August 2006

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.

COPYRIGHT

Producing “Sanitized” Versions of Movies Was Not Fair Use
Companies that reproduced and distributed copies of “sanitized” master versions of movies were not engaged in fair use, the federal district court in Denver has ruled. Thus, the companies were held to have infringed motion picture studios’ copyrighted works. In raising the fair use defense, the companies argued that they were “criticizing” objectionable content and providing more socially acceptable alternatives by deleting sex, nudity, profanity, and gory violence from motion pictures. However, the court found the companies’ “public policy” argument inconsequential to the copyright law. The copyright law protects a creator’s right to protect its creation in the form in which it was created, the court noted. Accordingly, the companies were permanently enjoined from continuing their infringing activities. The presumed destruction of the companies was not a justification for denying the copyright holders their exclusive rights (Clean Flicks of Colorado v. Soderbergh, D. Colo., CCH Copyright Law Reports ¶29,210).

Government Did Not Waive Immunity under Digital Millennium Copyright Act
A claim that the federal government violated the Digital Millennium Copyright Act (DMCA) by hacking into a computer program to alter the automatic expiration function was dismissed by the U.S. Court of Federal Claims because the government had not waived its sovereign immunity from monetary suits under the DMCA. A waiver of sovereign immunity must be unequivocally expressed. In this case, the DMCA contained no clear statement waiving sovereign immunity, and there was no indication that the government ever intended to be subject to the Act’s provisions, the court held (Blueport Co. v. The United States, Fed. Ct. Cl., CCH Copyright Law Reports ¶29,217).

Copyright Office Requires Electronic Payment of Royalty Fees

A final rule requiring the submission of royalty fees to the Copyright Office by electronic funds transfer was published in the Federal Register on August 10. The change eliminates the options of payment by certified check, cashier’s check, or money order. The final rule will become effective on October 1, 2006. The new rule includes a waiver provision for situations in which it is virtually impossible to use electronic funds transfers. The amended rules appear at CCH Copyright Law Reports ¶12,020, ¶12,034, and ¶12,049.01.

TRADEMARK

Sale of Web Search Terms Could Infringe Cigar Seller’s Marks
An Internet search engine’s sale of the right to use a cigar seller’s trademark and slight variations as Internet keywords to generate “hits” for the seller’s competitors in paid search results constituted “use” of the marks for purposes of the seller’s Lanham Act claims, the federal district court in Newark has determined. By accepting bids from the cigar seller’s competitors for prominence in search results, the search engine (GoTo.com) traded on the value of the cigar seller’s marks. The keyword sale could cause consumer confusion, since the keywords were virtually identical to the marks, the search engine and cigar seller’s marketing channels overlapped (as did the parties’ sales targets), and the products of the competitors were similar to those of the cigar seller. The marks were strong and entitled to a high degree of protection. There was no evidence that consumers clicked on an advertising listing, believing it originated with the cigar seller, the court observed. However, GoTo.com’s use of the marks could suggest an affiliation or connection between the search engine and the cigar seller. There was evidence that 20,000 users had typed the disputed keywords into the search engine and were diverted to websites operated by the competitors (800-JR Cigar, Inc., D. N.J., CCH Trademark Law Guide ¶60,860).

Knockoff Auto Grilles Could Cause Downstream Confusion
A Taiwanese manufacturer’s sale of replacement automobile grilles bearing General Motor’s “bow tie” design and “GMC” logo could have infringed General Motor’s trademarks, according to the U.S. Court of Appeals in Cincinnati. The manufacturer’s sale of its grilles to body shops and on the Internet did not present a likelihood of “point of sale” confusion because purchasers were informed that they were not buying GM grilles. However, a genuine issue of material fact existed as to the possibility of “downstream” consumer confusion, the court said. Downstream or “post-sale” confusion refers to confusion among the general public upon encountering knockoff goods in the stream of commerce, potentially causing harm to the reputation of the owner of the mark. Thus, claims brought by General Motors were allowed to proceed (General Motors Corp., 6th Cir., CCH Trademark Law Guide ¶60,841).

Leaflets Were Likely to Cause Confusion, Not Irreparable Harm
A restaurant owner was likely to succeed on the merits of its claim that a nonprofit organization’s distribution of leaflets—bearing the restaurant’s trademarks and protesting allegedly poor working conditions for the restaurant's employees—would cause a likelihood of confusion, the federal district court in New York City has decided. However, the restaurant owner was not entitled to a preliminary injunction against the leafleting because it failed to establish that it would sustain irreparable harm. Distribution of the leaflets by the organization constituted "use" of the trademarks in connection with goods or services, for purposes of the restaurant's Lanham Act claims, the court said. Both parties agreed that an individual handed one the leaflets would initially think it was associated with the restaurant. The "initial interest" confusion caused by use of the mark on the front of the leaflet was actionable under the Lanham Act, according to the court. Although irreparable harm for preliminary injunction purposes was generally presumed to exist when confusion is shown, this general rule did not apply in all cases. In this instance, the organization’s use of restaurant’s marks was unlikely to cause the restaurant to lose any sales due to the infringement. It was the message in the leaflet that might cause a reader to dine elsewhere (SMJ Group, S.D. N.Y., CCH Trademark Law Guide ¶60,847).

COMPUTER & INTERNET LAW

Employee Had No Expectation of Privacy in Workplace Computer
Images of child pornography that an electronic processing company found on an employee’s work computer were admissible as evidence in a criminal prosecution, the U.S. Court of Appeals in San Francisco determined. There was no Fourth Amendment violation because the defendant did not have a legitimate expectation of privacy in the files stored on his workplace computer, according to the court. Although the employee may have subjectively believed that the contents of his work computer were private because they were accessed with a password, the employee had no objectively reasonable expectation of privacy in the computer, particularly since the company had notified its employees of its routine monitoring, its right to access the contents, and its prohibition of private use by employees (U.S. v. Ziegler, 9th Cir., CCH Guide to Computer Law ¶49,165).

Amazon Not Liable for Displaying Unauthorized Book Image
Amazon.com’s product page display of the cover a book—purportedly bearing an unauthorized photograph—did not violate a woman’s right to publicity, according to the U.S. Court of Appeals in Atlanta. A photograph of the woman as a child appeared on the cover of the book, which was offered for sale on Amazon.com’s website. The woman had consented to the publisher’s use of the photo in the book’s first edition, but allegedly did not extend her consent to the second edition. She sued Amazon.com for violation of Florida’s right of publicity and civil theft statutes, as well as common law invasion of privacy. The right of publicity claim was barred by the federal Communications Decency Act (CDA) because the relevant information (a photo) was provided by a third party (the book publisher). Thus, Amazon.com was not the “publisher or speaker” of the information under the CDA. The civil theft claim failed because the woman did not show that Amazon.com knowingly obtained or used the photograph with “a felonious intent.” Amazon.com could not be held liable for invasion of privacy, since its use of the image was not for “trade, commercial, or advertising purposes” but was merely incidental to the business of Internet book sales (Almeida v. Amazon.com, Inc., 11th Cir., CCH Guide to Computer Law ¶49,155).

Guide to Computer Law Issues Transfer Book
A 2004-2006 Computer Cases transfer book (Report 297A) was sent to CCH Guide to Computer Law subscribers on August 11, 2006.

Computer and Internet Integrated Library to Launch in September
A new electronic library for computer and internet law will be launched by Wolters Kluwer Law & Business in September. The CCH Computer and Internet Law Integrated Library will bring together in one comprehensive research tool news, analysis, commentary, and full text reporting of laws, regulations, and court decisions. The core library will consist of CCH Guide to Computer Law and five treatises from Aspen Publishers—Law of the Internet, Drafting Internet Agreements, Law of Electronic Commerce, Scott on Computer Law, and Scott on Multimedia Law. In addition, subscribers to the core library will receive Computer and Internet News Alert e-mails, Advance Release Documents, and two monthly Aspen Journals—Journal of Internet Law and The Computer & Internet Lawyer. Seven optional add-on publications will enable subscribers to customize their libraries to suit their practices.