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The Ninth Circuit Clarifies the “Safe Harbor” Provisions of the Digital Millennium Copyright Act

On March 29, 2007, the Ninth Circuit issued its opinion in the case Perfect 10, Inc. v. CCBill LLC, et al. in which it attempted to clarify when immunity is available to internet service providers for copyright infringement under the Digital Millennium Copyright Act (“the DMCA”), 17 U.S.C §512. Perfect 10, the publisher of an adult magazine and a related subscription website, brought a lawsuit claiming that CCBill and CWIE violated copyright laws by providing services to other websites that posted images stolen from Perfect 10’s magazine and website. CWIE provides web hosting and related internet connectivity services to the owners of various websites. CCBill allows customers to use credit cards or checks to pay for subscriptions or memberships to various websites. The U.S. District Court granted summary judgment in favor of CCBill and CWIE as to the copyright claims finding that they qualified for the “safe harbor” provisions from copyright infringement liability under the DMCA.

The Ninth Circuit began by recognizing that the DMCA created specific “safe harbors” to “provide protection from liability for: (1) transitory digital network communications; (2) system caching; (3) information residing on systems or networks at the direction of users; and (4) information location tools.” While the safe harbor provisions limit liability, they “do not affect the question of ultimate liability under the various doctrines of direct, vicarious and contributory liability.” The Ninth Circuit recognized that to be eligible for any of the four safe harbor provisions, a service provider must first meet the threshold requirements set out in section 512(i). Specifically, a service provider such as CCBill or CWIE must have “adopted and reasonably implemented, and informed subscribers and account holders, of . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders . . . who are repeat infringers.” (17 U.S.C. § 512(i)(1)(A).)

The Ninth Circuit observed that the DMCA does not define “reasonably implemented,” but held that “a service provider ‘implements’ a policy if it has a working notification system, a procedure for dealing with DMCA – compliant notifications, and if it does not actively prevent copyright owners from collecting information needed to issue such notifications.” While the DMCA allows a service provider to implement a variety of procedures, a policy implementation is reasonable if under “appropriate circumstances” the service provider “terminates users who repeatedly or blatantly infringe copyright.”

In turning its attention to these factors, the Ninth Circuit addressed Perfect 10’s claim that CCBill and CWIE prevented the implementation of their policies by failing to track webmasters who repeatedly infringed. The Ninth Circuit disagreed and found that CCBill/CWIE had implemented a policy of tracking repeated infringers. The Court recognized that CCBill and CWIE posted a “DMCA Log” which attempted to identify those webmasters who were repeat infringers. The DMCA Log, although having some gaps, indicated the email address and/or name of those webmasters who routinely infringed. Therefore, there was no triable issue of fact that CCBill and CWIE implemented a repeat infringer policy.

As to the issue of reasonableness, the Ninth Circuit recognized that “[a] service provider reasonably implements its repeat infringer policy if it terminates users when ‘appropriate’.” The Ninth Circuit again recognized that the DMCA does not define when it is “appropriate” for service providers to act. The Court emphasized, however, that service providers do not need to “affirmatively police its users for evidence of repeat infringement.” This is premised on the fact that the DMCA provides that a service provider is not liable for monetary relief “if it does not know of infringement.” The Court also observed that the DMCA provides that a service provider is not liable “if it acts ‘expeditiously to remove, or disable access to, the material’ when it (1) has actual knowledge, (2) is aware of facts or circumstances from which infringing activity is apparent, or (3) has received notification of claimed infringement meeting the requirements of § 512(c)(3).”

The Ninth Circuit found that Perfect 10’s claimed notice of infringement did not give rise to a triable issue of fact since it did not substantially comply with the notice requirements of section 512(c)(3). The Ninth Circuit ruled that compliance is not “substantial” if the notice complies with only some of the requirements of § 512(c)(3)(A). The Court held that the DMCA requires “substantial compliance with all of section 512(c)(3)’s clauses, not just some of them.” The Court rejected Perfect 10’s claims that it had substantially complied with 512(c)(3) since it claimed that its notices were provided in a “combination of three sets of documents.” The Ninth Circuit recognized that each of these communications contained more than mere technical errors, rather, one or more of the required elements were entirely absent from the notices. The Ninth Circuit recognized that substantial compliance with section 512(c)(3) is necessary because of the drastic consequences of accusations of alleged infringement: i.e., a user could have content removed or may have his access terminated entirely. Since Perfect 10 did not provide effective notice, the Ninth Circuit held that actual knowledge of infringement could not be imputed to CCBill/CWIE based on Perfect 10’s communications.

In granting summary judgment, the District Court had held that notices of infringement sent to CCBill and CWIE by other, non-party copyright holders were not relevant to the issue of Perfect 10’s claims of copyright infringement. However, the Ninth Circuit disagreed and ruled that CCBill/CWIE’s actions toward copyright holders who were not parties to the litigation was “relevant in determining whether they reasonably implemented their repeat infringer policy.” The Ninth Circuit recognized that a “policy is unreasonable only if the service provider fails to respond when it had knowledge of an infringement.” Thus, the Ninth Circuit held that the District Court on remand must consider whether CCBill and/or CWIE “implemented its repeat infringer policy in an unreasonable manner with respect to any copyright holder other than Perfect 10.”

Finally, the Ninth Circuit held that a service provider “may lose immunity if it fails to take action with regard to infringing material when it is ‘aware of facts or circumstances [“red flags”] from which infringing activity is apparent.’” Perfect 10 argued that CCBill/CWIE were aware of a number of “red flags” since it provided service to various websites such as illegal.net and stolencelebritypics.com. The Ninth Circuit rejected this argument, however, ruling that there was nothing in these titles to put CCBill/CWIE on notice of apparent infringing activity since these “titillating” titles “may be an attempt to increase their salacious appeal rather than an admission that the photographs are actually illegal or stolen.”

Perfect 10 also argued that CCBill was not entitled to immunity because it interfered with “standard technical measures” by blocking Perfect 10’s access to CCBill-affiliated websites in order to prevent Perfect 10 from discovering whether those websites infringed on Perfect 10’s copyrights. The Ninth Circuit remanded to the District Court to determine “whether access to a website is a ‘standard technical measure’ and if so whether CCBill interfered with [Perfect 10’s] access.”

CCBill argued that, because it provides a hyperlink so that a user may access a client website after it processes that user’s credit card, it fell under the “information location tools” safe harbor of section 512(d). The Ninth Circuit found that even if the hyperlink provided by CCBill could be viewed as “information location tool,” the majority of CCBill’s activities fall outside of the safe harbor. The Ninth Circuit recognized that section 512(b) provided immunity only for the infringement “by reason of the provider referring or linking users to an online location containing infringing material or infringing activity.”

The Ninth Circuit’s opinion in Perfect 10 requires copyright holders to remain vigilant and observe strict compliance with the notice of infringement requirements in the DMCA. Otherwise, a service provider can claim that it did not have actual knowledge of the infringing activity because of the defective notice. A copyright holder then risk being thrown out of court for failing to comply with these notice requirements if a service provider can establish immunity under the “safe harbor” provisions of the DMCA.

The Ninth Circuit Expands Employer’s Right to Sue Competitors Who Hire Away Their Employees

By Andrea Anapolsky

The state of California is considered an at-will employment state, where both the employee and the employer may freely walk away from the employment contract at any time with little to no consequences. This freedom, while intended to benefit both the employer and the employee, has enabled several employers to hire away their competitor’s employees. Last month the Ninth Circuit identified significant nuances concerning the issue of whether, under California law, a corporation’s allegations that its competitor lured away employees who signed term-based employment contracts, sufficiently plead intentional interference with contract, interference with prospective economic advantage and violation of the California Business and Professions Code section 17200 et seq., also known as the Unfair Competition Law (“UCL”).

On March 15, 2007, the Court of Appeals for the Ninth Circuit issued a decision interpreting these two common law tort claims and the URL in CRST Van Expedited, Inc. v. Werner Enterprises, Inc., 2007 No. 04-56809 and No. 04-57129 (9th Cir. March 15, 2007). The appellate court reversed the district court’s decision to dismiss Plaintiff CRST’s claims and instead ruled that California law forbids hiring an employee whom the competing employer knows to be under contract with his or her present employer, even if the contract does not assure the employee of continued employment for a specified period of time.

The case involved a trucking company, CRST, which paid for its employees to receiving training in order to become truck drivers. Specifically, CRST would pay for the first two phases of training with a prospective employee and then would enter into an employment contract, at which time CRST would pay for the third phase of training. CRST’s employment contracts provided, in pertinent part that “the term of CRST’s employment of Employee under this contract shall be for a period of one (1) year…subject to termination for Due Cause by CRST prior to the end of the term…” (Id. at 3188). After the one year period, the employment became at will and could be terminated at any time by either party. (Ibid.) If an employee left CRST within the first year, they would be required to reimburse CRST $3,600 in training expenses. Conversely, if CRST terminated an employee within the first year without cause, CRST would release the employee from their obligation to reimburse CRST for the training expenses. The defendant, Werner, allegedly solicited and hired two of CRST’s employees (both of whom had completed their first month of their first year of employment), even though CRST had notified Werner several times of the terms of its employment contracts.

CRST sued Werner in federal court for intentional interference with contract, violation of the UCL, interference with prospective economic advantage and misappropriation of trade secrets (which was dismissed). Werner claimed that under California law, it was free to hire the drivers so long as Werner did not use “independently wrongful means” in doing so. The Ninth Circuit rejected Werner’s defense and held that CRST’s employment contract alleged did not create an at-will employment relationship during the first year of employment, the period when it was allegedly the subject of Werner’s interference and consequential breach. Further, since the terms of the employment contract concerning the first year of employment limited both CRST’s and the employee’s “freedom to walk away from the employment”, the Ninth Circuit found that CRST’s employment contract provided for employment of a specified term and as such, the employment relationship was not at-will during the first year of employment. (Id. at 3194, 3196).

Interestingly, in upholding CRST’s claims of interference with prospective economic advantage, the Court agreed that Werner’s act of interviewing and offering a job offer was sufficient to constitute a business act or practice, and since CRST’s employment agreements with these drivers were term contracts, Werner committed the “wrongful act” required to satisfy the interference with economic advantage claim. The Court recognized that in earlier California cases, in order to successfully plead interference with contract, the plaintiff who lost an at-will employee, had to allege and prove that its competitor not only interviewed an applicant and made a job offer, but initiated targeted solicitations to disrupt the competitor’s business, for example. The appellate court emphasized that while its holding may appear contrary to the distinction between the two common law torts of intentional interference with existing contract and intentional interference with prospective economic relations by earlier California cases, the Ninth Circuit noted that CRST adequately alleged specific allegations of contract interference coexisting with independent interference with prospective economic relations.

This ruling has repercussions for employers on both sides of competitive hiring: the hiring company and the previous employer. New employers who hire a competitor’s employees should take extra precautions when actively recruiting employees to ensure that the prospective employee is not contractually banned from accepting the employment offer. For employers who want to prevent an employee from leaving to join a competitor, they should enter into a contract that provides for some financial consequences if the employee is terminated or severs their employment within a set period of time.

The YouTube Question

By now, everyone has heard about the One Billion dollar copyright infringement lawsuit Viacom filed against YouTube and its owner, Google. The lawsuit stems from the fact that clips from a number of Viacom’s programs are regularly appearing on the YouTube website.

YouTube allows its users to post video clips onto the YouTube website, and categorize the clip by providing terms which enable the clip to be displayed when a viewer conducts a search. While some users post videos clips they themselves create, other users are posting clips from television programs and motion pictures, including programs owned by Viacom such as Sponge Bob Square Pants, The Daily Show with Jon Stewart, The Colbert Report, South Park, and MTV Unplugged.

One of Viacom’s chief complaints is that YouTube has not instituted filtering technologies to prevent the uploading of clips from Viacom’s programs despite promises from its executives. Viacom also complains that because YouTube users are able to re-post removed clips almost as soon as they come down. This and other factors cause Viacom to lament that “no matter how much a copyright owner expends to protect their rights, there will always be a vast collection of infringing videos available on YouTube to draw users to its site.”

As an attorney who regularly represents content owners, I understand Viacom’s concerns. Viacom believes that if clips from one or more of its programs are available to users for free on YouTube, this may lessen the demand for those programs on either Apple’s iTunes or on one of Viacom’s own sites. Is YouTube taking advantage of some loopholes in the now 9 year old Digital Millennium Copyright Act (“DMCA”), or is the DMCA doing what its supposed to do and content owners are trying to run rough shot over what may be fair use.

Under the DMCA, a “Service Provider” may be entitled to immunity from claims of copyright infringement in four areas: 1) transitory communications; 2) system caching; 3) storage of information on systems or networks at direction of users; and 4) information location tools. While each area would appear to have some application to YouTube’s business, the information storage category is likely to be of primary focus if Viacom’s suit progresses.

Under the information storage safe harbor, the Service Provider:

  1. Must not have actual knowledge that the material is infringing;
  2. Must not aware of facts or circumstances in which they would be aware of that the material is an infringement;
  3. Upon becoming aware of the existence of such infringement material, acts promptly to remove or disable access to the infringing material.

In addition, in order to be entitled to copyright infringement immunity under this provision, the Service Provider must not receive a financial benefit directly attributable to the infringing material where it has the right and ability to control it. Additionally, the Service Provider must, upon notification of a claim of infringement, quickly removes or disables access to the infringing material.

The areas that will receive the most attention in determining whether or not YouTube should be entitled to the protections of this safe harbor is whether YouTube receives a financial benefit directly attributable to the infringing material, and YouTube’s knowledge that the material is, in fact, infringing.

YouTube sells advertising on its site, and reaps a financial benefit from high user traffic. However, as far as this writer is aware, YouTube does not include advertisements either before, after or within the video clips themselves. Rather, YouTube runs banner ads where YouTube gets paid based on the number of times any particular ad is viewed. Under Ninth Circuit case law this may be enough to establish a “financial interest.” (See, A&M Records, Inc. v. Napster, Inc; Fonovisa, Inc. v. Cherry Auctions, Inc. See also Perfect 10 v. Google, Inc.)

Does YouTube know that material on its system is infringing. Viacom claims that YouTube does. In an Op-ed piece in the Washington Post, Viacom’s general counsel claims that YouTube users use the site to view infringing material and “[i]f the public knows what’s there, then YouTube’s management surely does.” Other critics claim that YouTube must be aware that infringing material is on its system and this generally knowledge should strip it of safe harbor protection. While it would be safe to presume that YouTube knows that there is some content on its system which infringes the copyright held by a third party. However, its almost certain that YouTube does not know which of each piece of content stored on its system is infringing and which is not.

Viacom and others insist that YouTube could install filtering software that would flag files which contain certain keywords tending to be associated with clips from television shows such as “The Daily Show” or “The Colbert Report.” However, if YouTube did install such filters, it would then have to manually review each file to determine whether or not fair use or some other applicable exemption would be applicable. Not to mention the resources YouTube would have to devote to this, what if YouTube’s definition of fair use deviated from that of its users. Why should the fight about fair use be between the user and YouTube.

As a result of YouTube and other similar companies, content owners are required to be extra vigilant in policing their rights. That vigilance comes with a price tag. However, at the end of the day, content owners can have infringing content removed from YouTube very quickly. (Based on personally experience, YouTube is by far the quickest to respond to a take down notice.)

The DMCA is performing as its supposed to do. Content owners have the ability to initiate the removal of allegedly infringing content, the posting party has the ability prevent its removal by claiming fair use or some other exception, and if the content owner still feels strongly about removing the content, the DMCA allows the content owner to take the poster to court. It may be somewhat expensive for a content owner to patrol sites like YouTube and send out take down notices, but if the burden were on YouTube, posts like the pro Barack Obama clip incorporating Apple’s 1984 Super Bowl television ad might not have made it up. (Oor the various clips responding in kind)

Protecting the public’s right to use a third party’s material for criticism or comment are the hallmarks of fair use, and must be protected. The question the Viacom litigation poses is who will bear the price associated with protecting this right.

The Academy Award’s Oscar: Golden or Generic under Trademark Law

And the Oscar goes too …. This phrase means only one thing to most people: the annual award given to those celebrated actors and actresses at the Academy Awards each February. The eight and a half pound gold plated statue standing thirteen and a half inches tall is as well known as any celebrity, and its name has become synonymous with the show itself. Although the origin of the name is in dispute, the statute has been called Oscar since the 1930’s.

The Oscar name is a registered trademark of the Academy of Motion Picture Arts and Sciences, and they have vigorously protected the use of their famous mark. Recently, the Academy filed suit against an Italian broadcaster who used the word Oscar in the title of several of their award programs. These shows were broadcast in Italian to subscribers living in the United States. The Academy filed a motion for summary judgment based on the broadcaster’s trademark infringement. This motion was denied by the United States District Court, Central District of California. The judge held that the mark Oscar may be generic in Italian and may not be entitled to trademark protection.

Under trademark law, the quality of a mark’s distinctiveness determines the scope of its protection. Courts have developed four categories to determine a mark’s distinctiveness and, consequently, its strength as a trademark. These categories are (i) coined or arbitrary, (ii) suggestive, (iii) descriptive, and (iv) generic marks. Trademarks that are coined or arbitrary receive the highest protection. Marks such as Kodak or Exxon are examples of coined trademarks. Marks such as Apple for computers or Grey Goose for vodka are examples of arbitrary marks. These marks receive the highest protection since they are inherently distinctive.

One step below coined or arbitrary marks are suggestive marks. Suggestive marks are also inherently distinctive. They are considered weaker than coined or arbitrary marks because the marks suggest some characteristic or quality of the goods or services. With suggestive marks, an individual must use imagination to understand the significance of the marks. Examples of suggestive marks are Greyhound for buses or Mustang for cars. Unlike arbitrary marks, these marks suggest a quality of the goods and services. The suggestion of these two marks denotes speed and quickness.

Falling below suggestive marks are descriptive marks. These are marks that merely describe the good or services. Examples of descriptive marks are Computer Land for a computer store or Park N Fly for airport parking services. These marks are considered weak marks and are only entitled to trademark protection if they have acquired a secondary meaning in the marketplace. An example of a descriptive mark that has acquired secondary meaning is International Business Machines (IBM). IBM is clearly descriptive of its goods and services, but the trademark has acquired secondary meaning through its branding and long history in the marketplace allowing for trademark protection.

The weakest marks and those that are entitled to no protection under trademark law are generic marks. Generic marks describe the general class of goods or services. Simply, the everyday common words for goods and services, such as car or food, are not entitled to trademark protection.

In this case, the judge recognized that Oscar was a strong mark in the United States and should be protected. The judge, however, refused to grant the summary judgment because evidence was presented to show that Oscar in Italian may be a generic term for an award. Since the broadcast was in Italian, the judge found it difficult to prevent an Italian broadcast from using a term that was generic in their own language even if the broadcast was aimed for viewers in the United States. The judge stated, “If the viewers of [the broadcast] perceive the word ‘oscar’ as being a generic term for an award when used in the Italian language, then the Italian award programs using the word ‘oscar’ may not even bring about a mental association with the Plaintiff’s Oscar mark.”

Despite Oscar being a strong mark in the English language, this ruling states that the mark may not be protected against uses in other languages where the mark is a generic term in that language. Since the use of the term Oscar in Italian would evoke the generic sense of the term, it does not infringe on the Academy’s trademark rights.

California Supreme Court Affirms Broad Immunity for Defamatory Republication on the Internet

When can you knowingly republish defamatory statements without risk of liability? When you do so on the Internet.

The California Supreme Court, in Barrett v. Rosenthal (November 2006) 40 Cal.App.4th 33, followed the line of federal cases interpreting the Communications Decency Act of 1996 (CDA) to find broad immunity for both Internet service providers and users of an interactive computer service for republishing defamatory statements.

In the Barrett case, two doctors brought an action alleging libel and libel per se against an alternative health proponent who had posted messages on Internet news groups referring to the doctors as “quacks.” The defendant also redistributed an email message prepared by another author which alleged that one of the plaintiff doctors had stalked women. The trial court granted defendant’s SLAPP motion, finding that the comments concerned an issue of public interest and ruling that the republication of the third party email was immunized by the CDA. The court of appeal vacated the order, finding that the CDA did not protect the defendant from common law liability for defamation as a “distributor” of the article written by the third party. The Supreme Court granted cert. to determine whether the CDA confers immunity on “distributors.”

The CDA provides:

“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” (47 U.S.C. § 230(c)(1).)

The plaintiff doctors argued that section 230 did not abolish liability for “distributors” of defamatory statements, arguing that the CDA grants immunity only to the service provider who publishes the defamatory statement, but not to the individual who distributes knowingly defamatory statements authored by another.

Under common law, a “distributor,” such as newspaper vendors or booksellers, is liable only if the distributor knew or had reason to know of the defamatory nature of the material. On the other hand, a “publisher,” such as the newspaper where the defamatory statement originally appeared, is liable even without notice. The plaintiff doctors acknowledged that section 230 expressly provides for immunity for the “publisher,” but did not create absolute immunity for the “distributor” of the defamatory statement. A central component of plaintiffs’ argument, which was adopted by the court of appeal, was that there should be a difference between Internet service providers and individuals who use the Internet.

The California Supreme Court followed the holding of Zeran v. AOL (4th Cir. 1997) 129 F.3d 327, in finding that Congress did not intend to exempt “distributors” from the broad immunity granted by the CDA. The Supreme Court noted that section 230(c) specially extends the immunity to both a “provider” and to a “user” of the interactive computer service, making no distinction between the two. The court noted that the common law distinction between a publisher versus a distributor has very little meaning in the context of the Internet. Publication is a necessary element of all defamation claims and includes every repetition and distribution of a defamatory statement. In fact, “distributors” are frequently referred to as “republishers.” However, in light of plaintiffs’ argument, the Supreme Court requested additional briefing on the statutory term “user” and whether there is a different immunity analysis if a user engages in “active” versus “passive” conduct.

The appellate court, in finding for “distributor” liability, did not draw any distinction between an Internet service provider and an individual user in finding that a distributor who has notice of the defamatory statements is not immune from liability. The Supreme Court recognized that “users,” like the defendant in this case, were situated differently than a service provider in that individual users were not faced with the massive volume of posting that could subject them to liability for distributing defamatory statements. Nevertheless, the Court found that the term “user” is not defined in section 230, nor did the legislative record reflect why Congress included “users” as well as service providers under the broad umbrella of immunity granted by the CDA. Absent Congressional history drawing a distinction between a “provider” and “user,” the Supreme Court found that both are entitled to the broad immunity.

The plaintiff doctors attempted to argue that someone who republishes defamatory statements is no longer involved in passive Internet use but is actively posting or republishing the information and, as such, is an “information content provider” unprotected by the statutory immunity. An “information content provider” is defined as “any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service . . ..” (Section 230(f)(3).)

The Supreme Court rejected the plaintiffs’ argument, noting that the argument failed to recognize that the immunity granted by section 230(c)(1) expressly prohibits treating any “user” as the publisher or speaker of the defamatory comment. Congress obviously had a broad meaning by the use of the term “user.” Moreover, the Court rejected the argument, attempting to distinguish between “passive” and “active” users. Attempting to draw such a fine distinction would have a chilling effect on online speech – the whole intent behind the Congressional grant of immunity. If distributors could be liable if they had notice of the defamatory statement, there would be great pressure simply to remove the allegedly defamatory statement. The distributor only faces liability by failing to remove the allegedly defamatory statement, but no liability if it improperly removes non-defamatory content. Secondly, the standard of “known or should have known” defamatory nature of the content would defeat the legislative goal of encouraging the self-policing efforts by Internet service providers to remove harmful or obscene content. The Supreme Court did note that, at some point, active involvement in picking and choosing to republish only certain provisions out of an allegedly defamatory publication could expose a defendant to liability as an original source of the material. However, because defendant Rosenthal republished the defamatory work in whole, the Supreme Court did not determine when that might occur. It should be noted, however, that federal cases have reasoned that making modifications to the prior work which do not go beyond the traditional editing function would not defeat a defendant’s immunity under the CDA.

The Supreme Court echoed policy concerns raised by the plaintiffs and some commentators that granting broad immunity to users of the Internet failed to properly consider the public interest in providing redress to victims of Internet defamation. Allowing individuals to knowingly republish defamatory statements on the Internet has broad societal implications, but is a legislative concern. The Supreme Court noted that the Congressional record, as well as the express language of section 230, expressly extends its broad immunity to Internet service providers as well as users and makes no distinction between active and passive use. A victim of defamatory statements published on the Internet only has recourse against the original author of the defamatory statement. Any remedies beyond the original author must await Congressional action.

Weintraub Ups Ante to $100,000 for Associate Pay

Sacramento Business Journal
March 2, 2007
By Kathy Robertson, Staff Writer

Managing Shareholder Gary Bradus is quoted in the article that “the firm is not hiking billing rates or billable hours associates are expected to work.” He also noted that this salary increase and the benefits of work/life balance will assist the firm in recruting the “best and brightest” young lawyers.

Weintraub Genshlea Chediak Elects Three Shareholders

SACRAMENTO, Calif., February 26, 2007 – The Sacramento based law firm of Weintraub Genshlea Chediak, a business law and business litigation firm, announces that Mike De Angelis, Shawn M. Kent and Lizbeth V. West have been elected shareholders to the firm.

“We are proud to announce the election of Mike, Shawn and Lizbeth to shareholder status,” said Managing Partner Gary Bradus. “Their continued dedication to excellence and ability to find innovative solutions for our clients represents the qualities that have helped build this firm into a progressive, entrepreneurial law firm.”

Mr. De Angelis joined the firm in 2003 and is a member of the firm’s Business, Securities and Commercial Transactions practice group. His practice focuses on representing both public and private companies with venture capital financings, mergers, acquisitions, spin-offs and public offerings of securities. He also has experience advising clients on intellectual property matters and equity compensation issues.

Mr. Kent joined the firm in 2003 and is a member of the firm’s Real Estate and Business, Securities and Commercial Transactions practice groups. He specializes in the representation of lenders and borrowers in major loan transactions, purchase, sale and development of real property, drafting and negotiating leases and construction contracts. He also counsels corporate clients with the formation and capitalization of business entities, representation of companies in venture financing, private placements, mergers, acquisitions and debt offerings.

Ms. West joined the firm in 2000 and is a member of the firm’s Disputes, Trials and Appeals, and Labor and Employment practice groups. Her practice focuses on counseling employers on issues such as wage and hour laws, disciplinary actions, employment policies, privacy issues, terminations, lay-offs, hiring, contracts and compliance with state and federal employment laws. She also defends employers in various employment related litigation matters, as well as administrative actions, at the state and federal level. Ms. West also has experience advising clients on the Americans with Disabilities Act public accommodation and disability access law.

Weintraub Genshlea Chediak is Sacramento’s leading business and litigation law firm with one of the largest corporate practices in the region. Major practice areas include litigation, real estate, corporate, securities, banking, intellectual property, licensing and distribution, nonprofit law, entertainment, labor and employment, fiduciary abuse, tax, trusts and estates. For more information, please visit weintraubstage.wpengine.com.

New Associate Jeff Pietsch

Download: Pietsch Press Release.pdf



SACRAMENTO, Calif., February 22, 2007 – The Sacramento law firm of Weintraub Genshlea Chediak, a business law and business litigation firm announces that Jeffrey Pietsch has joined the firm as an associate attorney.

Jeffrey is an associate in the firm’s Business, Securities and Commercial Transactions and Intellectual Property practice groups. His practice focuses on representing public and private companies with complex business and securities matters.

Jeffrey earned his law degree from the University of California, Davis in 2006 and his Bachelor of Arts degree from the University of California, Santa Barbara in 1999. While in law school, he served as articles editor for the UC Davis Law Review and the UC Davis Business Law Journal. Also during this time, Jeffrey became a certified volunteer in the Internal Revenue Service’s Volunteer Income Tax Assistance Program.

In 2004, He went on to intern at the law and motions division of the Superior Court of California for Sacramento County and belongs to the Sacramento County Bar Association. Prior to law school, Jeffrey worked for Charles Schwab & Co., Inc., where he acted as a financial advisor and received his Series 7 and Series 63 licenses.

The Complexity of Proving Copyright Infringement

Last year’s Ninth Circuit’s decision in Funky Films, Inc. v. Time Warner Entertainment is a reminder just how complex and complicated it can be proving copyright infringement. Funky Films involved a claim that the award winning Home Box Office mini-series “Six Feet Under” infringed Funky Films’ screenplay “The Funk Parlor.” At issue on appeal was the district’s court conclusion that “The Funk Parlor” and “Six Feet Under” were not substantially similar.

In order to bring a claim for copyright infringement, a plaintiff must establish (1) ownership of a valid copyright, and (2) copying of protected elements of the plaintiff’s work. Ordinarily, ownership is established by way of a copyright registration certificate and tends not to be the subject of much debate. Courts spend most of their time and effort analyzing the elements of the infringement prong. Absent evidence of direct copying, “proof of infringement” involves fact-based showings that the defendant had “access” to the plaintiff’s work and that the two works are “substantially similar.”

In Funky Films, the district court assumed that the defendant had access to the plaintiff’s work. Ordinarily, in order to establish “access” a plaintiff must show that the defendant had an opportunity to view or copy the plaintiff’s work. This opportunity must be a “reasonable opportunity” and not a “bare possibility” in the sense that anything is possible.

Access can be established by way of circumstantial evidence. A court will consider either (1) a particular chain of events which establishes a link between plaintiff’s work and the defendant’s access (e.g., dealings with a movie studio or record label), or (2) that the plaintiff’s work has been widely disseminated.

After establishing access, a court will turn to whether the two works are substantially similar. In the Ninth Circuit, substantial similarity is inextricably linked to the issue of access. This is known as the “inverse ratio rule” and requires lower standard of proof of substantial similarity when a high degree of access is shown.

Proof of substantial similarity is satisfied by a two part test of extrinsic similarity and intrinsic similarity. The extrinsic test is objective in nature and requires the plaintiff to identify specific criteria which it alleges have been copied. The intrinsic test is an examination of an ordinary person’s subjective impression of the similarities between the two works, and is the exclusive province of the jury. Since Funky Films addressed the district court’s grant of summary judgment, the court’s focus was the extrinsic test.

Applying the extrinsic test the Ninth Circuit found that at a very high level of generality, both works shared certain plot similarities. However, this would not be enough to support plaintiff’s burden as general plot ideas are not protected by copyright law. After substantial review of the plot, characters, themes, setting, mood, pace, dialogue, and sequence of events of the two works, the court found no similarities and upheld the district court’s grant of summary judgment.

The Ninth Circuit’s decision in Funky Films is a reminder that satisfying the extrinsic test can be difficult and require substantial proof. The extrinsic test often requires analytical dissection of a work and expert testimony. In cases such as Funky Films the focus is not on basic plot ideas for the stories, but articulable similarities between protectable elements (e.g., not scenes a faire) of the two works.

Will the Real Keith Urban Stand Up: A Showdown in Cybersquatting

Last week Keith Urban, the Grammy nominated country singer from Australia, sued Keith Urban, a New Jersey painter, for use of the website www.keithurban.com. The suit filed in federal court alleges that Keith Urban, the painter, is infringing on the singer’s trademark rights by misleading internet users into believing that the website is owned by the singer. The website, which has been owned and registered by the painter since 1999, sells oil paintings through the website. Upon entering the site users see the following: “You have reached the site of Keith Urban. To those who don’t know, oil painting is one of my hobbies.” Users are then directed to a link which displays several paintings. The singer claims this use infringes on the Keith Urban trademark by violating the Anticybersquatting Consumer Protection Act, the Federal Trademark Dilution Act, and federal unfair competition laws. This article will examine the claims against the painter under the Anticybersquatting Consumer Protection Act.

The Anticybersquatting Consumer Protection Act (ACPA), established in 1999, provides trademark holders protection from cybersquatters. Cybersquatting is registering and using a domain name in bad faith with the intent of profiting from the goodwill created by another’s trademark. Cybersquatters often seek to sell the domain name to the trademark holder at an inflated price. In the early days of the internet, who ever registered a domain first had rights to that domain name. Many individuals bought names hoping to later sell them for exorbitant sums of money. For example, the generic domain name business.com sold for 7.5 million dollars in 1999. Concerned about this environment as it relates to federally registered trademarks, Congress passed the ACPA. The ACPA gives trademark owners legal remedies against defendants who cybersquat.

In this case, Keith Urban, the singer, alleges that the Keith Urban, the painter, is cybersquatting on the domain name www.keithurban.com. In order to receive relief, the singer must show that the painter:

1) has a bad faith intent to profit from the registered trademark (Keith Urban); and

2) registers, traffics in, or uses a domain name that is identical, confusingly similar, or, in cases of famous marks, dilutive of a mark that is distinctive or famous at the time the domain name was registered.

The Act defines many non-exclusive factors that show bad faith. These include offering to sell or transfer the domain name for financial gain; acquiring similar domain names relating to the same mark; diverting consumers from the owner’s online location to a site accessible under the domain name that harms the goodwill of the mark; supplying false information when registering the domain name; and not using the site for a bona fide noncommercial or fair use purpose.

The court will consider these factors to determine if the painter acted in bad faith in obtaining the domain name. Examining the website, it appears that the painter uses his domain name for commercial purposes, specifically to sell paintings as well as advertisements. Also, the web site does not state that the painter is not the famous singer. In fact, the web page subtly implies that the painter and the famous singer are the same. The message that states, “To those who don’t know, oil painting is one of my hobbies” implies that the owner is someone well known. This creates the appearance that the singer is the owner of the site and also paints as a hobby. The web page also stresses that the paintings are available for sale in a “very limited edition.” This language may cause unwitting fans to purchase limited art work of their favorite singer. These factors show bad faith.

On the other hand, no evidence suggests that the painter is seeking to sell the domain name for a profit. The painter is selling his art but on a very limited basis. The painter does not disclaim that he is not the singer, but he also does not proclaim this fact. A more significant factor favoring the painter is that he registered the domain name in 1999, and the domain name he registered was his actual name. Based on these facts, the court will determine if the painter acted in bad faith.

In addition, the singer must prove that his trademark was famous or distinctive when the painter registered the domain name. The painter registered the domain name in May, 1999. Although the singer was well known in Australia at this time, he was not well known in the United States. In October 1999, he released a self-titled album which produced three top ten country singles over the next two years. In 2001, he won awards for top male country vocalist cementing his status as a star in the music industry. The singer, however, must prove that his trademark Keith Urban was famous at the time the painter registered the domain name in May, 1999. This will be difficult for the singer to establish considering the above facts. If the singer is unable to prove this he was in fact famous at the time of registration, he will not be eligible for relief under the ACPA even if the painter acted in bad faith.

This is not the only recourse for the singer. The singer has also sued the painter on other federal trademark grounds as well as for unfair competition. Although the singer might prevail on these claims, the painter’s registration and use of the domain name before the singer’s mark became famous will be difficult to overcome.