Tag Archives: liability



March 26 / All Articles, Patent

Inequitable Results in Transnational Patent Infringement Liability: Closing The Method Loophole

A set of recent patent infringement cases are primed to have major impacts and, some argue, inequitable effects on the current patent scheme in the United States. A problem has arisen concerning what kind of patent protection, or lack thereof, method and process patents should receive when certain steps of those methods or processes are implemented outside the U.S. Read literally, as the courts have, current law requires a method to have taken place in the U.S. for protection. But what results when a method or process patent is infringed partially in the U.S. and partially abroad? Should the patent receive protection by U.S. patent laws or has it not been infringed because the entire method has not been carried through in the U.S. from start to finish?

 

To illustrate the problem in a simple analogy, imagine a mother standing over the kitchen sink preparing dinner in full concentration. Her son and his friend sit in the middle of the kitchen floor playing catch with a ball. The mother, becoming aware of the game of catch, reprimands her son, telling him, as she has before, that the rule of the house is that catch is not to be played in the kitchen. She points to a list of rules hanging from the refrigerator that specifically states, “No catch in the kitchen.” The son waves his friend off through the kitchen door, until the son is throwing the ball from the kitchen to his friend in the living room and vice versa. Is the son still playing catch in the kitchen? Technically, he is not. A traditional game of catch requires two people, and there is only one in the kitchen. Thus, the son is not technically disobeying the rules.

 

Nonetheless, most mothers would override the written rule here, explaining to the son that his activities are meant to be included in the rule because any throwing or catching of the ball creates the same hazard. But what if the mother was bound to the rule on the refrigerator, however technically it was being read, and she could not reprimand the son further? Is the resulting restraint on the mother fair even though the son’s actions constitute, at best, an honest attempt to obey the rules or, at worst, a creative attempt to flout the rules on a technicality?

 

This is the problem facing the current U.S. patent regime with respect to process or method patents that are implemented internationally. Under this regime, a patented method is not considered infringed so long as a single step of that method takes place on foreign soil. [1] Thus, like the son who cleverly relocates his friend to the living room to avoid further trouble from his mother, alleged infringers are not technically infringing if they implement one or more steps of someone else’s patented method in a different country. [2] And like the mother who must respect the written rule on the refrigerator, courts have shown much deference to the rules that claim to deal with the extraterritorial application of patent rights, enforcing the current rule which allows this avoidance of infringement. [3] This seemingly inequitable result is one that stares U.S. patent law in the face as geographical borders erode making transnational infringement easier with each passing day….

 

Alejandro Valencia

June 8 / All Articles, Trademark

Been Deep Linked? Apparent Authority Might Link You To Liability

Current trends in trademark law have not met the issue of deep linking with open arms. To date, there is a dearth of cases that touch on deep linking and trademark infringement. Cases such as Ticketmaster Corp. v. Tickets.com dismissed claims of deep linking as trademark infringement with little explanation, simply stating that deep linking itself is not a trademark violation absent “confusion of source.” [1] Yet, there is no case to set the boundaries at the other end of when deep linking would be trademark infringement; it can be implied then that the traditional tests of likelihood of confusion would most likely be applied to find an act of deep linking as trademark infringement.

 

However, the perils do not end for the website owner that is being deep linked from another website and having little means to stop this from occurring. Website owners that are being deep linked can also potentially face liability under the agency theory of apparent authority. Consider the following hypothetical.

 

CELL-X is a popular manufacturer and seller of cellular phones. In addition to distributing and also selling their products through authorized locations and CELL-X company stores, they operate and maintain a website. The website consists of a homepage and interior pages which contain information on the details of the different cellular phone models. Transactions of sales of cellular phones can also occur in the interior web pages of Cell-X’s website; Cell-X states in its purchase web page (and not on any other webpage such as the webpage of each specific model) that purchases via the internet will have an additional 90 days of warranty on top of the standard one year warranty. At the bottom of all the web pages, Cell-X has disclosed the statement, “CELL-X and its logo are registered trademarks.”

 

InterABC is a cellular phone distributor and re-seller. This company sells various brands of cellular phones, including Cell-X, and cellular accessories to the public. However, InterABC is not endorsed, authorized, nor licensed by Cell-X to sell Cell-X brand products. InterABC also operates and maintains a website allowing the internet consumer to browse and purchase the cellular phones InterABC carries. Specifically, InterABC deep links to Cell-X’s interior pages on all Cell-X cellular phone models and products.

 

Consumer Z is in the market to buy fifteen cellular phones for all his family members. By scouring the internet, Z finds InterABC’s website advertising cellular phones for a reasonable price. Z clicks on InterABC’s website hoping to find more information about Cell-X phones and clicks on the link to read more about Cell-X phone model 100A. This page lists the features of model 100A such as a four hour battery life, tri-band mode, a one inch color screen, and an additional one year warranty on top of the original warranty of one year. [2] There is another link that the Z can click on to read even more about model 100A; Z clicks on the link and realizes that the web page he just clicked to open is deep linked to Cell-X’s interior web page for model 100A; this page offers even more technical details of the cell phone such as measurements and accessories. Z is under the belief that InterABC is an authorized reseller of Cell-X products. Z is now quite sure that he wants to purchase Cell-X 100A cellular phones; in addition to the reasonable price that InterABC is selling the phone at, Z notices that buying the phones online comes with an additional one year warranty. Through a secured server, Z inputs his credit card and shipping information, and the cellular phones are subsequently shipped to him.

 

After one and one half years of use, two of Z’s Cell-X 100A phones abruptly stop working. Recalling that since he bought the phones from the internet, he has an additional one-year warranty in order to get them repaired or replaced. However, when trying to contact InterABC, he learns that they have since gone out of business. For Consumer Z, his next reasonable approach would be to contact Cell-X. However, Cell-X cannot honor Z’s warranty claim since it claims that it only offers an additional 90 day warranty. The statement that InterABC made on its website was false, and InterABC is not authorized by Cell-X.

 

The issue then becomes whether Consumer Z can hold Cell-X responsible for warranty claims under apparent authority. Since case law has never considered whether deep linking would ever constitute apparent authority, the next question to ask is whether the traditional cases of case law can shed any light on the issue.

 

Tan Pham*

 

June 4 / All Articles, Copyright

On-Line Copyright Infringement Liability For Internet Service Providers: Context, Cases & Recently Enacted Legislation

“If you can’t protect what you own–you don’t own anything.” [2] Motion Picture Association of America

“To promote the progress of knowledge on the Internet, those who are building the Net itself need fair and predictable ground rules” [3] U.S. Telephone Association

INTRODUCTION:

The above quotes, the first from a member of the content community and the second from an association representing telephone companies and Internet Service Provider (ISP), highlight the tension that exists between copyright holders and Internet Service Providers concerning the issue of on-line copyright infringement liability. As the Internet has grown, the problem of on-line copyright infringement has developed into an economically significant issue. [4] According to the Motion Picture Association of America, U.S. companies are losing millions per year to on-line copyright pirates, and with the current growth of the Internet, the content community fears that the amount lost to pirates will only increase. [5] The ISP industry, however, while acknowledging its unique position in terms of the Internet, does not want to become a “deep-pocket”, third-party defendant in every on-line copyright infringement lawsuit. The Internet Service Providers have argued that the law’s lack of predictability in this area and its standards for ISP copyright liability over the past few years have caused real concerns for this new and growing industry. [6] ISPs have argued that due to the nature of the Internet and the unique role of the ISP industry, a narrow limitation on copyright infringement liability should be established for Internet Service Providers so that those who are building the Internet will have a clearer sense of how and when they might be held liable for on-line copyright infringement. [7] In turn, they argue that a heightened level of certainty about this issue will help speed the growth of the Internet by encouraging more entrepreneurs to enter the ISP industry. [8]

How fast has the Internet grown? At the end of the Reagan-Bush era, just six years ago, the world of cyberspace consisted of fewer than 50 World Wide Web sites, most of them used by computer scientists and physicists. [9] Today the Internet is no longer just for researchers, and it is expected that within five years international commerce on the Internet could reach $3.2 trillion. [10] The fact is that in the past 72 months the number of Internet users has risen from hundreds to millions of users, and is estimated by some experts to reach perhaps a billion users by the year 2008. [11] In terms of copyright infringement, the commercialization and exponential growth of the Internet create an entirely new set of problems for copyright holders. [12]

In this context, it is understandable why writers, publishers, and researchers often look upon using the Internet as “riding the Tiger.” While the Internet has allowed researchers, educators, artists and publishers to expand their markets at an unprecedented rate, the same technology allows any anonymous and invisible copyright pirate to copy and disseminate instantaneously anything that is displayed on the Internet. Understanding how easy it is to duplicate copyrighted material from the Internet today, the content community has valid concerns about how much easier pirating could be five or ten years from now, and they argue that something must be done now to address this problem. [13]

Recognizing the inherent difficulty of enforcing copyrights against individual Internet users world-wide, some experts have argued that the answer to this problem is placing legal liability for copyright infringement on those who allow and enable Internet copyright pirates to exist, namely the ISPs. [14] It is argued that ISPs profit from the pirates’ use of the Internet, and in comparison to an independent publisher or author, an ISP is in a much better position to police how its subscribers use the Internet. [15] On the other side of the argument, ISPs claim that they are passive carriers similar to telecommunications companies and therefore should be granted some limitation from copyright infringement liability. [16] In addition, they argue that to make ISPs liable could stifle the growth of the Internet. [17]

Others argue that the answers to this problem will come from technological innovations, such as the use of “digital watermarking”, rather than through legal reforms. [18] In addition, the argument has been made that cooperation between ISPs and the content community is what is truly needed to solve this problem. [19] ISPs share the content community’s desire to see the Internet grow, and some believe that the threat of holding ISPs liable for copyright infringement may not be the best way to encourage ISPs to help minimize Internet copyright piracy. [20]

The issue of on-line copyright infringement has been around since the use of the Internet started to expand rapidly in the early 1990’s and has been the subject of extensive federal executive branch activities, court cases, and Congressional action. In the closing days of the 105th Congress, President Clinton signed into law a bill that addressed this issue; Title II of the Digital Millennium Copyright Act, the Online Copyright Infringement Liability Limitation Act of 1998. [21]

This paper will analyze the policy arguments, the court cases, and the legislative process that produced this law.

As for the structure of the paper, the first section will discuss the Clinton Administration’s activities concerning this issue. The second section will briefly address statutory copyright law in general and will put the specific issue of on-line copyright infringement liability in context by analyzing the five leading court cases in this area of law. The third section will address the policy arguments for and against the establishment of a limitation on copyright infringement liability for Internet Service Providers. Lastly, this paper will analyze the final version of the legislation that has been signed into law, and discuss why enacting this bill into law is a step in the right direction for the Internet.

 

Mark E. Harrington [1]