Public Allegation of Copyright Infringement
Leads to $300K Defamation Verdict
April 23, 2004
If you think a competitor is doing something illegal, like infringing your copyright, it’s usually best not to complain to customers about it. If it turns out you’re wrong about the alleged illegality, you could be liable for defamation. A Web site operator named Boats.com recently learned a $300,000 lesson on that subject in a Florida federal district court.
Amazon, Borders Face Market-Division Claims
March 31, 2004
According to this story at CNet News, last week a federal district judge in San Francisco said that a private antitrust claim against Amazon and Borders, for allegedly divvying up portions of the on-line book market between them, could proceed to trial. (The judge dismissed a companion price-fixing claim as “ludicrous on its face.”) The claim related to a teaming agreement that Amazon and Borders signed in 2001. The CNet story reports that:
[Judge] Patel said one section of the contract, which is similar to one Amazon inked for the online store of Toys “R” Us, is “troubling.” A restriction prohibiting Borders from competing with Amazon means that “Borders could not even provide overstock books to another online marketer, even if there were no mention online that these books came from Borders,” Patel said.
Bowling for Dollars: Junk FAXer Settles for $1M+
March 5, 2004
According to an article at law.com:
A bowling business that sent out as many as 352,000 unsolicited faxes will settle a class action for up to $1 million cash and $1.5 million in coupons. However, it’s not clear how much of the money will be paid out.
The settlement came under criticism from a lawyer with his own fax case against the bowling company, AMF Bowling Centers, who said the company was getting off too easily.
Excellent - maybe the word will spread and these pests will quit wasting our FAX paper.
For more information about junk faxes, see www.junkfaxes.org (apparently hosted by a consumer) or www.tcpa.com (apparently a law firm site).
Compuware: Hit By Its Own Torpedoes
February 11, 2004
In my Navy days I was a carrier sailor, not a submariner. But I still heard the story about the valor of the submarine USS TANG, sunk in the middle of a furious battle in 1944 by one of its own faulty torpedos with the loss of all but nine of its crew. TANG’s skipper, Richard O’Kane, was one of the most successful U.S. sub skippers of WW II; he was awarded the Medal of Honor after he and his surviving crew were released from Japanese captivity at the end of the war.
(In re-reading this essay before posting it, I wonder whether I’ll be guilty of poor taste in using TANG’s epic saga as a motif for a far less-heroic tale. But many of you will have never heard of either TANG or O’Kane, and you should, so here goes.)
Compuware, a mainframe computer software vendor, seems to have been hit by several of its own torpedoes. In 2002, it launched a copyright- and trade-secret lawsuit against IBM, its former alliance partner. Not long afterwards, CompuWare’s own assertions were re-directed at them, as part of a class-action securities lawsuit. Last week, Compuware’s motion to dismiss the class-action lawsuit was denied in part, leaving the unfortunate Compuware to the tender mercies of the securities plaintiffs’ bar. See In re Compuware Securities Litigation, _ F. Supp.2d _, 2004 WL 231464 (E.D. Mich. Feb. 3, 2004) (link via Securities Litigation Watch.)
Junk FAXing brings $5.4M Fine
January 7, 2004
On Monday the Federal Communications Commission (FCC) announced that it was fining Fax.com, Inc. nearly $5.4 million “for faxing unsolicited advertisements to consumers in violation of the Telephone Consumer Protection Act (TCPA) and the Commission’s rules. . . . This is the largest single fine ever imposed by the Commission for violation of the TCPA.”
The FCC said that it imposed the maximum permissible forfeiture of $11,000 for each of 489 separate violations on grounds that “Fax.com’s primary business activity itself constitutes a massive on-going violation” of the TCPA.
See the FCC’s press release for more details.
Marketers, Be Careful About Your GET Statements
December 9, 2003
Recently, several pharmaceutical companies narrowly dodged a privacy class-action bullet concerning their collection of data about Web-site visitors. See In re Pharmatrak, Inc. Privacy Litigation, No. 00-11672-JLT (D. Mass. Nov. 6, 2003) (granting summary judgment for defendants), copy available at the BNA Web site, on remand from 329 F.3d 9 (1st Cir. 2003) (reversing and remanding summary judgment dismissing action).
The lesson for marketing managers is to check whether your Web-site programmers are using GET statements in a way that results in saving personaly-identifying information about your site’s visitors.
Victoria’s Secret Exposes Too Much
(It’s Not What You Think)
October 28, 2003
No, it’s not what you think. Victoria’s Secret had computer security problems that allowed customers to browse through other customers’ on-line orders. (Insert your choice of joke here.) That attracted the attention of NY attorney general Elliot Spitzer. When the dust settled, the Victoria’s Secret parent company agreed to give refunds or credits to customers in New York and to pay the state of New York a $50,000 fine. See the AP story.
POSSIBLE LESSON: This is yet another example of how companies doing business on the Internet may have to contend with multiple legal authorities. Some other examples:
- Earlier this month, Google was ordered to pay a French company 75,000 euros in damages for allowing paid advertisements to be linked to the French company’s trademark in search terms; see the Reuters story.
- Last December, an Australian court ruled that a local business executive could bring suit — in Australia — against Dow Jones for allegedly libelous statements posted on a U.S. Web site. See this BBC analysis.
- In November 2000, another French judge ordered Yahoo! to block French access to Nazi-memorabilia sites; see this BBC story.
Advertising Heartburn
October 15, 2003
Sometimes it seems there’s no shortage of object lessons about the troubles that over-enthusiastic advertising can cause. Procter & Gamble (P&G) ran ads for a new heartburn product, Prilosec OTC. The ad copy read, “One pill. 24 Hours. Zero Heartburn” The ad copy apparently gave Johnson & Johnson heartburn of a different sort – it filed suit against P&G.
In response to J&J’s motion for a preliminary injunction, a federal judge in New York found that P&G had engaged in false advertising. The judge prohibited P&G from continuing its ad campaign pending a full trial. (Johnson & Johnson-Merck Consumer Pharmaceuticals Co. v. The Procter & Gamble Company, No. 03 Civ.7042(JES) (S.D.N.Y. Sept. 25, 2003).)
If the parties don’t settle before trial, P&G may find itself staring down the barrel of a big damages award for corrective advertising, under precedent such as one of my favorite case stories, that of U-Haul v. Jartran.
Mother Always Said, Don’t Brag
October 14, 2003
The exuberance and assertiveness of marketing people can make enormous contributions to a company. They can also put the company in a deep hole. Here’s an example of the latter: Some not-atypical, faintly boastful language in a company’s press releases language, of a kind your marketing people might well have used themselves, kept the company mired in a securities class-action lawsuit, when the lawsuit might otherwise have been dismissed.
Will Your PPT Slides’ Footer Help Lose a Lawsuit Too?
October 1, 2003
Last week a court poured out * Storage Technology’s corporate-raiding lawsuit against Cisco. One of the nails in the coffin was the way that Storage Tech had protected — or more accurately, failed to protect — the alleged trade secrets that Cisco had supposedly misappropriated. While that alone didn’t lose the case for Storage Tech, it didn’t help, and it likely has triggered some internal recriminations at Storage Tech.
* When a lawsuit is “poured out,” it generally means the lawsuit was dismissed, in this case, by the granting of summary judgment.
Here’s the story: