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U.S. Intellectual Property and New Media Law Update AMAZON DIDN'T CLICK WITH THE FEDERAL CIRCUIT Amazon.com, Inc. v. Barnesandnoble.com, Inc. (Fed. Cir. - February 14, 2001) NINTH CIRCUIT ALSO CONSIDERS NAPSTER NASTY A&M Records, Inc. et al v. Napster, Inc. (9th Cir. - February 12, 2001) COURTS TOUGHER THAN ICANN UDRP Referee Enterprises, Inc. v. Planet Ref., Inc. et al (E. D. Wisc. - January 24, 2001) STRAIGHT FORWARD DOMAIN NAME BLACKMAIL Virtual Works v. Volkswagen (Fourth Cir. - January 22, 2001) AMAZON DIDN'T CLICK WITH THE FEDERAL CIRCUIT Amazon.com, Inc. v. Barnesandnoble.com, Inc. (Fed. Cir. - February 14, 2001) It would be hard not to know that last year a district judge in the State of Washington issued a preliminary injunction based on Amazon.com's patent, enjoining Barnesandnoble.com's Internet one-click purchase option. Not surprisingly, Barnesandnoble.com appealed the finding of likelihood of infringement and validity which formed the basis of the preliminary injunction. The Federal Circuit has vacated the preliminary injunction, since it believed that Barnesandnoble.com had mounted a substantial challenge to the validity of the patent in suit. The Federal Circuit did, however, find literal infringement of the claims by construing all four independent claims as requiring that the single click purchase be made immediately after display of the purchase information about an item, without any intervening action, but not necessarily immediately after the first display of the object to be purchased or every display in the online web page. On the validity issue, the Federal Circuit found that the District Court committed a clear error by misreading the factual content of the prior art references cited by Barnesandnoble.com and by failing to recognize that Barnesandnoble.com had raised a substantial question of validity of the asserted claims in view of these prior art references. In this context, a reference which is insufficient to demonstrate invalidity for the purposes of summary judgment might be enough to prevent issuance of a preliminary injunction. This is particularly so where the patent is untried and there is no long term acquiescence in the patent's validity. The Federal Circuit found that the cited references raised the question of validity sufficiently to bar a preliminary injunction, but that this decision in no way resolved the issue of validity which only could be decided at trial. This decision can be viewed at: http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=fed&navby=case&no=001109 NINTH CIRCUIT ALSO CONSIDERS NAPSTER NASTY A&M Records, Inc. et al v. Napster, Inc. (9th Cir. - February 12, 2001) Do we really have to give this sophisticated audience a summary of Napster and how it works? Probably not, but we will anyway. Napster is an online service primarily used as an intermediary in the transmission of MP3 music files in a peer-to-peer transmission. One who wishes to obtain a copy of a song using Napster goes to the Napster web site and downloads a list of songs and their location. In actuality, Napster makes available a list of all the participating computers which are online at that moment and which contain the desired song in a publicly available location on the member's computer. Thus, Napster facilitates the ability to copy that song directly from the member's computer containing it. Here, the record industry sued and obtained a preliminary injunction in the court of first instance. Napster appealed and the Court of Appeals slightly modified the injunction, but maintained the basic illegality under the copyright law of both the copying between the computers and Napster's role as a facilitator. The Court essentially found that peer-to-peer file sharing of copyrighted MP3 music files to be improper under the copyright law. Napster users infringe at least two of the copyright holders exclusive rights. Napster users who upload file names through the search index for others to copy violates Plaintiff's distribution rights. Napster users who download files containing copyrighted music violate Plaintiff's reproduction rights. Napster contends that its users do not infringe the Plaintiff's copyright because its users are engaged in fair use of the material, i.e., sampling prior to purchase space shifting and permissive distribution of recordings. The Ninth Circuit found no fair use since the MP3 files were not transformed by the copying. Equally, the Court found commercial use based on distribution to anonymous users who were getting something free for which they would normally have to pay. The Court also found support for the original works being creative works, in that distribution caused injury to the copyright holder through its effect on the market. All of these factors would, thus, indicate there was no fair use. The Court supported the District Court in its rejection of sharing and space shifting as fair uses in the context of Napster. Given that Napster knew or must have known of the infringing use, the Court felt it was proper to impose contributory liability when linked to the infringing use of the Napster system. The District Court's finding that Napster materially contributed to the infringing activity was proper based on the facts as found by the District Court. The Ninth Circuit agreed that Napster provided the site and facility for direct infringement and, thus, was contributorily an infringer. The Ninth Circuit also found the District Court finding that Napster was engaged in vicarious copyright infringement. Vicarious copyright liability is an outgrowth of respondeat superior. In the context of copyright law, vicarious liability extends beyond employer/employee relationship to cases in which defendant has the right and ability to supervise the infringing activity and also has a direct financial interest in such activity. In light of results of the appeal, the Plaintiff has submitted a proposed order to the judge which can be seen at: www.inside.com/jcs/story?article_id=23814&pod_id=9 The decision can be viewed at: http://caselaw.lp.findlaw.com/cgi_bin/getcase.pl?court=9th&navby=case&no=0016401 COURTS TOUGHER THAN ICANN UDRP Referee Enterprises, Inc. v. Planet Ref., Inc. et al (E. D. Wisc. - January 24, 2001) Plaintiff originally bought an ICANN proceeding against eReferee.com and variations of that based upon on its trademark REFEREE. When it lost in the ICANN proceeding it went to the United States District Court for the Eastern District of Wisconsin and won a preliminary injunction despite the ICANN finding. The injunction is extremely broad and bars any mark, domain name or highlighted term when in any way used other than in the common technical reference by any other mark or second level domain name including the term Referee in any form. This is far broader than any relief requested in the UDRP proceedings. The decision can be viewed at: http://www.loundy.com/CASES/Referee_Ent_v_Planet_Ref.html STRAIGHT FORWARD DOMAIN NAME BLACKMAIL Virtual Works v. Volkswagen (Fourth Cir. - January 22, 2001) Defendant, Virtual Works, registered the domain name VW.net with NSI. At the time of registration the Defendant agreed they would use the VW name for their company use as an ISP "but if Volkswagen offered to work out a deal for services or products, that [they] would sell it to [Volkswagen] for a lot of money". At the time of registration there were a number of alternative formulations for VW to indicate Virtual Works. A representative of the defendant eventually called Volkswagen indicating that they owned the rights to VW.net and that unless Volkswagen "bought the rights to VW.net, Virtual Works would sell the domain name to the highest bidder." Defendants gave Volkswagen 24 hours to respond. This one was a no-brainer for the court. The Fourth Circuit affirmed the finding of violation of the ACPA. The decision can be viewed at: http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=4th&navby=case&no=001356P |
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