Cyberlaw Central

Jamie Kalven is a Chicago-based journalist who covers the conditions in Chicago’s housing projects. He blogs at ViewFromTheGround.com. He covered the case of Diane Bond, a woman with a pending civil rights case in Federal Court against five Chicago police officers, some superintendents, an administrator, and the City of Chicago. The defense attorneys issued a subpoena on Kalven to turn over his notes from the interviews he conducted with the parties and witnesses. Kalven then fought the subpoena and the resultant motion to compel.

In a decision dated June 27, 2006, Magistrate Judge Arlander Keys issued an opinion in which he denied the motion to compel the enforcement of the subpoena and certain deposition questions. Incidentally, there is no such thing as a reporter’s privilege in the 7^th Circuit. Instead, Kalven resisted the subpoena on the grounds that the subpoena was overbroad and there were more relevant, reasonable methods available to obtain the requested information. As Judge Keys notes, Kalven’s article itself is readily available to impeach witnesses, the notes themselves do not appreciably add to the defense’s ability to do so. As a side note, only Kalven’s notes from any conversations with the plaintiff herself are required to be produced, but only because she is the plaintiff and there is no basis for protecting those conversations.

The case is Diane Bond v. Chicago Police Officer Edwin Utreras, et al, 04 C 2617, Northern District of Illinois.

Curto v. Medical World Communications, Inc., et al.

Decided May 15, 2006, E. District of New York, No. 03 CV 6327 (2006 WL 1318387)

Plaintiff, Lara Curto, has an ongoing EEOC complaint against the Defendants.  While still employed, she used company-issued laptops in her home office to correspond with her attorneys.  She was careful to use an outside mail service to make sure her memos was not transmitted over the company’s mail system.  Also, the documents were deleted from the laptops prior to her return of the machines.  Defendant Medical World Communications later hired a forensic consultant to examine and recover documents from both laptops.  Plaintiff then asserted attorney-client privilege on these recovered documents.  The magistrate judge agreed, and now Defendant appeals.

Defendants did have a computer usage policy which states that all computers can only be used for business purposes and there is no expectation of privacy for any personal data created, stored, sent or received on these work computers.  However, Defendants only enforced this policy in limited circumstances which gave the employees a false sense of security in their data.

The magistrate judge applied a test with four factors to judge whether the disclosure of these privileged documents was inadvertent.  The magistrate ruled that the balance of factors weighed in favor of the Plaintiff, ruling that the documents were still covered by privilege.  Specifically, the Plaintiff did take reasonable precautions to keep the documents private, the volume disclosed was small, she promptly asserted the privilege upon notification of their recovery, and public policy of encouraging full disclosure with attorneys also weighed in her favor.

The appeal focused on whether the magistrate judge was correct in considering whether the Defendants enforced its computer policy.  It was considered as part of the analysis of whether the Plaintiff acted reasonably in taking precautions to avoid disclosure.  Defendants focused on the well-established body of law that establish that employees have no expectation of privacy on workplace computers where there is a company policy.  However, these cases do not address the related question as to whether an attorney-client privilege could still remain in these materials even though there is no privacy right per se.

In other words, Plaintiff could not object to the forensic computer expert’s analysis and recovery of deleted files from the work computers on the basis of privacy.  However, she still could assert attorney-client privilege in some of these deleted files.

Another factor found important by the court is that these were computers used in a home office.  The court specifically does not address whether such a privilege could be asserted in a computer used in a corporate office environment, noting that these cases are so fact specific they must be analyzed on a case by case basis.

Holding: The magistrate judge’s order is affirmed.

Sanford Wallace, former spammer and now spyware installer with his company Smartbot.Net, today was ordered by a New Hampshire district court to pay restitution to consumers in the amount of four million dollars. Co-defendants OptinTrade and Jared Lansky were required to pay $227,000 in restitution.

The complaint alleges that the Defendants installed spyware on user’s computers without consent in order to sell their anti-spyware products.

For more information, here is a link to an article discussing the case at Internetnews.com

From the Rockford Star, here is a link to an article by Chris Green. David Kauchak, formerly of Machesney Park, pleaded guilty Tuesday to unauthorized use of a computer system. He received a fine of $250.00 and a year of probation.

According to the article, Kauchak was in a car at night outside a nonprofit agency’s offices with a laptop computer using the agency’s open wi-fi connection. A police officer coming by saw him and figured out what was happening.

Sometimes people set up open wi-fi connections with the intent to allow others to access them, but I can’t imagine a nonprofit agency doing so deliberately. It’s hard to plead innocence when caught using it in a car outside the building but within range of the wireless signal.

A reminder to all out there with wi-fi connections - be sure to secure them using at least WEP, if not WPA, level of encryption. If your hardware supports it, I recommend WPA. It’s much more secure.

A federal Judge has indicated that he is likely to compel Google to comply with the Justice Department’s subpoena for search engine data. In a 90-minute hearing held yesterday in California, the Honorable James Ware told Justice Department lawyers that it is likely to receive some of the information requested. A written decision is expected later this week.

(Link courtesy of BeSpacific)

By way of backstory, Google had been requested by the U.S. Department of Justice to respond to a subpoena for the production of its stored data regarding search results. The government argued that it needs to defend the constitutionality of the COPA (Childrens Online Protection Act) that was partially struck down as unconstitutional in 2003. The claim is that the search engine data is needed in order to evaluate the impact of some blocking tools on search engine results. Interestingly, only Google is fighting the subpoena, Yahoo! and MSN have already complied.

Judge Ware indicated that the Justice Department has again scaled down its request. The original subpoena called for “[a]ll URL’s that are available to be located on your companys’ search engine as of July 31, 2005.” After meeting with the lead attorney for the government, the subpoena was narrowed to a “multi-stage random sample of one million URLS” from Google’s database. This was to assure that several random samples of URL’s were submitted. The above article indicates that the government now wants a random sampling of 50,000 Web site addresses indexed by Google and the text of 5,000 random search requests.

I look forward to reading Judge Ware’s opinion when it is released. Hopefully he is able to strike a balance between the Government’s request and the right to privacy on the Internet. The concern, of course, is that this will set the precedent for more subpoenas that will be more invasive of user privacy than this one.

Stay tuned.

Mark Partridge of the Guiding Rights blog has a great summary of a recent case here in Illinois about personal jurisdiction over an out of state defendant. The court found that there were sufficicent minimum contacts based upon activity performed over the defendant’s website with the state of Illinois to justify holding the defendant subject to Illinois jurisdiction. I’d considered summarizing the case myself, but had decided not to since personal jurisdiction cases are so fact specific and the underlying law in this area is rather well settled. Still, I liked his summary of the case, so here is the link.

Angé v. Templer
Decided February 21, 2006
No. C 05-05169 WHA, 2006 WL 436139 (N.D.Cal.)

Plaintiffs, an individual and a California corporation named Gap International, Inc., sued in state court for the conversion of the domain name Gapinternational.com. Defendants include the hosting company who took the Plaintiff’s domain name and the Pennsylvania company named Gap International, Inc. the domain was ultimately transferred to. The defendants convinced a state court judge that the action needed to be removed to Federal court by arguing that Plaintiffs claims, although couched in state law claims, really were claims for cybersquatting under the Lanham Act. Before the court was Plaintiff’s motion to remand the case back to state court.

Upon reviewing the briefs, the court agreed with plaintiffs and remanded the case back to state court. While the property at issue is a domain name, not all disputes over them constitute cybersquatting. For instance, there were no claims based on confusion between two domain names. Rather, defendants had taken an asset of the plaintiffs and interfered with a contractual relationship. Specifically, a fifty million dollar business deal had gone sour as a result of the theft and conversion of the domain name.

The court has a particularly good quote regarding the intersection of federal and state claims over domain names:

At bottom, defendant’s arguments suffer from an attempt to translate every issue relating to the Internet into a federal question. The Internet is not a talisman bestowing federal jurisdiction. There remains a place for state courts to determine the rights and responsibilities in the constantly evolving world of Internet law. Congress has not indicated an intent to strip state courts of this role. While the Lanham Act bestows federal jurisdiction, it does so only over claims that explicitly fall under its scope.

Defendants were required to pay plaintiff’s costs in bringing the remand motion, which were $2,600.00.

Analysis: This case is a reminder that state law claims can exist in the context of domain name disputes. While Federal jurisdiction may be appropriate for some claims, here it was not what the plaintiffs wanted. It seems clear that they wanted a state court to hear its claim and award it monetary damages for the domain name theft since it caused fifty million dollars in funding to fall through. Defendants clearly wanted the court to view it through the lens of cybersquatting, which particular crime they may be innocent of. Conversion, though, is a state law claim which properly should be before a state court if there is no other reason for Federal jurisdiction.

Digital Telemedia, Inc., d/b/a Logicworks vs. C. I. Host, Inc. and Logicworks Corporation, No. 04 Civ. 1734(CSH) - Southern District of New York
2006 WL 300465 (S.D.N.Y.)

Decided February 8, 2006

The plaintiff, Digital Telemedia, Inc., does business as “Logicworks.” It alleges trademark infringement, cyberpiracy, unfair competition, and deceptive trade practices against two defendants. The defendants, C.I. Host, Inc. and Logicworks Corporation, are related companies that share the same address. Before the court is Logicwork’s motion for partial summary judgment seeking transfer of the domain name “logicworks.com” from defendants to plaintiff.

Held: Summary judgment is denied.

Important Facts
The plaintiff is a web hosting company formed in 1993. It renamed itself as “Logicworks” in 2001. At the time, it did a trademark search and discovered the name was available for its services. However, the domain name “logicworks.com” was already registered to a Logicworks Corporation, but could not make contact with anyone at the phone number or email address listed in the domain name registry. It was able to determine that defendant C.I. Host was at the same address, but it did not send any written communications there. An investigator also called two C.I. Host employees, who had never heard of Logicworks Corporation. Accordingly, it registered the domain name “logicworks.net” instead. Plaintiff then registered several trademarks in the LOGICWORKS name. An investigator once emailed Logicworks Corporation to determine whether the .com name was available for purchase, but was told that no “bid less than $100,000 cash” would be considered.

The domain name “logicworks.com” was originally registered in 1999 and did some limited business in 2001 and 2002 before ceasing operations. At some time, the domain name was redirected to point to the C.I. Host website. At the start of this litigation, it was redirected once again to point to a blank page. Defendants never intended to sell the domain name, but instead responded with the $100,000 offer to make the plaintiff go away. Apparently there is some current commercial activity by Logicworks Corporation in the area of software development and sales in California and Texas.

Plaintiff claims that there have been cases of actual confusion, such as customers emailing the plaintiff at the .COM extension rather than the correct .NET address. C.I. Host and Logicworks offer similar web hosting services, so there are also allegations of customers purchasing services from the defendants rather than the plaintiff.

Trademark Infringement Claims
Summary judgment is appropriate only when there is no genuine issue of a material fact once all of the evidence and pleadings are considered. If an issue of fact remains, then a trial must be held. Defendants do not dispute that Logicworks has valid trademark registrations, but instead argues that there is no likelihood of confusion. Plaintiff offers web hosting services, while defendant Logicworks Corporation only provides software development and sales. In support of the argument, it points out that the plaintiff had previously argued in a Response to Office Action before the trademark office that there was no likelihood of confusion between its LOGICWORKS mark and another LOGICWORKS for “computer programs for use as a computer software and database design tool.” That argument was successful, resulting in the Plaintiff’s registration of its mark.

The court notes that most of the confusion between the parties seems to be a result of the plaintiff’s choice to use the .NET address when it knew the .COM address was already registered.

The question as to whether pointing the domain name to the C.I. Host website constitutes infringement is more difficult. A number of theories were advanced, including “initial interest confusion.” These theories depend, however, on the defendant not having valid rights in the name at issue. Here, the defendants have perfectly reasonable explanations for their actions. All of the unused domains registered by the company’s owner pointed to Logicworks.com. Further, the domain name had been used by the defendant prior to the plaintiff’s rebranding of itself as Logicworks. The issue of who properly has the right to the name LOGICWORKS remains a material fact in dispute, resulting in denial of the summary judgment motion.

Cyberpiracy Claims
In order to prevail on a claim under the Anticybersquatting Consumer Protection Act (”ACPA”), the plaintiff must prove:
1) the mark is distinctive or famous;
2) that the domain name is identical or confusingly similar to that mark; and
3) that the domain name was registered, trafficked in, or used with a bad faith intent to profit from that mark.

Even if the first two prongs are met here, the court was not convinced that the plaintiff had established use in bad faith by the defendants. The domain was registered before the plaintiff’s rebranding. Further, the court believed that defendant’s explanation of its later use of the mark was reasonable. Since there is a material issue of fact regarding the bad faith of the defendant, summary judgment was not appropriate.

Analysis
The defendant here is in the unenviable position of owning a domain name it can’t easily use in commerce. Since the domain was registered before the plaintiff started using its mark, only later use in bad faith could result in the registrant losing the domain. Whether pointing to its other company’s website constitutes bad faith is an open question, especially when the company is a competitor of the plaintiff. I’m not convinced that the defendant’s normal practice of pointing its unused domains to the C.I. Host website will be enough to prove that it isn’t now profiting from a domain it once had the right to use in commerce but now may not. If the plaintiff can prove the services are similar enough, then there likely will be infringement based upon this kind of use.

At trial, I would expect the plaintiff to have a much better chance of making its case. Still, its choice of going forward with the .NET domain name when the .COM was already registered was a calculated risk, one that in hindsight was probably not the best one to make. I’m not too sympathetic about its confusion claims since, as the court points out, the confusion was self inflicted. What the plaintff didn’t expect, though, was the domain name being used to point to a competitor’s website. That use is likely what will be at issue at trial.

Ryan Singel at Wired News has a great article on the battle (has it really been ten years? My, how time flies) ten years ago over the Communications Decency Act. The article is entitled “They Saved the Internet’s Soul.” I highly recommend it, it’s only two pages long.

This case went all the way to the Supreme Court while I was in law school, and wow, it was an exciting time to be interested in technology and the law. Reading through the Court’s opinion, it was clear that the Court actually understood the technology and its implications and was very careful in this case of first impression to get it right. Even ten years later, the decision is a good primer on how the Internet works.

The recent case of Hub Group, Inc. v. Clancy, decided by Judge Stengel of the Eastern District of Pennsylvania on January 25, 2006, provides an interesting look at a trade secrets case (they’re relatively rare when compared to other forms of intellectual property) and it also provides a review of the standards needed in order to obtain a preliminary injunction.

Plaintiff Hub Group, Inc. (“Hub”) is an Illinois-based transportation management service company. Defendant Clancy is a former employee who, prior to the end of his employment, sent information from Hub’s confidential pricing database to his wife’s Hotmail account. Clancy then began working for a direct competitor of Hub’s. A temporary restraining order (“TRO”) was entered in May of 2005, then a preliminary injunction hearing was held in August, 2005. The hearing was to decide whether the facts of the case were sufficient to justify extending that TRO into a preliminary injunction that would last until trial. No explanation is given in the opinion for the delay between the preliminary injunction hearing in August and this decision in January of 2006.

Trade secrets cover any information so long as it is kept reasonably secret and it provides economic advantage to the one possessing it. The pricing database is a trade secret because it contains confidential information that is kept secret. Clancy had signed a confidentiality agreement that covered access to the database, which is password protected.

Federal jurisdiction is based on violation of the Computer Fraud & Abuse Act. Clancy tried to argue that Hub wasn’t sufficiently damaged for the Act to apply, but that argument was unsuccessful. Clancy did exceed the scope of his authorization to use the information in that database, and Hub did allege sufficient damage.

In order for Hub to succeed and obtain the preliminary injunction, it needed to prove the following elements:
1)HUB needed to establish that it suffered irreparable harm by Clancy’s actions;
2)HUB needed to prove a reasonable probability of success on the merits;
3)that the harm to HUB outweighed the possible harm to other interested parties, and
4)that the injunction would be in the public interest.

In this case, however, Hub was unable to meet these required elements. Hub could not prove that it would suffer harm that could not be remedied by other means, such as payment of monetary damages. Clancy had no continuing access to Hub’s information, plus the pricing information obtained by Clancy was already severely out of date. The court reasoned that the monetary remedies were sufficient if Clancy chose to use the old data, so accordingly the preliminary injunction was denied and the temporary restraining order was dissolved.

Analysis
The information obtained by Clancy had a very short useful life, so the fact that Hub had succeeded in preventing Clancy from using it for over seven months (by bringing suit and obtaining the TRO) was already a sufficient remedy. There was no sufficiently compelling reason to prevent Clancy from accessing the information until a trial since there were other remedies available if Clancy were to actually use this obsolete information. If there were ongoing serious harm, it is likely that the injunction could have been granted.

Hub Group, Inc. v. Clancy, 2006 WL 208684 (E.D.Pa.), January 25, 2006.