JOLT Digest

Fourth Circuit Holds Google’s Keyword Advertising May Infringe Trademark
By Michael Hoven – Edited by Abby Lauer

Rosetta Stone Ltd. v. Google, Inc., No. 10-2007 (4th Cir. Apr. 9, 2012)
Slip opinion

The Fourth Circuit affirmed in part, vacated in part, and remanded to the Eastern District of Virginia, which had granted Google summary judgment in holding that Google was not liable on all trademark infringement and trademark dilution claims brought by plaintiff Rosetta Stone in 2009.

The Fourth Circuit held that a reasonable trier of fact could find Google liable for direct infringement, contributory infringement, or dilution of trademark by allowing advertisers to bid on the trademarks of third parties. The court flatly rejected Google’s functionality defense, while affirming summary judgment for Google on vicarious infringement and affirming the dismissal of Rosetta Stone’s unjust enrichment claim. The court restored the direct infringement claim because there was a question of fact about consumer confusion. On the contributory infringement claim, the court concluded that there was a question of fact as to whether Google continued to sell keywords to advertisers it knew were engaging in trademark infringement. In so holding, the court stated that the district court had applied the wrong standard of review for summary judgment but said little about the lawfulness of keyword advertising.

MSNBC.com provides an overview of the case. On the Technology & Marketing Law Blog, Eric Goldman criticized the decision for ignoring the policy interests at stake and delaying an “inevitable” consensus that keyword advertising does not violate trademark law. (more…)

District court holds that an advertisement-like salute to Michael Jordan is constitutionally protected free speech
By Abby Lauer – Edited by Laura Fishwick

Jordan v. Jewel Food Stores, Inc., 2012 WL 512584 (N.D. Ill., Feb. 15, 2012)
Slip Opinion (hosted by Justia.com)

The Northern District of Illinois has ruled that a national grocery store chain’s reference to basketball superstar Michael Jordan in a page published in a commemorative issue of Sports Illustrated is constitutionally protected free speech. The court has accordingly granted defendant Jewel Food Store’s motion for summary judgment as far as the First Amendment issue is concerned.

The district court held that Jewel’s page constituted noncommercial speech because it did not propose a commercial transaction. Instead, the page merely congratulated Jordan on his accomplishments, and Jewel’s logo and slogan were used “to ensure that the congratulatory message sounded like it was coming from Jewel and not from any other person or entity.” Jordan v. Jewel Food Stores, Inc., 2012 WL 512584, at *4. In addition to the general noncommercial speech inquiry, the Northern District of Illinois also applied the Supreme Court’s subsidiary three-factor test to determine whether speech is commercial, and the court found that the test favored finding Jewel’s page to be noncommercial speech.

ESPN Chicago provides an overview of the case. Rebecca Tushnet’s 43(B)log offers a detailed description of the district court’s holding and analysis.  (more…)

Federal Circuit Reverses Dismissal of Ultramercial Patent Infringement Claim
By Amy Rossignol – Edited by Michael Hoven

Ultramercial , LLC v. Hulu, LLC, No. 2010-1544 (Fed. Cir. Sept. 15, 2011)
Slip Opinion

The United States Court of Appeals for the Federal Circuit reversed and remanded the U.S. District Court for the Central District of California’s dismissal of Ultramercial’s patent infringement claim against Hulu, LLC and Wildtangent, Inc.. The District Court had found that U.S. Patent No. 7,346,545 did not claim patent-eligible subject matter.

The Federal Circuit held that the ‘545 patent claims a “process” that is patent-eligible under 35 U.S.C. § 101. The ‘545 patent consists of a method of distributing copyrighted material, such as movies, television shows, music, or books, through a website to consumers who view or interact with advertisements in exchange for free access. The revenue generated from the advertisers would then pay for the copyrighted material. The court did not consider this process abstract, finding that it went beyond mere “mental steps.” Following the Supreme Court’s decision in Bilski v. Kappos, 130 S.Ct. 3218 (2010), the court rejected the machine-or-transformation test, noting its waning application to the “inventions of the Information Age.”

Patently-O provides an overview of the case. JOLT Digest previously reported on the District Court’s 2010 decision. JOLT Digest also reported on the Bilski decision.  (more…)

District Court Says CAN-SPAM Act Does Not Violate First Amendment
By Samantha Kuhn – Edited by Chinh Vo

U.S. v. Smallwood, 09-CR-00249 (N.D. Tex. July 15, 2011)
Slip Opinion hosted by Scribd.co

The District Court for the Northern District of Texas rejected a First Amendment challenge to the CAN-SPAM criminal statute, which prohibits the computer transmission of “multiple commercial electronic mail messages, with the intent to deceive or mislead recipients . . . . as to the origin of such messages.”

The court first rejected defendant Alicia Smallwood’s motions challenging her indictment for, among other things, electronic mail fraud in violation of 18 U.S.C. §§ 1037(a)(2) and (b)(2)(c) (“CAN-SPAM Act”). The court determined that Smallwood was engaging in “clearly proscribed conduct” and was therefore not entitled to challenge the statute for vagueness. As a result of this finding, the main issue in the case became whether the statute was overly broad in its regulation of protected speech and thus a violation of the First Amendment. The arguments presented by Smallwood for over-breadth centered around the statute’s limitations on commercial speech, and the court rejected them.

Eric Goldman provides commentary on the outcome and implications of the opinion. For a background on the CAN-SPAM Act’s requirements, see Cybertelecom.

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Ninth Circuit Vacates Injunction in Keyword Advertising Case
By Kaethin Prizer – Edited by Kassity Liu

Network Automation, Inc. v. Advanced Systems Concepts, Inc., No. 10-55840 (9th Cir. Mar. 8, 2011)
Slip Opinion

The Ninth Circuit vacated the preliminary injunction granted by the district court to Advance Systems Concepts (“Systems”) in a trademark infringement case involving the use of keyword advertising.

The court found that the lower court erred in its analysis of whether Network Automation’s keyword advertising, which targeted the name of its competitor Systems’ software, created a likelihood of consumer confusion. The district court had prioritized the “Internet troika” factors that were emphasized by this court in Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1054 (9th Cir. 1999). The circuit court disagreed with this approach, holding that the “troika” factors should not be the controlling factors for all cases of trademark infringement that involve the internet, and added that the “troika” factors may only be appropriate for domain name disputes. In so holding, the court emphasized that “[w]e must be acutely aware of excessive rigidity in applying the law in the Internet context; emerging technologies require a flexible approach.”

IP Law Chat gives an overview of the case. Public Citizen and Eric Goldman provide thorough analyses of the decision. (more…)