California Business Litigation Blog

Last month, the Ninth Circuit Court of Appeals ruled that an automobile broker’s use of the following five letters “Lexus” was not trademark infringement. It stated that it was actually a “lawful nominative fair use”.

Farzad and Lisa Tabari are independent, online auto brokers in Southern California who formerly used the domain names “buy-a-lexus.com” and “buyorleaselexus.com”. Toyota Motor Sales USA filed a trademark infringement lawsuit against the Tabaris. Toyota also sought an injunction to prevent use of the Lexus mark.

The District Court concluded that the brokers had infringed Toyota's mark. That court enjoined use of the Lexus mark in any domain name or metatag. The Tabaris appealed these decisions.
On appeal, the Ninth Circuit reversed the lower court’s decisions. The appellate court stated that consumers looking for a Lexus online are sophisticated enough to know an official Lexus website from the Tabaris sites. The court also affirmed that internet searchers are used to trial and error searches, and as such would not be confused.

Lacking any affirmative suggestion of affiliation or sponsorship, the Ninth Circuit reasoned, simple use of the mark in the domain name would not cause Internet users to believe there is sponsorship or affiliation with Toyota/Lexus.

Quoted from the Ninth Circuit decision, which may be viewed HERE : “The Tabaris are using the term Lexus to describe their business of brokering Lexus automobiles; when they say Lexus, they mean Lexus. We’ve long held that such use of the trademark is a fair use, namely nominative fair use. And fair use is, by definition, not infringement.”

Continue reading "Ninth Circuit Rules in Favor of Defendants' Use of Lexus Name" »

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Posted In: Business Litigation   Featured Posts   Intellectual Property   Internet

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When Craig Kleffman received 11 email messages offering broadband phone services from Vonage and noticed that they came from a variety of domain names, he found a lawyer and filed a lawsuit. Kleffman felt that these emails were spam (also known as junk emails) and as such a violation of a California spam law that prohibits marketers from sending messages with misleading headers.

While the emails might be annoying, the California Supreme Court ruled this week that they were not spam, and did not violate California law.

Justice Ming W. Chin wrote on behalf of a unanimous court: "We find that a single e-mail with an accurate and traceable domain name neither contains nor is accompanied by 'misrepresented … header information' ... merely because its domain name ... is 'random,' 'varied,' 'garbled' and 'nonsensical' when viewed in conjunction with domain names used in other e-mails.”

He continued: "An e-mail with an accurate and traceable domain name, makes no affirmative representation or statement of fact that is false."

And concluded: “…we hold that, on the undisputed facts of this case, sending commercial e-mail advertisements from multiple domain names for the purpose of bypassing spam filters is not unlawful under section 17529.5(a)(2).”

The ruling (which may be viewed HERE) will likely make it more difficult for internet users to sue email marketers in California, which has an anti-spam law that is broader than the federal Can-Spam law. Generally, the federal law (which bars individuals from suing for spam violations) overrules most state spam laws. There's an exception for state laws to be used when dealing with fraud.

Continue reading "CA Supreme Court Rules in Favor of Vonage in Spam Lawsuit" »

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Posted In: Business Litigation   False Advertising   Freedom of Speech   Internet

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Last month we wrote a post about a lawsuit filed in Pennsylvania alleging that school laptop computer cameras were being remotely activated while in students’ homes.

The most recent update in the case is that numerous parents in the school districts named in the lawsuit have filed documents in federal court opposing the lawsuit and asking to intervene.

Parents objecting to the lawsuit state that they are angry about the unauthorized use of webcams in students’ homes, but are more concerned about the financial impact of a class action lawsuit. Approximately 500 parents have signed a petition opposing the lawsuit which is seeking class action status.

One parent, Larry Silver, stated "We see no benefit to the school district or to the students if a large damage award is gained by the plaintiffs. We want a positive resolution to this matter. We want them (school districts) to get back to their educational mission."

Our original post is available HERE.

An extremely detailed (lengthy) account of events leading to the lawsuit is available on Philly.com.

Continue reading "UPDATE: Parents Oppose Webcam Lawsuit Against School District" »

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Facebook, the social networking website has won an award of $711 million in damages. The damages awarded from Sanford Wallace who is a prolific spammer and social network scammer, reports state. The man was banned from accessing Facebook as well, as punishment for bombarding Facebook users with spam. The lawsuit, filed by Facebook in early 2009, names Wallace, Adam Arzoomanian and Scott Shaw, all accused of accessing accounts of users without permission to do so and sending spam emails and making posts to public message walls of users.

Facebook has a long list of victories over spammers, including one in 2008 for some $873 million against Adam Guerbuez and Atlantis Blue Capital. In this ruling, the three men violated the Computer Fraud and Abuse Act, the California Anti Phishing Act and the Controlling the Assault of Non Solicited Pornography and Marketing Act.

However, experts believe that Facebook will not see the judgement awarded. In fact, Wallace and his partner, Walter Rines, were fined some $230 million in May of 2008 in a case involving MySpace. In that case, the accused tricked users into providing login information through phishing scams. Then, as they accessed the accounts of users, they sent more than 730,000 messages with links to gambling, porn and ringtone websites. The two made more than half a million though their MySpace violations only.

It is unlikely that Facebook will receive much of the judgment, but that is not what Facebook is hoping for. They are using the case as a ploy to show other pro spammers what can happen to them for violating the rules. However, experts state that pro spammers already know what to expect and they do not see it as a deterrent. In fact, whenever these pros lose, they simply disappear for some time and emerge as a different entity somewhere else, rarely paying any of the fees they owe.

Ninety-Five percent of all email is spam, says Jamie De Guerre, who is chief technology officer at Cloudmark. De Guerre also stated that while the industry is doing well to fight spam, the spammers are doing well to find new ways to continue the process. The problem, and perhaps the solution, lies in the hands of consumers and legitimate organizations, who may wish to take more conservative communication efforts, such as avoiding any type of URLs in email communications. The problem is worldwide, and is even more common in other countries. In Russia, for example, even legitimate, respectable companies use spam.

Continue reading "Facebook Unlikely to Collect $711 Million Spam Award" »

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Microsoft has returned virtually all Sidekick user data, including contact information and other personal data to users. Nevertheless, there are likely to be pending lawsuits filed against the company.

On Saturday, Microsoft informed users that it had lost all data and backup systems in a system wide crash. The company now says that it has restored that data, but it appeared to be weary of issuing such a message early on.

Microsoft vice president Roz Ho provided an open letter to customers of the Sidekick stating that only a small number of users are still without their personal data. However, such a warning may not be enough to keep customers. In recent conversations at T-Mobile's website, talk was about leaving the company. Users seemed to be interested in filing a class action lawsuit against Sidekick and owner Microsoft.

More so, there was evidence that some of the messages posted on the website from Sidekick users unhappy with the company were deleted or moved in some fashion after mention of the lawsuit.

The social media outlets are teaming with information. On Twitter, the micro blogging website, mention of Sidekick lawsuits was the talk of the day, including mention of several pending lawsuits in California and in Washington. One such case filed in California, was filed by a mother whose teen daughter lost photos and song lyrics in the loss of data.

Another lawsuit was filed in Atlanta, by a woman, Maureen Thompson, says that the companies she named (including T-Mobile, Microsoft and Danger the manufacturer of the device) were negligent and failed to meet advertised promises to customers. Attorney John Jablonski, speaking about the case, said that it was likely that such cases would lose merit, since the data was restored.

T-Mobile employees are not speaking of the case and claim they have no comment in regards to the online complaints from customers. The company does seem to have kept customers informed and on Monday, temporarily halted all sales of the Sidekick smartphones. In addition, the company offered affected customers one month free service from the company, plus a $100 T Mobile gift card.

It is not clear how many Sidekick users have filed or plan to file lawsuits against the company, nor how many people may still be affected by a loss of data. You may view the California lawsuit HERE, compliments of SeattlePI.com.

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The American Civil Liberties Union has been called on by a school librarian and two high school students in Tennessee. The students believe that the school's blocking of lesbian, gay, bisexual and transgender (commonly called LGBT) issues is particularly troublesome because it does not allow students to gain information from both sides of issues, as well as limits their rights to obtain needed information.

In Tennessee, some 107 school districts have an Internet filtering software program that stops LGBT content from being displayed on school computers. This software, called Educational Networks of America filters content according to the settings selected by the district.

Because of the filtering, high quality and nationally established websites including the Gay and Lesbian Alliance Against Defamation, Human Rights Campaign and the Parents, Families and Friends of Lesbians and Gay's websites cannot be accessed.

Enter a school librarian named Karyn Storts Brinks from Fulton High School. She tried to improve the situation and change the rules, to no avail. The problem with the software is that it only allows students to get one side of the story even though the contents are in the public forum now. While it does not allow students to visit these websites, considered legitimate resources, it does allow for students to visit websites encouraging reparative therapy which has been labeled dangerous by the American Medical and Psychiatric Associations.

One student tried to access information for LGBT students on scholarships available. Others have used it to research current debates in the public venue. There is no law, federal or state wide that requires such a block. The state law does require the blocking of material deemed obscene or harmful to minors.

The hope is that with the aid of the American Civil Liberties Union, there will be a solution put in place to aid these students.

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Posted In: Education   Education Law   Internet   School District Law

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Cyperbullying is the act of threatening individuals in some manner through electronic means. Bullying in general is something that many students have faced over their school life and now, it has moved to the Internet. A good example of what is happening is with the website Facebook, a very popular, social network geared towards connected people.

Facebook users can create "hate groups" in which some students are using to mock, harass or otherwise harm users. This has lead to situations in which students are bullying other students not on school grounds, but through the Interent. The problem here is that there is no one group that is considered ultimately responsible for fixing this form of bullying.

The State of California passed Assembly Bill 86, which defines cyberbullying, but some believe it does not go far enough. Should police be involved in the situation, to handle these types of situations? Or, should the school be responsible? In some cases expressing cyberbullying, schools are often unable to monitor children off school grounds and yet try to stop cyberbullying anyway.

Some parents disagree with this. They do not want schools monitoring their children's computers or interacting with children outside of the classroom atmosphere. Parents themselves are often unable to monitor children close enough due to groups like Facebook, which makes it very easy for kids to come together online without their parent's knowing. Take this a step farther and some could blame social groups like Facebook, which does not have stricter requirements. Should the website stop kids from cyberbullying? They often do not realize such groups exist until it is brought to their attention, which rarely happens soon enough.

An example of this happened in California's Palo Alto school where a group of kids created a Facebook group that was called "I Hate Tyler" which was specifically targeted towards a student at Jordan Middle School. Over 100 members joined the group, which was created after the boy posted a video of himself singing on another popular site YouTube.

The question remains. Who is responsible for policing children who participate in cyberbullying?

Continue reading "Cyberbullying: Schools, Websites, and Parents Go Head To Head" »

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Internet giant Google has been sued by Aaron and Christine Boring for taking photographs of their property for Google Maps Street View feature. The problem is that the photos were taken from a private road.

For those who have not yet experienced Google Street View it is a feature of Google maps that allows users to actually “visit” the street via the internet through photographs providing a 360 degree view.

Not all cities have this Google feature available yet, but the Boring’s property was included last year. The images are captured by a car similar to the one seen above with an array of cameras mounted to its roof.

Google spokesperson Larry Yu said that the company has a policy of only taking photos from public streets. He also said that concerned citizens can contact the company if they want a photo taken down. Yu added “"We absolutely respect that people may not be comfortable with some of the imagery on the site. We actually make it pretty easy for people to submit a request to us to remove the imagery."

In this case, damages may be difficult to prove since Google is not the only place on the web showing an image of the Boring’s home. The Allegheny County real estate Web site has a photo, a description of the home and the couple's name. The site contains similar information, including pictures, of nearly every property in the county.

The Smoking Gun has a copy of the photos (which are no longer on Google Streetview), a copy of the lawsuit (including the Boring’s home address) and a photo from the Allegheny County website.

Continue reading "Google Sued by the Borings for Invasion of Privacy" »

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Most of us have seen the LifeLock advertisement in which company CEO Todd Davis reveals his Social Security number and then speaks about the effectiveness of the company’s protections. Experian’s lawsuit claims that LifeLock’s ads are fraudulent and misleading. Experian also claims that LifeLock’s primary means of protecting its 600,000 clients is filing a fraud alert every 90 days for each LifeLock client.

A fraud alert is a notice/flag put on your credit report through the consumer reporting agencies. This flag establishes that as part of any credit approval process, you need to be notified.

Experian claims LifeLock’s practice of filing fraud alerts on behalf of clients is illegal because, under the Fair Credit Reporting Act, “fraud alerts can only be requested by the individual consumer or an individual acting on behalf of the consumer."

Further the lawsuit claims, adding four alerts per year for 600,000 LifeLock members to Experian’s database will degrade the effectiveness of legitimate fraud alerts over time. Credit grantors could lose the ability to distinguish between fraud alerts added by consumers who legitimately believe that identity theft is imminent and those added by LifeLock. The complaint alleges that credit grantors will have reason to doubt the credibility of all fraud alerts and their effectiveness for consumers legitimately impacted by fraud and identity theft will be severely compromised.

The complaint against LifeLock was filed by Experian in the U.S. District Court for the Central District of California.

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Posted In: Business Litigation   False Advertising   Internet

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Lisa Krinsky was formerly president and CEO of SFBC International in Florida. On a financial message board hosted by Yahoo, Krinsky was the target of some very negative, crude and vulgar comments. Krinsky filed suit against 10 pseudonymous posters for libel and interference with contractual/business relationships.

The problem was that she had to identify the people she was suing. Krinsky attempted to discover the defendants’ identities by serving a subpoena on Yahoo. Yahoo notified Doe 6 that it would comply with the subpoena in 15 days unless a motion to quash or other legal objection was filed.

Doe 6 then moved in superior court to quash the subpoena on the grounds that (1) plaintiff had failed to state a claim sufficient to overcome his First Amendment rights for either defamation or interference with a contractual or business relationship, and (2) plaintiff's request for injunctive relief was an invalid prior restraint.

Santa Clara Superior Court Judge Socrates P. Manoukian concluded that the totality of circumstances justified the relief Krinsky was seeking, and denied Doe 6’s motion to quash.

Doe 6 appealed.

On appeal, Justice Franklin D. Elia wrote for the court that posters to Internet message boards had a First Amendment right to shield their identity, and that this right could only be overcome if Krinsky could make a prima facie showing that a case for defamation existed.

Directly from the opinion, which can be found HERE “We thus conclude that Doe 6's online messages, while unquestionably offensive and demeaning to plaintiff, did not constitute assertions of actual fact and therefore were not actionable under Florida's defamation law. Because plaintiff stated no viable cause of action that overcame Doe 6's First Amendment right to speak anonymously, the subpoena to discover his identity should have been quashed.”

While we in no way condone the vulgarity and crudeness used by Doe 6 (as quoted in the opinion), we commend the California Court of Appeals for protecting our free speech rights related to the Internet.

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In a David v. Goliath story with a surprise ending, Transmeta and Intel have settled their mutually opposing patent infringement lawsuits. Intel will pay Transmeta a total of $250 Million; $150 Million now plus $20 Million a year for the next 5 years.

In addition to all pending lawsuits being settled, Intel will receive non exclusive rights to Transmeta’s entire patent portfolio (press release here). Transmeta gets an influx of cash and a guaranteed income for 5 years which will allow further research & development. Additionally, Transmeta can proceed without the threat of any additional patent lawsuits from Intel.

So who won? While it may be a little early to speculate, Transmeta is clearly better off than it was before the lawsuits were filed. Prior to this settlement, Transmeta’s market value was slightly over $40 Million. They have pretty much guaranteed their future for at least 5 years. In all likelihood, Intel will parlay their “investment” in Transmeta’s patent portfolio into profits which will exceed their cash outlay.

This is a textbook example of a settlement in a business lawsuit which not only stands to benefit both parties, but consumers as well.

One final note. Transmeta has 2 attorneys on it’s in house legal team while Intel’s in house legal team has over 200. I have long believed that in law, smaller is better because it allows much greater flexibility in litigation.

It’s nice to see that David won even if Goliath didn’t lose!

Continue reading "Intel and Transmeta End Patent Lawsuits With Intriguing Settlement" »

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By the time you read this, there will likely be at least one more lawsuit filed against Apple and AT&T over the iPhone. While I believe that all lawyers are good and some are better, it is times like these that make me question some in the legal profession.

When lawyers take on a lawsuit where the plaintiffs are suing because the iPhone will do everything it was promised to do, but won’t allow use on other networks or with third party application software....it just ticks me off!

Good lawyers DO NOT accept meritless lawsuits!

In case you don’t know, the Apple iPhone has been sold to only work on the AT&T network. There were never any other promises in any advertising or on the website. If you visit the Apple iPhone questions and answers web page you will find the following:

Can I “unlock” iPhone and use it with another wireless carrier?
AT&T is the exclusive wireless carrier for iPhone in the United States. If you currently use another wireless carrier, you can choose to transfer your number when you activate your AT&T account.

One of the toughest aspects of my practice is meeting with people who think they have a case and telling them they don’t. Countless times during an initial consultation with a prospective client, I have to tell them honestly that they have little or no chance of coming out ahead in a lawsuit. Most people appreciate our integrity.

Knowing where you stand before signing a retainer agreement or writing a check means that both you and your lawyer have a better chance of reaching a favorable result in your legal matter. This is one of the reasons for success on our clients’ behalf.

If your iPhone won’t fly a kite or will not do anything else it was not intended to do…call someone else. But if you want an honest appraisal of your current legal issue (always at no charge), call me today at 818-461-8500.

Richard Oppenheim

PS Additional helpful information may be found in questions 5 and 6 in our resource document “Eleven Questions to Ask BEFORE Hiring a Business Attorney”. You will find it on our website Home page.

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The RIAA (Record Industry Association of America) has filed an estimated 20,000 lawsuits in the last 3 years against people (many of them unnamed “John Does”) for downloading music on P2P networks. One such lawsuit was filed against siblings Michelle and Robert Santangelo who have filed a motion to add AOL and Sharman Networks/KaZaa as third party defendants.

In this legal strategy, the Santangelos are demanding approximately $3.9 million each from AOL & Sharman. Their claim is that AOL did not take any actions to block file sharing and did not warn Michelle and Robert about consequences. The revised Complaint also blames KaZaa for designing software which automatically shares downloaded files. It also alleges that both AOL and Sharman failed to pass on RIAA warnings related to the legality and consequences of file sharing.

If the Santangelos are successful other P2P defendants in RIAA suits would likely sue their internet service and file sharing network providers for damages. Further, it could lead to file sharing software providers and ISP’s changing how they handle file downloading and uploading on the internet.

The strategy of adding other parties (especially larger companies with deeper pockets) to business lawsuits has been around a long time. It requires a special set of conditions...

Continue reading "AOL & KaZaa Could be Added to RIAA v. Santangelo Lawsuit" »

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We regularly receive requests to explain the process of litigation, which we always communicate (using dialog NOT monologue) to prospective clients during our initial consultation. We hope you will find our lawsuit synopsis helpful. Feel free to forward it to others and remember to contact us with any questions about any business or employment lawsuit.

The litigation process generally involves four (4) phases. The length of each phase varies with the legal and factual complexities of each case.

The initial phase takes place before anything is filed in court. The attorney meets with the client to determine the facts of the claim being advanced by the client or the client's defense to a claim brought by another. In either case, it is essential that the client meet with the attorney at the earliest opportunity as valuable rights may be lost by delay. Once the attorney meets with the client, the attorney will review any documents relevant to the matter, research the applicable law and possibly speak to witnesses in order to chart a course which is in the best interest of the client.

The next phase involves the filing of an initial pleading in court. Typically, this is the filing of a Complaint or an Answer to a Complaint. The discovery process begins, which may include serving the other side with written questions, called Interrogatories, obtaining evidence which may be in the possession of the adversary or some other party and taking depositions, the oral questioning of parties and witnesses.

Once this phase has been completed, the case is ready to be tried. A trial may be in front of a Jury or a Judge and can vary in length depending upon the number of witnesses and quantity of exhibits offered. Under our system of jurisprudence, the plaintiff has the burden of proof. The plaintiff's case goes first. The defendant then has an opportunity to respond to the plaintiff's case with witnesses and evidence to support the defense. If the defendant has brought a Cross-Complaint, it is tried in the same manner. Otherwise, the plaintiff has an opportunity to put on a rebuttal case to counter the evidence offered by the defendant and, on occasion, a defendant may offer a sur-rebuttal to reply to the evidence offered by plaintiff in the rebuttal case.

The final phase of litigation involves the post-trial matters including motions to vacate or correct the judgment, appeals and efforts to collect on the judgment.

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Can a social networking site like MySpace.com prevent its users from posting links to other competing social networking websites? According to U.S. District Court Judge A. Howard Matz, it can. In his ruling Judge Matz threw out the antitrust claim against MySpace.com declaring that the social networking site isn't required to display competitors' Web page links.

According to court documents, LiveUniverse alleges that MySpace prevents users from watching vidiLife videos that they or other users previously loaded onto their MySpace webpage, deletes references to vidiLife.com on MySpace and prevents MySpace users from mentioning “vidiLife.com.”

This may be the first antitrust case to address whether a social networking site can prevent its users from posting certain links. Representing MySpace, attorney Richard Stone stated ”MySpace doesn't prevent anyone from going to their competitors' sites, but, we have no responsibility to build a moving walkway to a competitor's store." Stone continued “And by including those links, MySpace would be risking exposure if sites such as vidiLife had any inappropriate content. “

LiveUniverse, owner of vidiLife.com was founded by Brad Greenspan. Mr. Greenspan was the founder eUniverse the company that created MySpace.com which was sold to Rupert Murdoch’s News Corp for $580 Million. According to Business Week, in that transaction Greenspan pocketed more than $47 Million.

Another VERY important aspect of this lawsuit is the lawsuit timeline.

The suit was filed on November 2, 2006. On November 22 MySpace filed a motion to dismiss LiveUniverse’s complaint. The court held a hearing on December 18 in which it granted that motion, but gave LiveUniverse an opportunity to clarify one premise of the complaint.

On January 16, 2007 LiveUniverse filed a First Amended Complaint (FAC). On February 5, MySpace filed the motion to dismiss the FAC.

The court held a hearing on March 5 and presented its decision on June 4, 2007.
In only seven months, this lawsuit went from initial complaint to resolution. Lawsuits do not have to drag on for years while depleting the assets of both parties. As was done here, good lawyers look for, create and act on opportunities to move toward resolution.

Continue reading "VidiLife.com (LiveUniverse) Loses Antitrust Case Against MySpace.com" »

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Last month final approval was given for a class action settlement involving “click fraud” that has Yahoo paying nearly $5 million in attorney fees and giving full credits to advertisers dating back to 2004.

The judge's action on Monday settles claims by Checkmate Strategic Group that Yahoo charged advertisers for clicks on online ads that were done in bad faith or fraudulent.

Although preliminary approval was given last summer, final approval for this settlement was held up by attorneys representing parties in a similar (Google) lawsuit in Arkansas. The California settlement releases Yahoo from all similar click fraud claims against it in other actions in all other states. That’s an offer Yahoo couldn’t refuse.

Reggie Davis, Yahoo's new vice president of marketplace quality stated “Final approval of the settlement validates the strength of Yahoo's click-through protection systems, and our commitment to delivering a quality experience to both our advertisers and our consumers. Our commitment does not stop here. Quality is a top priority for Yahoo, and we have a clear road map for how we're going to create the highest-quality search-advertising network in the industry."

Additionally, in my opinion final approval of this settlement allows Yahoo to put this resource draining litigation behind them, allowing Yahoo to focus on the future of the internet search business.

Putting litigation behind you is often a wise strategy in business.

Continue reading "California Judge Gives Final OK to Yahoo Click Fraud Settlement" »

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In a case that closely mirrors a 2004 California lawsuit, New Hampshire has a law requiring anyone or any business running real estate ads on the web for New Hampshire homes to be a real estate broker. An internet listing service ZeroBrokerFees.com sued the New Hampshire Real Estate Commission and the state attorney general last year challenging the constitutionality of the law.

The Real Estate Commission failed in their attempt to have the suit dismissed. U.S. District Court Magistrate Judge James Muirhead ruled on Tuesday March 13 that the lawsuit presents important free speech questions that can and should be resolved in court.

ZeroBrokerFees.com argued that it provides advertising services similar to newspapers that publish Real Estate ads online and in print.

In late 2004, California lost a similar case when Sacramento U.S. District Court Judge Morrison C. England Jr. ruled that ForSaleByOwner.com did not need a RE Broker’s license to publish paid ads listing properties for sale any more than any print publication.

In my opinion, it seems that a great deal of taxpayer money is being wasted making sure that internet companies enjoy the same free speech rights as newspapers.

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