. People select dates, spouses, roommates, and other persons with whom to socialize or interact on the basis of many criteria, including age, sex, appearance, religious faith, whether or not they have children, and whether or not they are gay. Neither state nor federal laws reach this conduct. On the other hand, various state and federal statutes prohibit housing discrimination. But, this case does not involve property owners who discriminate in selling or leasing property.

Rather, the FHCSFV and another local government agency in California, sued the service provider,, to prevent individuals from applying these criteria in seeking roommates. However, rather than suing the individuals who discriminate, they sued the interactive computer service. The individuals supply information about themselves to the service provider, which then assists in matching prospective roommates.

The opinion of the three judge panel only addresses Section 230 immunity. It does not concern whether any any federal or state statute was violated, or whether the statutes as applied are Constitutional. wrote in its petition [52 pages in PDF] for en banc rehearing that "The republication immunity created by ... § 230 ... has made possible a true ``mass media´´ where anyone can share with countless other people his or her views, creations, and knowledge. The panel decision dramatically curtails the CDA's protection of Internet services that collect and publish information originating with third parties, in conflict with" other opinions of the 9th Circuit."

The Electronic Frontier Foundation (EFF) wrote in its amicus brief [PDF] in support of en banc rehearing that "laws and regulations should avoid stifling free expression on the Internet". It continued that "the panel's decision contravenes this objective. Whatever the underlying merits of the Fair Housing Act, opening the door to liability for information intermediaries is not the solution" to any problem before the court.

It concluded that affirming the three judge panel "would return online innovators to that environment of unnecessary risk and liability that was banished with the passage" of Section 230.

The three judge panel was comprised of Alex Kozinski, Stephen Reinhardt, and Sandra Ikura. Reinhardt's opinions are frequently overturned by the Supreme Court for his disregard for precedent, and the plain language of statutes. However, neither Kozinski, who wrote the opinion, nor Ikura, have such a record.

This case is Fair Housing Council of San Fernando Valley and Fair Housing Council of San Diego v., LLC, U.S. Court of Appeals for the 9th Circuit, App Ct. Nos. 04-56916 and 04-57173, appeals from the U.S. District Court of the Central District of California.

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10/12. The Federal Communications Commission (FCC) published a notice in the Federal Register that announces, describes, and sets the effective date (November 13, 2007), of the FCC's Report and Order and Memorandum Opinion and Order regarding the provision of in-region, long distance services by the Bell Operating Companies (BOCs) and their independent incumbent local exchange carrier (ILEC) affiliates. This item is FCC 07-159 in WC Docket Nos. 02-112 and 06-120, and CC Docket No. 00-175. The FCC adopted this item on August 30, 2007, and released it on August 31, 2007. See, Federal Register, October 12, 2007, Vol. 72, No. 197, at Pages 58021-58027. See also, story titled "FCC Relaxes Regulation of BOCs' Provision of Long Distance Service" in TLJ Daily E-Mail Alert No. 1,633, September 4, 2007.

GWU Must Disclose Identities of Online Infringers

10/11. The U.S. District Court (DC) issued an Memorandum Opinion and Order [2 pages in PDF] in Arista Records v. John Does, granting the record companies' request for a Rule 45 subpoena directing George Washington University (GWU) to provide the names, addresses, phone numbers, and e-mail addresses of certain unnamed users of the GWU's computer network to copy and distribute copyrighted music.

GWU is not a party to this action. Rather, record companies, including Arista, filed a complaint in the District Court against unnamed Joe John defendants. The record companies allege that the unnamed defendants have infringed their copyrights, using GWU's network. The record companies further assert that they know the unique internet protocol addresses assigned to the defendants by GWU, but not their identities. The record companies sought a subpoena pursuant to Rule 45, and 47 U.S.C. § 551(c)(2)(B).

Rule 45, Federal Rules of Civil Procedure, governs the issuance of subpoenas in civil actions.

Subsection 551(c)(2)(B), which pertains to "personally identifiable information", provides that "A cable operator may disclose such information if the disclosure is subject to subsection (h) of this section, made pursuant to a court order authorizing such disclosure, if the subscriber is notified of such order by the person to whom the order is directed".

Subsection 551(h) provides, in part, that "a governmental entity may obtain personally identifiable information concerning a cable subscriber pursuant to a court order only if, in the court proceeding relevant to such court order -- (1) such entity offers clear and convincing evidence that the subject of the information is reasonably suspected of engaging in criminal activity and that the information sought would be material evidence in the case; and (2) the subject of the information is afforded the opportunity to appear and contest such entity’s claim".

The District Court granted the request, subject to notice to the defendants by GWU, and an opportunity to quash. The Court wrote that "when GW is served with a subpoena, GW shall give written notice, which may include email notice, to the subscribers in question within five business days. If GW and/or any Defendant wants to move to quash the subpoena, the party must do so before the return date of the subpoena, which shall be 25 days from the date of service. GW shall preserve any subpoenaed information pending the resolution of any timely filed motion to quash."

This case is Arista Records LLC, et al. v. John Does 1-19, U.S. District Court for the District of Columbia, D.C. No. 07-1649 (CKK), Judge Colleen Kotelly presiding.

PFF Paper Argues That New Technologies End Rationale for Regulation of Video Content

10/11. The Progress & Freedom Foundation (PFF) released a paper [16 pages in PDF] titled "Parental Control Perfection? The Impact of the DVR and VOD Boom on the Debate over TV Content Regulation". The author is the PFF's Adam Thierer.

Back on April 26, 2007, the Federal Communications Commission (FCC) released a report [39 pages in PDF] in its proceeding titled "In the Matter of Violent Television Programming And Its Impact On Children".

That report found that violent video programming can be harmful to children. It recommended that the Congress could enact legislation to protect children from violent programs, such as through a time channeling solution, or by mandating family tiers or a la carte programming. The report also asserted that such restrictions on speech would not violate the constitutional rights of video providers or viewers.

See, story titled "FCC Recommends that Congress Regulate TV Content to Protect Children from Violence Programs" in TLJ Daily E-Mail Alert No. 1,572, May 1, 2007.

The just released PFF paper argues that "there are better ways to find quality media content, or deal with objectionable media content, than through government mandates".

This paper states that "new video technologies, such as digital video recorders (DVRs) and video on demand (VOD) services, are changing the way households consume media and are helping parents better tailor viewing experiences to their tastes and values. These developments have profound implications for debates over the regulation of television programming. As parents are given the ability to more effectively manage their family's viewing habits and experiences, it will lessen -- if not completely undercut -- the need for government intervention on their behalf."

Thierer argues that parents are now able to build libraries of preferred programming, and then let their children view programming from this library. Parents are now buying content on DVD. They are using digital video recorders (DVRs), also known as personal video recorders, to record content, as with old VCR technology. However, Thierer writes that with the new DVR technology consumers have "an unprecedented level of control over their viewing experiences by allowing them to instantly pause, rewind, and fast-forward programming. DVRs also let consumers watch television on their terms by building an archive of desired programming. Today, all DVRs -- including those sold or leased by cable, telco, and satellite operators -- offer these features."

Thierer also argues that video on demand (VOD) services add to parental control, and that technology companies are providing products and services that make it easier for parent to organize and manage their collection.

Thierer also argues that the quantity of family friendly programming being provided by cable, telco, and satellite operators is increasing, through such options as "ABC Family", "Black Family Channel", "Cartoon Network", "Discovery Kids", and "Disney Channel".

Thierer concludes that "These developments are also important because they undercut the logic of past judicial pronouncements or the need for future regulatory efforts. ... It is impossible to consider video programming an ``intruder´´ in the home when tools exist that can help parents almost perfectly tailor viewing experiences to individual household preferences."

He wrote that "The logic of Pacifica, therefore, is now moot."

In FCC v. Pacifica Foundation, 438 U.S. 726 (1978), the Supreme Court of the US (SCUS) upheld the FCC's power to regulate broadcasting that is indecent, but not obscene. At issue was a radio broadcast of a monologue by gutter comic George Carlin. It its effort to articulate a rationale for regulating speech, the SCUS noted the pervasive, accessible and ubiquitous nature of broadcasting.

Go to News from October 6-10, 2007.