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BUSTED….or NOT. Copyright and Trademark Infringement Claims against Online Auction Sellers

Online auction giant eBay has recently faced a number of copyright and trademark infringement claims both internationally and domestically. Well-known brands such as LOUIS VUITTON and CARTIER have charged that eBay is liable for secondary copyright or trademark infringement due to eBay’s users selling infringing goods on their website. However, despite the expanding number of cases and the similarity in evidence presented, these cases have yet to demonstrate a strong trend in policy towards the liability of online auction sites in their users’ infringement activities. Whether or not online auction sites are found liable appears to hinge on if the site can prove that it has taken sufficient measures to prevent and discourage infringing activities on its website. The ambiguous definition of “sufficient” leaves the central question to the judge’s discretion: Who is ultimately responsible for actively policing copyright and trademark infringement—the brand or the auction site?

Recent eBay cases in Europe and the United States demonstrate the difficulties presented in these claims.

eBay vs. Moet Hennessy Louis Vuitton (MHLV)

The case between online auction site eBay and the French luxury brand MOET HENNESSY LOUIS VUITTON has been a headliner in the French courts for the past five years. MHLV originally sued eBay over counterfeit MHLV goods being sold on the auction site, alleging that eBay was partially liable for its users’ infringement. The French judge sided with MHLV and required eBay to pay damages to the company. In January 2007, after being sued for a second time by the luxury brand, eBay upped its infringement prevention practices. From this point on, sellers in select categories, such as luxury goods and clothing, were limited to the number of items they could sell and were no longer allowed to use the one-day auction option popular with counterfeiters. The site also introduced restrictions based on the sellers’ locations, banning sellers in Hong Kong and mainland China (locations hosting the greatest number of infringers on the eBay site) from selling such items at all. In addition, some listings were delayed from being posted on the eBay site to give eBay employees time to review the items. As a result of these measures, eBay claims that 95% of infringing goods are now removed from the site before the auction ends.

In 2008, however, eBay got sued once again by the French brand, and was ordered to pay $60.8 million dollars to the French brand. Citing its increased prevention and policing measures, eBay appealed the French court decision. Yet again, the French court sided with the MHLV. Though the amount was decreased, MHLV has continued to fight, slapping eBay with several more lawsuits in the past two years, most of which end up requiring eBay to pay. It seems that on France’s end at least, eBay is considered liable for its users’ infringing actions despite the measures it takes to prevent infringement.

eBay vs. Tiffany & Co.

TIFFANY & CO. also got in on the action in a Manhattan court, charging eBay with secondary trademark infringement and alleging that 75% of the 325 advertised TIFFANY items that the company bought on eBay since 2004 as part of an infringement prevention program were counterfeit. TIFFANY claimed that eBay’s failure to stop the sale of counterfeit goods on its website made it liable for trademark dilution, false advertising, and unfair competition.

This time, however, the judge was on eBay’s side. Judge Richard Sullivan asserted that the responsibility for policing its goods fell to TIFANNY & CO., not to eBay, and that the luxury brand had failed to prove that eBay was liable for the infringement.

Unlike the French judges, the Manhattan court found that the online auction site could not be held responsible for the infringement activities of its users.

eBay Sellers Charged with Infringement

In addition to the company itself facing charges of infringement, the law has cracked down on individual sellers that sell illegal goods online. In 2004, CARTIER INTERNATIONAL and MONTBLANC-SIMPLO filed complaints about two eBay vendors—Marina’s Boutique Store and Verona Eyewear—in a California court. The two companies sought damages for trademark infringement, trademark dilution, and false advertising.

Another individual seller from Portland, Oregon was sentenced to four years in federal prison after he ran a counterfeit software operation through eBay. He pleaded guilty to copyright infringement, mail fraud, and identity threat after he used hundreds of stolen identities to conceal his own. He will also serve three years probation and community service after he is released, and forfeit the $220,000 in income he made selling the infringing software.

Whereas eBay’s liability in these cases remains unclear, the law has set a firm precedent in terms of individual infringers, doling out significant jail terms and financial penalties.

Your Name as a Trademark–What You Need to Know

March 22, 2010 by · Comments Off
Filed under: Business, law, trademark, Trademark Articles 

As a general rule, the U.S. Patent and Trademark Office will refuse trademark registration under 15 U.S.C. 1052(e)(4) for a mark that is “primarily merely a surname”.  While this is the general rule, there is still some wiggle room for getting a surname registered through the USPTO.

Just to be clear, this rule applies to all surnames, regardless of whether the surname is yours, someone you know, or is completely arbitrary.  Keep in mind, however, that 15 U.S.C. 1052(c) requires the written consent of another to use their name or likeness as a trademark.

The general refusal of surnames does not apply to all surnames, however.  Rather, the rule is that a mark will be refused under 15 U.S.C. 1052(e)(4) if the general consuming public would recognize the mark as a surname.  The Trademark Manual of Examining Procedure (TMEP) section 1211.01 sets out the five factors that will be considered in determining if a mark is a “surname”:

  1. Whether the surname is rare.
  2. Whether the surname is of anyone connected to the applicant.
  3. Whether the term has a recognized meaning other than a surname.
  4. Whether the term has the “look and feel” of a surname.
  5. Whether the mark uses stylized lettering or drawing that would indicate it is being used as a mark.

The rarity of a surname is arguably the most important factor in a “surname” evaluation by the USPTO.  In cases such as In re Joint-Stock Company “Baik”, 84 USPQ2d 1921 (TTAB 2007) the Trademark Trial and Appeal Board (TTAB) has held that a surname was so rare that 15 U.S.C. 1052(e)(4) does not apply.  The rationale behind this rule is that if a surname is rare enough the consuming public will not recognize it as a surname.  There is no firm rule, however, as to how rare the name must be to qualify.  While this test is based in numbers (the number of people with a particular name), the “look and feel” test works on similar grounds.  Essentially the USPTO is looking to see if the consuming public would recognize the mark as a surname.

A surname may also be acceptable as a mark if it also has another meaning.  A mark must be primarily a surname for registration to be refused.  For example, the name “Bird” in Fisher Radio Corp. v. Bird Electronic Corp., 162 USPQ 265 (TTAB 1969) was accepted despite “Bird” being a surname.

Even if your surname would fail under the factors described above, it still may be suitable for registration if you can show the mark has “acquired distinctiveness” under 15 U.S.C. 1052(f).  This works because surnames are considered descriptive, and descriptive marks are generally not able to be registered.  The factors in TMEP § 1211.01 (discussed above) are used to determine if the surname is descriptive.  It is for this reason that a name combined with other descriptive words cannot be registered.  For example ‘Mason’s Painting Service’ would generally be unacceptable as a mark, since all three words are considered descriptive.

Descriptive marks can still be registered if they have acquired distinctiveness – i.e. the consuming public recognizes the term as a mark, not a descriptive phrase.  In some cases, showing that you have used the mark as a name for five or more years will be sufficient to show acquired distinctiveness.  Other factors that are used to show acquired distinctiveness are listed in TMEP § 1212.06 and include:

  1. Amount of time you have used the surname as a mark.
  2. How much you have spent on advertising the mark and the extent to which it has been advertised.
  3. Survey evidence showing consumers recognize your surname as a mark.
  4. Other direct evidence that users view your surname as a mark.

So while it is possible to use your surname as a mark you must do one of the following to achieve registration:

  1. Prove that your surname is not descriptive based on the factors in TMEP § 1211.01.
  2. Prove that your surname has acquired distinctiveness based on the factors in TMEP § 1212.06.

The important thing to keep in mind from this article is that while it is possible to register your surname as a mark with the USPTO, it is a more complicated process and care should be taken to ensure you have a good chance of registering your surname before shelling out the money for the application.

Once your mark has gained federal registration through the USPTO you have a right to exclude others from using your mark throughout the entire United States.  Please go here to learn more about registering a trademark.

Copyright Infringement 101

March 17, 2010 by · Comments Off
Filed under: Business, Copyright Articles, law 

Knowing what exactly constitutes copyright infringement is not always easy. Vendors selling fake CHANEL bags on the street are fairly obvious infringers, but the woman in the neighborhood that makes copies of her favorite MARTHA STEWART cookbook recipes and distributes them to her neighbors is not so obvious. The second case is technically copyright infringement, but would a court really punish a woman for wanting to share a few recipes? The answer is most likely not, but there are other forms of indirect infringement that come with legal penalties, and the differences between getting a penalty and escaping prosecution are not always very clear-cut.

Here is a short guide to the three forms of copyright infringement and some cases that illustrate their characteristics and potential penalties:

Direct Liability

Direct Liability is what most people imagine when they think about copyright infringement. It is defined as any unauthorized use of a copyrighted work in violation of the copyright owner’s rights. In order for a copyright owner to prove direct liability copyright infringement, he or she must first prove ownership of a currently valid copyright and then prove that the infringer had knowledge of the copyright and still copied constituent original elements of the copyrighted work. The civil suit claiming infringement must be started within three years of the infringing actions occurring.

What constitutes copying constituent original elements of a copyrighted work? The most common examples are ones such as the CHANEL purse knock-offs mentioned above. Any vendor or individual that manufactures a product that is substantially similar to a copyrighted product and intentionally made to look like a copyrighted product is subject to direct liability infringement penalties. An alternate example was found in the case Mannion v. Coors Brewing Co. (377 F. Supp. 2d 444, S.D.N.Y. 2005). The case examined the copyrightability of photographs and determined that photographs possess three forms of originality that may be subject to copyright protection—their rendition, their timing, and the creation of their subject matter. If these three elements in the offending photograph are substantially similar to the copyrighted photograph then direct liability copyright infringement will have occurred. In this case, the photograph in question was found to be original, but it set a precedent for copyright protection of the visual arts.

Secondary Liability

When direct copyright infringement has occurred, any individuals or organizations that have assisted in the infringement may be found liable for secondary infringement. There are two types of secondary liability—contributory and vicarious—and a person may be found guilty of one, or both.

Contributory Infringement

You may be found liable for contributory infringement if you had knowledge of the direct infringement of the copyrighted material and yet knowingly encouraged or assisted in the infringement. The most well-known case involving contributory infringement is A&M Records v. Napster, Inc. (239 F.3d 1004, 9th Cir. 2001). In this case, the Ninth Circuit Court of Appeals considered the issue of peer-to-peer file-sharing and used contributory infringement to hold Napster liable for the millions of illegal downloads made by Napster users. While users were liable for direct infringement, Napster itself was held liable for both contributory and vicarious infringement both because of their knowledge that the songs were copyrighted material and because the software contained a central indexing system that Napster controlled.

Vicarious Infringement

Though Napster was held liable for both contributory and vicarious infringement, individuals may also be only held liable for vicarious infringement. Vicarious infringement is often unintentional; however, you may be held liable for this type of copyright infringement if you had the right and ability to control the infringement and derived a financial benefit from the infringement.

For example, in a scenario that is being played out in several copyright infringement suits against the online auction website eBay, eBay could or could not be held liable for the selling of infringing goods on its website. Though eBay does not specifically regulate the materials sold on its website unless tipped off by the owners of the copyrighted material about the infringement, it could still be held liable for vicarious infringement if it is determined that eBay did not take sufficient measures to control the selling of “fake” goods on its website. Because eBay earns a commission on the goods sold through the online auction site, it is possible that the company could indeed be held liable though it may not have had direct knowledge of the copyright infringement. The overall verdict in eBay’s case is still up in the air, as some courts have found eBay guilty of secondary infringement while others have asserted that the site takes reasonable measures to prevent the selling of infringing goods and thus is not liable.

Do you know anyone accused of copyright infringment for selling online?  If so, please ask them to answer the below survey.  Your voice matters.

The Snitch in Your Pocket: Is it Legal for the Government to Track Personal Cell Phones without a Warrant?

March 4, 2010 by · Comments Off
Filed under: Business, law, Online Privacy 

By Emily S., William & Mary Class of 2011

While the country was in an uproar about government wiretapping during the Bush administration, another type of government access to personal information was being largely overlooked.  On February 19, 2010 NEWSWEEK ran a story revealing that federal prosecutors have been seeking telecommunications companies’ internal data showing the locations of customer cell phones. Prosecutors claim to need these records in order to track down drug traffickers, human smugglers, and corrupt officials, but some federal magistrates (who sign off on these requests) have questioned the need for such invasive techniques. Alarmed by these methods, federal magistrates in Texas, New York, and Pennsylvania have spurred a constitutional clash between Obama’s Justice Department and civil libertarians who disapprove of government intrusion into personal affairs.

Civil libertarians have long decried government access to bank records and credit card transactions, but using cell-phones as surreptitious tracking devices has caused particular concern. Keeping location data on cell phones was originally meant as a means of aiding 911 operators sending police and medical help to the scene of an accident or crime, but it has evolved into an unsuspected locating device that government agents are able to access without a judicial warrant. It is unclear how often these records are accessed by federal agencies, but NEWSWEEK’s sources claim it has grown exponentially in the past few years and that companies are now getting thousands of such requests a month.

Access to this information is certainly a powerful tool for law enforcement agents going after elusive criminals, however abuse has also occurred.  Worried about this potential for abuse, several federal magistrates began refusing government agents’ requests for this information.  The requests often come in with little legal reasoning behind them, but when some magistrates refused them they were simply sent to other more amenable magistrates.  Recently, however, the legal community has begun to take notice. Faced with a request to grant access to historical cell phone records for a drug-smuggling case, a magistrate in Western Pennsylvania wrote a 56 page opinion turning the request down, detailing all of the ways that the information could be misused. To prevent the government agency from going to another magistrate, all of the magistrates in Western Pennsylvania lent their signatures to her opinion. (source: NEWSWEEK)

In February of this year, the issue was sent to a federal courtroom in Philadelphia. The lawyer seeking to overturn the Pennsylvania magistrate’s ruling was closely questioned by one judge, who wished to make certain that these records could never be used by the federal government to identify political protestors. After trying in vain to deflect the question, the lawyer finally acknowledged that the constitution did not guard against such a use. This disconcerting answer shocked many privacy advocates and ensures that this issue will be closely watched by the legal community.