Austin Technology Law Blog : Texas Technology Lawyers & Attorneys for Copyright, Trademarks & Software Licensing in Houston, Dallas & Austin TX

You may have read recently that ICANN (Internet Corporation For Assigned Names and Numbers) has approved the new top level domain (TLD) of .XXX.  Obviously, this is intended for the adult entertainment industry and TLDs with that extension will begin to be issued in the near future.  However, aside from any passing prurient interest you may have in mentioning this factoid in social chatter, does this affect you in any way?

It does if you would not want to Google your name, trademark or tradename in the future and find that name with a .XXX extension.  So, if  you are concerned that this might happen either because someone might want to take advantage of the popularity of your name or you have a really sick friend that might want to hold this over you as a pathetic practical joke, here is what you need to do now.

ICM Registry has obtained the rights to act as the registrar for the .XXX domain.  They have set up a procedure to address your concerns about having your name or tradename associated with a .XXX domain.  The procedure is referred to as Sunrise A, B and C and offers you two avenues to avoid the result we describe above.  Obviously, one avenue would be to apply for all the domain names you want to protect with the .XXX extension and then just not use them for anything.  However, you would still show up in a search on WHOIS as the owner.  This is the Sunrise A procedure.  The preferred route would be Sunrise B, which allows domain holders and trademark holders to apply to block use of those names with the offending extension.  This is the explanation from the ICM website:

"Sunrise B is for rights owners from outside the [adult entertainment industry]. Names secured through Sunrise B will not result in the registration of a conventional, resolving domain name at the .xxx registry. Instead, these names will be reserved and blocked from live use. The applied for string will resolve to a standard plain page indicating only that the string is reserved from use through ICM’s rights protection program."

Since time could be of the essence, head over to this site or have someone do it for you and open an account and apply to reserve the appropriate names.  At some point in the process (after the original submission), you may be asked to prove you have the rights to the names so be prepared to do that. 

Now, don't you feel better?

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The many avid readers of this blog will no doubt remember our in depth discussion of the "first sale" doctrine as it relates to the inability of Netflix to rely on such doctrine for the streaming of videos, since there is no "sale" involved.  We surmised that this would increase costs because Netflix would have to license the videos from the copyright holders rather than just buy the DVD and rent it out.

Now, another service is trying to side step the issue and offer streaming DVD videos in a time frame well in advance of when Netflix can offer the video.  Zediva went from beta to production last week and is offering streaming videos as soon as the DVD is available for purchase.  Zediva's legal reasoning on this (we believe) is that they are buying the DVDs and physically taking delivery of the DVDs and actually playing them on a DVD player somewhere in their data center.  The particular DVD and the player on which it is playing are leased to the subscriber for four hours, during which no other subscriber can access either that DVD or that player.  The technology employed by Zediva allows that DVD and player to stream the video over the internet to the subscriber's device.  So, according to Zediva, it is like renting the DVD and player and the player just has a really long cord (with the cord serving as a metaphor for the cloud).  Surely, says Zediva, that must be allowed under the "first sale" doctrine.   If DVD copyright holders take umbrage at this arrangement, they might say that the "first sale" doctrine requires physical transfer of the medium and "Don't call me Shirley".  (gratuitous Leslie Nielsen homage)

The roll out of this bears watching.  Zediva's website today says it is down while they get more capacity.  Recently, another company thought they fit into an exception of the Copyright Act. ivi TV was retransmitting television broadcasts and claimed they were a virtual "cable company" and therefore entitled to transact their business under Sec. 111 of the Copyright Act, although they didn't get retransmission consent nor qualify as a cable company under the Communications Act.  The US Court for the Southern District of New York granted a preliminary injunction that ceased their operation until further adjudication.

As new technology challenges the present state of the law, we close this post as we almost always do.  Stay tuned.

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Sometimes referred to as the Facebook for the business set, LinkedIn provides a multitude of information and contacts to its members.  Last week, LinkedIn notched its 100 millionth user.  According to the metrics on my LinkedIn page, I'm connected to about 4 percent of them.  That's a lot.  I hope they don't all decide to come over to the house at once.

In a nice touch, the founder of LinkedIn sent a personal letter of thanks to the first 1 million adopters, specifically citing their order of signing up.  I didn't get a letter as I missed being in the first million by a mere 16,915,876.  If you are looking for your letter, you can determine if you are going to get one by looking at your full profile URL.  Your order in the LinkedIn hierarchy is listed after the "id=__" in the URL.

I'm probably not going to get a letter from Mark Zuckerberg either.

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Syracuse University once were known as the "Orangemen".  This arose from a hoax in the student newspaper about the fictional remains of an Indian chief being found during the excavation of a university building.  Because of the racist stereotype, Orangemen was eventually changed to "Orange" and the mascot now is a rotund citrus fruit known as Otto.  Now, Syracuse has moved to trademark the "Orange" .  After all, the Fifth Circuit has held that a color scheme can be part of a identifying mark if likely to cause confusion.  Other universities that embrace orange as a team color and use the term orange as part of their identifying marks and slogans have objected, including Tennessee and Auburn but surprisingly not Texas.  Maybe burnt orange is sufficiently different so as to not cause confusion.  After all, school buses, road cones, citrus fruit and pumpkins are different colors, right?

In Google's quest to rule the world, it entered into agreements with several large libraries to scan books, include "snippets" of such books in a database and allow searches of such scans.  In 2005, Google predictably was sued for copyright infringement and just as predictably raised fair use as a principal defense.  The suit was in the nature of a class action and Google had entered into a settlement of this case, which would have allowed Google to continue the scanning with the payment of certain fees.  The settlement was subject to approval by the courts but the District Court Southern District of New York said "not so fast" and rejected the settlement.  The reasons stated by the Court include that the settlement "...would grant Google significant rights to exploit entire books, without permission of the copyright owners. Indeed, the [settlement agreement] would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case."

Back to the drawing board.

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We recently reported on a case where competing law firms were involved in a tussle over the use by one of the law firms of the other law firm's name as a Google AdWord.  The California court in that case found trademark infringement.

Now, another case from the Ninth Circuit comes along where one software company bought the name of the other company's product as a Google AdWord.  Advanced System Concepts licensed a product under the registered trademark "ActiveBatch".  Network Automation (whose own product is called "AutoMate")  bought ActiveBatch as a Google AdWord (doesn't anyone own a space bar?).  Advanced System Concepts brought suit against Network Automation and was granted a preliminary injunction prohibiting the use of ActiveBatch in this way by Network Automation.  Network Automation appealed to the Ninth Circuit.

The District Court applied the Sleekcraft test first espoused in AMF Inc. v. Sleekcraft Boats,
599 F.2d 341 (9th Cir. 1979), which set out eight factors in determining infringement.  The District Court held that the three most important factors in the Sleekcraft test in cases relating to the internet were: (1) the similarity of the marks; (2) the relatedness of the goods; and (3) the marketing channel used.

The Ninth Circuit held: "Mindful that the sine qua non of trademark infringement is consumer confusion, and that the Sleekcraft factors are but a nonexhaustive list of factors relevant to determining the likelihood of consumer confusion, we conclude that Systems’ showing of a likelihood of confusion was insufficient to support injunctive relief."  (Emphasis added)

The Court then went on to say:

"Given the nature of the alleged infringement here, the most relevant factors to the analysis of the likelihood of confusion are: (1) the strength of the mark; (2) the evidence of actual confusion; (3) the  type of goods and degree of care likely to be exercised by the purchaser; and (4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results page.
The district court did not weigh the Sleekcraft factors flexibly to match the specific facts of this case. It relied on the Internet “troika,” which is highly illuminating in the context of domain names, but which fails to discern whether there is a likelihood of confusion in a keywords case. Because the linchpin of trademark infringement is consumer confusion, the district court abused its discretion in issuing the injunction."

It's important to note that the Court did not say that there was no infringement here, merely that the factors to be considered were not limited to those in the Sleekcraft case and they had to be applied in a flexible manner and therefore, the Ninth Circuit remanded for further consideration in line with these factors.

In my conversations with communications and advertising people, it is apparent that purchasing competitor's trademarks and names as SEO enhancers is a common and accepted practice.  Therefore, this emerging area of the law will be developing for several years.  So, as usual, stay tuned.

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Normal people who are not intellectual property lawyers (assumes that some normal people are intellectual property attorneys, a hypothesis not yet proven) would read the title of this post essentially as follows:  Blah, blah, blah, Betty Boop, blah, blah, blah, blah.

However, what it means in its simplest form is that the Ninth Circuit Court of Appeals in California held that a t-shirt, purse, or handbag containing the image of Betty Boop (a cartoon pinup with "a large round baby face with big eyes and a nose like a button, framed in a somewhat careful coiffure, with a very small body"), was utilized as a "functional product" as opposed to a trademark, and therefore would not be subject to a claim of trademark infringement.  

The Ninth Circuit's opinion has caused some head scratching and criticism.  The lower Court denied the Plaintiff's (the purported owner of the Betty Boop character) claims based on a determination that the Plaintiff had failed to show proper chain of title to the copyright ownership of the character and failed to meet its burden of proof of the existence of a federally registered trademark.

The Plaintiff appealed on these issues.  The Ninth Circuit could have disposed of this case by deciding any number of issues, e.g. whether cartoon characters are protectable as trademarks, whether Plaintiff owns a registered trademark in Betty Boop’s image and name, whether Plaintiff owns a common law trademark in “Betty Boop”, whether the fractured ownership of the Betty Boop copyright precludes Plaintiff from asserting a trademark claim or whether Defendants infringed Plaintiff's marks.  However, the Court opted to not take the common approach of deciding the issues before them and stated: "...all of these arguments are mooted by controlling precedent that neither party cited: International Order of Job’s Daughters v. Lindeburg & Co.633 F.2d 912 (9th Cir. 1980)." pg. 2778 (Emphasis added)

The Court held that none of the issues mentioned above is as important as the proposition in the Job's Daughters case and held: “The name and [Betty Boop image] were functional aesthetic
components of the product, not trademarks. There could be, therefore, no infringement”.

The fact that the Betty Boop character was readily visible, was not held out as officially licensed, and no evidence of actual confusion was provided led the Court to conclude that the character was what the buyer really wanted and therefore was a functional aesthetic component.

A strict application of this case could lead one to conclude that an outline of a Longhorn steer plainly visible (is there any other way?) on a tee shirt, that's not held out as officially licensed would not be infringing on a trademark.  This would threaten the collegiate and professional licensing schemes that abound and would cause the University of Texas (and many other institutions) a great deal of heartburn.

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We will be leading a discussion on "Ten Things You Should Know About Cloud Computing Agreements" at Austin RISE Week 2011 tomorrow at 4:00 pm at the PeopleFund offices at 207 Chalmers Avenue in Austin.  If you need something to do during that awkward time between afternoon coffee break and happy hour, come on out and share it with us.

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Our partner, Stuart Hiserodt, has been very active in the nomination, judging and awarding of the recently completed Austin Under 40 awards.  These awards recognize young up and comers in the Austin business and social scene.  We congratulate all the winners but we especially congratulate Stuart, who spent much time and effort on making this a very successful event.  Stuart's picture (along with Joah Spearman on the right) as it appears in today's Austin American Statesman is shown here. 

The article outlining the festivities is here. 

Well done, our friend.

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A few things for your consideration:

1.  The White House's proposed budget includes the authority for the USPTO to charge a surcharge on patent applications.  The proposed budget would provide $2.7 billion for fiscal 2012 with one of the stated objectives to reduce the backlog of 720,000+ applications.

2.  By Executive Order 13565 of February 8, 2011, the White House established two I.P. committees.  One is the Senior Intellectual Property Enforcement Advisory Committee, which will facilitate the formation and implementation of each Joint Strategic Plan, which will be be developed by the other committee established, the Intellectual Property Enforcement Advisory Committee.  As is evidenced by their names (i.e. Senior and not Senior) the Senior Advisory Committee will be comprised of cabinet level members or their designees and the Enforcement Advisory Committee will be comprised of representatives from the USPTO, DOJ, Department of Commerce and others.

3.  Health and Human Services through its Office for Civil Rights has assessed its first ever civil penalty for violation of HIPAA.  The penalty was $4.3 million against Cignet Health of Prince George’s County, Md.  Cignet failed or refused to provide health records to at least 41 patients and then apparently stonewalled the patients and requests from the Office for Civil Rights to the extent that the Office for Civil Rights obtained a default judgment against them.  Cignet also apparently was uncooperative in the investigation into this affair.  The penalty was $1.3 million for failure to provide access to the records and $3.0 million for being uncooperative.

4.  Microsoft was successful in getting a patent infringement suit originally filed in the Eastern District of Texas transferred to the Western District of Washington on the grounds of forum non conveniens.  For some strange reason, there are a lot of patent infringement suits and class actions filed in the Eastern District of Texas.  The plaintiff here, Allvoice, was an U.K. company with an office in the Eastern District of Texas but with no employees there or anywhere in the U.S.  Calls there were transferred to their office in the U..K.  Allvoice was incorporated in Texas but had done so 16 days before the suit was filed.  Forum shop much?  The Circuit Court of Appeals issued a writ of mandamus compelling transfer to Microsoft's home court even though Microsoft had also petitioned to move the case the Southern District of Texas.

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