E-Commerce Law Week, Issue 506

Don't Blame Me for Illegal File Sharing, It's My Computer's Fault

Record companies' suits against people that share or download music over the Internet continue to test the limits of copyright law.  In Atlantic Recording Corp. v. Howell, several record companies alleged that a married couple had violated the plaintiffs' exclusive right to distribute 54 copyrighted recordings by allowing their computer to share the songs through the KaZaA file-sharing system.  Late last month, a federal court in Arizona denied the companies' motion for summary judgment, holding that "[m]erely making an unauthorized copy of a copyrighted work available to the public does not violate a copyright holder’s exclusive right of distribution."  Rather, the plaintiffs had to show that a KaZaA user had downloaded the recording from the defendants in order to establish liability.  This ruling is consistent with most district court decisions to date, but conflicts with a decision by the Fourth Circuit.  The court also determined that downloads made by the record companies' investigator could be used to establish unauthorized distribution.  But the defendants' responsibility for such downloads remained open to debate, since their testimony suggested that other users of the computer or the KaZaA program itself, rather than the defendants, may have authorized the sharing of the recordings.

Has the Web Outgrown " Meta Tag" Suits?

Companies sometimes try to improve their position in search results for a trademarked term by placing the term in the "meta tags" of their website code.  Like the purchase of advertising triggered by searches for trademarked terms, this practice has led to lawsuits against companies that use a trademark without permission.  But in Standard Process, Inc., v. Banks, a federal court in Wisconsin recently ruled that Dr. Banks could not be held liable for trademark infringement based on "initial interest confusion" allegedly resulting from his use of Standard Process's trademarks in his meta tags, because "modern search engines make little if any use of metatags" to rank search results and rely instead on "algorithms that rank a website by the number of other sites that link or point to it."  The court also held that even if the meta tags actually had sent customers to Banks' website, consumer confusion was unlikely because Banks allowed visitors to purchase unaltered versions of Standard Process's goods.  In that sense, the court ruled, Banks was "not a direct competitor to Standard Process," even if he was not authorized to sell its products.  While many techies have said for several years that meta tags no longer play a huge role in search rankings, some courts (including the Eleventh Circuit, as we recently reported, and the Seventh Circuit in 2002) have allowed trademark suits to proceed based on the use of a trademark in meta tags.  One wonders, too, why a company would bother to use a trademark in its meta tags if such tags really were of no utility.  Whatever the case, for now, Standard Process stands in contrast to decisions by several other courts.  Only time will tell whether meta tag suits have continued vitality.

Another Court Upholds a Claim for the Conversion of Electronic Property

Another court has ruled that the common law tort of conversion (basically, the unjustified interference with someone's possession of his personal property) reaches electronic, as well as physical, property.  In Ali v. Fasteners for Retail, Inc., a federal court in California ruled that plaintiff Al Ali had successfully stated a claim for the conversion of proprietary source code, cost data, and part numbers that various defendants had copied from his laptop and emails without his authorization.  This decision follows similar rulings by the Ninth Circuit, the New York State Court of Appeals, and a Massachusetts state trial court.   So, while at least one court has ruled in recent months that conversion does not apply to intangible information, the weight of precedent suggests that plaintiffs may increasingly find that electronic property can be the basis for a conversion claim.

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