Laws of .com

Volume IV, Issue 7: April 6, 2006

B.C. Court Awards Damages and Permanent Injunction in Cyberlibel Lawsuit

UK Politician Wins Internet Defamation Lawsuit

U.S. Federal Court Finds Use of Competitor's Marks as Keywords in Online Advertising not Trademark Infringement

Gratis Internet Sued for Massive Privacy Violations

Travel Websites Sued over Hotel Occupancy Taxes

Legality of Internet Archive at Issue

Ontario Judge Concludes Time Spent on Research Excessive in Electronic Age

Illinois Court Tough on Wi-Fi Bandit

Stem-Cell Research Opponents Enjoined From Violating Copyright

Good News in the World of Patents for Google Earth

Shaw Sued by U.S. Competitor over Vetoed TV Ad

B.C. Court Awards Damages and Permanent Injunction in Cyberlibel Lawsuit

In WeGo Kayaking Ltd. v. Sewid et al., the plaintiffs sought a permanent injunction along with damages and costs against the defendants for ongoing libelous remarks. Although each defendant filed a defence and was properly served with the plaintiffs’ Notice of Motion, neither appeared for the hearing.

The plaintiffs, Northern Lights Expeditions Ltd. and WeGo Kayaking Ltd., are adventure companies that operate kayak tours off the west coast of British Columbia. The defendant, Thomas Sewid, operated a tour and water taxi business in the same area.

The action arose from website content titled a “Kayak Companies Review” that the defendants published on a website advertising Mr. Sewid’s services. The review, which listed good and bad kayak companies in the area, stated that bad kayak companies are ones that “have done things to try and make First Nations become token Indians who are only needed as items of attraction or convenience.” The plaintiffs were listed as one of the bad kayak companies and Mr. Sewid’s name appeared at the bottom of the review.

Mr. Sewid’s views of WeGo Kayaking were also published in a local newspaper in May 2005. He subsequently retracted his statement and provided an apology indicating that his remarks were factually incorrect.

As a result of the defendants’ website, which had one of the top search engine rankings for potential visitors looking for information on sea kayak tours off the west coast of B.C., the plaintiffs experienced significant reduction in customer Internet bookings and consequently net profit.

At the hearing, Metzger J. was satisfied that the other defendant, Kathleen Westergaard, who operated the Village Island website, and continually published Mr. Sewid’s opinions, was his partner. In his analysis, Metzger J. reiterated that:

• [a]n action for defamation requires the court to balance the competing principles of freedom of expression and the protection of reputation;
• [a] publication that tends to lower a person’s reputation in the estimation of reasonable persons, or to expose a person to hatred, ridicule or contempt is defamatory; and that
• [i]n an action for libel, the plaintiff must prove that the impugned statements are defamatory. The plaintiff need not prove that the statements resulted in actual loss; damage is presumed.

Metzger J. went on to conclude that in this case the words are defamatory in the ordinary meaning. The statements wherein the plaintiffs were labeled as Bad Kayak Companies, “imply that the plaintiffs do not respect First Nations persons and culture, and have environmentally unsound business practices.” In finding that an injunction was justified in this case, the court concluded that the plaintiffs would suffer irreparable harm if an injunction were not granted. Moreover, loss of goodwill might never be recovered, nor adequately compensated by damages.

In awarding each plaintiff $60,000 for general damages, Metzger J. stated that the assessment of damages flows from the circumstances of the particular case, and in assessing damages the following factors should be considered, namely, “the plaintiff’s conduct, position and standing; the nature of the libel; the mode and extent of publication; the absence of any apology or retraction; and the defendant’s conduct from the time of publication to the end of trial.”

For a copy of the decision, visit:
WeGo Kayaking Ltd. v. Sewid et al.

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UK Politician Wins Internet Defamation Lawsuit

Michael Keith Smith of the UK Independence Party sued Tracy Williams for libel, after Ms. Williams posted several derogatory remarks in an Internet chat room operated by Yahoo.

Williams’ remarks stem from her dissatisfaction with Smith’s 2003 comments that he was in favour of the Iraq war. The accusations leveled against Smith included claims that he was a racist, pervert and a sexual deviant, guilty of sexual offences including sexually harassing a co-worker and soliciting boys. Williams’ remarks were made under a pseudonym. In 2004, Smith obtained a court order forcing Yahoo to reveal the identity of the poster and subsequently brought forward his case to the High Court, claiming that Williams had continued to abuse him online.

Presiding Judge Alistair MacDuff ordered Ms. Williams to pay £5,000 general damages, plus £5,000 for aggravated damages, and granted Smith an injunction preventing further publication of the same or similar defamatory remarks. Additionally, Ms. Williams, who did not file a defence, was ordered to pay costs in the amount of £7,200.

For additional information, visit:
http://uk.news.yahoo.com/060323/152/g77z6.html

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U.S. Federal Court Finds Use of Competitor's Marks as Keywords in Online Advertising not Trademark Infringement

The U.S. federal court ruled this week that, while the purchase of a competitor’s search engine keyword may constitute trademark dilution and false advertising, it does not constitute trademark infringement.

The lawsuit filed by Merck against several online pharmacies alleged trademark infringement, trademark dilution and false advertising based on the use of the “Zocor” trademark on websites and in keywords. The decision contradicts the rulings in the interlocutory decisions in Geico and the recent Edina Realty Ltd. case, but is consistent with other decisions, such as the appellate decision in 1-800-Contacts.

In Geico, it was argued that Google’s sale to car insurance providers of “Geico” as a keyword to trigger their ads constituted “use in commerce” and was thus trademark infringement. Google settled the case.

In Merck, the court made reference to the Geico decision but did not agree with its reasoning. Instead, the court held that the defendant’s purchase of “Zocor” as a keyword was not improper because the trademark was not placed on the product or label or displayed in the sale of services and as such, did not constitute trademark use.

In Edina Realty Ltd., the Minnesota court found that there was cause to believe that the use of the name “Edina Realty” in keywords purchased by competitors would cause confusion amongst consumers.

Although the Merck ruling is good news for search engine advertisers and competitors seeking to oust their rivals, the issue is not yet crystal clear.

For additional information, visit:
http://news.com.com/2100-1030_3-6056754.html
http://news.com.com/2100-1024_3-6055768.html

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Gratis Internet Sued for Massive Privacy Violations

New York 's Attorney General, Elliot Spitzer, has sued Gratis Internet, an online marketer, for what authorities are describing as the biggest deliberate breach of Internet privacy ever.

Gratis owns and operates Websites that offer free merchandise to consumers in exchange for registering their email addresses. Notwithstanding its promises to "never lend, sell or give out for any reason your email address or personal information", Gratis is alleged to have sold personal information obtained from as many as 7 million user records to three independent email marketers.

For additional information, visit:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14169365.htm

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Travel Websites Sued over Hotel Occupancy Taxes

The city of Atlanta has sued a dozen major online travel website operators, including Expedia, Orbitz, Hotels.com and Travelocity.com, claiming the companies have failed to pay tens of millions of dollars in hotel occupancy taxes. In a lawsuit filed March 29, 2006 in Fulton County Superior Court, the city says the companies are collecting the full seven percent Atlanta occupancy tax from customers, but remitting only part of it to the city and keeping the rest as profit.

As claimed by one of the city’s lawyers, the operators purchase hotel rooms directly from hotels at discounted rates and then re-sell the rooms to customers at higher rates, charging the customers the occupancy tax based on the higher rates. The operators remit to the city the tax amount based on the discount price paid to the hotel, not the higher price received from the customer. The city’s position is that the tax remitted should be based on the final price charged to the customer.

Similar lawsuits have been filed in the last year by the cities of Chicago, Los Angeles, Philadelphia, San Diego and Rome, Georgia. A pending federal lawsuit was also filed last year by Fulton and Hart counties and several North Georgia cities.

For additional information, visit:
http://www.m-travel.com/news/2006/03/internet_travel.html

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Legality of Internet Archive at Issue

The Internet Archive (www.archive.org) touts itself as “a digital library of Internet sites and other cultural artifacts in digital form”. The non-profit archive was created in 1996 to preserve web pages; you can enter a particular site into its search engine, and access various iterations of that site as it has appeared over the years. Of course, the Internet Archive depends on creating and storing exact copies of web pages, an activity that obviously raises copyright issues, and that has become the focus of an ongoing lawsuit.

In 2003, Healthcare Advocates Inc. sued another company for trade-mark infringement and for taking trade secrets. The defendant firm used the Internet Archive to obtain old versions of the Healthcare Advocates website, and demonstrated that some of the information at issue was not secret because Healthcare Advocates had made it available on its own website.

Not pleased by this development, Healthcare Advocates sued the Internet Archive. Healthcare Advocates claimed that the archive failed to protect information even after Healthcare Advocates asked how access to certain files could be restricted.

Website owners can take steps to prevent their sites from being included in the Internet Archive, and can also ask that information in the archive be removed. Whether Healthcare Advocates made such a request, and whether the Internet Archive responded appropriately, is presumably an issue in the lawsuit. Another underlying issue is the value and purpose of the archive itself; the Internet Archive says that it provides a valuable social and historical service by preserving web pages over time, while Healthcare Advocates claim that the archive’s indiscriminate collection of information violates copyright and may not be appropriate.

For additional information, visit:
http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14234814.htm

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Ontario Judge Concludes Time Spent on Research Excessive in Electronic Age

In a recent decision from the Ontario Superior Court (Family Court), Justice Campbell reduced a claim for costs on the basis that certain case-law research could have been conducted more efficiently through the use of an electronic search tool. The following quote from the decision best captures Justice Campbell’s reasoning:

“This motion was not at all complicated. Although some case-law research was necessary and although Mr. Hopkins did indeed produce several relevant and persuasive cases relating to the circumstances of one parent’s removing children to another locality before trial, I cannot understand how Mr. Hopkins could invest 10½ hours obtaining and reading the essence of those cases. Surely in this electronic age, Mr. Hopkins would perform the same task that I, or any other legally trained person, would and “click” the word “mobility” into the QuickLaw website. His computer would then have given him the relevant case law. I decline to award costs for the amount of time claimed for this part of the preparation for the argument.”

For a copy of the decision, visit:
Biggin v. Maloney

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Illinois Court Tough on Wi-Fi Bandit

In January of this year, David M. Kauchak, of Winnebago County, Illinois was discovered by a police officer piggybacking on someone else's wireless Internet signal. He pleaded guilty and admitted in court that he parked in a lot in the early morning hours to use the wireless network of a local non-profit organization, behaviour that drew the attention of police. For this crime, Kauchak was sentenced to a year of probation and a $250 fine.

Kauchak has become the first person in Illinois to be arrested for this type of conduct. According to Assistant State Attorney, Tom Wartowski, "we just want to get the word out that it is a crime. We are prosecuting it, and people need to take precautions.”

For additional information, visit:
http://www.rrstar.com/apps/pbcs.dll/article?AID=/20060323/NEWS0107/103230036/1004/NEWS

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Stem-Cell Research Opponents Enjoined From Violating Copyright

A federal court judge has issued an injunction preventing the Elliot Institute for Social Sciences (the “Institute”), an institute dedicated to opposing stem-cell research, from using material it had taken from the site of the Missouri Coalition for Lifesaving Cures (the “Coalition”), an organization which supports the protection of stem-cell research.

The court found that the Institute violated the Coalition’s copyrights by mimicking the look, the feel and even invisible computer tags of the Coalition’s Website. They used the same pictures with the same layout on each page. The Coalition had argued that that was a deliberate attempt to confuse the public. The Institute even used the Coalition’s trade-marks as metatags in the Institute’s Website. The Institute will now have to stop using the trade-marks, graphic design and computer code used in the Coalition’s Website. They have indicated that they intend to comply with the ruling and set up a newly designed site.

For additional information, visit:
http://www.kansascity.com/mld/kansascity/news/local/14146828.htm

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Good News in the World of Patents for Google Earth

A preliminary order released in late March by a U.S. District Court in Massachusetts favours Google in a patent infringement suit dealing with its popular Google Earth geographical mapping program. Virginia-based Skyline Software Systems launched a patent infringement suit in May 2004 against California-based Keyhole, claiming that Keyhole’s 3D terrain imaging technology violated Skyline’s U.S. Patent No. 6,496,189. Google acquired Keyhole in October 2004 and employed its technology as the basis for Google Earth released in June 2005. In January 2006, Skyline sought a preliminary injunction to shut down Google Earth and preclude further sales until the dispute is resolved. In the recent Markman hearing ruling to construe the meaning of the patent, Judge Woodlock sided with Google’s interpretation of the patent terms on several occasions, only adopting Skyline’s version on two uncontested instances.

Google Earth “combines satellite imagery, maps and the power of Google Search” allowing users to explore the entire planet from their desktop. The software employs streaming technology to access terabytes of aerial and satellite imagery, including 3D depictions of several large cities. Users have embraced the software project, which may be used to ascertain driving directions, plan a trip, or search for schools, parks, and local businesses.

Google offers commercial versions of the software for an annual subscription fee in addition to its popular free non-commercial version. Google Earth’s release was an effort to capture a dominant market share in the mapping services industry. However, Google is not alone and competes with Microsoft’s Virtual Earth, Amazon’s A9, and of course, Skyline’s TerraExplorer.

A trial to determine whether Google’s technology indeed infringes the Skyline patent is expected to start in late 2006.

For additional information, visit:
http://news.com.com/2102-1032_3-6056716.html

For Skyline’s U.S. Patent No. 6,496,189, visit:
http://tinyurl.com/lme4f

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Shaw Sued by U.S. Competitor over Vetoed TV Ad

A recent report indicates that ZingoTel, a U.S.-based Internet telephone provider, has filed a $1.2 million lawsuit against Shaw Communications, a Canadian company that provides Internet, television and digital telephone services. The lawsuit alleges that Shaw refused to broadcast a ZingoTel television advertisement because it promoted a competing telephone service. ZingoTel has further sought damages from Corus Entertainment, Shaw’s media buyer, and has filed a complaint with the Canadian Radio-television and Telecommunications Commission (the “CRTC”), an independent agency that regulates Canada's broadcasting and telecommunications systems. The report also indicates that Vonage Canada has recently requested the CRTC to investigate why Shaw’s high-speed Internet subscribers must pay an additional $10 fee to Shaw if they select a non-Shaw Internet telephone service. Shaw representatives argue the fee is optional and is used to ensure higher-quality telephone services. Some observe that as Internet telephone technology becomes more popular, competition will increase in the Canadian telecommunications market to the benefit of consumers.

For a copy the report, visit:
http://tinyurl.com/mjy6k

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