NEAL & MCDEVITT BLOG
Bogus trademark infringement threats violated the First Amendment
In 2011, two women established a public Facebook group where parents and community members could discuss matters related to the Los Lunas, New Mexico school district. This online forum served as a space for open dialogue about local education issues for seven years before drawing administrative attention.
In 2018, the district’s superintendent discovered the group and became concerned about its content. Her specific worries included posts containing incorrect snow day information and criticism directed at one of the district’s middle school principals.
The superintendent then developed a legal strategy to address the concerning online group. She filed an application with the United States Patent and Trademark Office to register the mark LOS LUNAS SCHOOLS. The USPTO granted the registration on July 9, 2019 (Reg. No. 5798193).
Equipped with purported trademark rights, the school district’s legal counsel sent cease and desist letters to the operators of the “Los Lunas School District Parent Discussion Page.” These letters threatened trademark infringement litigation if the group continued to operate under its existing name.
The Facebook group administrators sued in federal court. Their claim asserted that these trademark infringement threats constituted retaliation for speech protected by the First Amendment. When the superintendent moved for summary judgment, the district court rejected her motion, finding that the district’s actions violated the plaintiffs’ “clearly established” constitutional rights.
On appeal, the Tenth Circuit Court affirmed the lower court’s denial of summary judgment. The appellate court’s reasoning drew from principles articulated in Beedle v. Wilson, 422 F.3d 1059 (10th Cir. 2005), saying that government officials violate the First Amendment when they threaten frivolous litigation to silence protected speech.
In Beedle, the court had determined that government entities cannot bring libel actions against private citizens who criticize them -such claims are legally frivolous by definition. Similarly, in this case, the court found the trademark infringement threats to be legally baseless because the Facebook group had used the district’s name solely for commentary about the district itself, without connection to any goods or services that would trigger Lanham Act protections.
The evidence demonstrated that the district was substantially motivated to threaten litigation specifically in response to protected speech. So the case can be viewed as a warning – at least for government officials – to not misuse intellectual property law seeking to achieve an objective for which the law was not intended.
Did Facebook ads targeted at people under 50 unlawfully discriminate on the basis of age?
Several property management companies in the Washington, D.C. area advertised rental properties on Facebook, but only to users aged 50 and younger. Plaintiff, a 55-year-old woman, never saw these ads while searching for housing. She sued, claiming the companies discriminated against her based on age.
Plaintiff argued that by excluding users over 50 from seeing the ads, the companies deprived her of housing opportunities and information. She asked the court for a declaratory judgment, a permanent injunction, and damages. The district court dismissed the case, ruling that she lacked standing because she had not suffered a concrete injury. She sought review with the Fourth Circuit.
The appellate court upheld the dismissal. The court explained that to have standing, a plaintiff must show an injury that is real, personal, and specific. Plaintiff’s claim failed because she did not allege that she had directly been denied housing or misled by the defendants. She also did not prove that, even without age targeting, she would have seen the ads. Facebook’s algorithm determined ad distribution based on multiple factors, not just age. The court also rejected her argument that she suffered stigma from the companies’ ad practices, finding that she had not been personally affected in a way that would give her standing to sue.
Three reasons why this case matters:
- Simply being part of a group that may have been treated unfairly is not enough; a plaintiff must show personal harm.
- Businesses using demographic filters in online ads may be shielded from lawsuits unless a plaintiff can prove direct harm.
- The ruling highlights that courts do not recognize speculative or abstract injuries as grounds for a lawsuit.
Opiotennione v. Bozzuto Mgmt. Co., 2025 WL 678636 (4th Cir. Mar. 4, 2025)
Supreme Court decision on trademark damages protects corporate affiliates from infringement claims
A long-running trademark case between two real estate companies over the mark DEWBERRY reached the U.S. Supreme Court, which ruled that the lower court improperly awarded profits from non-party companies. The decision clarified that only a named defendant’s profits – not those of its affiliates – can be recovered in a trademark infringement case.
The lawsuit and the lower court’s decision
Plaintiff Dewberry Engineers sued defendant Dewberry Group for trademark infringement under the Lanham Act, as well as for breach of contract. Plaintiff owns the mark DEWBERRY and had previously reached a settlement with defendant that limited how defendant could use the mark. However, defendant allegedly breached the agreement leading to a new dispute and the present litigation.
The district court ruled in plaintiff’s favor, finding that defendant intentionally and willfully infringed the trademark. Because defendant had operated at a loss, there was not much against which to collect a judgment. So, in calculating damages (of approximately $43 Million), the district court included profits from 30 companies affiliated with defendant – which were separately incorporated but owned by the same person.
The Court of Appeals upheld the award
Defendant sought review with the Fourth Circuit. On appeal, the Fourth Circuit upheld the damages award. The appellate court reasoned that because the affiliates’ profits were the “economic reality” of defendant’s operations, it was appropriate to treat all of the companies as a single entity when calculating the award. A dissenting judge disagreed, arguing that courts cannot simply add the revenues of non-parties when awarding a plaintiff the defendant’s profits.
The Supreme Court reverses
The Supreme Court vacated the lower court’s decision, ruling that the Lanham Act only allows a plaintiff to recover the named defendant’s profits – not those of its affiliates. Justice Kagan, writing for the Court, explained that the law does not override traditional corporate law principles, which treat affiliated companies as separate legal entities. The Court emphasized that the Lanham Act explicitly allows for recovery of the defendant’s profits, not anyone else’s. And corporate law does not automatically merge affiliated companies into one legal entity.
The high Court noted that the lower courts failed to follow the correct legal process for disregarding corporate separateness. For example, it did not conduct an analysis to see whether it would be appropriate to “pierce the corporate veil” of affiliates.
What happens next?
The case now returns to the lower courts, where plaintiff may seek a new damages award, but only based on defendant’s own profits. The Supreme Court left open the possibility of alternative legal arguments, including whether plaintiff could have made a stronger case for veil-piercing.
Three reasons why this case matters:
- Clarifies trademark damages – The ruling reinforces that a plaintiff can only recover the named defendant’s profits, not those of other related companies.
- Protects corporate separateness – The decision upholds fundamental corporate law principles, preventing courts from automatically lumping together affiliated businesses.
- Limits expansive remedies – Companies facing trademark lawsuits now have a stronger defense against attempts to recover profits from separate but related entities
Dewberry Group, Inc. v. Dewberry Engineers Inc., 604 U.S. ____ (February 26, 2025).
People tagging the wrong place on Instagram did not help prove trademark infringement
The City and County of San Francisco sued the Port of Oakland and the City of Oakland alleging trademark infringement and unfair competition. The dispute began when Oakland renamed its airport “San Francisco Bay Oakland International Airport,” which San Francisco claimed created confusion and harmed the brand of its own airport, San Francisco International Airport (SFO). San Francisco asked the court for a preliminary injunction to stop Oakland from using the new name while the case proceeded.
The court granted the motion in part, finding that the new name improperly implied an affiliation between the airports. However, it rejected claims that Oakland’s actions caused confusion during online ticket searches or at the point of sale. Social media evidence featured prominently in the case but ultimately did not sway the court’s decision.
San Francisco argued that social media posts demonstrated actual consumer confusion. For example, some users on platforms such as Instagram tagged images of SFO with Oakland’s new name, while others expressed uncertainty about which airport they were referencing. Despite these examples, the court found the evidence weak and unconvincing. It noted that most of the posts lacked context, such as whether the users were actual travelers or how their confusion affected any purchasing decisions. Additionally, the court questioned the sincerity of some posts, particularly where users repeated the same confusion across multiple platforms or appeared to joke about the issue.
While the court acknowledged that social media evidence could have value, it stressed the need for reliability. Without clear patterns or evidence of widespread confusion, the posts provided little support for San Francisco’s broader claims.
Three reasons why this case matters:
- The Limits of Social Media Evidence: This case demonstrates that courts demand robust, contextualized proof when social media posts are used to argue consumer confusion.
- Trademark Law in the Digital Age: The case highlights the challenges of protecting trademarks in a world where branding and consumer perception are shaped online.
- Impacts on Regional Branding: The ruling underscores the importance of clear naming practices for public infrastructure, especially in areas with competing interests.
City and County of San Francisco v. City of Oakland, 2024 WL 5563429 (N.D. Cal., November 12, 2024)
Key Takeaways From the USPTO’s Guidance on AI Use
On April 10, 2024, the United States Patent and Trademark Office (“USPTO”) issued guidance to attorneys about using AI in matters before the USPTO. While there are no new rules implemented to address the use of AI, the guidance seeks to remind practitioners of the existing rules, inform of risks, and provide suggestions for mitigating those risks. The notice acknowledges that it is an effort to address AI considerations at the intersection of innovation, creativity and intellectual property, consistent with the President’s recent executive order that calls upon the federal government to enact and enforce protections against AI-related harms.
The guidance tends to address patent prosecution and examination more than trademark practice and prosecution, but there are still critically important ideas relevant to the practice of trademark law.
The USPTO takes a generally positive approach toward the use of AI, recognizing that tools using large language models can lower the barriers and costs for practicing before the USPTO and help practitioners serve clients better and more efficiently. But it recognizes potential downsides from misuse – some of which is not exclusive to intellectual property practice, e.g., using AI generated non-existent case citations in briefs filed before the USPTO and inadvertently disclosing confidential information via a prompt.
Key Reminders in the Guidance
The USPTO’s guidance reminds practitioners of some specific ways that they must adhere to USPTO rules and policies when using AI assistance in submissions – particularly because of the need for full, fair, and accurate disclosure and the protection of clients’ interests.
Candor and Good Faith: Practitioners involved in USPTO proceedings (including prosecution and matters such as oppositions and cancellation proceedings before the Trademark Trial and Appeal Board (TTAB)) are reminded of the duties of candor and good faith. This entails the disclosure of all material information known to be relevant to a matter. Though the guidance is patent-heavy in its examples (e.g., discussing communications with patent examiners), it is not limited to patent prosecution but applies to trademark prosecution as well. The guidance details the broader duty of candor and good faith, which prohibits fraudulent conduct and emphasizes the integrity of USPTO proceedings and the reliability of registration certificates issued.
Signature Requirements: The guidance outlines the signature requirement for correspondence with the USPTO, ensuring that documents drafted with AI assistance are reviewed and believed to be true by the signer.
Confidentiality: The confidentiality of client information is of key importance, with practitioners being required to prevent unauthorized disclosure, which could be exacerbated by the use of AI in drafting applications or conducting clearance searches.
International Practice: Foreign filing and compliance with export regulations are also highlighted, especially in the context of using AI for drafting applications or doing clearance searches. Again, while the posture in the guidance tends to be patent heavy, the guidance is relevant to trademark practitioners working with foreign associates and otherwise seeking protection of marks in other countries. Practitioners are reminded of their responsibilities to prevent improper data export.
USPTO Electronic Systems: The guidance further addresses the use of USPTO electronic systems, emphasizing that access is governed by terms and conditions to prevent unauthorized actions.
Staying Up-to-date: The guidance reiterates the duties owed to clients, including competent and diligent representation, stressing the need for practitioners to stay informed about the technologies they use in representing clients, including AI tools.
More Practical Guidance for Use of Tools
The guidance next moves to a discussion of particular use of AI tools in light of the nature of the practice and the rules of which readers have been reminded. Key takeaways in this second half of the guidance include the following:
Text creation:
Word processing tools have evolved to incorporate generative AI capabilities, enabling the automation of complex tasks such as responding to office actions. While the use of such AI-enhanced tools in preparing documents for submission to the USPTO is not prohibited or subject to mandatory disclosure, users are reminded to adhere to USPTO policies and their duties of candor and good faith towards the USPTO and their clients when employing these technologies.
Likely motivated by court cases that have gotten a lot of attention because lawyers used ChatGPT to generate fake case cites, the USPTO addressed the importance of human-review of AI generated content. All USPTO submissions, regardless of AI involvement in their drafting, must be signed by the presenting party, who attests to the truthfulness of the content and the adequacy of their inquiry into its accuracy. Human review is crucial to uphold the duty of candor and good faith, requiring the correction of any errors or omissions before submission. While there is no general duty to disclose AI’s use in drafting unless specifically asked, practitioners must ensure their submissions are legally sound and factually accurate and consult with their clients about the representation methods used.
More specifically, submissions to the TTAB and trademark applications that utilize AI tools require meticulous review to ensure accuracy and compliance with the applicable rules. This is vital for all documents, including evidence for trademark applications, responses to office actions, and legal briefs, to ensure they reflect genuine marketplace usage and are supported by factual evidence. Special attention must be given to avoid the inclusion of AI-generated specimens or evidence that misrepresents actual use or existence in commerce. Materials produced by AI that distort facts, include irrelevant content, or are unduly repetitive risk being deemed as submitted with improper intent, potentially leading to unnecessary delays or increased costs in the proceedings.
Filling out Forms:
AI tools can enhance the efficiency of filing documents with the USPTO by automating tasks such as form completion and document uploads. But users must ensure their use aligns with USPTO rules, particularly regarding signatures, which must be made by a person and not delegated to AI. Users are reminded that USPTO.gov accounts are limited to use by natural persons. AI systems cannot hold such accounts, emphasizing the importance of human oversight in submissions to ensure adherence to USPTO regulations and policies.
Automated Access to USPTO IT Systems:
The guidance notes that when utilizing AI tools to interact with USPTO IT systems, it is crucial to adhere to legal and regulatory requirements, ensuring authorized use only. Users must have proper authorization, such as being an applicant, registrant, or practitioner, to file documents or access information. AI systems cannot be considered “users” and thus are ineligible for USPTO.gov accounts. Individuals employing AI assistance must ensure the tool does not overstep access permissions, risking potential revocation of the applicable USPTO.gov account or face other legal risk for unauthorized access. Additionally, the USPTO advises against excessive data mining from USPTO databases with AI tools. The USPTO reminds readers that it provides bulk data products that could assist in these efforts.
Redirecting URL was unlawful but did not cause damages
In the months leading up to the FDA shutting down plaintiff’s business, one of the co-owners of the business left and set up a competing enterprise. For a few weeks, the former co-owner set plaintiff’s domain name to forward to the new company’s website.
Plaintiff sued and the court held that redirecting the URL was a violation of the Lanham Act (the federal law relating to trademarks and unfair competition). But plaintiff was not entitled to any damages because it failed to show that the redirection caused any lost sales. During that time, 133 users who tried to access plaintiff’s website were redirected to the new company’s website, and of those 133 visitors, only two submitted inquiries and neither customer who submitted an inquiry placed an order.
ABH Nature’s Products, Inc. v. Supplement Manufacturing Partner, Inc., 2024 WL 13452228 (E.D.N.Y., March 29, 2024)
MetaBirkins defendant was denied of opportunity to exhibit NFT artwork in Swedish museum
In February 2023, Sonny Estival, known by his pseudonym “Mason Rothschild,” was found liable by a jury on a number of claims, including intentional trademark infringement, trademark dilution, and cybersquatting against luxury brand Hermès. The court ordered Estival to pay $133,000 in damages to Hermès and issued a comprehensive permanent injunction against him and his associates. This injunction specifically prohibited the production, distribution, and promotion of “MetaBirkins” non-fungible tokens (NFTs) and related merchandise, aiming to prevent any association or confusion with Hermès’s “Birkin” trademark.
In January 2024, Estival sought clarification from the court regarding the scope of the permanent injunction, particularly whether it would prevent him from allowing a Swedish museum to exhibit his MetaBirkins artworks as part of an exhibition on Andy Warhol and Business Art. Despite his claims that the museum’s display would not imply any association with Hermès and would even include mention of the lawsuit and its outcome, Hermès opposed this motion. The court held an evidentiary hearing, and after considering submissions from both parties and testimony from museum representatives, denied Estival’s motion. The court could not conclude that the proposed exhibition would comply with the injunction’s terms, given the lack of detailed information about the nature of the permission Estival would be granting to the museum, especially concerning the promotion of the exhibit and potential merchandising.
The court’s decision was heavily influenced by the context of Estival’s previous actions and the jury’s findings, which characterized him as intentionally misleading the public to associate his NFTs with Hermès’s Birkin brand. Despite the museum’s assurance that the exhibit would not suggest any affiliation with Hermès, the court remained unconvinced, especially given discrepancies in the museum representatives’ testimonies regarding how the lawsuit and Estival’s infringement would be presented to the public.
Hermès Int’l v. Rothschild, 2024 WL 1089427 (S.D.N.Y. March 13, 2024)
The Andy Warhol photo of Prince copyright fair use case that went to the Supreme Court settles
Last year the Supreme Court decided the case of Andy Warhol Foundation Visual Arts v. Goldsmith, 143 S. Ct. 1258 (2023). [Read our blog post from shortly after the decision.] The case was particularly intriguing because it involved the artwork of a famous artist (Andy Warhol) that depicted a famous musician (Prince). The court’s decision provided critically important insight into the copyright doctrine of fair use. It centered on the copyright implications of “transformative” use, particularly within the visual arts and is already greatly affecting how courts treat the fair use doctrine. [See, e.g., how the Fourth Circuit handled this case about a photograph of musician Ted Nugent.] Because the Court found there was no fair use, the litigation continued. Now we have learned that the case has settled.
Courthouse news reports that last Friday (March 15, 2024) the Andy Warhol Foundation reached an agreement to pay photographer Lynn Goldsmith over $21,000 to resolve the dispute. The Foundation’s law firm expressed relief in concluding the litigation and eagerness to continue supporting emerging artists. This settlement reportedly includes around $11,000 for court costs, effectively ending the years-long dispute. The Foundation initially pursued the lawsuit to advocate for artistic freedom and to honor Andy Warhol’s legacy. In their recent statement, the Foundation reiterated its commitment to artistic free expression and Warhol’s enduring influence. Despite the settlement, the Foundation says that it “respectfully” maintains that Warhol’s original creation of the Prince Series was an act of fair use.
What does the “bill that could ban TikTok” actually say?
In addition to causing free speech concerns, the bill is troubling in the way it gives unchecked power to the Executive Branch.
Earlier this week the United States House of Representatives passed a bill that is being characterized as one that could ban TikTok. Styled as the Protecting Americans from Foreign Adversary Controlled Applications Act, the text of the bill calls TikTok and its owner ByteDance Ltd. by name and seeks to “protect the national security of the United States from the threat posed by foreign adversary controlled applications.”
What conduct would be prohibited?
The Act would make it unlawful for anyone to “distribute, maintain, or update” a “foreign adversary controlled application” within the United States. The Act specifically prohibits anyone from “carrying out” any such distribution, maintenance or updating via a “marketplace” (e.g., any app store) or by providing hosting services that would enable distribution, maintenance or updating of such an app. Interestingly, the ban does not so much directly prohibit ByteDance from making TikTok available, but would cause entities such as Apple and Google to be liable for making the app available for others to access, maintain and update the app.
What apps would be banned?
There are two ways one could find itself being a “foreign adversary controlled application” and thereby prohibited.
- The first is simply by being TikTok or any app provided by ByteDance or its successors.
- The second way – and perhaps the more concerning way because of its grant of great power to one person – is by being a “foreign adversary controlled application” that is “determined by the President to present a significant threat to the national security of the United States.” Though the President must first provide the public with notice of such determination and make a report to Congress on the specific national security concerns, there is ultimately no check on the President’s power to make this determination. For example, there is no provision in the statute saying that Congress could override the President’s determination.
Relatively insignificant apps, or apps with no social media component would not be covered by the ban. For example, to be a “covered company” under the statute, the app has to have more than one million monthly users in two of the three months prior to the time the President determines the app should be banned. And the statute specifically says that any site having a “primary purpose” of allowing users to post reviews is exempt from the ban.
When would the ban take effect?
TikTok would be banned 180 days after the date the President signs the bill. For any other app that the President would later decide to be a “foreign adversary controlled application,” it would be banned 180 days after the date the President makes that determination. The date of that determination would be after the public notice period and report to Congress discussed above.
What could TikTok do to avoid being banned?
It could undertake a “qualified divestiture” before the ban takes effect, i.e., within 180 days after the President signs the bill. Here is another point where one may be concerned about the great power given to the Executive Branch. A “qualified divestiture” would be situation in which the owner of the app sells off that portion of the business *and* the President determines two things: (1) that the app is no longer being controlled by a foreign adversary, and (2) there is no “operational relationship” between the United States operations of the company and the old company located in the foreign adversary company. In other words, the app could not avoid the ban by being owned by a United States entity but still share data with the foreign company and have the foreign company handle the algorithm.
What about users who would lose all their data?
The Act provides that the app being prohibited must provide users with “all the available data related to the account of such user,” if the user requests it, prior to the time the app becomes prohibited. That data would include all posts, photos and videos.
What penalties apply for violating the law?
The Attorney General is responsible for enforcing the law. (An individual could not sue and recover damages.) Anyone (most likely an app store) that violates the ban on distributing, maintaining or updating the app would face penalties of $5,000 x the number of users determined to access, maintain or update the app. Those damages could be astronomical – TikTok currently has 170 million users, so the damages would be $850,000,000,000. An app’s failure to provide data portability prior to being banned would cause it to be liable for $500 x the number of affected users.
GenAI and copyright: Court dismisses almost all claims against OpenAI in authors’ suit
Plaintiff authors sued large language model provider OpenAI and related entities for copyright infringement, alleging that plaintiffs’ books were used to train ChatGPT. Plaintiffs asserted six causes of action against various OpenAI entities: (1) direct copyright infringement, (2) vicarious infringement, (3) violation of Section 1202(b) of the Digital Millennium Copyright Act (“DMCA”), (4) unfair competition under Cal. Bus. & Prof. Code Section 17200, (5) negligence, and (6) unjust enrichment.
Open AI moved to dismiss all of these claims except for the direct copyright infringement claim. The court granted the motion as to almost all the claims.
Vicarious liability claim dismissed
The court dismissed the claim for vicarious liability because plaintiffs did not successfully plead that direct copying occurs from use of the software. Citing to A&M Recs., Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n.2 (9th Cir. 2001) aff’d, 284 F.3d 1091 (2002) the court noted that “[s]econdary liability for copyright infringement does not exist in the absence of direct infringement by a third party.” More specifically, the court dismissed the claim because plaintiffs had not alleged either direct copying when the outputs are generated, nor had they alleged “substantial similarity” between the ChatGPT outputs and plaintiffs’ works.
DMCA claims dismissed
The DMCA – at 17 U.S.C. 1202(b) – requires a defendant’s knowledge or “reasonable grounds to know” that the defendant’s removal of copyright management information (“CMI”) would “induce, enable, facilitate, or conceal an infringement.” Plaintiffs alleged “by design,” OpenAI removed CMI from the copyrighted books during the training process. But the court found that plaintiffs provided no factual support for that assertion. Moreover, the court found that even if plaintiffs had successfully asserted such facts, they had not provided any facts showing how the omitted CMI would induce, enable, facilitate or conceal infringement.
The other portion of the DMCA relevant to the lawsuit – Section 1202(b)(3) – prohibits the distribution of a plaintiff’s work without the plaintiff’s CMI included. In rejecting plaintiff’s assertions that defendants violated this provision, the court looked to the plain language of the statute. It noted that liability requires distributing the original “works” or “copies of [the] works.” Plaintiffs had not alleged that defendants distributed their books or copies of their books. Instead, they alleged that “every output from the OpenAI Language Models is an infringing derivative work” without providing any indication as to what such outputs entail – i.e., whether they were the copyrighted books or copies of the books.
Unfair competition claim survived
Plaintiffs asserted that defendants had violated California’s unfair competition statute based on “unlawful,” “fraudulent,” and “unfair” practices. As for the unlawful and fraudulent practices, these relied on the DMCA claims, which the court had already dismissed. So the unfair competition theory could not move forward on those grounds. But the court did find that plaintiffs had alleged sufficient facts to support the claim that it was “unfair” to use plaintiffs works without compensation to train the ChatGPT model.
Negligence claim dismissed
Plaintiffs alleged that defendants owed them a duty of care based on the control of plaintiffs’ information in their possession and breached their duty by “negligently, carelessly, and recklessly collecting, maintaining, and controlling systems – including ChatGPT – which are trained on Plaintiffs’ [copyrighted] works.” The court dismissed this claim, finding that there were insufficient facts showing that defendants owed plaintiffs a duty in this situation.
Unjust enrichment claim dismissed
Plaintiffs alleged that defendants were unjustly enriched by using plaintiffs’ copyright protected works to train the large language model. The court dismissed this claim because plaintiff had not alleged sufficient facts to show that plaintiffs had conferred any benefit onto OpenAI through “mistake, fraud, or coercion.”
Tremblay v. OpenAI, Inc., 2024 WL 557720 (N.D. Cal., February 12, 2024)
DMCA subpoena to “mere conduit” ISP was improper
Because ISP acted as a conduit for the transmission of material that allegedly infringed copyright, it fell under the DMCA safe harbor in 17 U.S.C. § 512(a), and therefore § 512(h) did not authorize the subpoena issued in the case.
Some copyright owners needed to find out who was anonymously infringing their works, so they issued a subpoena to the users’ internet service provider (Cox Communications) under the Digital Millennium Copyright Act’s (“DMCA”) at 17 U.S.C. § 512(h). After the ISP notified one of the anonymous users – referred to as John Doe in the case – of the subpoena, Doe filed a motion to quash. The magistrate judge recommended the subpoena be quashed, and the district judge accepted such recommendation.
Contours of the Safe Harbor
The court explained how the DMCA enables copyright owners to send subpoenas for the identification of alleged infringers, contingent upon providing a notification that meets specific criteria outlined in the DMCA. However, the DMCA also establishes safe harbors for Internet Service Providers (ISPs), notably exempting those acting as “mere conduits” of information, like in peer-to-peer (P2P) filesharing, from liability and thus from the obligations of the notice and takedown provisions found in other parts of the DMCA. This distinction has led courts, including the Eighth and D.C. Circuits, to conclude that subpoenas under § 512(h) cannot be used to compel ISPs, which do not store or directly handle the infringing material but merely transmit it, to reveal the identities of P2P infringers.
Who is in?
The copyright owners raised a number of objections to quashing the subpoena. Their primary concerns were with the court’s interpretation of the ISP’s role as merely a “conduit” in the alleged infringement, arguing that the ISP’s assignment of IP addresses constituted a form of linking to infringing material, thus meeting the DMCA’s notice requirements. They also disputed the court’s conclusion that the material in question could not be removed or access disabled by the ISP due to its nature of transmission, and they took issue with certain factual conclusions drawn without input from the parties involved. Additionally, the petitioners objected to the directive to return or destroy any information obtained through the subpoena, requesting that such measures apply only to the information related to the specific subscriber John Doe.
Conduits are.
Notwithstanding these various arguments, the court upheld the magistrate judge’s recommendation, agreeing that the subpoena issued to the ISP was invalid due to non-compliance with the notice provisions required by 17 U.S.C. § 512(c)(3)(A). The petitioners’ arguments, suggesting that the ISP’s assignment of IP addresses to users constituted a form of linking to infringing material under § 512(d), were rejected. The court clarified that in the context of P2P file sharing, IP addresses do not serve as “information location tools” as defined under § 512(d) and that the ISP’s role was limited to providing internet connectivity, aligning with the “mere conduit” provision under § 512(a). The court also dismissed the petitioners’ suggestion that the ISP could disable access to infringing material by null routing, emphasizing the distinction between disabling access to material and terminating a subscriber’s account, with the latter being a more severe action than what the DMCA authorizes. The court suggested that the petitioners could pursue the infringer’s identity through other legal avenues, such as a John Doe lawsuit, despite potential challenges highlighted by the petitioners.
In re: Subpoena of Internet Subscribers of Cox Communications, LLC and Coxcom LLC, 2024 WL 341069 (D. Hawaii, January 30, 2024)
Six Neal & McDevitt attorneys named to the 2024 WTR 1000
Neal & McDevitt is honored to have again been named to the annual World Trademark Review 1000 along with six of the firm’s attorneys. We are grateful to be recognized alongside other esteemed professionals around the globe, reinforcing our shared commitment to the highest standards of practice in trademark law. Congratulations to Kevin McDevitt, Christina Frangiosa, Rick Biagi, Nicholas de la Torre, Evan Brown and Tom Monagan.
Fourth Circuit reverses lower court’s decision in online copyright infringement case
Plaintiff photographer sued defendant news website for copyright infringement over a photo of Ted Nugent that defendant used in an online article. The lower court granted summary judgment for defendant, finding that its use of the photo was fair use. Plaintiff sought review with the Fourth Circuit. On review, the court reversed, applying the factors set out in 17 U.S.C. § 107 in finding the use of the photo was not fair use.
For the first fair use factor, the court found that defendant’s use of the photo was not transformative and was commercial. This caused the factor to weigh against fair use. It looked to the recent Supreme Court case of Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023). The court noted that in a manner similar to what happened in the Warhol case, plaintiff took the photo of Ted Nugent to capture a “portrait” of him, and defendant used the photo to “depict” the musician. Accordingly, the two uses “shared substantially the same purpose.” The court actually found that defendant in this case had “less of a case” for transformative use than the Andy Warhol Foundation did, because unlike in Warhol, defendant did not alter or add new expression beyond cropping negative space. And though the article in which the photo appeared did not generate much revenue for defendant, the relevant question to determine commercial use was whether defendant stood to profit, not whether it actually did profit.
Though the district court did not address the second and third fair use factors, the appellate court looked at those factors, and found they did not support fair use. Looking at the nature of plaintiff’s photo, the court observed that plaintiff made several creative choices in capturing the photo, including angle of photography, exposure, composition, framing, location, and exact moment of creation. As for the third factor, the court found it to weigh against fair use because defendant copied a significant percentage of the photo, only cropping out negative space while keeping the photo’s expressive features.
Finally, the court also found that the fourth fair use factor weighed against fair use. The court concluded that if defendant’s unauthorized use became “uninterrupted and widespread,” it would adversely affect the potential market for the photo. It emphasized the notion of the potential market. In this case, there was at least one instance where plaintiff had allowed use of his photo for free, and he also made it available for free subject to a Creative Commons license, requiring attribution in return. But that did not change the outcome, given that he customarily licensed if for either money or attribution.
Philpot v. Independent Journal Review, — F.4th —, 2024 WL 442066 (4th Cir., February 6, 2024)
Disclaimer in software license agreement protected vendor from liability
A recent federal court case alleging breach of contract over failure of software to perform highlights the importance of careful drafting and review of disclaimer and other language in technology contracts.
Loss of livelihood
In 2021, a federal court entered an order that permanently barred plaintiff from preparing tax returns for other people. The court’s order apparently addressed past deficiencies in plaintiff’s past tax filings. In 2017, when using TaxWise software, plaintiff did not attach certain required forms to the tax returns.
No doubt this caused extreme hardship for plaintiff, so he sought to recover by blaming the software company – the defendant in this case – for a malfunction in the software that caused the required forms to be omitted.
He sued for breach of contract. Defendant moved to dismiss. The court granted the motion.
The lawsuit was too late
It held that plaintiff’s suit was untimely because the software license agreement contained a provision saying that any such claim had to be commenced within one year from the date such claim or cause of action first arose. The court rejected plaintiff’s argument that by bringing suit in January 2023, he was within the one year period because his first payment of a fine to the IRS was due in January 2022. Instead, the court held that the one year period for bringing suit began to run when the alleged breach occurred, i.e., in 2017 when the software allegedly malfunctioned.
Disclaimers knocked out the complaint
The court also held that certain disclaimer language in the software agreement served to defeat plaintiff’s claims as to the software’s performance. The agreement stated that plaintiff “expressly disclaim[ed] any representations or warranties that [his] use of the Products will satisfy any statutory or regulatory obligations, or will assist with, guarantee or otherwise ensure compliance with any applicable laws or regulations.” Moreover, the contract stated that plaintiff bore “THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PRODUCT(S), INCLUDING ELECTRONIC FILING” and so the court found that this eliminated plaintiff’s ability to shift that responsibility to the software provider.
Diedrich v. Wolters Kluwer, 2024 WL 291156 (S.D.N.Y., January 25, 2024)
Who owns the trademark rights in the name of a user-created community?
In the realm of online communities, where does the ownership of trademark rights lie – with the platform hosting the community or the individual user who creates and develops it?
The intriguing case involving Reddit and the founder of the well-known r/WallStreetBets subreddit presents a scenario that addresses this question concerning online communities and intellectual property rights. The case deals with the ownership and alleged infringement of two trademarks: WALLSTREETBETS and WSB.
Reddit and WallStreetBets
Reddit is a widely-used social media platform that enables users to create, manage, and participate in communities known as subreddits, centered around various interests. Plaintiff Rogozinski launched r/WallStreetBets in January 2012 to establish a forum for discussions and information exchange about the financial industry. While preparing for the launch, plaintiff invested considerable time and effort in developing the subreddit’s unique identity. This included creating the WALLSTREETBETS logo, designing the site using CSS to modify Reddit’s template. Later he set up related online channels, including an Internet Relay Chat (IRC) chatroom, a Discord channel, and a Twitter account under the WALLSTREETBETS name. By 2020, the r/WallStreetBets subreddit had amassed over a million followers.
Reddit Got Mad
The conflict took shape when plaintiff filed an application to register the WALLSTREETBETS trademark with the USPTO in March 2020. Reddit subsequently suspended plaintiff’s account for a week, citing his attempt to monetize the community, and barred him from moderating on the platform. In January 2022, plaintiff filed to register the mark WSB, and the USPTO granted this registration in June 2022.
Then There Was Litigation
Plaintiff sought a declaratory judgment – which in this case was a request for the court to acknowledge his ownership of the WALLSTREETBETS and WSB trademarks. He also made a claim against Reddit for infringing these trademarks, together with various other claims arising under state law. On the infringement issue, his theory was that he did not give Reddit permission to use the WALLSTREETBETS trademark following his ban as a moderator of the r/WallStreetBets subreddit he created.
The court dismissed Plaintiff’s first complaint, which he filed in February 2023. That dismissal, however, came with the opportunity for plaintiff to amend his complaint to address these issues. Despite his efforts to fix the identified shortcomings in his amended complaint, Reddit argued that he had still failed to meet the necessary legal standards. The court agreed and dismissed the case again.
Court Says the Rights are Reddit’s
The Court’s placed significant emphasis on the principle of “first use in commerce,” a critical element in establishing trademark ownership. In his amended complaint, plaintiff attempted to demonstrate his early and significant involvement in the development and use of the trademarks in question. He detailed his efforts in creating the logo, designing the subreddit, and establishing associated online channels. However, the court remained unconvinced by these assertions, noting that plaintiff’s actions did not meet the threshold of “use in commerce” as required by trademark law. The Court also scrutinized the timing and nature of plaintiff’s activities in relation to the establishment and popularity of the subreddit, ultimately finding that these actions did not suffice to establish his ownership of the trademarks.
And the case addresses the interesting issue of who owns trademark rights in a user-generated community – the platform or the moderator/creator? Reddit asserted that it owned the trademark rights in the community. Specifically, citing a case from the USPTO’s Trademark Trial and Appeal board, In re Florists’ Transworld Delivery Inc., 2016 WL 3998062 (T.T.A.B. May 11, 2016), Reddit had argued that account holders like plaintiff “generally will not be able to rely on use of [their] social media account to support an application for registration of a mark for such service.” Reddit argued that “[j]ust as the applicant in In re Florists’ Transworld could not claim rights in connection with ‘creating an online community’ based on use of Twitter, Plaintiff cannot rely on his use of Reddit’s platform to support alleged service mark rights in connection with a ‘web based community’”.
Regarding the state law claims, the court looked to 47 U.S.C. 230, which provides immunity to providers of interactive computer services from liability for content posted by others. The court found that these claims, as presented, did not get around Reddit’s Section 230 immunity.
Rogozinski v. Reddit, Inc., 2024 WL 150727 (N.D. California January 12, 2024)
IP warranty in the spotlight: Licensor’s failure to assure licensee of rights leads to litigation
In the recent breach of contract case in federal court in New York, we learn about what it takes for a copyright licensee to successfully assert that a warranty from the licensor as to copyright ownership has been breached. Licensee’s unsuccessful efforts to verify the truth of the facts warranted provided a key basis for the lawsuit to move forward.
Blake and Video Elephant entered into an agreement whereby Video Elephant granted a sublicense for Blake to use certain news, entertainment, sports, and other related content. Video Elephant’s business model was to procure such rights from content owners and then grant sublicenses to licensees such as Blake. The agreement contained a provision whereby Video Elephant “warrant[ed] that [the third party owner] is the sole owner of all copyright in [the content] which is granted to [Blake] under this Agreement other than such logos and trademarks and/or title name which are owned by [Blake].”
Assure or get sued
This warranty was crucial for Blake, as it helped Blake be assured that it could use and broadcast the content without the fear of copyright infringement claims from third parties. After Blake repeatedly attempted, without success, to verify whether the third party creator actually owned the intellectual property rights in the content, and after Video Elephant failed to offer adequate assurances that the third party had such rights, Blake filed a counterclaim in the ongoing litigation between the parties for breach of warranty.
Video Elephant moved to dismiss the counterclaim. The court denied the motion.
Due diligence dead end
Blake alleged that it conducted thorough investigations, consulting relevant rights databases and contacting business contacts in the movie industry, seeking to confirm the third party’s ownership of the rights. Despite these efforts, the ownership remained unverified, leading to Blake’s conclusion that the third party might not be the sole owner of the copyright in the licensed content. This situation, according to Blake, rendered it unable to use the content as intended under the agreement, thereby causing substantial damages.
Video Elephant, on the other hand, argued that Blake’s allegations were unfounded, asserting that Blake’s pleading failed to establish a claim for breach of express warranty. It argued that Blake had not demonstrated that the warranty was, in fact, breached.
Belief about doubt
In ruling in Blake’s favor, the court noted that Blake’s assertions “[u]pon information and belief,” that “[the third party] was not in fact the sole owner of all copyright rights in and to the content licensed” and Blake’s unsuccessful investigations into the ownership of the sublicensed content’s rights made the inference of breach plausible.
Moreover, the court found that under New York law, Blake had pled facts showing its reliance on the warranty as the basis for the agreement, since without such third party rights being granted, Blake would have been at risk of infringement liability. The court also found that the lack of assurances – and the resulting inability to use the content because of the resulting infringement risk – supported Blake’s allegations of “substantial damages”.
Video Elephant Ltd. v. Blake Broadcasting LLC, 2024 WL 68525 (S.D.N.Y. January 5, 2024)
Online platforms will have to answer for online sales of alleged counterfeit products
A federal court in New York has denied the motion to dismiss filed by Chinese online platforms Alibaba and AliExpress in a lawsuit brought by a toymaker alleging that these companies’ merchant customers were engaged in contributory trademark and copyright infringement through the online sale of counterfeit products.
Background of the Case
Plaintiff toymaker accused the Alibaba defendants of facilitating the sale of counterfeit products on their platforms. The lawsuit stemmed from the activities of around 90 e-commerce merchants who were reportedly using the platforms to sell to sell fake goods.
The Court’s Rationale
The court’s decision to deny the motion to dismiss turned on several allegations that suggest the Alibaba defendants played a more complicit role than that of a passive service provider. These allegations included:
- Specific Awareness of Infringement: The Alibaba defendants were allegedly well-informed about the infringing activities of several merchants, including some named in the lawsuit. The Alibaba defendants should have known of these instances from orders in six separate lawsuits against sellers on the platforms.
- Continued Proliferation of Infringing Listings: Despite this awareness, the platforms reportedly allowed the continued presence and proliferation of infringing listings. This included listings from merchants already flagged under Alibaba’s “three-strike policy” for repeat offenders.
- Promotion of Infringing Listings: Plaintiff alleged the Alibaba defendants actively promoted infringing listings. The Alibaba defendants reportedly granted “Gold Supplier” and “Verified” statuses to infringing merchants, sold related keywords, and even promoted these listings through Google and promotional emails.
- Financial Gains from Infringements: Crucially, plaintiff argued that the Alibaba defendants financially benefited from these activities by attracting more customers, encouraging merchants to purchase additional services, and earning commissions on transactions involving counterfeit goods.
DMCA Safe Harbor Provisions Not Applicable
The court rejected the Alibaba defendants’ argument that safe harbor provisions under the Digital Millennium Copyright Act (DMCA) applied at this stage of the litigation. The DMCA safe harbor is typically an affirmative defense to liability, and for it to apply at the motion to dismiss stage, such defense must be evident on the face of the complaint. The court found that in this case, it was not.
Implications of the Ruling
This decision is relevant to purveyors of online products who face the persistent challenges of online enforcement of intellectual property rights. Remedies against overseas companies in situations such as this are often elusive. The case provides a roadmap of sorts concerning the types of facts that must be asserted to support a claim against an online provider in the position of the Alibaba defendants.
Kelly Toys Holdings, LLC v. 19885566 Store et al., 2023 WL 8936307 (S.D.N.Y. December 27, 2023)
Fifth Circuit dissent issues scathing rebuke of broad Section 230 immunity
Dissenting in the court’s refusal to rehear an appeal en banc, Judge Elrod of the Fifth Circuit Court of Appeals – joined by six of her colleagues – penned an opinion that sharply criticized the broad immunity granted to social media companies under Section 230 of the Communications Decency Act. The dissent emerged in a case involving John Doe, a minor who was sexually abused by his high school teacher, a crime in which the messaging app Snapchat played a pivotal role.
The Core of the Controversy
Section 230 (47 U.S.C. §230) is a provision that courts have long held to shield internet companies from liability for content posted by their users. The dissenting opinion, however, argues that this immunity has been stretched far beyond its intended scope, potentially enabling platforms to evade responsibility even when their design and operations contribute to illegal activities.
Snapchat’s Role in the Abuse Case
Snapchat, owned by Snap, Inc., was used by the teacher to send sexually explicit material to Doe. Doe sought to hold Snap accountable, alleging that Snapchat’s design defects, such as inadequate age-verification mechanisms, indirectly facilitated the abuse. But the lower court, applying previous cases interpreting Section 230, dismissed these claims at the initial stage.
A Critical Examination of Section 230
The dissent criticized the court’s interpretation of Section 230, arguing that it has been applied too broadly to protect social media companies from various forms of liability, including design defects and distributor responsibilities. It highlighted the statute’s original text, which was meant to protect platforms from being deemed publishers or speakers of third-party content, not to shield them from liability for their own conduct.
Varied Interpretations Across Courts
Notably, the dissent pointed out the inconsistency in judicial interpretations of Section 230. While some courts, like the Ninth Circuit, have allowed claims related to design defects to proceed, others have extended sweeping protections to platforms, significantly limiting the scope for holding them accountable.
The Implications for Internet Liability
This case and the resulting dissent underscore a significant legal issue in the digital age: how to balance the need to protect online platforms from excessive liability with ensuring they do not become facilitators of illegal or harmful activities. The dissent suggested that the current interpretation of Section 230 has tipped this balance too far in favor of the platforms, leaving victims like Doe without recourse.
Looking Ahead: The Need for Reevaluation
The dissenting opinion called for a reevaluation of Section 230, urging a return to the statute’s original text and intent. This reexamination – in the court’s view – would be crucial in the face of evolving internet technologies and the increasing role of social media platforms in everyday life. The dissent warned of the dangers of a legal framework that overly shields these powerful platforms while leaving individuals exposed to the risks associated with their operations.
Conclusion
The court’s dissent in this case is a clarion call for a critical reassessment of legal protections afforded to social media platforms. As the internet continues to evolve, the legal system must adapt to ensure that the balance between immunity and accountability is appropriately maintained, safeguarding individuals’ rights without stifling technological innovation and freedom of expression online.
Doe through Roe v. Snap, Incorporated, — F4th — 2023 WL 8705665, (5th Cir., December 18, 2023)
Generative AI: How should enterprise information governance models respond to its use?
The great thing about generative AI is that it is generative. It results in the creation of new content in an efficient way, drawing on vast sources of data. But with that power comes the potential for bumping into issues that range from intellectual property protection to data privacy concerns to reputation management in the marketplace. Sensible enterprises should implement information governance models that maximize the effectiveness of the use of generative AI while curbing the risk for bad results. Here are some things to keep in mind.
Contextual Understanding and Scope Definition
With the surge in the use of generative AI tools within enterprises, it is important to revisit and recalibrate information governance models. Initially, enterprises should gain a thorough understanding of how generative AI is being used within the organization. This involves identifying the departments, processes, and roles where these AI tools have been implemented. Once the enterprise has a comprehensive view, it should define the scope of its governance model by setting boundaries on the generation and consumption of AI-produced content.
Data Quality and Integrity Checks
Generative AI systems can produce massive volumes of information, and while their efficiency is unparalleled, they are not infallible. Businesses must institute robust data quality and integrity checks to ensure that the outputs from these AI systems align with organizational standards. This might mean setting up periodic audits, incorporating human-in-the-loop validation processes, or using secondary AI tools to assess the reliability of the generated content. There should be mechanisms to track the lineage of AI-generated data, so it is clear where information originates and how it evolves over time.
Training and Responsibility
Employees must be trained adequately not only in the usage of generative AI tools but also in understanding the potential risks and biases associated with them. Proper training ensures that employees can distinguish between AI-generated outputs and human-generated content, understanding the strengths and limitations of each. Additionally, there must be a clear delineation of responsibility. Who takes accountability when generative AI produces inaccurate or harmful information? Assigning roles and responsibilities prevents ambiguities in accountability, ensuring that potential issues are addressed promptly.
Ethical and Legal Considerations
Generative AI poses unique ethical and legal challenges. From creating synthetic data that might be indistinguishable from real, sensitive data, to potentially producing misleading or biased information, there are many potential pitfalls that enterprises must navigate. The governance model should incorporate ethical guidelines on AI use, ensuring transparency, fairness, and privacy. Legal teams should be closely involved to stay updated on regulations that pertain to AI-generated content, ensuring that the organization remains compliant, and is prepared for any potential legal implications. For example, Colorado has a statute that imposes certain requirements on participants in the insurance industry governing how AI tools are used to undertake various insurance practices.
So as generative AI becomes an integral tool for many businesses, the need for robust information governance models becomes paramount. Only through comprehensive, proactive measures can enterprises safely harness the power of generative AI while safeguarding the quality and integrity of their information.
When X makes it an ex-brand: Can a company retain rights in an old trademark after rebranding?
This past weekend Elon Musk announced plans to rebrand Twitter as X. This strategic shift from one of the most recognized names and logos in the social media realm is stirring discussion throughout the industry. This notable transformation raises a broader question: Can a company still have rights in its trademarks after rebranding? What might come of the famous TWITTER mark and the friendly blue bird logo?
Continued Use is Key
In the United States, trademark rights primarily arise from the actual use of the mark in commerce (and not just from registration of the mark). The Commerce Clause of the United States Constitution grants Congress the power to regulate commerce among the states. Exercising this constitutional authority, Congress enacted the Lanham Act, which serves as the foundation for modern trademark law in the United States. By linking the Lanham Act’s protections to the “use in commerce” of a trademark, the legislation reinforces the principle that active commercial use, rather than mere registration, is a key determinant of rights in that trademark. So, as long as a company has genuinely used its trademark in commerce (assuming no other company has rights that arose prior in time), the company retains rights to that mark.
Though a company may transition to a new brand identity, it can maintain rights to its former trademark by continuing its use in some form or another. This might involve selling a limited line of products under the old brand, using the old brand in specific regions, or licensing the old trademark to other entities. Such actions show the company’s intent to maintain its claim and rights to the mark—such rights being tied strongly to the actual use of the mark in commerce. No doubt continued use of the old marks after a rebrand can be problematic, as it may paint an unclear picture as to how the company is developing its identity. For example, as of the time of this blog post, X has placed the new X logo, but still has the words “Search Twitter” in the search bar. And there is also the open question of whether we will in the future call content posted to the platform “tweets”.
Avoiding Abandonment
If a company does not actively use its trademark and demonstrates no intention to use it in the future, it runs the risk of abandonment. Once a trademark is deemed abandoned, the original owner loses exclusive rights to it. This is obviously problematic for a brand owner, because a third party could then enter the scene, adopt use of the abandoned mark, and thereby pick up on the goodwill the former brand owner developed over the years.
What Will Twitter Do?
It is difficult to imagine that X will allow the TWITTER mark to fall into the history books of abandoned marks. The mark has immense value through its long use and recognition—indeed the platform has been the prime mover in its space since its founding in 2006. Even if the company commits to the X rebranding, we probably have not seen the end of TWITTER and the blue bird as trademarks. There will likely be some use, even if different than what we have seen over the past 17 years, to keep certain trademark rights alive.
Court: Amazon did not breach its contract by removing book reviews
In 2015, plaintiff began posting book reviews on Amazon, but in 2019 Amazon revoked his review privileges due to guideline violations, including reviews that criticized Donald Trump and two authors. After arbitration in 2020 favored Amazon, plaintiff and Amazon reached a settlement allowing plaintiff to post reviews if he adhered to Amazon’s policies. However, in 2022, after posting reviews derogatory of millennials and referring to COVID-19 as the “Wuhan plague,” Amazon once again revoked plaintiff’s ability to post book reviews and deleted his prior reviews from the platform.
Plaintiff sued Amazon alleging breach of contract and violation of Washington’s Consumer Protection Act (CPA), and seeking a request for a declaratory judgment saying Section 230 of the Communications Decency Act should not protect Amazon. Plaintiff asserted that Amazon wrongfully removed plaintiff’s reviews and did not adequately explain its actions. The CPA violation centered on Amazon’s insufficient explanations and inconsistent policy enforcement. Amazon sought to dismiss the complaint, arguing there was no legal basis for the breach of contract claim, the other claim lacked merit, and that both the Section 230 and the First Amendment protect Amazon from liability. The court granted Amazon’s motion.
Breach of Contract Claim Tossed
The court noted that to win a breach of contract claim in Washington, plaintiff had to prove a contractual duty was imposed and breached, causing plaintiff to suffer damages. Plaintiff claimed that Amazon breached its contract by banning him from posting book reviews and asserted that Amazon’s Conditions and Guidelines were ambiguous. But the court found that Amazon’s Conditions and Guidelines gave Amazon the exclusive right to remove content or revoke user privileges at its discretion, and that plaintiff’s claim sought to hold Amazon responsible for actions the contract permitted. Similarly, the court found plaintiff’s claims for both breach of contract and breach of the implied duty of good faith and fair dealing to be baseless, as they failed to identify any specific contractual duty Amazon allegedly violated.
No Violation of Washington Consumer Protection Act
To be successful under Washington’s Consumer Protection Act, plaintiff would have had to allege five elements, including an unfair or deceptive act and a public interest impact. The court found that plaintiff’s claim against Amazon, based on the company’s decision to remove reviews, failed to establish an “unfair or deceptive act” since Amazon’s Conditions and Guidelines transparently allowed such actions, and plaintiff presented no evidence showing Amazon’s practices would mislead reasonable consumers. Additionally, plaintiff did not adequately demonstrate a public interest impact, as he did not provide evidence of a widespread pattern of behavior by Amazon or the potential harm to other users. Consequently, plaintiff’s claim was insufficient in two essential areas, rendering the CPA claim invalid.
Section 230 Also Saved the Day for Amazon
Amazon claimed immunity under Section 230(c)(1) of the Communications Decency Act (CDA) against plaintiff’s allegations under the CPA and for breach of the implied duty of good faith and fair dealing. Section 230 of the CDA protects providers of interactive computer services from liability resulting from third-party content (e.g., online messaging boards). For Amazon to receive immunity under this section, it had to show three things: it is an interactive computer service, it is treated by plaintiff as a publisher, and the information in dispute (the book reviews) was provided by another content provider. Given that Amazon met these conditions, the court determined that plaintiff’s claims against Amazon under Washington’s CPA and for breach of the implied duty were barred by Section 230 of the CDA.
As for plaintiff’s declaratory judgment claim regarding Section 230, the court found that since the Declaratory Judgment Act only offers a remedy and not a cause of action, and given the absence of a “substantial controversy,” the Court could not grant this declaratory relief. The court noted that its decision was further reinforced by the court’s conclusion that Section 230 did bar two of plaintiff’s claims.
Haywood v. Amazon.com, Inc., 2023 WL 4585362 (W.D. Washington, July 18, 2023)
Does a human who edits an AI-created work become a joint author with the AI?
If a human edits a work that an AI initially created, is the human a joint author under copyright law?
U.S. copyright law (at 17 U.S.C. § 101) considers a work to be a “joint work” if it is made by two or more authors intending to mix their contributions into a single product. So, if a human significantly modifies or edits content that an AI originally created, one might think the human has made a big enough contribution to be considered a joint author. But it is not that straightforward. The law looks for a special kind of input: it must be original and creative, not just technical or mechanical. For instance, merely selecting options for the AI or doing basic editing might not cut it. But if the human’s editing changes the work in a creative way, it might just qualify as a joint author.
Where the human steps in.
This blog post is a clear example. ChatGPT created all the other paragraphs of this blog post (i.e. not this one). I typed this paragraph out from scratch. I have gone through and edited the other paragraphs, making what are obviously mechanical changes. For example, I didn’t like how ChatGPT used so many contractions. I mean, I did not like how ChatGPT used so many contractions. I suspect those are not the kind of “original” contributions that the Copyright Act’s authors had in mind to constitute the level of participation to give rise to a joint work. But I also added some sentences here and there, and struck some others. I took the photo that goes with the post, cropped it, and decided how to place it in relation to the text. Those activities are likely “creative” enough to be copyrightable contributions to the unitary whole that is this blog post. And then of course there is this paragraph that you are just about done reading. Has this paragraph not contributed some notable expression to make this whole blog post better than what it would have been without the paragraph?
Let’s say the human editing does indeed make the human a joint author. What rights would the human have? And how would these rights compare to any the AI might have? Copyright rights are generally held by human creators. This means the human would have rights to copy the work, distribute it, display or perform it publicly, and make derivative works.
Robot rights.
As for the AI, here’s where things get interesting. U.S. Copyright law generally does not recognize AI systems as authors, so they would not have any rights in the work. But this is a rapidly evolving field, and there is ongoing debate about how the law should treat creations made by AI.
This leaves us in a peculiar situation. You have a “joint work” that a human and an AI created together, but only the human can be an author. So, as it stands, the AI would not have any rights in the work, and the human would. Here’s an interesting nuance to consider: authors of joint works are pretty much free to do what they wish with the work as they see fit, so long as they fulfill certain obligations to the other authors (e.g., account for any royalties received). Does the human-owner have to fulfill these obligations to the purported AI-author of the joint work? It seems we cannot fairly address that question if we have not yet established that the AI system can be a joint author in the first place.
Where we go from here.
It seems reasonable to conclude that a human editing AI-created content might qualify as a joint author if the changes are significant and creative, not just technical. If that’s the case, the human would have full copyright rights under current law, while the AI would not have any. As these human-machine collaborations continue to become more commonplace, we will see how law and policy evolve to either strengthen the position that only “natural persons” (humans) can own intellectual property rights, or to move in the direction of granting some sort of “personhood” to non-human agents. It is like watching science fiction unfold in reality in real time.
What do you think?
See also:
How do you sort out who owns a social media account used to promote a business?
Imagine this scenario – a well-known founder of a company sets up social media accounts that promote the company’s products. The accounts also occasionally display personal content (e.g., public happy birthday messages the founder sends to his spouse). The company fires the founder and then claims it owns of the accounts. If the founder says it owns the accounts, how should a court resolve that dispute?
The answer to this question is helpful in resolving actual disputes such as this, and perhaps even more helpful in setting up documentation and procedures to prevent such a dispute in the first place.
An energetic founder
In the recent case of In re: Vital Pharmaceutical, the court considered whether certain social media account that a company’s founder and CEO used were property of the company’s bankruptcy estate under Bankruptcy Code § 541. Though this was a bankruptcy case, the analysis is useful in other contexts to determine who owns a social media account. The court held that various social media accounts (including Twitter, Instagram and TikTok accounts the CEO used) belonged to the company.
Some new guidance
In reaching this decision, the court recognized a “dearth” of legal guidance from other cases on how to determine account ownership when there is a dispute. It noted the case of In re CTLI, LLC, 528 B.R. 359 (Bankr. S.D. Tex. 2015) but expressed concern that this eight year old case did not adequately address the current state of social media account usage, particularly in light of the rise of influencer marketing.
The court fashioned a rather detailed test:
- Are there any agreements or other documents that show who owns the account? Perhaps and employee handbook? If so, then whoever such documents say owns the account is presumed to be the owner of the account.
- But what if there are no documents that show ownership, or such documents do not show definitively who owns the account? In those circumstances, one should consider: Does one party have exclusive power to access the account? Does that same party have the ability to prevent others from accessing the account? Does the account enable that party to identify itself as having that exclusive power?
- If a party establishes both that documents show ownership and that a party has control, that ends the inquiry. But if one or both of those things are not definitively shown, one can still consider whether use of the social media account tips the scales one way or the other: What name is used for the account? Is the account used to promote more than one company’s products? To what extent is the account used to promote the user’s persona? Would any required changes fundamentally change the nature of the account?
What we can learn
Companies utilizing social media accounts run by influential individuals with well-known personas should take guidance from this decision. Under this court’s test, creating documentation or evidence of the account ownership would provide the clearest path forward. Absent such written indication, the parties should take care to establish clear protocols concerning account control and usage.
In re: Vital Pharmaceutical, 2023 WL 4048979 (Bankr. S.D. Fla., June 16, 2023)
Profit-Motivated Jokers Beware: Key Takeaways From Jack Daniel’s v. VIP Products
In a highly anticipated decision, the Supreme Court in the case of Jack Daniel’s Properties, Inc. v. VIP Products LLC recently weighed in on the applicability of the Rogers test [1] and the fair-use exemption from trademark dilution liability. Justice Kagan, writing for the unanimous court, held that “when an alleged infringer uses a trademark as a designation of source for the infringer’s own goods, the Rogers test does not apply” and that “the Lanham Act’s exclusion from dilution liability for any noncommercial use of a mark, does not shield parody. . . when an alleged infringer uses a mark as a designation of source for its own goods.”
The Supreme Court made clear that it is not deciding the fate of the Rogers test or how far the noncommercial exclusion goes. Instead, the Court found that VIP Products LLC is using the Bad Spaniels trademark and trade dress to designate the source of its own goods. Such trademark use must meet an infringement claim on the usual battleground of “likelihood of confusion.” Therefore, the case is remanded to determine whether VIP’s use of its Bad Spaniels trademark and trade dress is confusingly similar to Jack Daniel’s trademark and trade dress.
Background
VIP Products makes a line of Silly Squeaker dog toys that resemble beverages such as “Jose Perro” (Jose Cuervo), “HeinieSniff’n” (Heineken), “Doggie Walker” (Johnnie Walker), and “Bad Spaniels” (Jack Daniel’s).
Soon after the Bad Spaniels toy hit the market, Jack Daniel’s sent VIP a cease and desist letter demanding VIP stop selling the toys. VIP responded by filing suit, seeking declaratory judgement that Bad Spaniels neither infringed nor diluted Jack Daniel’s trademarks. Jack Daniel’s counterclaimed for infringement and dilution.
The District Court rejected VIP’s arguments regarding the applicability of the Rogers test and that VIP’s parody of Jack Daniel’s trademarks constituted “fair use” of Jack Daniel’s famous marks at summary judgment. Then during a bench trial, the District Court found that consumers were likely to be confused about the source of the Bad Spaniels toy and that the toy’s negative associations with dog excrement (e.g., “The Old No. 2”) would harm Jack Daniel’s reputation.
The Ninth Circuit reversed, finding that an infringement claim was subject to the Rogers test. On remand, Jack Daniel’s could not satisfy either element of the Rogers test and granted summary judgment to VIP Products on the infringement claim finding the Bad Spaniels parody to be within the “noncommercial use” exclusions. The Court of Appeals affirmed, and the Supreme Court granted Jack Daniel’s petition for certiorari.
Key Takeaways
VIP has consistently argued that it owns trademarks and trade dress in its dog toys and markets its dog toys in a manner consistent with making trademark use of its Silly Squeaker dog toy names, including Bad Spaniels. Such source-indicating use of its humorous take on Jack Daniel’s trademarks and trade dress was detrimental to shielding it from the likelihood of confusion analysis.
The Rogers test is only applicable when the use of a trademark is being used to solely perform some expressive function other than to designate the source of a good. [2]
The fair use exemption is only applicable, even when engaging in parody, criticism, or commentary, when such use of a trademark is not being used to designate the source of the goods. Use of a mark does not automatically count as “noncommercial use” because it parodies, criticizes or comments on another’s product.
And now we wait to see whether Bad Spaniels is likely to cause consumer confusion as to the source of the dog toys and dilute Jack Daniel’s trademarks.
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[1] The Rogers test provides that liability may apply when (1) the challenged use of a mark “has no artistic relevance to the underlying work” or (2) that it “explicitly misleads as to the source or the content of the work.”
[2] Some examples of the applicability of the Rogers test cited by the Court include: Mattel v. MCA Records, 296 F.3d 894 (9th Cir. 2002) (use of Barbie within the title of a song, Barbie Girl, was not source indicative use of Barbie trademark); University of Ala. Bd. of Trustees v. New Life Art, Inc., 683 F. 3d 1266, 1279 (2012)(Artist’s depiction of Crimson Tide’s football uniforms memorializes a notable event in football history rather than indicate source of art); Louis Vuitton Mallatier S. A. v. Warner Bros. Entertainment Inc., 868 F. Supp. 2d 172 (SDNY 2012) (the film was not using Louis Vuitton trademark as its own mark when a character in The Hangover: Part II move described his luggage as LOUIS VUITTON). Conversely, the Rogers test did not apply in the following cases where the courts found the infringing party was making trademark use of another’s mark: United We Stand Am., Inc. v. United We Stand, Am. New York, Inc., 128 F. 3d 86, 93 (1997); Harley-Davidson, Inc. v. Grottanelli, 164 F. 3d 806, 812–813 (1999); and Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F. Supp. 2d 410, 412 (SDNY 2002).
