INTERNET LAW BLOG

With the advent of technology and massive use of social networking forums, it is only a matter of time before electronic service of process starts replacing the traditional methods of service of process.

Recently, a Judge in Minnesota was faced with the challenge of serving a husband with divorce papers where the wife had not seen her husband in years and had no physical address to serve him. The wife asked the court if she could send the notice by general delivery. According to the Judge, it did not make any sense to use general delivery as it would only result in waste of postage. Furthermore, the Judge did not trust publication of notices in legal newspapers because it is unlikely that someone would look at a legal newspaper to learn that their spouse wants to get divorced.

To resolve this, the Judge, authorized the wife to serve notice of process to her husband by email, Facebook, Myspace or any other social networking site. The Judge acknowledged the traditional ways of service of process but emphasized that the social networking sites provide a cheaper and more effective way.  This was a radical move because although electronic service of process is common in Canada, United Kingdom, Australia and New Zealand, it is extremely rare in the United States. Another example where the court authorized the use of electronic service of process was in a trademark infringing action where the defendant had neither an office not a home address. All it had was a computer terminal with an email address.

Lawyers across the nation have mixed reactions to this growing trend of using electronic service of process. Some believe that the traditional ways of communication have become obsolete in this world of social networking. Therefore, they believe that the courts should adapt to the new ways of communication. On the other hand, some have raised privacy concerns due to the broadcasting nature of these social networking sites. And some lawyer’s are concerned with the use of electronic service for pro se litigants. Many low-income people do not have home computers or email addresses. These people usually go to public libraries to access the Internet and not everyone is proficient to navigate the system. Therefore, the courts also need to address a reasonable way to deal with these litigants.

For now, all we can do is to just wait and watch the courts’ next move. And who knows, may be in the next few years the courts will also allow electronic service via text messaging.

Comments/Questions: gdn@gdnlaw.com

© 2012 Nissenbaum Law Group, LLC

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Can a company that has an office in New York sue an Arizona company in the New York Courts solely on the basis that the Arizona company allegedly infringed upon the New York company’s copyright?

In a recent decision, the Court of Appeals of New York considered this question and answered in the affirmative, holding that the location of the copyright holder’s business is more determinative of where the lawsuit should be filed than the site of the alleged infringing action. Penguin Group (USA) Inc. v. American Buddha, 2011 NY Slip Op 2079 (N.Y. 2011).

The defendant, American Buddha, was an Oregon-based non-profit corporation with its principal place of business in Arizona. The company maintained the Ralph Nader Library website, which provided online access to classical literature and other works. Four of the works provided on the site had been published in print format by the plaintiff, Penguin Group (USA) Inc. (“Penguin”), which was based in New York. Penguin sued American Buddha in the United States District Court for the Southern District of New York, claiming that American Buddha uploaded unauthorized copies of four of Penguin’s books and, in doing so, violated Penguin’s copyrights. 

The District Court granted American Buddha’s motion to dismiss, finding that nothing made the suit amenable to jurisdiction in New York because the books were not copied there. Instead, they were (presumably) copied in Oregon and Arizona, the location of American Buddha’s servers.  Penguin appealed the decision.

The United States Court of Appeals for the Second Circuit certified to the Court of Appeals of New York the question of interpreting the scope of long-arm jurisdiction under CPLR 302(a)(3)(ii). It allows a court in New York to exercise personal jurisdiction over an out-of-state defendant when the nondomiciliary:

“(3) commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he…(ii) expects or should reasonably expect the act to have consequences in the state and derive substantial revenue from interstate or international commerce.”

NY CLS CPLR Sec. 302.

This case involved downloading copyrighted material and allowing it to be available for public access online. Therefore, the Court focused on whether the site of injury refers to the location of the infringing action or the location of the principal place of business of the copyright holder.

The Court acknowledged that the question was more difficult because the alleged infringing behavior took place online. However, it found that “a New York copyright owner alleging infringement sustains an in-state injury pursuant to CLPR 302(a)(ii) when its printed literary work is uploaded without permission onto the Internet for public access.” Id. at 6. “The crux of Penguin’s copyright infringement claim is not merely the unlawful electronic copying or uploading for the four copyrighted books,” the Court held. “Rather, it is the intended consequence of those activities – the instantaneous availability of those copyrighted works on American Buddha’s Web sites for anyone, in New York or elsewhere, with an Internet connection to read and download the books free of charge.” Id. at 6.

Additionally, the Court held that infringing behavior harms a copyright holder in more ways than mere loss of revenue due to the unique bundle of rights granted to the holder. Infringement could diminish their incentive to want to continue to write and publish material, while also impairing their rights to reproduce and distribute copies by sale. As the Court determined, “[t]he injury to a New York copyright holder, while difficult to quantify, is not as remote as a purely indirect financial loss due to the broad spectrum of rights accorded by copyright law.” Id. at 8.

This decision is significant for the developing field of internet law because it notifies parties that their location or the location of their business assets will not shield them from being brought into other states if they are sued for illegally downloading copyrighted material. Those involved in activities that infringe – or even allegedly infringe – another party’s copyright may (under the right circumstances) be brought into the copyright holder’s domicile to defend themselves.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

For the first time in almost sixty years, patent law is receiving a major update.

On September 16, 2011, President Obama signed the Leahy-Smith America Invents Act (the “Act”), providing the most significant change to patent law since the Patent Act of 1952. The Act (H.R. 1249) shifts the underlying legal framework for patents from a “first-to-invent” to “first-to-file” system. It  places a greater emphasis on the date of patent application is filed. By doing so, it puts United States law more in line with the patent laws used in other countries. The Act seeks to ensure that the first person to file the patent application and have it approved will be the owner of that patent.

Under the “first-to-invent” system, companies generally wait until patents are close to marketability before they file applications for them. The new “first-to-file” system will alter incentives and expedite the process. Companies and individuals with sufficient resources will be more likely to file patent applications earlier during the development process. A company or individual that waits to file an application will now run the risk that another company or individual will invent and file for protection of the same product and thus be granted patent protection over it. The delay that had become common under current law should diminish when the new law takes effect. The Act will apply to patents with priority claims after March 2013.

The Act also eliminates the ability for plaintiffs to sue unrelated entities in a single case. Under previous patent law, plaintiffs were able to join in one lawsuit all defendants who allegedly infringed on the plaintiff’s patent. For cases filed after September 16, 2011, plaintiffs will only be able to join defendants if the alleged infringement is based on the same product or process.

In addition to the shift to a first-to-file system, the Act makes several other significant changes to the patent system. These include:

• Creating two additional ways for a person or company to contest an issued patent: post-grant review and inter partes review.
• Specifying who can file a false-marking lawsuit. Under the Act, either the United States government or a competitor who can prove actual injury can sue for false marking.
• Eliminating the “best mode” requirement. Under the Act, an applicant’s failure to disclose a “best mode” of accomplishing the invention is not a basis for invalidating an issued patent.
• Expanding the prior commercial use defense. The defense was previously only available for method claims. It is now available for any type of claim, so long as it meets certain time requirements.
• Scheduling the opening of additional satellite offices for the Patent and Trademark Office. Four offices are scheduled to open in the next five years, including an expected opening in Detroit.

The Act can be read in its entirety here.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

The legal concept of invasion of privacy by false light could end up leaving the music network MTV in the dark.

In Savely v. MTV Music Television, the Federal District Court for the District of New Jersey denied MTV’s motion to dismiss a suit filed by a street musician. The musician asserted that he did not consent to having footage of his performance included in a documentary the network aired. Savely v. MTV Music Television, 2011 WL 2923691 (D.N.J.).  

Michael Savely, a drummer who performs daily as “Mike Alaska” on New York subway platforms, claimed that he was approached by MTV representatives during one of his routines last November. The representatives asked whether they could film his performance for use in an upcoming documentary. Savely reviewed a contract with which the representatives presented him. He then returned the contract; declined their offer to use footage of him; and told them he did not consent to being filmed. In spite of his refusal, a four-second clip of Savely’s performance was included in a program about the life and career of rap artist Nicki Minaj that debuted on November 28, 2010.

Savely filed suit against MTV asserting three claims of invasion of privacy. The Court granted MTV’s motion to dismiss two of Savely’s claims: (a) invasion by appropriation of name, likeness or identity and (b) invasion by publication of private facts. (A motion to dismiss generally allows a court to throw out prior to trial claims that are without legal merit).

However, the Court denied MTV’s motion to dismiss Savely’s other claims that the network invaded his privacy by false light. According to Savely, the inclusion of the footage of him in the documentary associated him with Minaj, an artist that he said – through her profane lyrics and provocative attire – glorified a lifestyle that was contrary to the image that he chose for himself as a performer and music teacher (drum lessons).

Under New Jersey law, the invasion of privacy can occur under a number of different circumstances. One of them is when “[o]ne who gives publicity to a matter concerning another…places the other before the public in a false light. This breaks down into two elements:

1. the false light in which the other was placed would be highly offensive to a reasonable person and
2. the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed.”

See Cibenko v. Worth Publishers, Inc., 510 F.Supp. 761, 766 (D.N.J. 1981).

Savely asserted that the unprofessional quality and sounds of the footage included in the documentary reflected poorly on him. He also asserted that as a performer, the implied association between Minaj and him portrayed him in a false, unfavorable and disparaging light. In support of this assertion, Savely cited the facts that  the use of the footage caused (a) his fans to criticize him; (b) the parents of his students to terminate his teaching services;  and (c) sales of t-shirts with his image to decline. He said that part of his reason for declining MTV’s offer to be included in the documentary was his fear that association with the “wrong” artist would cost him significant business.

MTV argued, in part, that the footage of Savely was not distorted in any way and that images of him were not distinctly linked to Minaj or any substantive themes of the documentary. However, the Court noted that a claim of invasion of privacy by placing the other before the public in a false light would not require that MTV’s action defamed Savely, but instead merely that the network’s action was “something that would be objectionable to the ordinary reasonable man.” Canessa v. J.I. Kislak, Inc., 97 N.J.Super. 327, 334 (Law Div.1967).

The Court’s decision to deny MTV’s motion to dismiss does not mean the network is guilty for invading Savely’s right to privacy. Instead, it allows Savely’s claim that he was publicized in a false light to continue because the facts he alleged, if proven to be true, could support his claim. Additionally, the Court noted, the question of whether the documentary is capable of bearing a particular meaning that is highly offensive to a reasonable person is one for the Court to decide.

The Court’s decision not to deny MTV’s motion to dismiss is significant for entertainment companies and individuals that record the image and likeness of people for use during those individuals’ projects. Savely’s suit demonstrates the significance of receiving consent from those who are included during a television broadcast, movie or similar medium and the consequences of including those who refuse consent.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC

Entrepreneurs and small business owners beware.

In December 2010, President Obama signed into law the Restore Online Shoppers’ Confidence Act (“ROSCA” or the “Act”), Pub. L. No. 111-345, 124 Stat. 3618 (2010).  In effect, the new law tries to live up to its name by banning certain Internet sale practices so consumers can feel confident in online shopping.

ROSCA sets forth its purposes as follows:

“[c]onsumer confidence is essential to the growth of online commerce. To continue its development as a marketplace, the Internet must provide customers with clear, accurate information and give sellers an opportunity to fairly compete with one another for consumers’ business.”

Id. at Section 2.

Two specific practices that the new law targets are “cross-sales” and “negative option features.” Cross-sale marketing refers to a sales practice where a consumer is offered additional goods or services that are both unrelated to the original purchase and provided by a third party seller. An example of this would be an offer for a magazine membership through a third party website. The concern with this practice is that customers are misled to believe that they are still conducting business with the initial merchant. Also, the consumer’s payment information may be passed to an unauthorized vendor or payment processor without that consumer’s knowledge or consent.

To regulate this practice, ROSCA makes it illegal for post-transaction third party sellers to charge or attempt to charge consumers for any online sale unless they:

(a)    disclose all material terms (including description and price of the good or service being offered) to the consumer before obtaining the consumer’s billing information; and 

(b)   obtain the purchaser’s informed consent to billing (i.e. checking an unchecked box affirming the transaction).

Id. at Sec. 3.

ROSCA also places limits on the negative option features. These concern offers to consumers that are binding unless the consumer opts out of the sale by, for example, deselecting a pre-checked box. ROSCA makes it illegal for a person or company to charge any consumer for any goods or services sold in a transaction through a negative option feature, unless the person:

(a) “provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer’s billing information; 

(b) obtains a consumer’s express informed consent before charging the consumer’s credit card, debit card, bank account, or other financial account for products or services through such transaction; and 

(c) provides simple mechanisms for a consumer to stop recurring charges from being placed on the consumer’s credit card, debit card, bank account, or other financial account.”

Id. at Sec. 4.

Under the new law, the Federal Trade Commission is able to take action against online businesses that use cross-sale or negative option feature marketing but do not comply with the law’s requirements. Additionally, state Attorneys General are also empowered to prosecute against those found to be in violation of ROSCA. Therefore, it is crucial that any business engaging in such practices adjust their methods in order to be compliance with the new law.

Comments/Questions: gdn@gdnlaw.com

© 2011 Nissenbaum Law Group, LLC