IP/Internet/New Media Blog

By Galen Gentry

On July 22nd the Ninth Circuit Court of Appeals overturned almost all of a Riverside federal court judge’s rulings and jury’s findings in the $100 million Bratz v. Barbie case. Judge Stephen Larson presided over the trial which ultimately found that Mattel Inc. had the rights to the Bratz dolls produced by rival MGA Entertainment Inc.

The appeals court ruled that most of the jury instructions and conclusions reached during the 2008 trial between Mattel and MGA were incorrect. “Because several of the errors we have identified appeared in the jury instructions, it’s likely that a significant portion – -if not all — of the jury verdict and damage award should be vacated, and the entire case will probably need to be retried,” said the appellate panel in an opinion written by Chief Judge Alex Kozinski. See our orgininal blog post on this topic here. 

The panel stated in the opinion“Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand.”   And went on to say “It is not equitable to transfer this billion-dollar brand, the value of which is overwhelmingly the result of MGA’s legitimate efforts, because it may have started with two misappropriated names.”

Wow. Talk about a difference of opinion. The trial judge and the appeals court saw this one very differently.

Galen Gentry

In an article in the Wall Street Journal yesterday, Justin Scheck, described the short lived trademark category for marijuana.  The article reports that the USPTO plans on ‘shutting things down’ by the end of the month, but apparently there was a brief period in which  the U.S. Patent and Trademark Office created a new trademark category dedicated to medical marijuana, spurring a hoards of applications from people and businesses in the 14 states where the drug is legal for medicinal purposes.  Among the trademarks: Chronic, Mellow Yellow, and Maui Wowie.  

The trademark agency said it was “highly unlikely” that the office would grant a medical marijuana trademark anytime soon because a product must be legal for interstate trade to be eligible for trademark protection…and so it goes.  An interesting but at least for now academic argument is whether whether long-used names for the drug could be trademarked if..uh it was legal it sell it.

The justices agreed with an appeals court that the method was too abstract to be patented. The Supreme Court used a different analysis to reach that conclusion, disagreeing with the legal test used by the lower court.   Read the Wall Street Journal article on the court decision.

By Galen Gentry

In City of Ontario, California v. Quon. The court held that a public employer’s examination of an employee’s personal text messages on a government-issued pager did not violate the Fourth Amendment. Justice Kennedy’s opinion for the Court remarked that a review of messages on an employer-provided device would similarly be regarded as “reasonable and normal in the private-employer context.”

A police sergeant was using a work-issued pager to send sexually explicit texts. The Supreme Court ruled Thursday that under the circumstances the police department was entitled to read his messages. In a unanimous decision, the high court said that even if police Sgt. Jeff Quon had an expectation that his pager messages would remain private, a police department audit of his messages was nonetheless reasonable.

“Because the search was motivated by a legitimate work-related purpose, and because it was not excessive in scope, the search was reasonable,” Justice Anthony Kennedy wrote for the court.

Quon’s employer asked its wireless service provider for details about the text messages sent and received by the city’s police officers, when their texts regularly exceeded the monthly limit for which the city had contracted. Quon was disciplined for violating police department rules when the city discovered that he sent numerous personal messages. He and the individuals with whom he communicated and who communicated with him sued the city, arguing that the city engaged in an unreasonable search in violation of the Fourth Amendment of the US Constitution, the privacy clause found in Article I, section 1 of the California constitution, and also the federal Stored Communications Act (SCA).

This is good news for employers and the case gives them guidance on the issue of employee privacy in this context:

Employers should establish the level of privacy expectations with a written policy that covers all the gizmos the company uses–telephones, cellular phone, sms text, and email.

Employers should avoid reviewing the content of sms messages, or emails or asking their service providers to do so, unless the employer has a clear work-related purpose such as an investigation of suspected wrongdoing or a non-investigative financial or administrative objective.

Content review should be done in a manner that limits privacy intrusions. The Quon decision states that this does not mean “least intrusive search practicable” but instead it must be a search reasonably limited to the employer’s legitimate, work related objectives.

A reasonable review of employee communications with realistic work related objectives can also serve as a defense against privacy claims by non-employees who communicated with the employee.

According to Rachel M. Zahorsky of the ABA  Journal Blog in the past five months, Virginia-based law firm Dunlap, Grubb, & Weaver has filed suits against thousands of individuals accused of illegally downloading independent films—an operation that could yield the firm and its clients over $15 Million.

Under the operative the U.S. Copyright Group, the lawyers seek out indie filmmakers and offer to sue anonymous movie pirates for no charge. The firm then subpoenas Verizon, AT&T and other ISPs to identify each John Doe user, and threatens to sue each person for $150,000 unless they agree to a $1,500 to $2,500 settlement fee, according to Ars Technica’s Law & Disorder blog and Techdirt. Defendants can pony up the cash on a website set up to accept checks and credit cards.

To identify illegal file-sharing, the firm uses a program that captures IP addresses based on the time stamp that a download has occurred and then checks it against a spreadsheet to make sure the downloaded content is the copyright-protected film and not a misnamed film or trailer, according to the Hollywood Reporter’s THR, Esq. blog

By Galen Gentry

On April 6^th  the District of Columbia Court of Appeal ruled that the Federal Communications Commission has no authority to determine how internet services providers manage traffic to their customers.  The case, Comcast v. FCC , is a blow to proponents of net neutrality.  In 2008 the FCC ruled that Comcast improperly discriminated against certain internet content when it blocked some of its customers from using the popular BitTorrent Inc. technology which allows users to download large files such as videos more easily.

Comcast appealed and the three judge panel unanimously found that the FCC overstepped its bounds in the 2008 ruling.  The court stated the FCC lacks direct authority from Congress to regulate internet traffic.  The ruling brings the issue of net neutrality back to the fore.  Some government and business leaders seek legislation which would prevent internet providers from curbing or charging higher prices for use of selected applications or access to certain websites. 

At issue is whether telecommunications companies should be allowed to manipulate how fast or slow websites pages load on customers computers.  Companies like Google support net neutrality which would prevent internet providers from curbing or charging higher prices for use of selected applications or access to certain websites.  The telecom giants such Verizon and Comcast are against such legislation.  President Obama supported previous efforts to enact net neutrality legislation and FCC chairman Julian Genachowski has made net neutrality a top priority. 

The issue of net neutrality is a partisan one.  It may take a long time for Congress to act.  In the interim the FCC may appeal the ruling or it may seek to reclassify high speed internet service so that it would be regulated like telephone services under existing laws.  The same companies which oppose net neutrality, the giant telecoms, would oppose such a move.  If the FCC makes an effort to reclassify high speed internet service the telecom companies are sure to challenge the action in court. 

 America needs competition among its high-speed internet providers. Open access has proved to be an effective way to do this in other countries. The FCC’s rules on net neutrality were an adequate substitute.  But with the Court’s ruling the United States now has neither.

The United States Patent Office issued a press release today stating that henceforth it would seek patent examiners by running ads in Playboy.  The Office went on to state that rumors that everything worth inventing had been invented now that the ipad was a reality were in fact true.

By Galen Gentry

Yesterday, Mayor Villaraigosa signed a measure to cut business taxes for internet based firms. Last year internet firms were reclassified from multimedia to business and professions. It’s an important distinction because the former pay a city tax rate of $1.01 of gross receipts and the latter pay $5.07 (yes, fellow attorneys you are unfortunately in the $5.07 category). The change was approved without dissent by the city council. The rate change is retroactive. The fact that it is retroactive will cost the city at least $3.4 Million in revenue according to an article today’s Los Angeles Times Business Section by Phil Willon.

The mayor and the city council were clear as to the reasons for the change of heart–they believe internet based companies are easy to move and that the drastic increase in city tax would result in an exodus which would ulitmately cost Los Angeles more revenue in the long run.

By Galen Gentry

The AP reported that Google stopped censoring the Internet for China by shifting its search engine off the mainland today, March 22, 2010. Google is acting on its statement, made Jan. 12th, that it would no longer adhere to China’s requirement that it keep some Internet results out of its citizens’ view. Visitors to Google’s old service for China, Google.cn, are now being redirected to the Chinese-language service based in Hong Kong, where Google does not censor the search results; however, it cannot be accessed inside China, because the mainland government filters restrict the links that can be clicked by mainland audiences.

Google plans to keep its engineering and sales offices in China so it can keep a presence in the country and continue to sell ads for the Chinese-language version of its search engine in the U.S. Google is unlikely to sever all ties with China in the future. It would not make economic sense. China’s explosive growth has created a market that is hard to pass up.

By Galen Gentry
According to WebProNews Facebook was the most visited site for the week of March 7 to March 13. The fact that FB was the number one site will influence the value of advertising on the site and surely increase the advertising by big business. Facebook advertisers can be very specific as to who they target. For instance you can advertise on Facebook just to lawyers or people who list horses in their interests and live in Toledo. That is drilling down. These are exciting times for Facebook and interesting times for big business as they try to spend their advertising dollars wisely on a user content focused web.

By Galen Gentry

On February 24, 2010 the United States Court of Appeals for the Federal Circuit found that Defendants infringed on patents for Crocs ubiquitous foam clogs. The Appeals Court overturned an earlier ruling by the US International Trade Commission and sent the matter to the ITC to fashion a remedy.

Crocs sued several Defendants for copying the design of the foam shoe which features holes in the top forefoot and a strap for the heel. An International Trade Commission Administrative Law Judge ruled against Crocs in 2008. He stated that the Defendants’ shoes did not infringe because of differences in their design and construction such as where the straps were placed, the shape of the holes and how far apart the holes were on the Defendants’ shoes. The Defendants in the case were Double Diamond Distribution Ltd., Holly Soles Holdings Ltd., and Effervescent, Inc.

In reversing the ITC Circuit Judge Randall Raider stated that the overall similarities between the shoes were such that an ordinary observer would be deceived into believing the products at issue were the same as the patented design. Raider compared several competitors’ shoes side by side with Crocs in illustrations contained in the ruling.

It remains to be seen what the ITC will do. In an article by Craig Anderson in the Los Angeles Daily Journal on Thursday February 25, 2010 Crocs lawyer Jim Ottenson is quoted stating that most of the defendants in the original case have come up with a “design around” to avoid infringement.

By Galen Gentry
PC Magazine reported that two law firms have filed a class action law suit against Yelp for allegedly extorting advertising payments in exchange for removing or modifying negative reviews appearing on the site. The named Plaintiff is a veterinary hospital in Long Beach, California. The plaintiff claims it asked Yelp to remove a false and defamatory review and in response the company sales representatives repeatedly contacted the hospital and requested that it advertise with Yelp in exchange for hiding or removing the negative review.

What is interesting is that the allegations in the complaint are not new. On February 18, 2009 The East Bay Express, a free weekly publication, based in Oakland, California published an article entitled “Yelp And The Business Of Extortion 2.0”

In the article The East Bay Express stated that interviews with dozens of business owners revealed several people were promised that negative reviews would be moved or removed if the business would advertise by Yelp sales reps. Further in another six instances positive reviews disappeared after owners declined to advertise.

Web 2.0 is all about user generated content. That business model, pioneered by Google, is used more and more as the cornerstone of the marketing efforts of businesses large and small. Yelp is a popular website which posts user generated content in the form of reviews of small businesses such as restaurants, dry cleaners, nightclubs, tire stores, and the like. Yelp attempts to monetize the content by obtaining advertising contracts from businesses which have been reviewed on the site. Yelp’s business model is not unique (Avvo.com has a somewhat similar site for lawyers) but it is one of the biggest players. Negative reviews on Yelp, particularly if a business has a small number of reviews, can really impact sales.

Last year Yelp’s CEO Jeremy Stoppelman responded to the article in the East Bay Express saying that claims of manipulation of reviews result from the fact that the businesses do not know how Yelp’s proprietary review algorithm works.

Yelp is hugely popular. It seems unlikely it would engage in wholesale extortion. It doesn’t need it. User generated content is the key to Web 2.0 and Generation X likes Yelp. Perhaps individual Yelp employees in their zeal to make a sale may have promised more, much more, than they could deliver.

By Galen Gentry

Aided By Exciting Competition, Higher Than Expected TV Ratings, And A Hockey Game For The Ages NBC’s Experiment In Social Media Will Pay A Dividend

NBC did a great job on www.nbcolympics.com. There was lots of video; it downloaded easily, and it was not exclusively of and about U.S. athletes.  NBC had tweets and blogs as a page on its site, allowing good access to the personal if not always interesting blogs and tweets of those involved in the games.

NBC also did a good job using its local news affiliates.  In addition to making NBC’s content available the affiliates focused on connections to local athletes.  NBC Los Angeles had articles and video of on the numerous athletes in the games with California connections  including skater Mirai Nagasu and ubersnowboarder Shawn White.  NBC Los Angeles had the tweets of some local athletes as well.

In my February 16th post I noted that NBC was making a concerted and expensive effort to measure the use of different media platforms at the Vancouver games so that ultimately it and advertisers could make meaningful decisions on how to spend money in emerging media. NBC hopes to determine what media the public used—mobile devices, computers and how they used it.  Monetizing new media content is the Holy Grail.  The 2010 Winter Olympic games will give NBC and its advertising clients lots of data to crunch.

 There was plenty of buzz, the television ratings were higher than expected,  and the both premier and secondary events were filled with excitement. Did NBC’s push into social media work?  Probably.

By Galen Gentry

NBC believes that the Olympic Games are a giant petri dish for new media consumption and the company is making every effort to effectively measure and evaluate new media trends and use.  Monetizing new media is the mantra of the world’s biggest corporations.  All of whom have serious money to spend in advertising and are involved to greater and lesser degrees in different media platforms.  The problem is that there are no standards by which to measure the audience of the most of the outlets.

Advertisers want  numbers, but collecting and quantifying the data on emerging media use is in its infancy.  NBC has hired a host of market research companies and  will release  among other things a daily total audience measurement which will count  how many people watched the Olympics on the various media platforms.  Sample size, the means of measurement and other issues will affect how much faith advertisers put in the numbers, but professionals involved in the legal and marketing aspects of  emerging media are very interested in NBC’s “daily total audience measurement.”