E-Commerce Law Week, Issue 527

Seventh Circuit Rules that Warrants for Electronically Stored Communications are Valid Nationwide

The Seventh Circuit recently ruled that the broader territorial jurisdiction rules that apply to warrants for the disclosure of stored communications under the Electronic Communications Privacy Act (ECPA) override the territorial restrictions on search warrants established in the Federal Rules of Criminal Procedure.  In United States v. Berkos, the court found that ECPA section 2703(a) permits a court with jurisdiction over an offense to issue a search warrant for the disclosure, in any jurisdiction, of electronic communications held in storage by a communication provider for 180 days or less -- despite the fact that Federal Rule of Criminal Procedure 41(b) authorizes search warrants only for property "within the district."  The Seventh Circuit therefore upheld a district court's ruling that a search warrant issued by a Judge in Illinois, where an investigation into the defendant's failure to pay child support was ongoing, was valid in Texas, where it was served on a company that hosted the defendant's websites.  Given the clear language of section 2703 and the fact that at least one other federal court has reached a similar conclusion, the Seventh Circuit's ruling is unsurprising.  Nonetheless, communications providers should be aware that they can expect to be served with warrants for stored communications from any federal court in the country.

Courts Continue to Struggle with Defining the Scope of Website Immunity

A recent ruling by a federal court in Arizona could help clarify when webmasters can claim immunity under the Communications Decency Act (CDA) for information posted to their site by third parties.  Section 230 of the CDA states that "[n]o 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," and defines an "information content provider" as "any person ... responsible, in whole or in part, for the creation or development of information provided through … [an] interactive computer service."  In Best Western International, Inc., v. Furber, Best Western alleged, inter alia, that Loren Unruh and James and Nidrah Dial posted defamatory comments to a website allegedly created and maintained by James Furber and the Dials.  Furber, Unruh, and Mrs. Dial moved for partial summary judgment on the defamation claim, arguing that section 230 immunized them for "the posts they did not create or develop."  The court found that both Furber and Unruh were entitled to immunity since they had not solicited any of the defamatory material in these posts, but that Mrs. Dial could not claim immunity because she might have collaborated with her husband in creating some of the posts.  Meanwhile, a ruling by an Oregon court in Fehrs v. StubHub, Inc., could add to the confusion over whether websites that provide a forum for the unlawful resale of event tickets are also entitled to CDA immunity.  The court there stated that claims against StubHub for alleged violation of an anti-scalping ordinance were barred by the CDA, a statement in some tension with an earlier ruling by a North Carolina court in Hill v. StubHub, Inc.  

Three Wins For Plaintiffs in Trademarked Search Term and Metatag Suits

Three more courts have weighed in on the legality of using a competitor's trademarks in domain names, metatags, and keywords that trigger search engine advertising, all siding with plaintiffs.  In Venture Tape Corporation v. McGills Glass Warehouse, the First Circuit held that McGills' use of Venture's trademarks in metatags and hidden website text, for the admitted purpose of "lur[ing] customers" to its website, likely confused consumers and was therefore infringing.  Meanwhile, in Finance Express LLC v. Nowcom Corp., a district court in California granted a preliminary injunction barring Nowcom from using Finance Express' trademarks in domain names, trademarked search terms, and metatags or other website code.  And, in Soilworks, LLC v. Midwest Industrial Supply, Inc., a district court in Arizona granted Midwest summary judgment on a trademark infringement counter claim alleging that Soilworks had used Midwest's marks in keyword advertising and website metatags.

U.S. Amends Export Rules Governing Foreign-Produced Products Containing US-Origin Software and Technology

On October 1, 2008, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) published an interim final rule revising the Export Administration Regulations (“EAR”) with regard to the application of the de minimis rule to foreign-produced products containing U.S.-origin software and technology.  This amendment reflects a significant change in the rules used to determine when U.S. re-export jurisdiction applies to items that are made abroad but contain U.S.-controlled content.  The interim rule is effective immediately, but BIS is soliciting comments until December 1, 2008.

Steptoe Lawyers Analyze Troubled Assets Relief Program and Announce Creation of Troubled Assets Task Force

Last week, President Bush signed a law authorizing the Treasury Department to purchase up to $700 billion in "troubled assets" from the nation’s financial institutions. The law will give the Treasury Department up to two years to purchase troubled assets, while also placing limits on the compensation that can be paid to senior executives of the selling institutions.  The law also contains a number of changes to the tax code, and renews numerous expiring tax provisions. Steptoe lawyers have provided a full analysis of the law, while also announcing the formation of a Troubled Assets Task Force to advise financial institutions, sellers and purchasers of assets, asset managers, and others on the implementation of the new law, and to assist clients with related congressional oversight investigations, white collar criminal defense, federal contracting opportunities, tax issues, ERISA and executive compensation questions, and mortgage and asset securitization issues.

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