E-Commerce Law Week, Issue 455

iPods May Be Fashion Accessories, But Music Downloads Are Not Public Performances

As legal ways to distribute digital audio content online take off, questions surrounding who should profit from such transmissions – and how much they should earn – have become hotly debated.  The Copyright Royalty Board recently released a rulemaking which, barring congressional intervention, will likely mean significantly increased fees for most webcasters.  And, in a separate but related issue, a federal court in New York has weighed in on who should profit from the digital music revolution, finding that those who transmit digital music downloads thereby reproduce -- but do not perform -- the songs in question.  Had the court gone the other way, each music download could have been subject to royalty fees for both reproduction (payable to the record label) and public performance (payable to the performance rights organization).  The court's ruling should thus be welcome news to media distributors, who now won't have to pay twice for music they send to their online customers.

Does Google Have A "Blind" Spot?

Another court has weighed in on the issue of search engines' liability for the sale of trademarked search terms.  In Google Inc. v. American Blind and Wallpaper Factory, Inc., a federal court in California largely rejected Google's motion for summary judgment on American Blind's various claims for trademark infringement and dilution.  American Blind (AB) alleged that, by selling online advertising triggered by a search for AB's trademarks but displaying ads belonging to AB's competitors, Google had used AB's marks in commerce in a way that was likely to confuse users as to the origin of the ads.  In a ruling marked "Not For Citation," the court ruled that Google had used AB's marks in commerce and that AB had presented sufficient evidence of initial-interest confusion to survive Google's motion for summary judgment.  Since several other courts – including the Second Circuit – have refused to find use in commerce in similar cases, the American Blind ruling will likely add to the legal uncertainty surrounding the sale and use of trademarked search terms.

Data Breach Liability Springs up in the Northeast

Just as April showers bring May flowers, so data breaches can create fertile ground for actions by state attorneys general and the plaintiffs' bar.  New York Attorney General Andrew Cuomo recently announced that his office has reached its first settlement under New York's Information Security Breach and Notification Act, underscoring that notification may be the best course of action even when customer data is not misused.  And in Massachusetts, the data breach at retail conglomerate TJX Companies, Inc. has drawn another class action suit.  While Cuomo's announcement suggests that the Empire State may be stepping up its data breach enforcement efforts, the (now consolidated) class actions pending against TJX in the Bay State could set new civil liability standards for negligent data security practices. 

Delayed French Encryption Rules Adopted on Eve of Presidential Election

In traditional France, popularized abroad in books like Peter Mayle's A Year in Provence, things get done in their own time.  But under the new vision for France articulated by recently elected President Nicolas Sarkozy, the 35-hour work week will be abolished and France will become a leaner, meaner participant in the global economy.  So is it any coincidence that just a few days before Sarkozy's victory in the final stage of France's Presidential election, Prime Minister Dominique de Villepin got around to issuing an implementing decree for the encryption provisions of the June 2004 Law on Confidence in the Digital Economy?  The implementing decree makes only modest changes to French encryption controls.  So, like the election of President Sarkozy, the new French encryption decree is far from revolutionary, but rather is calculated to relax moderately some burdensome regulation.

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