The Gray Blog

In Office Depot v. Zuccarini the Ninth Circuit has affirmed a district court decision ruling that a creditor may levy against a domain name in the jurisdiction where the domain name registry is located.  This decision is significant in that it verifies that domain names are property subject to levy.  By ruling that jurisdiction arises were the registry is located, this decision also opens the door to enforcement against foreign owned domains housed in US registries.

At trial, Office Depot obtained a judgment and assigned it to DS Holdings in 2000.  DS went after 190 domain names that were registered in Zuccarini’s name. DS sought to have a receiver appointed over the domain names. The district court granted DS’s request to have the receiver appointed, and Zuccarini appealed. Zuccarini’s appeal focused on whether it was proper to appoint the receiver in the Northern District of California, since the domain names were not necessarily “located” there.

The court of appeals applied California law to the question of whether domains constituted property.  The Court ruled that domains were intangible property subject to seizure.  Then, taking guidance from elements of the Anti-Cybersquating Consumer Protection Act (ACPA), although ACPA was not implicated in the case, the Court found in rem jurisdiction where the “registrar, registry, or other domain name authority” is located.

For a more thorough review of the decision see Eric Goldman’s Blog.

Within two weeks of an alleged leak we have another bigger and better document allegedly stepping through the internet terms of the highly secretive Anti-Counterfeiting Trade Agreement (ACTA).  The new document appears to be a European Union (EU) paper outlining the Internet and Civil Enforcement chapters, and setting forth proposals from the U.S. and responses from the EU, Japan, and other negotiating countries.  Highlights include:

• US advocacy of anti-circumvention controls and opposition from the EU, Japan and New Zealand.
• Arguments for internet service provider liability for knowing facilitation of infringement.
• US advocacy of global implementation of a Digital Millennium Copyright Act (DMCA) style enforcement protocol.
• Advocacy by some countries of limiting ACTA civil enforcement provisions to trademarks and copyrights and not to all intellectual property.
• The EU is seeking injunctive powers against infringing intermediaries.

For more information check out the article on Michael Geist’s Blog.

An alleged excerpt of the secretive Anti-Counterfeiting Trade Agreement (ACTA) has been disseminated as a PDF on a Google file share site.  The PDF is allegedly the proposed language for Article 2.17 of the act providing for internet and digital transmission restrictions.  The file is titled  “Enforcement procedures in the digital environment” and is divided into 7 numbered paragraphs and subsections.

The key provisions revealed in the document include:

• a duty to technology firms to shut down infringement where they have “actual knowledge” that such is taking place;
• a trademark takedown procedures similar to the current copyright takedown procedures;
• an expansion of the DMCA’s injunction against breaking digital locks;
• civil and criminal remedies to be supplemental and cumulative to other remedies;
• a provision for forcing ISPs to implement procedures to monitor for infringements and to address violations. (a footnote suggests that terminating user accounts for repeat infringers)

If genuine, this excerpt discloses many of the concerns with the Act that Internet advocates have been condemning.  For example, the duty to shut down infringement on actual knowledge that infringements may be occurring has previously been suggested in legal arguments.  Critics have characterized the argument as equivalent to requiring a Xerox to stop selling copiers to Kinkos because it has actual knowledge that infringements take place at Kinko’s outlets.  Likewise the termination of accounts are criticized because an entire family’s account is cancelled because of acts which may have been committed by third parties or by a child.  Furthermore, denial of service would arise without legal process and without a specific guaranteed appeal process.

There has been no confirmation that the document is genuine.

In the recent case of Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, No. 07-3340 (10th Cir. April 9, 2009), the 10th Circuit ruled that differences in warranty and service terms can constitute a “material” difference which prevents resale despite under the first sale doctrine.  Beltronics is a manufacturer of electronics equipment which it sells under its Beltronics trademark.  Beltronics maintained at least two authorized distributors who agreed to sell the products for a specified minimum price.  Apparently in violation of their distribution agreements, those distributors sold Beltronics radar detectors to Midwest, which in turn resold them as “new” on the internet auction site eBay.

To prevent Beltronics from discovering that Midwest’s inventory had been supplied by the two distributors, the distributors either replaced each radar detector’s original
serial number label with a phony label or removed the original label altogether
before shipping equipment to Midwest.  On rare occasions, when the distributors
supplied Midwest with a radar detector bearing an original serial number label,
Midwest removed the label prior to resale.

In September 2007, Beltronics filed suit against Midwest alleging (1) counterfeiting and federal trademark infringement under 15 U.S.C. § 1114; (2) false designation or origin under 15 U.S.C. § 1125; and (3) trademark infringement, unfair competition, and passing off in violation of state law.  Beltronics also sought a preliminary injunction.  The preliminary injunction was granted and Midwest appealed.

On appeal the 10th Circuit rejected the argument that “material” differences should be limited to physical differences.    The absence of manufacturer warranty service was material difference enough.   While affirming that adequate disclosure could insulate the sale, the 10th Circuit affirmed the lower court’s rulling that the disclosure placed on the product listing by Midwest was insufficient.  Midwest’s disclosure stated:

WARRANTY – WE PROVIDE A 1 YEAR DEFECTIVE
REPLACEMENT WARRANTY.  THE MFG WILL NOT HONOR
THE WARRANTY IF PURCHASED OFF EBAY.  SINCE WE
HONOR THE WARRANTY, THE SERIAL NUMBER HAS BEEN
REMOVED AND RETAINED BY US.

The district court rejected this disclosure as insufficient because no notice was provided on the products themselves and the disclosure failed to address software updates and other support elements.  Evidence of actual confusion by consumers contacting Beltronics for warranty service further sealed the decision.

Justice USA has listed the Gray Blog amongst its top 50 Internet law blogs.  Other popular and well known blogs which also made the list include The TTABlog, The Legal Satyricon, Erik J. Heels, Likelihood of Confusion, Technology and Marketing Law Blog
and the ABA Journal Privacy Law Blog.  Justice USA is a new blog devoted to personal security and law issues.

After a devastating ruling from a French Court, reported previously in the Gray Blog, and a user revolt over terms of payment, E-Bay has finally received some good news.  In a sixty page decision District Court Judge Richard J. Sullivan of the  U.S. District Court for the Southern District of New York has ruled against Tiffany on all counts.  The Court vindicated anti-counterfeiting procedures presently employed by eBay and other online auction services and confirmed that the burden of policing online sellers rests squarely on the shoulders of the trademark owner.  The decision in this case is in stark contrast with recent decisions by French courts which seek to obligate the on-line services to serve as gatekeepers, content monitors and policemen for their users.

The lawsuit filed by famous jeweler, Tiffany Inc., sought damages against online auction house dBay for the sale of counterfeit silver jewelry items sold in the service from 2003 to 2006.  The suit alleged counts for direct and contributory trademark infringement, false advertising, unfair competition, and direct and contributory trademark dilution.

Tiffany acknowledged that the users of the eBay service rather than eBay listed and sold the counterfeit articles.  Tiffany argued, however, that eBay was on notice that the problem existed and that this created an obligation to investigate and control the problem.  Tiffany effectively wanted eBay to refuse to post any listing with five or more Tiffany items and to suspend any seller whom Tiffany suspected to be involved in infringing activity.  eBay defended that it was Tiffany’s burden to monitor the site and to bring violations to its attention.

The Court rejected Tiffany’s position on various grounds.  The Court concluded that the generalized allegations of trademark infringement made by Tiffany were insufficient to impute knowledge or a reason to know of trademark infringement to eBay.  Although eBay had a generalized knowledge of counterfeiting activities on its site, “it took reasonable steps to address the wrongdoing through general anti-fraud measures.”

In conclusion the Court stated that while it is not unsympathetic to Tiffany’s plight “the law is clear: it is the trademark owner’s burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites.”

Ben Jones of TorrentFreak reports that Swedish prosecutor’s office has refused to investigate allegations of wrongdoing by a Swedish police allegedly on the payroll of a content provider during the course of the criminal investigation.

Pirate Bay is a leading internet file sharing site based in Sweden which is often accused of facilitating the piracy of movies and audio files.  Many content providers such as film studio Warner Bros have sought to use the Swedish legal system to shut down Pirate Bay.  Recently during a criminal investigation Jim Keyzer, the lead investigator revealed that he was working for Warner Bros on a social networking site.

Warner Bros initially denied that the officer was on their payroll during the investigation.  The Pirate Bay filed a criminal complaint for bribery against the officer.   After the complaint was filed Warner Bros admitted that the officer was working for them.  Nonetheless the Swedish prosecutor’s office has refused to investigate and has stated that “[there is] no reason to believe that a crime has been committed by anyone employed by the police.”