AOL owns trademark registrations covering various stylized representations of the mark “ADVERTISING.COM.” On August 17, 2009, AOL filed a complaint against Advertise.com, followed by a motion for a preliminary injunction, alleging that the Advertise.com domain and name were infringing upon the ADVERTISING.COM mark held by AOL. The district court granted AOL’s motion for a preliminary injunction and enjoined Advertise.com from using “any design mark or logo that is confusingly similar to the stylized forms of AOL’s ADVERTISING.COM marks” and from using the designation and trade name Advertise.com, but not from using the existing domain. The district court’s decision was based upon a finding that AOL was likely to show that the ADVERTISING.COM marks are descriptive and therefore protectable under trademark law. Advertise.com appealed the decision and the grant of the preliminary injunction with an argument that AOL’s marks are generic; the Court of Appeals agreed with Advertise.com and reversed the lower court’s decision and vacated the preliminary injunction.

Because ADVERTISING.COM is a registered trademark, there is “a presumption of validity,” which “places the burden of proving genericness upon the defendant,” Advertise.com. Filipino Yellow Pages, Inc. v. Asian Journal Publ’ns Inc., 198 F.3d 1143, 1146 (9th Cir. 1999). In order to show that the associated marks are generic, Advertise.com is required to show that the terms refer to “the genus of which the particular product or service is a species,” i.e., the name of the product or service itself. The services offered by AOL under the ADVERTISING.Com marks are (1) developing relationship with web publisher for the placement of third-party ads on publisher’s sites, and (2) selling online advertising space and marketing campaigns to web marketers. According to the court, “advertise” is concededly generic and the term “.com” refers generically to an online organization or any internet component of an existing business. The two components of AOL’s marks therefore are generic by themselves. While two generic terms brought together may create a distinctive mark, the court went on to find that this was not the case for AOL after applying the “who-are-you/what-are-you” test.

A valid and protectable trademark answers the buyer’s questions “Who are you?” and “Where do you come from?” Alternatively, a generic mark answers the question “What are you?” In applying this test the court determined that AOL’s marks were largely generic. If any of AOL’s competitors

The First Sale Doctrine – Sales of Copyrighted Software Online

Copyright protection gives exclusive control over the sale and distribution of copyrighted works to the copyright holder. Sales by an unauthorized party are considered piracy. There is an exception to this protection, which applies to rightful purchasers of a work, called the “first sale doctrine.” Under this theory, if you buy a book, for example, while you don’t own any portion of the copyright, you are the exclusive owner of that copy, and are free to keep it or sell it as you wish. The entire “used goods” market, which is a large portion of the eBay marketplace, is dependent on the first sale doctrine.

Many “purchasers” of software are aware that when they buy software what they are actually buying is a license for its use from the seller. Software is handled that way to allow developers to have more control over the use of their products once they are transferred. In 2007 Autodesk, Inc., the developer of the AutoCAD software package, sent a takedown notice to eBay after discovering the sale of several AutoCAD packages by Timothy Verner. Mr. Verner acquired the software packages from a Seattle architecture firm (CTA), and not Autodesk, Inc.

According to Autodesk, it still owned the AutoCAD packages in Mr. Verner’s possession because it never transfered ownership to CTA and under the terms of the software license CTA was barred from transferring rights to a third party. Thus, Verner’s sales constituted copyright infringement, or at least contributory infringement, according to Autodesk. The District Court attempted to reconcile two lines of precedent regarding this issue but was ultimately unable leading it to side with the oldest precedent among the competing options. Ultimately Mr. Verner’s sale was held to be privileged by the first sale doctrine regardless of how restrictive Autodesk’s “license” was because the intent of the parties had been to transfer ownership. Autodesk never sought to reclaim ownership of any of its software packages, the packages were merely licensed to extend unenforceable control over its products in the stream of commerce.

Forum Selection Clause – Plan Your Trip to California

In Tricome v. eBay, Inc., the plaintiff argued that eBay’s forum selection clause naming California as the forum for disputes is unconscionable and should not be enforced. The plaintiff further argued that as a “form contract,” eBay’s terms of use constituted a procedurally and/or substantively unconscionable agreement.

While plaintiff contended that the user agreement containing the forum selection clause was a contract of adhesion since the plaintiff never had the opportunity to discuss or negotiate its terms, numerous courts have held that not to be the standard for deeming a contract to be one of adhesion. Additionally, even the terms of an admitted adhesion contract are enforced unless they are “so one-sided as to be oppressive.” eBay operates worldwide and it is not shocking for it to focus its legal defense in a particular forum rather than having to litigate in potentially hundreds or thousands of other jurisdictions.

So, if you’re an eBay seller, selling software in compliance with eBay’s terms is probably not going to cause you any trouble with the copyright holder but if you run afoul eBay’s rules prepare for a trip to California.

Predictably, Hallmark dragged out the usual defenses, namely, the First Amendment’s protection of free speech. Included among the usual suspects of defenses was an interesting move. A move to strike Hilton’s misappropriation claim based on California’s Anti-SLAPP laws (CCP § 425.16). The Anti-SLAPP law (found <a href=”http://casp.net/statutes/cal425.html“><u>here</u></a>) moves to prevent intimidation and the silencing of critics by use of the courts and burdensome and expensive litigation. Said simply, Anti-SLAPP is a move by the California Legislature to protect people’s freedom of speech from unnecessary litigation.

Hilton argued that (well her lawyers argued) the card itself was commercial speech and thus only allowed minimal protection. Hallmark countered saying it was free speech, satirizing Hilton. The court sided with Hallmark, further stating commercial speech is speech merely advertising or soliciting business and not, as Hilton would argue, anything connected to the product of that company.

Although Hallmark met the threshold for Anti-SLAPP protection, Hilton was still allowed to go forth with her misappropriation claim. Although Hallmark’s free speech is the source of Hilton’s suit, as long as she can sustain a legal claim she cannot be prevented from suing Hallmark on her misappropriation claim.

The court further said, “”We must conclude that Hallmark cannot employ the ‘public interest’ defense because its birthday card does not publish or report information.”

The case has now been handed down for trial.