In Advertise.com, Inc. v. AOL Advertising, Inc., 2010 WL 3001980 (9th Cir. 2010), the Court of Appeals for the Ninth Circuit partially reversed a trial court decision granting AOL an injunction against Advertise.com.  In August 2009, AOL – which owns the mark ADVERTISING.COM – filed a complaint and motion for a preliminary injunction against Advertise.com alleging that Advertise.com had infringed AOL's trademark rights.  Advertise.com appealed the trial court's decision to grant the preliminary injunction, but it did not contest that part of the preliminary injunction that enjoined it from using any design mark that was confusingly similar to AOL's stylized marks.

On appeal, the Ninth Circuit concluded the ADVERTISING.COM mark was generic .  Generic  terms are those that refer to the genus of which the particular product or service is a species, i.e., the name of the product or service itself.  To determine whether a term is generic, a court determines whether consumers understand the word to refer only to a particular producer's goods or whether the consumer understands the word to refer to the goods themselves. On the other hand, a mark that is descriptive describes the qualities or characteristics of a product. Generic terms cannot be valid marks subject to trademark protection, whereas a descriptive mark can be valid and protectable if it has acquired secondary meaning.

The Ninth Circuit first examined the component parts of ADVERTISING.COM and determined ADVERTISING and .COM were both generic terms.  Merging the terms together yielded a generic term as well.  The court indicated that AOL accurately could describe itself as an “advertising.com” or “advertising dot-com.”  AOL’s references to cases in which a seemingly generic URL mark was ruled non-generic did not persuade the court.

Additionally, the multitude of other domain names incorporating the word “advertising” (Advertise.com cited 32 such examples) convinced the court that AOL’s mark is generic.  The court addressed AOL’s remaining arguments as inapplicable or unpersuasive and reversed the district court’s grant of an injunction against Advertise.com to the extent it enjoined Advertise.com from using the designation and trade name ADVERTISE.COM or any other designation or trade name that is confusingly similar to AOL's ADVERTISING.COM marks.

If you require assistance navigating a trademark dispute or registering your trademark, you should consult counsel experienced in handling trademark matters.

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On August 12, 2010, Oracle sued Google in U.S. District Court in San Francisco based on claims that Google’s Android operating system constitutes an infringement of Oracle’s patents and copyrights related to the Java software development platform. Oracle owns the intellectual property rights in Java following its acquisition of Sun Microsystems earlier in 2010, and in its lawsuit, it alleges that a Google-developed technology called Dalvik, which is integrated in the Android O/S, is a competitor to Java that infringes the various patents and the copyright in Java.

In light of the massive resources Oracle and Google each are able to bring to bear in this fight, the outcome of the lawsuit is anything but certain. Google has countered that versions of Java have been licensed under open-source licenses for years and that Dalvik was developed under that kind of license. In addition, Sun Microsystems’ approach to Java patent matters historically was very permissive, which may call into question Oracle’s ability now to base a patent suit on rights that arguably may have been diminished through past inaction.

However, one thing that is certain is that Oracle’s lawsuit will cause – and should cause – many software developers to think long and hard about the advisability of any long-term plans that depend on the open availability of Java as software development platform. As this case unfolds, developers should be prepared to carefully consider whether it represents a sea-change in Java-related IP enforcement, in which case it may make sense to start identifying appropriate alternatives to Java, or whether it is merely a case of one big fish going after another big fish in an effort to reach a joint-licensing or other context-specific outcome.

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An Austin-area software publisher recently obtained a significant court order against Discovery Communications, Inc. related to the popular Cake Boss television show on TLC. The plaintiff, Masters Software, Inc., which consists of husband-and-wife team Kelley and Jon Masters, publishes a computer program called CakeBoss that provides office management functions for professional cake bakers. The Masterses learned about the Cake Boss program, which, for the uninitiated, is a reality-TV program centered around the New York-based cake-baking business of Bartolo “Buddy” Valastro, prior to its debut and contacted both Discovery and Mr. Valastro in an effort to keep the show from airing under the Cake Boss name. The show aired despite the Masterses’ complaints, and it since has become one of the networks more popular shows.

After the show aired, the Masterses began receiving numerous inquiries and requests from people who mistakenly believed that they were associated with the show or with Mr. Valastro’s business, some of which overwhelmed the server hosting their web site. In addition, the Masterses entered into a licensing agreement in 2009 with a supplier to sell CakeBoss-branded cake decorating products, but the licensee stopped selling the kits after Mr. Valastro threatened it with legal action. The Masterses subsequently filed suit against Discovery in March 2010, seeking an injunction against its use of the term “Cake Boss.”

In granting a temporary injunction against Discovery, pending a trial, the U.S. District Court for the Western District of Washington noted the actual confusion that had resulted as a result of Discovery’s heavy marketing of “Cake Boss” and held that there is “a substantial danger that Discovery's ability to saturate the marketplace will lead consumers to assume that CakeBoss is somehow associated with Cake Boss.” The Court also held that, though the products at issue – a software program and a television show – are not directly competitive, it is nevertheless “not a substantial leap for a consumer encountering CakeBoss software in the market place to imagine that Cake Boss might have an interest in selling or sponsoring cake bakery management software.” As a result, the Court issued an order prohibiting Discovery and its affiliates from using the name “Cake Boss,” either to identify the television program currently entitled Cake Boss, or in connection with the sales of merchandise related to the show, though the Court also delayed implementation of the order for Discovery to finish airing the first run of the show’s third season.

Brand selection is a crucially important step when launching a new product line or a new business. Companies owe it to themselves to run thorough trademark screening searches to determine whether there is a likelihood that an initially favored brand may end up being the subject of a trademark dispute in the future, and they certainly should think long and hard before moving forward with a mark that they know, or should know, already is being used by another business in the same or a similar market. Knowledgeable IP counsel can provide valuable assistance with that analysis.

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The American Society of Composers, Authors, and Publishers (ASCAP) recently filed copyright infringement actions against 21 bars, nightclubs, and restaurants nationwide.  ASCAP claims in its press release that the establishments “either publicly performed the copyrighted musical works of ASCAP’s songwriter, composer and music publisher members without obtaining a license from ASCAP to do so, or had signed a license agreement with ASCAP but failed to comply with the license's payment terms.”  ASCAP claims that it gives each establishment an opportunity to license music and pay the appropriate fees and that it resorts to legal action only when amicable attempts at resolution to a licensing dispute have failed.

Establishments that engage in copyright infringement are subject to significant liability if found guilty.  ASCAP has the option of electing statutory damages of up to $30,000 per song infringed or up to $150,000 per song infringed if the conduct was considered willful.  The exact amount of damages awarded is within the court’s discretion.  Willful conduct often is defined as actual knowledge of infringement or reckless disregard that conduct constituted infringement.  Willful conduct also does not need to be proven directly and may be inferred from the defendant's conduct.  Some courts have presumed an establishment acted willfully if it fails to respond to a complaint or court order or if it fails to appear in court.

Alternatively, ASCAP may elect actual damages, normally calculated with respect to its lost profits.  The defendant also may be assessed ASCAP’s attorney’s fees in addition to paying its own fees.

Music copyright infringement disputes with ASCAP, BMI, and other music copyright owners and royalty clearinghouses can become very expensive for bars, nightclubs, restaurants, and other establishments.  If you are negotiating a license agreement with ASCAP, BMI, or a similar entity, or if you already are in a licensing dispute with the entity, you should contact counsel experienced with copyright law and license agreements.

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A new type of copyright lawyer has arrived on the intellectual property scene—not terribly good news for bloggers or online media outfits. Righthaven LLC CEO Steve Gibson is on the attack, beginning a campaign this past March against bloggers and website operators who post articles from the Las Vegas Review-Journal, his first client. Righthaven has acquired copyrights to the LVRJ content and is filing suit against these operators for copyright infringement. According to a Wired.com article, Righthaven plans to continue targeting bloggers who repost entire articles without permission by filing hundreds of lawsuits by the end of the year.

While there is clearly nothing improper about protecting intellectual property, some commentators are accusing Righthaven of “trolling,” a tactic known in patent law circles where a patent owner enforces its patents against an infringer, often in an aggressive manner, without any intention to actually market or develop the patented technology. In the case of Righthaven and LVRJ, lawsuits have been filed against bloggers with miniscule web traffic numbers, where the actual damages caused by the infringement are correspondingly minor. However, Righthaven uses the threat of statutory damages—which can range up to $150,000 per infringement—to scare the media outfit into settlement. For a blogger who receives notice of a lawsuit, often without first receiving a request to remove the infringing material, the prospect of a lengthy federal court battle is far too expensive. Righthaven apparently counts on such analysis to encourage quick, monetary settlement of these cases.

The “copyright trolling” trend being pioneered by Righthaven likely will expand before any material reform to copyright law occurs. Regardless of whether this type of use (or misuse) of copyright law is appropriate, Internet media companies and bloggers must ensure that any use of third-party content is either properly licensed or falls within the safe harbors provided by the copyright law prior to publication.

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On July 13, 2010, online auction giant eBay, Inc. was sued for $3.8 billion in the United States District Court for the District of Delaware by XPRT Ventures, LLC, on claims that eBay incorporated XPRT’s patented business method processes in eBay’s payment processing technology and that eBay breached a confidentiality agreement that allegedly covered the processes in question.

The viability of XPRT’s claims will depend on a number of factors that likely will be points of contention during the litigation. Those factors include the patentability of the processes in question (especially in light of the Supreme Court’s recent Bilski opinion regarding business method patentability), the degree to which the processes incorporated into eBay’s payment methods really are encompassed, if at all, within XPRT’s patent claims, and the enforceability of the confidentiality agreement referenced in (though not attached to) XPRT’s complaint, among others.

Patent infringement claims – especially those involving patented business methods and processes – are fairly common, and especially so when a defendant, such as eBay, has deep pockets and a similarly deep dependence on technological innovation in order to remain competitive. XPRT’s claims are somewhat more incendiary than those involved in many such suits, in that they include allegations of intentional wrongdoing by eBay’s officers and attorneys. However, the case generally appears to fit within a fairly common paradigm of a relatively unknown patent holder making claims for significant monetary damages based on patented technology allegedly incorporated in some aspect of the defendant’s products or services. Microsoft’s litigation with i4i, Inc. regarding XML-related technology in its Word software is another noteworthy, recent example.

The XPRT lawsuit also has the potential to be more of a news item than the average patent-infringement suit, because it alleges that the wrongdoing in question occurred during a period of time in which California gubernatorial candidate Meg Whitman was the CEO of eBay. Recent history shows that California politics – especially those involving contests for the Governor’s Office – almost always entail explosive political drama, so it would not be surprising if the lawsuit is used as a political weapon against Ms. Whitman in the run-up to the election. However, Ms. Whitman is not named separately as a defendant in the lawsuit, and there are no allegations in the complaint that she was directly responsible for any of the allegedly wrongful conduct.

Technology-dependent firms of all types must be prepared to recognize patent exposure as a cost of doing business, and they must be ready to work closely with knowledgeable counsel to evaluate the integrity of any patents they hold as well as the validity of any patent claims with which they are presented.

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On June 30, 2010, a New York businessman named Paul Ceglia filed a lawsuit against Facebook, Inc. and its founder, Mark Zuckerberg, that has the potential to become a significant distraction for the social networking giant. In the state-court complaint, Ceglia claims he signed into a contract in April 2003 with Zuckerberg, in which Zuckerberg agreed to grant Ceglia a 50% stake in the business to be derived from the expansion of “the project [Zuckerberg] has already initiated that is designed to offer the students of Harvard university [sic] access to a website similar to a live functioning yearbook with the working title of ‘The Face Book.’” Based on that and other language in the contract, and on the completion date for an earlier Zuckerberg-authored site at thefacebook.com, Ceglia claims that he now is entitled to an 84% interest in Facebook.

It is unclear whether the social networking technology Zuckerberg was developing in April 2003 is the same or even related to the technology that was the predecessor to Facebook as we now know it. In addition, Ceglia’s long delay in asserting his claim raises potential statute-of-limitations issues that may result in the claim being tossed out of court. Regardless, though, Ceglia was successful in New York State court in obtaining an order temporarily keeping Facebook and Zuckerberg from transferring or selling of their assets, stocks or bonds, pending a hearing. Facebook then removed the matter to a U.S. District Court in the Western District of New York, where the case currently remains, in an effort to have the state court order dissolved.

Regardless of the hurdles Ceglia may need to overcome in order to prevail on his claim, this case serves as a powerful reminder to developers of protectable, original content that they should carefully consider all of the effects of any agreements related to future ownership of business ventures.  Sloppy drafting may cause unintended consequences and could result in expensive litigation to resolve questions of ownership related to the business venture. In light of the risks highlighted by the Ceglia lawsuit, developers considering that type of agreement should consult with knowledgeable counsel before proceeding.

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