E-Commerce Law Week, Issue 557

Ninth Circuit Finds Another Route Around CDA Immunity

The Ninth Circuit has held that the Communications Decency Act (CDA) does not shield websites from liability for failing to make good on a promise to remove third-party content.  Section 230(c)(1) 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."  Most courts have held that this section immunizes websites from claims stemming from information posted by third parties.  But, in Barnes v. Yahoo!, Inc., the Ninth Circuit held that section 230 does not immunize Yahoo! against a claim that it broke a promise to remove objectionable content, since this claim was premised on a putative verbal contract between the parties, rather than on any action undertaken by Yahoo! as a publisher or speaker.

FTC Reaches Data Security Settlement with Mortgage Company

The Federal Trade Commission has reached another settlement with a company that allegedly failed to provide "reasonable" security for personal information.  In an agreement announced in early May, home mortgage firm James B. Nutter & Company (JBN) agreed to establish and maintain "a comprehensive information security program" and submit to ten years of biennial assessments of its data security in order to settle charges that its lax data security practices had violated the Privacy and Safeguards Rules promulgated under the Gramm-Leach-Bliley Act.  Among other things, the FTC's complaint stressed JBN's storage of personal information "in clear readable text," suggesting once again that encrypting can help a company avoid the long arm of the FTC's data security cops.

Will the FTC Become the Enforcer of Net Neutrality?

On another front, FTC Chairman Jon Leibowitz stated in a recent interview that the Commission's consumer protection mandate gives it a significant role to play on network neutrality issues.  Leibowitz stressed that Internet service providers must give notice of their network management policies to customers and obtain their consent before making changes to these policies, and suggested that the failure to do so could be considered an "unfair or deceptive ... practice[]" under the FTC Act.  He also warned that companies that favor the performance of their own network applications over the performance of competitors' software could face antitrust action.  Chairman Leibowitz's comments are in line with a concurring statement that he issued alongside a June 2007 FTC staff report entitled "Broadband Connectivity Competition Policy."  There, Leibowitz claimed that "failure to disclose [the] material terms [of an Internet service contract] could be considered 'unfair or deceptive' in violation of the FTC Act" and expressed concern that the FTC's existing antitrust enforcement powers would not provide an effective means of protecting certain other "Internet freedoms."  Now that Leibowitz is the Chairman of the Commission, he is likely to try to lead the FTC to become an active player in this area.

Court Rules that Use of Competitor's Mark in Metatags May Create Likelihood of Confusion

Another court has ruled that a websites' use of a competitor's mark in metatags can create a "likelihood of confusion" sufficient to support a trademark infringement claim under the Lanham Act.  In Deltek, Inc., v. Iuvo Systems, Inc., software company Deltek alleged that competitor Iuvo had, among other things, infringed upon Deltek's trademarks by using them in the metatags of the iuvosystems.com website.  Deltek sought a preliminary injunction against this and other uses of Deltek's marks on Iuvo's site.  A federal court in Virginia granted Deltek's motion, finding that Iuvo's "use of Deltek's trademarks as metatags may … create a likelihood of confusion."  In light of this and other rulings, companies should use caution when considering the use of a competitor's mark in a website metatag.

European Commission Slams Intel for Anticompetitive Practices

On May 13, the European Commission (the European Union’s antitrust watchdog) demonstrated its tough stance towards companies with a strong market position, announcing its final decision that chip manufacturer Intel Corp. had abused its dominant position by entering into effectively exclusive contracts with computer chip purchasers.  The Commission imposed an administrative fine of € 1.06 billion ($1.45 billion), the highest fine it has ever imposed on a single company for antitrust violations in the EU.  The fine represents 4.15% of Intel’s worldwide turnover in 2008 and is twice the amount imposed by the Commission against Microsoft in 2004 for tying and refusal to deal abuses.  To underscore the point, the European Commissioner in charge of competition law, Neelie Kroes, borrowed an Intel tag-line to say that her “vision for tomorrow” for Intel was for it to “obey the law.”

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