NYU Patents Discussion

I need support with this Cyber Security question so I can learn better.

After learning about the process an organization follows in obtaining a patent for an e-commerce business, answer the following question: How can internet patents be used to protect, or safeguard, numerous businesses practices on the internet? Explain using specific examples.Cyberlaw: The Law of the Internet
and Information Technology
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First Edition
Cyberlaw: The Law of the Internet
and Information Technology
Brian Craig
Globe University/Minnesota School of Business
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
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Copyright © 2013, Pearson Education, Inc., publishing as Prentice Hall. All rights reserved.
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Jersey 07458.
Many of the designations by manufacturers and seller to distinguish their products are claimed as
trademarks. Where those designations appear in this book, and the publisher was aware of a trademark
claim, the designations have been printed in initial caps or all caps.
Library of Congress Cataloging-in-Publication Data
Craig, Brian
Cyberlaw : the law of the internet and information technology/Brian Craig.—1st ed.
p. cm.
ISBN-13: 978-0-13-256087-0 (alk. paper)
ISBN-10: 0-13-256087-9 (alk. paper)
1. Internet—Law and legislation—United States. I. Title.
KF390.5.C6C73 2013
343.7309’944—dc23
2011035721
10 9 8 7 6 5 4 3 2 1
ISBN 10: 0-13-256087-9
ISBN 13: 978-0-13-256087-0
This book is dedicated to my beloved eternal companion,
Valerie, and our sons, Everett and Eli.
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BRIEF CONTENTS
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Jurisdiction and Venue in Cyberspace 1
Copyright Law in the Digital Age 15
Trademarks in E-Commerce 36
Patents and Trade Secrets in the Information Age 53
E-Commerce and Online Contracts 70
Online Tax-Related Issues 91
Cybercrimes 111
Tort Law in Cyberspace 136
Regulating Online Speech 158
Constitutional and Statutory Privacy Protections 182
Special Topics in Online Privacy 201
Appendix 225
Glossary 247
Index 254
vii
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CONTENTS
Preface
xiii
About the Author
xv
Acknowledgments
xvii
Chapter 1 Jurisdiction and Venue in Cyberspace
1
Chapter Overview 1
History and Development of the Internet
Introduction to Cyberlaw 2
Jurisdiction in Cyberspace 2
Long-Arm Statutes and Due Process 5
Choice-of-Law Provision 8
Venue 9
Full Faith and Credit Clause 11
Chapter 2 Copyright Law in the Digital Age
15
Chapter Overview 15
Introduction to Intellectual Property 16
Scope of Copyright Law 18
Copyright Notice 19
Copyright Registration 20
Copyright Duration 22
Digital Millennium Copyright Act 22
Copyright Infringement 24
Copyright Infringement Defenses 27
International Enforcement of Copyrights
Chapter 3 Trademarks in E-Commerce
2
31
36
Trademarks Generally 36
Acquisition of a Trademark 38
Registration of Trademarks 38
Marking Requirements 42
Trademark Infringement 42
Defenses to Infringement of Trademarks 46
Domain Name Disputes 48
International Enforcement of Trademarks 48
Chapter 4 Patents and Trade Secrets in the Information Age
Patents Generally 53
Patent Applications and Proceedings
Patent Infringement 60
Trade Secrets 65
53
56
ix
x
Contents
Chapter 5 E-Commerce and Online Contracts
70
Chapter Overview 70
Sources of Contract Law 71
Fundamental Principles of Contract Law 73
E-Commerce Law 77
Common Clauses in Online and Software Contracts
Chapter 6 Online Tax-Related Issues
91
Chapter Overview 91
Introduction to Tax Law 92
Sales Tax for Online Transactions
Income Tax Issues 99
Chapter 7 Cybercrimes
80
93
111
Computer Crime Definition and Categories 111
General Principles of Criminal Law 112
Constitutional Issues Relating to Cybercrimes 113
Jurisdictional Limits of Cybercrimes 118
Federal Approaches 119
State Approaches 128
Enforcement of Cybercrimes 130
Chapter 8 Tort Law in Cyberspace
136
Opening Scenario and Overview 136
General Principles of Tort Law 137
Invasion of Privacy 138
Intentional and Negligent Infliction of Emotional Distress
Economic Torts 147
Strict Liability 150
Remedies in Tort Cases 151
Defenses in Internet Tort Cases 152
Chapter 9 Regulating Online Speech
158
Opening Scenario and Overview 158
First Amendment Freedoms of Speech and Press
Civil Liability for Defamation 163
Defenses in Online Defamation Cases 167
Criminal Defamation 176
Business Disparagement 177
Chapter 10 Constitutional and Statutory Privacy Protections
Constitutional Right to Privacy 182
Key Federal Privacy Statutes 183
182
159
145
Contents
Chapter 11 Special Topics in Online Privacy
201
Chapter Overview 201
Social Networking Sites 201
Internet Search Queries 203
Online Advertising 208
Data Mining 214
Online Privacy Policies 215
Workplace Privacy 217
Self-Regulation and Reforms 219
Appendixes
Appendix A:
Digital Millennium Copyright Act (DMCA) Safe Harbor
Provision 225
Appendix B:
Trademark Dilution Revision Act of 2006
Appendix C:
CAN-SPAM Act
Appendix D:
Federal Trade Commission Fair Information Practice
Principles 242
Glossary 247
Index 254
233
236
xi
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PREFACE
Cyberlaw: The Law of the Internet and Information Technology is written primarily for
undergraduate students in paralegal, legal studies, criminal justice, business, and
computer and information science programs to help them better understand the legal
and policy issues associated with cyberlaw and the Internet. The text also includes compliance information that business managers, webmasters, and information technology
professionals will find relevant and useful. The goal is to help readers better understand the legal and policy issues associated with the Internet. Cyberlaw is the field of
law dealing with the Internet, encompassing cases, statutes, regulations, and disputes
that affect people and businesses interacting through computers. With the ever-expanding
role of the Internet and technology in people’s lives, Internet law is at the heart of many
legal and policy issues today, including jurisdictional questions, intellectual property
rights, tort actions, privacy rights, e-commerce, cybercrimes, and online speech. Since
the Internet is a fluid and dynamic medium, the need for a current text in the field
written for a diverse audience exists.
TEXT FEATURES
Cases
Each chapter includes one or more leading case that relates to the chapter material. A
background on each case is provided along with relevant portions of the court’s actual
opinion. Review and discussion questions are also available following each case.
Key Terms
As indicated above, each chapter contains a list of key legal terms that relate to the
chapter material. These terms and their definitions can be found in the Glossary.
Internet Resources
Internet resources are provided with links to websites that include helpful information
relating to the chapter material.
Review Questions
Each chapter contains questions for review based on the learning objectives to verify
that readers comprehend the material in the chapter.
Discussion Questions
Each chapter contains discussion questions that can be used in classrooms discussions
that may be used in both face-to-face and online classes.
Exercises
Each chapter includes exercises with simulated projects that a paralegal, manager, or
other professional might perform. Many of these exercises include hypothetical situations based on actual cases.
xiii
xiv
Preface
End Notes
End notes are provided at the end of each chapter with references to primary and
secondary sources. Readers may find these additional sources helpful.
Appendices contain the text of recent and relevant federal statutes governing the
Internet. Appendix A contains the full text of the Digital Millennium Copyright Act
(DMCA) Safe Harbor Provision, Appendix B contains the full text of the Trademark
Dilution Revision Act of 2006, and Appendix C contains selections from the CANSPAM Act. Appendix D also contains the Federal Trade Commission Fair Information
Practice Principles.
CHAPTER TOPICS AND ORGANIZATION
Chapter 1 provides a brief history on the development of the Internet and an introduction to the Internet. Chapter 1 then discusses jurisdictional issues in cyberspace, including the requirements for obtaining personal jurisdiction over defendants with online
transactions. Chapters 2–4 focus on intellectual property issues. Chapter 2 provides an
introduction to intellectual property in general and then focuses on copyright issues,
including the fair use defense. Chapter 3 focuses on trademark issues and domain name
disputes. Chapter 4 provides information on patents and trade secrets as they relate to
the online environment. Chapter 5 explores concepts in e-commerce and online
contracts. Chapter 6 provides information on tax-related issues relating to the Internet,
including sales tax and income tax. Chapter 7 focuses on computer crimes with an
emphasis on the key federal statutes. Chapter 8 focuses on torts relating to the Internet,
especially the common law tort of invasion of privacy. Chapter 9 examines issues
associated with online speech, including defamation actions and First Amendment
issues. Chapter 10 provides information on privacy rights afforded under the
U.S. Constitution, state constitutions, and key federal privacy statutes. Chapter 11
explores special topics in online privacy such as privacy issues associated with online
social networking sites and workplace privacy policies.
RESOURCES FOR INSTRUCTORS
Supplemental teaching resources include:
Instructor’s Manual
Includes content outlines for classroom discussion, teaching suggestions, and answers
to end-of-chapter questions from the text.
Test Bank in MyTest Generator
The test bank is arranged by chapter, containing a variety of question formats such as
true/false, multiple choice, completion, short answer, and essay.
PowerPoint Lecture Presentations
A PowerPoint presentation, organized by chapter, outlines and summarizes the major
points covered, and corresponds with the organization of the text.
ABOUT THE AUTHOR
Brian Craig is the legal program chair with the Globe Education Network Online
Division. The Globe Education Network includes Globe University, the Minnesota
School of Business, and Broadview University (formerly Utah Career College). He predominantly teaches and develops online legal courses, including constitutional issues,
intellectual property, legal research, and cyberlaw. Prior to joining the faculty of Globe
University/Minnesota School of Business, Brian worked as an attorney at ThomsonReuters from 2002 to 2008 where he dealt with a variety of intellectual property and
privacy issues. He also previously worked as a legal editor for Wolters Kluwer, judicial
law clerk for Idaho District Court Judge Carl Kerrick, and legislative aide for George
Runner in the California State Legislature. Brian Craig earned his bachelor’s degree in
political science from Brigham Young University (UT) and Juris Doctor from the
University of Idaho College of Law. Brian Craig previously taught legal writing as an
adjunct instructor at the University of Minnesota Law School. In addition, he is an articles reviewer for the American Business Law Journal and a member of the Academy of
Legal Studies in Business. His research interests focus on intellectual property, privacy,
and constitutional issues with emerging technologies. He has written scholarly articles
appearing in the North Dakota Law Review, Real Estate Law Journal, Real Estate Review,
Perspectives: Teaching Legal & Writing, and Raven: A Journal of Vexillology. Brian lives in
Providence, Utah, with his wife and two sons. Brian Craig can be reached via email at:
bcraig@msbcollege.edu.
xv
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ACKNOWLEDGEMENTS
I wish to thank Gary Bauer, Linda Cupp, and Molly Schmidt at Pearson for their
support and guidance. I also would like to recognize the contributions of my colleagues
at Globe University, including Seth Tesdall, Kelly Schmidt, Kristen O’Connell, Meg
Neubauer, Terri Lindfors, Cathy Kennedy, Kirstin Leighton-Lucas, Kim Maurer, and
Charles Feige. I extend special thanks for those individuals involved with the original
Advanced Research Projects Agency (ARPA) that established the groundwork for what
became the ARPANET and later the Internet today. I also acknowledge of the role of
James Madison as the principal architect of the Bill of Rights and other Founders in
securing the blessings of liberty in the U.S. Constitution, which are needed now more
than ever with the Internet. I also thank Professor James Macdonald from the
University of Idaho and Professor Bill Daynes from Brigham Young University who
inspired me to learn more about constitutional law. I am especially grateful for the
support of my family, especially my loving wife, Valerie, and our boys, Everett and Eli,
for their continued support and encouragement. I also appreciate the support and
encouragement of other family members, including my parents, Keith Craig and Kathie
Modugno, my brother, Kenneth Craig, Mary Morrison, Kent Morrison, and Ann
Morrison. In addition, I wish to thank the following reviewers of the manuscript for
their insights and comments.
Darlene Mallick
Anne Arundel Community College
Konnie Kustron
Eastern Michigan University
Todd H. Bailey
Miami University
Grant Alexander
Northeastern State University
Christine Russell
Eastern Carolina
Charlie Penrod
Northwestern State University
Susan Jaworowski
Kapiolani Community College
Russell R. Clark
George Washington University
Elizabeth Ivey McCowan
Pellissippi State Community College
Henry Sotelo
Truckee Meadows Community College
Jeffrey Pittman
Arkansas State University
Thomas Cary
City University of Seattle
Christy Powers
St. Petersburg College
xvii
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Cyberlaw: The Law of the Internet
and Information Technology
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CHAPTER
1
Jurisdiction and Venue in Cyberspace
[T]he borders of cyberspace do not map onto the borders of real space,
which poses a fundamental problem for courts whose jurisdiction is based
on geography.
HON. MICHEL BASTARACHE1
LEARNING OBJECTIVES
After completing this chapter, you will be able to:
1. Explain the history of the Internet.
2. Describe the different types of jurisdiction, including subject matter jurisdiction, personal
jurisdiction, and in rem jurisdiction.
3. Discuss how service of process plays a critical role in the commencement of litigation and how
service of process can be effectuated via electronic means.
4. Explain what activities are considered minimum contacts for a website owner and the sliding scale
used by courts for passive and active websites.
5. Describe the purpose of a choice-of-law provision and a forum selection clause in an online contract.
CHAPTER OVERVIEW
This chapter provides an introduction to cyberlaw and jurisdictional matters in cyberspace. In addition,
this chapter addresses what contacts are sufficient to satisfy the Due Process Clause for personal
jurisdiction, particularly in the context of Internet transactions and maintaining a website. Jurisdiction
in criminal cases and cybercrimes is covered in Chapter 7.
1
2
Chapter 1 • Jurisdiction and Venue in Cyberspace
HISTORY AND DEVELOPMENT OF THE INTERNET
The history of the Internet can be traced back to a military research network established
in 1968 called the Arpanet, which was sponsored by the Advanced Research Projects
Agency (ARPA) of the U.S. Department of Defense.2 The original purpose of ARPA was
to connect government computers across the country to exchange information during
wartime without interruption.3 In 1962, J.C.R. Licklider wrote about his Intergalactic
Network concept, where everyone on the globe is interconnected and can access
programs and data at any site from anywhere. Licklider became the first head of the
computer research program at ARPA, which he called the Information Processing
Techniques Office (IPTO).4
The Internet was later used by the private sector for exchanging research between
universities. Now the Internet is a complex series of interconnected computer networks
that communicate via telephone lines, fiber optics, copper wires, satellite transmissions,
and other dedicated data connections. The Internet has grown exponentially to the
ubiquitous and ever-present mass medium it is today. Over one billion people
worldwide and 79 percent of adults in the United States now use the Internet.5
INTRODUCTION TO CYBERLAW
Cyberlaw
The field of law dealing
with the Internet,
encompassing cases,
statutes, regulations,
and disputes that affect
people and businesses
interacting through
computers. Cyberlaw
addresses issues of online
speech and business that
arise because of the nature
of the medium, including
intellectual property rights,
free speech, privacy,
e-commerce, and safety, as
well as questions of
jurisdiction.
Black’s Law Dictionary defines “cyberlaw” as “the field of law dealing with the
Internet, encompassing cases, statutes, regulations, and disputes that affect people and
businesses interacting through computers.”6 With the ever-expanding role of the
Internet and technology in people’s lives, cyberlaw is at the heart of many legal and
policy issues today, including jurisdictional questions, intellectual property rights, tort
actions, privacy rights, e-commerce, cybercrimes, and online speech. Since the Internet
is a fluid and dynamic medium, cyberlaw is a field of law that changes rapidly and it is
important to stay current with recent trends.
Who controls the Internet? No single government or organization controls the
Internet. The global nature of the Internet creates insurmountable challenges in having
a general governmental regulatory body regulate it. This difficulty comes in part from
the nature of the Internet itself. Unlike a television or radio broadcasts localized in a
particular jurisdiction, the Internet has a global reach. Courts, government agencies,
and other entities all have some function in governing the Internet. This book will focus
on laws within the United States, but a number of international issues exist with
governing the Internet. Without a central body in place to regulate a borderless medium
like the Internet, the result is a complex system of laws governing a variety of different
legal issues such as jurisdictional questions, intellectual property law, contract law, tort
law, and numerous federal and state statutes.
Because so many laws govern the Internet, compliance can be a challenge for
many companies. Heather Killen, former Yahoo! senior vice president of international
operations, stated this challenge best when she said “It is very difficult to do business if
you have to wake up every day and say ‘Okay, whose laws do I follow?’ . . . We have
many countries and many laws and just one Internet.”7
JURISDICTION IN CYBERSPACE
Jurisdiction
A court’s power to decide
a case or issue a decree.
One of the first questions in any case or controversy that involves the Internet is
whether or not a particular court has jurisdiction to determine a certain case.
Jurisdiction is a court’s power to decide a particular case. There are several different
types of jurisdiction, including subject matter jurisdiction, in rem jurisdiction, and
Chapter 1 • Jurisdiction and Venue in Cyberspace
personal jurisdiction. Many of the contested cases involving e-commerce and online
transactions involve questions of personal jurisdiction.
Black’s Law Dictionary defines subject matter jurisdiction as “jurisdiction over
the nature of the case and the type of relief sought; the extent to which a court can rule
on the conduct of persons or the status of things.” In essence, subject matter jurisdiction
is the authority of a particular court to hear a certain type of case. For example, the U.S.
courts or federal courts have exclusive subject matter jurisdiction over patent
infringement cases. If a plaintiff files a patent infringement case in state court, the case
will likely be transferred to federal court or dismissed. Similarly, U.S. Bankruptcy
Courts have exclusive jurisdiction over bankruptcy petitions. State courts have
exclusive subject matter jurisdiction over other matters such as family law.
In rem jurisdiction involves jurisdiction over a particular thing or property. In
rem jurisdiction claims are most often found in probate and land title cases.
Personal jurisdiction is a court’s power to bring a person into its adjudicative
process; jurisdiction over a defendant’s personal rights, rather than merely over
property interests. Personal jurisdiction is also called in personam jurisdiction,
jurisdiction in personam, jurisdiction of the person, or jurisdiction over the person.
The rise of the Internet has led courts to examine personal jurisdiction doctrines.
Courts faced with the application of new technologies, including the Internet, to
personal jurisdiction issues have used traditional analysis of personal jurisdiction to
these new communication tools.
In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the U.S. Supreme Court
established “minimum contacts” as the basic jurisdictional test in the United States for
establishing personal jurisdiction. In International Shoe, the Supreme Court held that a
state could exercise personal jurisdiction over a defendant if the defendant had
minimum contacts with the state and it was fair for the defendant to defend the lawsuit
there. In Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) (Case 1.1), the U.S. Court
CASE 1.1
The Case of the Lemon 1964 Ford Galaxie Sold on eBay
Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008)
This appeal presents a question that remains surprisingly unanswered by the circuit courts:
Does the sale of an item via the eBay Internet auction site provide sufficient “minimum contacts”
to support personal jurisdiction over a nonresident defendant in the buyer’s forum state? PlaintiffAppellant Paul Boschetto (“Boschetto”) was the winning bidder for a 1964 Ford Galaxie sold on
eBay by the Defendant-Appellee, Jeffrey Hansing (“Hansing”) for $34,106. Boschetto arranged
for the car to be shipped from Wisconsin to California, but upon arrival it failed to meet his
expectations or the advertised description. Boschetto sued in federal court; his complaint was
dismissed for lack of personal jurisdiction. We now affirm.
All Defendants moved to dismiss based on lack of personal jurisdiction. On July 13, 2006,
the district court granted the motion. The district court reasoned that the lone jurisdictionally
relevant contact with California, an eBay sale consummated with a California purchaser, was
insufficient to establish jurisdiction over any of the Defendants. Although Hansing used eBay to
market the automobile, the district court observed that “eBay acted not as a ‘distribution center’
but rather as a virtual forum for the exchange of goods,” and that in a standard eBay
transaction—like the one at issue in this appeal—the item goes to whomever is the highest
bidder, and so “the eBay seller does not purposefully avail himself of the privilege of doing
business in a forum state absent some additional conduct directed at the forum state.”
(Continued)
3
Subject Matter
Jurisdiction
Jurisdiction over the nature
of the case and the type of
relief sought; the extent to
which a court can rule on
the conduct of persons or
the status of things.
In Rem Jurisdiction
A court’s power to
adjudicate the rights to a
given piece of property,
including the power to seize
and hold it.
Personal Jurisdiction
A court’s power to bring a
person into its adjudicative
process; jurisdiction over a
defendant’s personal rights,
rather than merely over
property interests. Also
called “in personam
jurisdiction” or
“jurisdiction over the
person.”
4
Chapter 1 • Jurisdiction and Venue in Cyberspace
(Continued)
II. Personal Jurisdiction
When no federal statute governs personal jurisdiction, the district court applies the law of the
forum state. California’s long-arm statute is co-extensive with federal standards, so a federal court
may exercise personal jurisdiction if doing so comports with federal constitutional due process.
“For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must
have at least ‘minimum contacts’ with the relevant forum such that the exercise of jurisdiction
‘does not offend traditional notions of fair play and substantial justice.’” Schwarzenegger, 374 F.3d
at 801 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95
(1945)). There are two forms of personal jurisdiction that a forum state may exercise over a nonresident defendant-general jurisdiction and specific jurisdiction. We deal here only with the latter.
A. The district court correctly dismissed Boschetto’s complaint for lack of personal jurisdiction.
We apply a three-part test to determine whether the exercise of specific jurisdiction over a
nonresident defendant is appropriate:
1. The non-resident defendant must purposefully direct his activities or consummate some
transaction with the forum or resident thereof; or perform some act by which he
purposefully avails himself of the privilege of conducting activities in the forum, thereby
invoking the benefits and protections of its laws;
2. the claim must be one which arises out of or relates to the defendant’s forumrelated activities; and
3. the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must
be reasonable.
For part one of this three-part test, we have typically analyzed cases that sound primarily in
contract-as Boschetto’s case does-under a “purposeful availment” standard. To have purposefully
availed itself of the privilege of doing business in the forum, a defendant must have “performed
some type of affirmative conduct which allows or promotes the transaction of business within the
forum state.” Sher, 911 F.2d at 1362 (internal quotation marks and citation omitted).
Here, Boschetto fails at step one of the test for specific jurisdiction, as the lone transaction
for the sale of one item does not establish that the Defendants purposefully availed themselves of
the privilege of doing business in California. The arrangement between Boschetto and Hansing
which is, at bottom, a contract for the sale of a good, is insufficient to have created a substantial
connection with California. Hansing did not create any ongoing obligations with Boschetto in
California; once the car was sold the parties were to go their separate ways.
In Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419 (9th Cir.1997), we discussed with approval
a sliding scale analysis that looks to how interactive an Internet website is for purposes of determining
its jurisdictional effect. (“In sum, the common thread, well stated by the district court in Zippo, is that
the ‘likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to
the nature and quality of the commercial activity that an entity conducts over the Internet.’”) (quoting
Zippo Mfg. Co. v. Zippo Dot Com, 952 F.Supp. 1119, 1124 (W.D.Pa.1997)). The plaintiff in Cybersell
relied on the fact that the defendant operated a website, accessible in the forum state, that contained
allegedly infringing trademarks. 130 F.3d at 416. The defendant’s website advertised its services but
did not allow parties to transact business via the site. Id. at 419. Noting the lack of interactivity on the
defendant’s website, the court concluded that the defendant had “done no act and [ ] consummated
no transaction, nor has it performed any act by which it purposefully availed itself of the privilege of
conducting activities, in Arizona, thereby invoking the benefits and protections of Arizona law.” Id.
This was a one-time contract for the sale of a good that involved the forum state only
because that is where the purchaser happened to reside, but otherwise created no “substantial
connection” or ongoing obligations there. Where eBay is used as a means for establishing regular
business with a remote forum such that a finding of personal jurisdiction comports with
“traditional notions of fair play and substantial justice,” International Shoe Co., 326 U.S. at 316,
66 S.Ct. 154, then a defendant’s use of eBay may be properly taken into account for purposes of
establishing personal jurisdiction. But on the facts of this case—a one-time transaction—the use
of eBay as the conduit for that transaction does not have any dispositive effect on jurisdiction.
Chapter 1 • Jurisdiction and Venue in Cyberspace
5
Case Questions
1. In opposition to a defendant’s motion to dismiss for lack of personal jurisdiction, which party
bears the burden of establishing that jurisdiction is proper?
2. According to the holding of the U.S. Supreme Court in International Shoe Co. v. Washington
cited in Boschetto v. Hansing, what level of contacts are needed to exercise personal
jurisdiction over a nonresident defendant?
3. What is the three-part test used by the U.S. Court of Appeals for the Ninth Circuit (a federal
appeals court) in Boschetto v. Hansing to determine whether the exercise of specific jurisdiction
over a nonresident defendant is appropriate?
4. Do you agree with the court’s holding that the seller was not subject to specific personal
jurisdiction? Why or why not?
of Appeals for the Ninth Circuit, a federal appeals court, applied the minimum contacts
test set forth in International Shoe and dismissed a California lawsuit brought by a
California-based plaintiff who purchased an automobile on eBay from a private
Wisconsin-based seller because the Wisconsin seller defendant did not have sufficient
minimum contacts with the State of California based on the eBay sale to a California
purchaser.
LONG-ARM STATUTES AND DUE PROCESS
Each state has a long-arm statute that allows a state court to exercise jurisdiction over a
particular defendant. For example, the Minnesota long-arm statute permits Minnesota
courts to assert personal jurisdiction over defendants to the extent permitted by the
federal constitution.8 To determine whether a court may exercise jurisdiction over a
nonresident defendant, a court determines whether jurisdiction in the forum state
satisfies the federal requirements of due process. (See Figure 1.1.)
Finding the Long-Arm Statute in a Particular State
A paralegal, legal assistant, or other professional may need to locate the long-arm
statute in a particular state. Usually the text of the long-arm statute will not expressly
include the phrase “long-arm” but rather use the language similar to the Minnesota
statute in Figure 1.1 that states “exercise personal jurisdiction over any foreign
corporation or any nonresident individual.” To find the long-arm statute in a particular
state, one option is to run a search in state cases for “long-arm” and find the relevant
statute cited in the judicial opinion. Another option is to search for the phrase
“jurisdiction over nonresident” in either a natural language search or a terms and
connectors search. On Westlaw, searching with the West Key Number 106k12(2), which
relates to long-arm jurisdiction, can be helpful. Westlaw (whose main competitor is
Lexis-Nexis) is a popular fee-based online legal research service used by many judges,
lawyers, and paralegals. West’s Key Number System is a comprehensive and widely
used indexing system for caselaw materials to assist in legal research. (See Figure 1.2.)
Constitutional Protections of Due Process
The due process clauses found in the Fifth and Fourteenth Amendments to the U.S.
Constitution provide that a court is limited in exercising its powers over a
nonresident defendant. The Due Process Clause of the Fifth Amendment states that
“no person shall be deprived of life, liberty, or property without the due process
Long-arm Statute
Statute that provides for
jurisdiction over a
nonresident defendant who
has had some contact with
the jurisdiction in which the
petition is filed.
6
Chapter 1 • Jurisdiction and Venue in Cyberspace
Subdivision 1. Personal jurisdiction. As to a cause of action arising from any acts enumerated in this
subdivision, a court of this state with jurisdiction of the subject matter may exercise personal
jurisdiction over any foreign corporation or any nonresident individual, or the individual’s personal
representative, in the same manner as if it were a domestic corporation or the individual were a
resident of this state. This section applies if, in person or through an agent, the foreign corporation
or nonresident individual:
(1) owns, uses, or possesses any real or personal property situated in this state; or
(2) transacts any business within the state; or
(3) commits any act in Minnesota causing injury or property damage; or
(4) commits any act outside Minnesota causing injury or property damage in Minnesota, subject to the
following exceptions when no jurisdiction shall be found:
(i) Minnesota has no substantial interest in providing a forum; or
(ii) the burden placed on the defendant by being brought under the state’s jurisdiction would
violate fairness and substantial justice.
Subd. 2. Service of process. The service of process on any person who is subject to the jurisdiction of the
courts of this state, as provided in this section, may be made by personally serving the summons upon
the defendant outside this state with the same effect as though the summons had been personally served
within this state.
Subd. 3. Acts enumerated. Only causes of action arising from acts enumerated in subdivision 1 may be
asserted against a defendant in an action in which jurisdiction over the defendant is based upon this
section.
Subd. 4. No limit right to serve process. Nothing contained in this section shall limit or affect the right to
serve any process in any other manner now or hereafter provided by law or the Minnesota Rules of Civil
Procedure.
Subd. 5. Definition. “Nonresident individual,” as used in this section, means any individual, or the
individual’s personal representative, who is not domiciled or residing in the state when suit is
commenced.
FIGURE 1.1 Minnesota’s Long-Arm Statute, M.S.A. § 543.19
of law.” 9 The Fourteenth Amendment to the U.S. Constitution adopted after the
U.S. Civil War, which extended to the principle of due process to state and local
governments, states that “no state shall . . . deprive any person of life, liberty, or
property without the due process of law.”10
In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the U.S. Supreme Court
held that a court’s exercise of personal jurisdiction must be consistent with the Due
Process Clause, which imposes a general fairness test requiring that certain minimum
contacts exist between the nonresident defendant and the forum such that maintenance
of the suit does not offend traditional notions of fair play and substantial justice.
The Fourteenth Amendment’s Due Process Clause allows a court to exercise personal
jurisdiction over any defendant that has sufficient “minimum contacts” with the forum
so that the suit does not offend traditional notions of fair play and substantial justice.
If browsing the West Key Number Digest, find the West Key Number 106k12(2), which relates to long-arm
jurisdiction, under the following topic and key numbers:
106 Courts
106I Nature, Extent, and Exercise of Jurisdiction in General
106k10 Jurisdiction of the Person
106k12 Domicile or Residence of Party
106k12(2) Actions by or Against Nonresidents; “Long-Arm” Jurisdiction in General
FIGURE 1.2 West’s Key Number System for Finding the Long-Arm Statute
Chapter 1 • Jurisdiction and Venue in Cyberspace
Federal Rule of Civil Procedure 4(e)
Serving an Individual Within a Judicial District of the United States.
Unless federal law provides otherwise, an individual—other than a minor, an incompetent person,
or a person whose waiver has been filed—may be served in a judicial district of the United States by:
(1) following state law for serving a summons in an action brought in courts of general jurisdiction
in the state where the district court is located or where service is made; or
(2) doing any of the following:
(A) delivering a copy of the summons and of the complaint to the individual personally;
(B) leaving a copy of each at the individual’s dwelling or usual place of abode with someone
of suitable age and discretion who resides there; or
(C) delivering a copy of each to an agent authorized by appointment or by law to receive
service of process.
FIGURE 1.3 Service of Process Under the Federal Rules of Civil Procedure
A related term involving personal jurisdiction is service of process. Service of
process is defined as the formal delivery of a writ, summons, or other legal process.
(See Figure 1.3.) The most common method for service of process is through personal
service. Rule 4 of the Federal Rules of Civil Procedure governs service of process in the
federal courts. Other forms of service of process might include delivery via certified
mail or publication in a newspaper.11
Although hand-delivered service of process is the preferred method for service of
process, sometimes personal service is not possible. The widespread use of the
Internet, including online social networking sites like Facebook, raises questions
whether electronic publication for service of process can be accomplished. In 2008, an
Australian judge recognized services of process via Facebook (see Case 1.2). Shortly
thereafter, in 2009, New Zealand followed suit, citing the Australian case and allowing
service of process via Facebook in an intra-familial business dispute.12 A number of
jurisdictions outside the United States now allow parties to be served via social
networking sites like Facebook. The question remains, however, whether a court in the
United States would allow services of processional through a social network site like
Facebook or Twitter.
When a nonresident defendant has been properly served with notice, the court
then asks whether the exercise of personal jurisdiction over defendant violates due
process. There are two recognized bases for exercising personal jurisdiction over
nonresident defendants: (1) “general jurisdiction,” which arises when the defendant’s
activities in the forum are sufficiently “substantial” or “continuous and systematic” to
justify the exercise of jurisdiction over it in all matters; and (2) “specific jurisdiction,”
which arises when a defendant’s specific contacts with the forum give rise to the claim
in question.
Courts often use a sliding scale to determine whether a website has minimum
contacts with a forum state to recognize personal jurisdiction. Courts have held that
passive or informational websites that are used only for purposes, such as advertising,
are not sufficient to establish minimum contacts to support exercise of personal
jurisdiction over a nonresident defendant.13 Courts are more likely to recognize
personal jurisdiction when the defendant maintains an interactive website. Interactive
websites have repeated contacts and transmissions, and may also allow participants to
enter into contracts. In Grimaldi v. Guinn, 72 A.D.3d 37, 895 N.Y.S.2d 156 (2d Dep’t 2010),
a New York state court held that when analyzing whether a defendant’s business
transactions are sufficient to justify exercise of long-arm jurisdiction, it is the quality of
the defendants’ contacts that is the primary consideration. The court in Grimaldi held
that a nonresident defendant’s passive website, when combined with other business
Service of Process
The formal delivery of a
writ, summons, or other
legal process. Also called
“service.”
7
8
Chapter 1 • Jurisdiction and Venue in Cyberspace
CASE 1.2
Service of Process Via Facebook
On December 12, 2008, Master David Harper of the Supreme Court of the Australian Capital
Territory authorized service of a default judgment via the social networking site Facebook. The
defendant couple had defaulted on a $150,000 home refinancing loan. After the couple failed to
appear in court, lawyers for the lending company applied to the court for a judgment for the loan
amount and for possession of the defendants’ home. The court granted default judgment on
October 31, 2008. Australian law required that the lending company locate the defendants and
serve the defendants with notice of the judgment. Lawyers for the plaintiff lending company
published notice in the Canberra Times and hired private investigators to serve the judgment. After
a number of failed attempts to serve the couple with notice, the lawyers for the lending company
applied to the Supreme Court of the Australian Capital Territory to serve notice of the judgment via
Facebook. The Facebook profiles of the defendants showed the defendants’ names, dates of birth,
and e-mail addresses. The court held that the lawyers showed that the Facebook profiles were those
of the defendants.
Case Questions
1. Do you think a U.S. court would accept service of process via Facebook?
2. Would a U.S. court accept service of process via Twitter if the recipient responded to
the “Tweet” or message?
3. Is a person more likely to be notified of a legal action via a Facebook account than a legal
notice in a newspaper? Does this make a difference for substituted service?
Andriana L. Shultz, Superpoked and Served: Service of Process via Social Networking Sites, 43 U. Rich. L. Rev.
1497, note 1 (2009), citing Noel Towell, Lawyers to Serve Notices on Facebook, SYDNEY MORNING HERALD, Dec. 16,
2008, available at http://www.smh.com.au/articles/2008/12/16/1229189579001.html.
activity, provided a reasonable basis for exercising personal jurisdiction over the
defendant under New York’s long-arm statute. Courts go back to the minimum contacts
test set forth in International Shoe and often decide matters on a case-by-case basis.
CHOICE-OF-LAW PROVISION
Choice-of-Law
Provision
A contractual provision
by which the parties
designate the jurisdiction
whose law will govern any
disputes that may arise
between the parties. Also
called choice-of-law clause.
After jurisdiction has been established, the next question in a case or controversy is
which law governs. Many online contracts contain a choice-of-law provision. A choiceof-law provision is a contractual provision by which the parties designate the
jurisdiction whose law will govern any disputes that may arise between the parties. A
choice-of-law clause or provision in a contract names a particular state and provides
that the substantial laws of that jurisdiction will be used to determine the validity and
construction (or interpretation) of the contract.
Contracts that contain choice-of-law clauses ordinarily are honored, so long as the
result is not contrary to public policy and as long as there is a reasonable relationship
between the parties or the transaction to the state whose law is chosen. The parties to a
contract may select the law by which they intend to be bound if the jurisdiction is the
domicile of at least one of the contracting parties and is that in which the contract is
intended to be performed. For example, the online retailer giant Amazon.com, whose
Chapter 1 • Jurisdiction and Venue in Cyberspace
9
corporate headquarters are located in Seattle, Washington, has a choice-of-law
provision in its conditions of use agreement that all disputes will be governed
according to the laws o the state of Washington. The Amazon.com choice-of-law
provision states: “APPLICABLE LAW: By visiting Amazon.com, you agree that the
laws of the state of Washington, without regard to principles of conflict of laws, will
govern these Conditions of Use and any dispute of any sort that might arise between
you and Amazon.”
Sometimes courts will not enforce a choice-of-law provision in a contract because
the contract violates public policy. In Fiser v. Dell Computer Corporation, 144 N.M. 464,
188 P.3d 1215 (N.M. 2008), the New Mexico Supreme Court examined as a threshold
question whether New Mexico state law or Texas state law would govern a consumer
class action lawsuit against Dell, a computer manufacturer, where the complaint
alleged that the website misrepresented the amount of memory in computers
purchased online. Even though the contract contained a choice-of-law clause directing
that Texas law be applied, the New Mexico Supreme Court held that the choice-of-law
clause was unenforceable and New Mexico courts will not give effect to another state’s
laws where those laws would “violate some fundamental principle of justice.”
VENUE
Along with a choice-of-law provision, many online contracts contain a forum selection
clause. A forum selection clause is a contractual provision in which the parties
establish the place (such as the country, state, or type of court) for specified litigation
between them.14 A forum selection clause is also called a choice-of-exclusive-forum
clause. The purpose of a forum selection clause is to provide a specific venue if a
conflict arises. Venue refers to the specific court where the case will be decided or the
county or other territory over which a trial court has jurisdiction. For example, a
breach of contract action based on a violation of a terms of use agreement could be
decided in the venue of Los Angeles County, California, rather than another county in
California. Meanwhile, jurisdiction refers to the power of a particular court to hear a
particular case.
The test of whether the courts will enforce a forum selection provision is
reasonableness under all the circumstances. Courts also scrutinize forum selection
clauses for fundamental fairness. A forum selection clause is unenforceable for a
plaintiff who did not have sufficient notice of the forum selection clause prior to
entering the contract.
In Monsanto Co. v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002), the U.S. Court of
Appeals for the Federal Circuit held that under either Missouri or Mississippi law, a
forum selection clause in a technology agreement entered by a farmer and by the owner
of patents on herbicide-resistant plants, seeds, and related inventions was valid and
enforceable, even though the farmer claimed that he failed to read clause, which was on
reverse side of signature page, and that the selected forum was unfair. The farmer
voluntarily failed to read what he signed, and the choice of forum in which patent
owner’s principal place of business was located was reasonable.
The eBay User Agreement contains a forum selection clause that all disputes
will brought in Santa Clara County, California, has been the subject of litigation.
See Tricome v. Ebay, Inc., 2009 WL 3365873 (E.D. Pa. Oct. 19, 2009); Universal Grading
Service v. eBay, Inc., 2009 WL 2029796 (E.D.N.Y. Jun. 10, 2009). The eBay User
Agreement states in part states in part, “You agree that any claim or dispute you may
have against eBay must be resolved exclusively by a state or federal court located in
Forum Selection Clause
A contractual provision in
which the parties establish
the place (such as the
country, state, or type
of court) for specified
litigation between them.
Also called “choice-ofexclusive-forum clause.”
Venue
The proper or a possible
place for a lawsuit to
proceed, usually because
the place has some
connection either with the
events that gave rise to the
lawsuit or with the plaintiff
or defendant. The county or
other territory over which a
trial court has jurisdiction.
10
Chapter 1 • Jurisdiction and Venue in Cyberspace
Santa Clara County, California. . . . You agree to submit to the personal jurisdiction of
the courts located within Santa Clara County, California for the purpose of litigating
all such claims or disputes.” In both Tricome v. Ebay, Inc. and Universal Grading Service v.
eBay, Inc. federal courts enforced the forum selection clause found in the eBay User
Agreement.
In CoStar Realty Information, Inc. v. Field, 612 F. Supp. 2d 660 (D. Md. 2009)
(Case 1.3), the court held that a forum selection clause in the online terms of use agreement was enforceable. Jurisdiction was proper over defendants who used the plaintiff’s
CASE 1.3
The Case of Consenting to Jurisdiction through an Online Agreement
CoStar Realty Information, Inc. v. Field, 612 F. Supp. 2d 660 (D. Md. 2009)
Alliance entered into two 11-user written license agreements with CoStar. The first one in June 2002
and the other in November 2004. The contract provided that Alliance would not provide third parties
access to or use of CoStar’s database, sub-license the use of the database, and, also, specifically
provided that Alliance could not share its user ID or passcode without the express written consent of
CoStar. CoStar alleges that Alliance shared its user ID and passcode with Lawson and Gressett in
violation of their contract; and as a result Lawson and Gressett continuously used CoStar’s services,
receiving Alliance’s contractual benefit with CoStar, without CoStar’s express authorization.
II. Motions to Dismiss
A. PERSONAL JURISDICTION The Defendants first challenge this Court’s authority to assert personal
jurisdiction on the basis that they lack sufficient connections with Maryland to satisfy the State’s
long-arm statute, or Due Process. CoStar asserts that jurisdiction is proper over the Defendants
based on both the forum selection clause located within the Terms of Use on its website and
under the Maryland long-arm statute, consistent with Due Process. Specifically, CoStar argues that
Lawson and Gressett have consented to jurisdiction in Maryland by accepting the Terms of Use on
its website, and due to their continuous tortious conduct in Maryland for their private business
purposes. Lawson and Gressett argue that presence and consent is lacking because neither of the
Defendants have ever been to Maryland or done any business in Maryland, their actions in
Maryland lack sufficient effects in Maryland, and the complaint fails to allege sufficient facts to
support formation of a contract in Maryland.
2. Forum Selection Clause Users of CoStar’s website who do not enter into a written licensing
agreement, but pay to use CoStar’s database on an à la carte basis, agree to a Terms of Use
provision which has a forum selection clause that provides, in relevant part:
You irrevocably consent to the jurisdiction of the federal and state courts located in
the State of Maryland, and to the jurisdiction of the federal and state courts located
in any State where you are located, for any action brought against you in connection
with these Terms of Use or use of the Product.
CoStar argues that the forum selection clauses are binding, and by accepting the Terms of Use,
within the forum selection clause, Lawson and Gressett consented to personal jurisdiction in
Maryland. In addition CoStar posits, and the Court agrees, that Lawson and Gressett availed
themselves of the contractual benefits provided by CoStar and Alliance and should be subject to
the same jurisdictional requirements as Alliance. Lawson and Gressett dispute the validity of the
forum selection clause and argue that they in no way formed a contract with CoStar or consented
to personal jurisdiction in this Court. CoStar maintains that in order to access its database an
authorized user must have a valid user ID and passcode. CoStar maintains, and the Defendants do
Chapter 1 • Jurisdiction and Venue in Cyberspace
11
not dispute, that Alliance provided its user name and passcode to Lawson and Gressett who then illegally accessed CoStar’s database, in violation of Alliance’s written contractual agreement with CoStar.
CoStar alleges that Lawson and Gressett accessed its website on several occasions over a four year period and agreed to the Terms of Use.
Courts have aptly addressed the issue whether parties are bound by user agreements,
containing forum selection clauses, in the internet context. Burcham v. Expedia, Inc. [2009 WL
586513 (E.D. Mo. Mar. 6, 2009)] involved a lawsuit brought by an attorney, Burcham, against
Expedia, where Burcham used Expedia’s website service to book a hotel reservation. The website
contained a user agreement with a forum selection clause. The court, in determining that Burcham
was bound to bring a lawsuit in a different jurisdiction pursuant to the forum selection clause
located within the online agreement, noted, “the legal effect of online agreements is an emerging
area of the law that has been addressed by a number of courts. Courts presented with the issue
apply traditional principles of contract law and focus on whether the plaintiff had reasonable notice
of and manifested assent to the online agreement.”
In this case, the forum selection clause is mandatory and valid and Defendants fail to show its
unreasonableness. The forum selection clause states that a user “irrevocably consents” to the
jurisdiction of a federal or state court located in Maryland. Defendants fail to make any argument
referencing the validity of the forum selection clause other than to state that there is no contract
based on the Terms of Use which contains the forum selection clause. As noted above, several
courts have found that an online user agreement, in this case referred to as the Terms of Use, may
constitute a valid contract, and this Court agrees.
Case Questions
1. Should failure to read an enforceable online agreement excuse compliance with the terms of
an online contract?
2. Although the court enforced the forum selection clause in CoStar Realty Information, Inc. v.
Field, under what circumstances might a court find a forum selection clause unenforceable and
unreasonable?
online databases without authorization, because the defendants likely would have seen
the terms of service, and the choice of forum clause contained in the terms of service
agreement. There was no showing of unreasonableness or that the formation of the contract was made by fraud or duress so the court enforced the forum selection clause.
The choice-of-law provision determines which state law governs the contract. The
forum selection clause determines the particular place where the dispute will be
decided. Sometimes these two clauses will appear together and sometimes the clauses
will be in separate sections of the contract. The choice-of-law provision might have the
heading “Applicable Law” or “Controlling Law” in the contract. See Chapter 5 for more
discussion of online contracts.
FULL FAITH AND CREDIT CLAUSE
Once a court obtains jurisdiction over a particular defendant, a judgment may be
entered. Sometimes a plaintiff will try to enforce a judgment that was originally entered
in a different state. Article IV of the U.S. Constitution contains the Full Faith and Credit
Clause. The Full Faith and Credit Clause states that “Full faith and credit shall be given
in each state to the public acts, records, and judicial proceedings of every other state.
And the Congress may by general laws prescribe the manner in which such acts,
records, and proceedings shall be proved, and the effect thereof.”15
The Full Faith and Credit Clause requires that each state give effect to the official
acts of another state. A judgment entered in one state must be respected in another,
provided that the first state had jurisdiction over the parties and the subject matter.
Full Faith and
Credit Clause
Clause in Article VI § 1
of the U.S. Constitution,
which requires states to
give effect to the acts,
public records, and judicial
decisions of other states.
12
Chapter 1 • Jurisdiction and Venue in Cyberspace
For example, a Wisconsin state court is required to recognize a judgment in an Illinois
state court. The Full Faith and Credit Clause mandates each state to enforce the rights
and duties validly created under the laws of other states. However, the Full Faith and
Credit Clause requires that states only give the same force to judgments as would be
given by the courts of the state in which the judgment was rendered.
For a court to recognize a violation of the Full Faith and Credit Clause, it is not
enough that a state court misconstrue the law of another state. Instead, the misconstruction must contradict the law of the other state that is clearly established and that has
been brought to the court’s attention. Sun Oil Co. v. Wortman, 486 U.S. 717, 108 S. Ct.
2117, 100 L. Ed. 2d 743 (1988).
Courts apply the general rules of construction under the Full Faith and Credit
Clause in cases that involve technology and software. In Patriot Commercial Leasing Co. v.
Jerry Enis Motors, Inc., 928 So. 2d 856 (Miss. 2006), a judgment creditor sought to enforce
a foreign judgment from Pennsylvania in Mississippi state court against the seller of an
automobile dealership involving a software lease executed by dealership buyer.
The Mississippi Supreme Court held that the lack of jurisdiction over the parties is the
primary limitation that tempers application of full faith and credit of foreign judgments.
The Mississippi Supreme Court cited the U.S. Supreme Court case Fauntleroy v. Lum, 210
U.S. 230, 237 (1908), which held that lack of jurisdiction over the person or the subject
matter might be shown to deny full faith and credit. The Full Faith and Credit Clause
applies only where the judgment of a foreign state is founded upon adequate jurisdiction
of the parties and subject matter. Since the service of process on seller was defective,
under Pennsylvania law, the Mississippi court could not enforce the judgment. In Fine v.
Am. Online, Inc., 139 Ohio App. 3d 133, 743 N.E.2d 416 (Ohio Ct. App. 2000), customers
brought a class action against AOL, an Internet service provider (ISP), to recover for poor
service in the wake of unlimited access for a flat fee. The Ohio Court of Appeals held that
settlement of a class action in another state did not violate the due process rights of
absent class members and, therefore, was entitled to full faith and credit.
In online transactions and e-commerce, courts will generally enforce a judgment
entered in another state provided the court where the judgment was originally entered
had proper jurisdiction.
Summary
The history of the Internet can be traced back to a
military research network established by the
Advanced Research Projects Agency (ARPA) of the
U.S. Department of Defense to connect government
computers across the country to exchange information during wartime without interruption. Cyberlaw
is the field of law dealing with the Internet, encompassing cases, statutes, regulations, and disputes that
affect people and businesses interacting through
computers. One of the first issues in any case involving the Internet is jurisdiction. Jurisdiction is defined
as the power of a court to hear a particular case.
Jurisdiction includes subject matter jurisdiction, in
rem jurisdiction, and personal jurisdiction. To exercise
personal jurisdiction over nonresident defendants,
courts utilize the state long-arm statute. If the defendant has sufficient minimum contacts in the forum
state, a court will likely find that there is no violation
of the Due Process Clause for the court to exercise
jurisdiction. Courts apply a sliding scale for website
owners and operators, and generally hold that a
passive website for advertising along does meet the
requirements for minimum contacts. Online contracts
will often contain a choice-of-law provision and a
forum selection clause. A choice-of-law provision is a
contractual provision by which the parties designate
the jurisdiction whose law will govern any disputes
that may arise between the parties. A forum selection
clause is a contractual provision in which the parties
establish the place (such as the country, state, or type
Chapter 1 • Jurisdiction and Venue in Cyberspace
of court) for specified litigation between them. The
choice-of-law provision determines which state law
governs the contract. The forum selection clause
determines the particular place where the dispute will
be decided. The Full Faith and Credit Clause requires
13
that each state give effect to the official acts of another
state. In online transactions and e-commerce, courts
will generally enforce a judgment entered in another
state provided the court where the judgment was
originally entered had sufficient jurisdiction.
Key Terms
choice-of-law
provision 8
cyberlaw 2
forum selection clause 9
Full Faith and Credit Clause 11
jurisdiction 2
in rem jurisdiction 3
long-arm statute 5
personal jurisdiction 3
service of process 7
subject matter jurisdiction 3
venue 9
Review Questions
1. Explain the history of the Internet.
2. Explain the difference between subject matter jurisdiction, personal jurisdiction, and in rem jurisdiction.
3. What is required to maintain personal jurisdiction over
a nonresident defendant who operates a website?
4. Explain the difference between a choice-of-law clause
and a forum selection clause. Why would a company
include these provisions in an online agreement?
Discussion Questions
1. Who do think should have a greater role in regulating
activities on the Internet: the federal government, state
governments, or nongovernmental organizations? Why?
2. Do you think a court should approve service of process
via e-mail or other electronic means as a substitute for
personal delivery? Why or why not?
3. Many companies that conduct transactions via the
Internet will include a forum selection clause in their
online agreements. Is this fair for the consumer? Should
courts enforce this type of forum selection clause and
choice-of-law provision? Why or why not? What types
of accommodations should be made for parties (e.g.,
telephonic or video appearances; scheduling of depositions near the plaintiff’s home)?
Exercises
1. Locate the long-arm statutes for California and Texas.
Conduct legal research using Westlaw, LexisNexis, a
law library, or Internet resources, and write a brief
memorandum where you provide the citation and
text of the long-arm statutes. Then discuss the
similarities and differences between the two long-arm
statutes.
2. You are the contracts specialist for Acme Online, Inc.
(a fictitious online retailer), and your supervisor at
Acme Online, Inc. wants to include a terms of use
agreement on its website where all disputes will be
exclusively resolved by a state or federal court located in Hennepin County, Minnesota, and governed by
the law of the state of Minnesota (or your own county
and state). Conduct research online and find the conditions of use agreement for Amazon.com, another
online retailer. Visit the website for Amazon.com and
click on “Conditions of use” at the bottom of the main
page and look for the sections entitled “Applicable
Law” and “Disputes.” Using the Amazon.com
agreement as a model, draft the text of a choice-of-law
provision and forum selection clause for Acme
Online, Inc. Then discuss why Acme Online would
want to include a choice-of-law provision and a
forum selection clause in its online terms of use
agreement.
14
Chapter 1 • Jurisdiction and Venue in Cyberspace
3. Locate the forum selection clauses for three different
companies such as eBay, Amazon.com, and Google.
Then evaluate the strengths and weaknesses of each
forum selection clause from the consumer’s perspective.
4. Mark, a resident of New York, visits a travel company’s
website that advertises a resort in Puerto Rico that
claims to have “white sandy beaches, crystal clear
water, fresh fish and a superb international cuisine.”
Based on the advertisement, Mark made reservations
for the resort through the defendant’s agent. When
Mark arrives at the resort location, the waters were
murky, the beach was swarming with insects, the hotel
rooms were infested with bed bugs, and the restaurant’s
food made him ill with intestinal poisoning. The travel
company maintains an active website and allows
customers to research, select, and book vacation
packages and recommended travel agencies located in
specific New York areas who were qualified to book
vacations for the company. Mark files a lawsuit against
the travel company alleging fraud, negligence, breach
of contract, unjust enrichment, deceptive business
practices, and violation of the Truth in Travel Act.
Discuss whether a New York state court would maintain personal jurisdiction of the defendant travel
company. See Kaloyeva v. Apple Vacations, 21 Misc. 3d
840, 866 N.Y.S.2d 488 (N.Y. City Civ. Ct. 2008).
Related Internet Sites
http://www.digestiblelaw.com/
Internet Case Law Digest provided by the law firm Perkins
Coie
http://www.findlaw.com/01topics/10cyberspace/
index.html
FindLaw Cyberspace Law Resources
http://www.megalaw.com/top/conflictoflaws.php
Conflict of Law and Choice-of-law Cases and Resources
http://www.law.berkeley.edu/bclt.htm
Berkeley Center for Law and Technology
http://www.lexisnexis.com/lawschool/study/understanding/ pdf/ConflictsCh1.pdf
Tutorial on Understanding the Conflict of Laws
http://cyberspacelaw.org/
Learning Cyberlaw in Cyberspace Training Modules
http://www.hcch.net
Website for the Hague Conference on Private International
Law
End Notes
1. Hon. Michel Bastarache, The Challenge of the Law in the
New Millennium, 25 MAN. L.J. 411–19 (1997–1998).
2. Computer History Museum, Internet History, available
at http://www.computerhistory.org/internet_history/.
3. Michelle Z. Hall, Comment, Internet Privacy or
Information Piracy: Spinning Lies on the World Wide
Web, 18 N.Y.L. SCH. J. HUM. RTS. 609, 611–13 (2002).
4. Mindy P. Fox, Does It Really Suck?: The Impact of
Cutting-Edge Marketing Tactics on Internet Trademark
Law and Gripe Site Domain Name Disputes, 20 FORDHAM
INTELL. PROP. MEDIA & ENT. L.J. 225, 229 (2009).
5. Jack Goldsmith and Tim Wu, Who Controls the
Internet? Illusions of a Borderless World 2 (2006).
6. Black’s Law Dictionary (9th ed. 2009).
7. Jessica E. Bauml, It’s a Mad, Mad Internet: Globalization
and the Challenges Presented by Internet Censorship, 63
FED. COMM. L.J. 697 (2011) citing Jack Goldsmith &
Tim Wu, Who Controls the Internet? Illusions of a
Borderless World 2 (2006).
8. Domtar Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29
(Minn.1995).
9. U.S. Const. amend. V.
10. U.S. Const. amend. XIV.
11. Fed. R. Civ. P. 4.
12. Ronald J. Hedges, Kenneth N. Rashbaum, and Adam
C. Losey, Electronic Service of Process at Home and
Abroad: Allowing Domestic Electronic Service of Process
in the Federal Courts, 4 FED. CTS. L. REV. 55, 68 (2010).
13. See Swoboda v. Hero Decks, 36 So. 3d 994 (La. Ct.
App. 2010).
14. Black’s Law Dictionary (9th ed. 2009).
15. U.S. Const. Art. IV.
CHAPTER
2
Copyright Law in the Digital Age
The Congress shall have power . . . To promote the Progress of Science
and useful Arts, by securing for limited Times to Authors and Inventors
the exclusive Right to their respective Writings and Discoveries.
U.S. Constitution Article I, Section 8
LEARNING OBJECTIVES
After completing this chapter, you will be able to:
1. Compare and contrast copyright law with other areas of intellectual property law.
2. Explain the scope of copyright protection for websites and software.
3. Describe the benefits of copyright notice and copyright registration.
4. Discuss the four fair use defense factors and how courts apply these factors in a copyright
infringement action.
5. Explain the major provisions of the Digital Millennium Copyright Act.
CHAPTER OVERVIEW
The law of intellectual property, and particularly copyright law, stands at the forefront of legal
issues related to the Internet. Intellectual property law encompasses the law governing copyrights,
trademarks, patents, and trade secrets. This chapter provides an introduction to intellectual
property law and focuses on copyright issues as they relate to technology and online content. Chapter 3
15
16
Chapter 2 • Copyright Law in the Digital Age
will cover trademark law and Chapter 4 will cover patents and trade secrets. This
chapter also focuses on the scope of copyright protection, copyright notice, copyright
registration, copyright duration, and the fair use defense with respect to computers and
new technology.
INTRODUCTION TO INTELLECTUAL PROPERTY
Intellectual Property
A category of intangible
rights protecting
commercially valuable
products of the human
intellect that comprises
primarily copyright,
trademark, patent, and
trade secret rights.
Black’s Law Dictionary defines property as simply as the right to possess, use, and enjoy
a certain thing.1 Several different types of property exist. Personal property includes
any movable or intangible thing that is subject to ownership and not classified as real
property. Examples of personal property include a laptop computer or a cell phone.
Real property encompasses land and anything growing on, attached to, or erected on it,
excluding anything that may be severed without injury to the land. Real property can
consist of a single-family home, a commercial building, or land used for farming. For
example, the buildings and land for the Google corporate headquarters, fondly
nicknamed the Googleplex, in Mountain View, California, fall under the realm of real
property. But the copyrights, trademarks, patents, and trade secrets owned by Google
are categorized as intellectual property.
Property rights can also be classified into the categories of tangible property
and intangible property. Tangible property has a physical existence and includes
personal property that can be seen, weighed, measured, felt, or touched, or is in any
other way perceptible to the senses, such as furniture, cooking utensils, and books.
Intangible property lacks a physical existence. Examples of intangible property
include stock options and business goodwill. Intellectual property rights also fall
under the umbrella of intangible property. Intellectual property covers a category of
intangible rights protecting commercially valuable products of the human
intellect. Intellectual property is sometimes abbreviated as “IP” and intellectual
property law is often shortened to “IP law.” The acronym “IP” may also refer to
“Internet Protocol” so spelling out “intellectual property” in full will help avoid any
confusion.
Intellectual property law protects the results of human creative endeavor. The
general types of intellectual property are (1) copyrights; (2) trademarks; (3) patents; and
(4) trade secrets. These general categories may often overlap. Article I, Section 8 of the
U.S. Constitution grants power to Congress to pass laws dealing with intellectual
property. (See Figure 2.1.) This section also known as the “Copyright Clause” states that
“The Congress shall have power . . . To promote the Progress of Science and useful Arts,
by securing for limited Times to Authors and Inventors the exclusive Right to their
respective Writings and Discoveries.”2
A trademark can be a word, name, symbol, or logo used in the ownership of a
product or service. Trademark law protects the rights of businesses who use
distinctive names, designs, logos, slogans, or other signifiers to identify and
distinguish their products and services. Trademarks last perpetually as long as they
are in use and do not become generic. A patent is a grant from the government that
permits the owner the right to prevent others from making, using, importing, or
selling an invention. Patents are only available for novel, useful, and non-obvious
inventions. A trade secret is valuable business information that if known by a
competitor would afford the competitor some advantage. Examples of trade secrets
include customer lists, marketing plans, and secret formulas such as the secret
formula for Coca-Cola. The owner must make reasonable attempts to maintain
secrecy of the trade secret. For more information relating to trademarks, patents, and
trade secrets, see Chapters 3–4.
Chapter 2 • Copyright Law in the Digital Age
17
Intellectual Property Law Chart
Copyrights
Trademarks
Patents
Trade Secrets
Definition
Protection granted
to authors of original
works of authorship,
fixed in a tangible form
A word, name,
symbol, or device
used to indicate origin,
quality, and ownership
of a product or service
Grant of right to exclude
another from making,
using, selling, or
importing a patented
invention or discovery
Any valuable business
information that if known
by a competitor would
afford the competitor
some advantage
What Is
Protected
Motion pictures, sound
recordings, photographs,
books, articles
Trademark or service
mark used in the source,
qualify, and ownership
of a product
or service
Utility patents protect
any new and useful
process, machine.
Design patents
protect new, original
designs for articles
of manufacture
Any information as
long as it has commercial
value, not in the
public domain, and owner
has made
reasonable attempts to
maintain secrecy
Examples
Gone with the wind
book and motion picture.
Sound recording for
NBC chime
Tradenames and logos.
Nike’s “Swoosh,”
Target’s “Bullseye”
New manufacturing
process, pharmaceutical
drugs
Coca-Cola formula,
customer lists,
marketing plans
Duration
of Protection
Generally, life of the author
plus 70 years. For works
made for hire, 95 years
from publication or 120
years from creation
Generally perpetually as
long as they are in use
and do not become generic.
Registration lasts 10 years
and is renewable
Generally, 20 years
from date of filing
an application for utility
and design patents.
For plant patents,
14 years from date
of grant
Perpetually as long as
they are properly
protected
Infringement
Test
Have any of the exclusive
rights been violated by
impermissible copying or
unauthorized use?
Likelihood of confusion
between the marks
Does the accused
invention fall within the
claims language of
the patent or is it
substantially similar?
Has the trade secret been
misappropriated?
Notice
Requirements
Not required but
recommended. Notice:
© (copyright symbol),
years of first publication,
owner’s name
Not required but
recommended. Registered
marks displayed with ®
symbol. Unregistered
trademarks and
unregistered servicemarks
used TM and SM symbols
in superscript
Not required by
recommended. Notice
includes word patent (or
abbreviation) and patent
number
Not required but
recommended.
Documents should be
marked “Confidential”
or other notices
Governing
Law
15 U.S.C. 1501 et. seq.
(Landham Act)
17 U.S.C. 101 et. seq.
(Copyright Act)
35 U.S.C. 100 et. seq.
(Patent Act)
Various state statutes,
cases, and private
contracts
Governing
Agency
U.S. Patent and
Trademark Office
U.S. Copyright Office
U.S. Patent and
Trademark Office
None
FIGURE 2.1
Intellectual Property Overview
18
Chapter 2 • Copyright Law in the Digital Age
SCOPE OF COPYRIGHT LAW
What Copyright Law Protects
Copyright
The right to copy a
property right in an
original work of
authorship fixed in any
tangible medium of
expression, giving the
holder the exclusive
right to reproduce,
adapt, distribute,
perform, and display the
work. Copyright
includes literary,
musical, dramatic,
choreographic, pictorial,
graphic, sculptural, and
architectural works;
motion pictures and
other audiovisual works;
and sound recordings.
Copyright Act of 1976
A major revision of U.S.
copyright law, extending
the term of protection to
the life of the author
plus 50 years, measured
from the date of
creation; greatly
expanding the types
of works that qualify for
protection; dropping
the requirement that
the work be published
before it can be
protected; making
fair use a statutory
defense to a claim in
infringement; and
preempting state
common-law copyright.
Also called 1976
Copyright Act. 17 U.S.C.
§§ 101 et seq.
Copyright is a form of protection provided by the laws of the United States to the authors
of “original works of authorship,” including literary, dramatic, musical, artistic, and
certain other intellectual works. This protection is available to both published and
unpublished works. Section 106 of the 1976 Copyright Act (17 U.S.C. § 106) generally
gives the owner of a copyright the exclusive right to do and to authorize others to do the
following:
• To reproduce the work in copies or phonorecords;
• To prepare derivative works based upon the work;
• To distribute copies or phonorecords of the work to the public by sale or other
transfer of ownership, or by rental, lease, or lending;
• To perform the work publicly, in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and motion pictures and other audiovisual
works;
• To display the work publicly, in the case of literary, musical, dramatic, and
choreographic works, pantomimes, and pictorial, graphic, or sculptural works,
including the individual images of a motion picture or other audiovisual
work; and
• In the case of sound recordings, to perform the work publicly by means of a
digital audio transmission.3
Websites
As a general rule, original content for a website is considered an “original work of
authorship” under the Copyright Act and can receive copyright protection. Copyright
law protects web design, text, images, photographs, midi files, clipart, and audio
associated with websites provided the work is original.4
Computer Programs and Software
The copyrightability of computer programs is firmly established, and a computer
program is a “work of authorship” entitled to protection under the Copyright Act.
Open source software, such as Open Office, in contrast, is not protected by copyright
protection.
Video Games
Video games can receive protection under copyright law as audiovisual works, since
a video game consists of visual and aural features of an audiovisual display
containing original variations sufficient to render the display copyrightable as an
audiovisual work. The copyright on the audiovisual display of a video game is valid
even though the computer program producing the display is not copyrighted. In
Midway Mfg. Co. v. Artic Int’l, Inc., 704 F.2d 1009, 1012 (7th Cir. 1983), a federal appeals
court held video game output was sufficiently fixed in the circuit board to permit
copyright protection. But copyrighted video game programs containing unprotected
aspects that may not be examined without copying are afforded a lower degree of
protection than more traditional literary works. With the U.S. computer and video
game software industry contributing $4.9 billion to the U.S. economy in 2009,
according to the Entertainment Software Association (ESA), copyright protection for
video games is significant. See Video Games in the 21st Century, 2010 Report,
Entertainment Software Association.
Chapter 2 • Copyright Law in the Digital Age
19
Derivative Works
Copyright ownership also includes the right to derivative works. A derivative work is
a work based on a pre-existing work that entitles only the holder of the copyright on
the original form to produce or permit someone else to produce a derivative work.
For example, the motion picture Twilight is a derivative of the vampire-romance novel
Twilight written by Stephanie Meyer. Bookmarks, posters, calendars, and other
merchandise based on the original novel and motion picture are also considered
derivate works.
Derivative Work
A work that is based on a
preexisting work. Only
the holder of the
copyright on the original
form can produce or
permit someone else to
produce a derivative
work.
What Copyright Law Does Not Protect
Although copyright law protects a wide variety of material, several categories of
material do not receive copyright protection. These categories include:
• Works that have not been fixed in a tangible form of expression.
• Titles, names, short phrases, and slogans; familiar symbols or designs; mere
variations of typographic ornamentation, lettering, or coloring; mere listings of
ingredients or contents.
• Ideas, procedures, methods, systems, processes, concepts, principles, discoveries,
or devices, as distinguished from a description, explanation, or illustration.
• Works consisting entirely of information that is common property and containing
no original authorship (for example: standard calendars, height and weight
charts, tape measures and rulers, and lists or tables taken from public documents
or other common sources).
Copyright protection does not cover works created by the federal government,
including work prepared by an officer or employee of the federal government as part of
that person’s official duties. For example, no one can claim copyright protection with
reports written by government agencies. State governments and agencies are not barred
from being copyright owners under statutory provisions.
The U.S. Court of Appeals for the Eight Circuit held in C.B.C. Distribution &
Marketing, Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007),
that an online fantasy baseball providers’ use of baseball statistics were facts in the
public domain. The statistics were readily available in newspapers and online and did
not belong to Major League Baseball. Therefore, copyright protects only works of
original authorship. The key is that the work must be original.
Public Domain
Works that are not
protected by intellectualproperty rights and are
therefore available for
anyone to use without
liability for infringement.
When copyright,
trademark, patent, or
trade-secret rights are
lost or expire, the
intellectual property they
had protected becomes
part of the public
domain.
COPYRIGHT NOTICE
While copyright law previously required notice of a copyright, U.S. law now no longer
requires the use of a copyright notice. Effective March 1, 1989, U.S. copyright law was
amended by the Berne Convention Implementation Act, which made copyright notice
permissible (or voluntary) rather than mandatory.5 Although copyright law no longer
requires copyright notice, notice is still encouraged. Copyright notice can help
defeat defenses based on innocent infringement in a copyright infringement action.
Also, notice requirement remains in effect for works that were created before the
Berne Convention.
According to the U.S. Copyright Office, copyright notice should be placed
“in such a way that it gives reasonable notice of the claim of copyright. The notice
should be permanently legible to an ordinary user of the work under normal
conditions of use and should not be not be concealed from view upon reasonable
examination.”
Berne Convention
An international
copyright treaty
providing that works
created by citizens of one
signatory nation will be
fully protected in other
signatory nations,
without the need for
local formalities. Also
called the Berne
Convention for the
Protection of Literary
and Artistic Property.
20
Chapter 2 • Copyright Law in the Digital Age
Copyright © 1995-2011 eBay Inc. All Rights Reserved.
Facebook © 2011
© 2011 YouTube, LLC
© 2011 CBS Interactive. All rights reserved.
© 1997–2011 Netflix, Inc. All rights reserved.
FIGURE 2.2 Examples of Copyright Notices for Popular Websites
Copyright notice consists of three elements:
1. The symbol © (letter C in a circle); the word “Copyright”; or the abbreviation
“Copr.”
2. The year of first publication; and
3. The name of the copyright owner, an abbreviation by which the name can be
recognized, or a generally known alternative designation of owner.
For websites, the copyright notice is usually placed at the bottom of the webpage.
This notice usually consists of (1) the copyright symbol “©” or the word “copyright”;
(2) the year of first publication or years of operation for the website; and (3) and the
name of the copyright owner, which is usually the company name. Figure 2.2 provides
examples of copyright notices for some popular websites. Some works might include
the phrase “All rights reserved,” but the phrase “all rights reserved” is no longer
required for copyright notice. The phrase “all rights reserved” resulted from international
practice before the United States joined the Berne Convention, an international treaty
that includes protection for copyright owners. Since software can also receive copyright
protection, copyright notice should also be included or affixed with software. In United
States v. Manzer, 69 F.3d 222 (8th Cir. 1995), a federal appeals court held that copyright
notice on a plastic module containing copyrighted software was sufficient to put the
defendant on notice for purpose of willfulness of copyright infringement. A federal
regulation, 37 C.F.R. 201.20(g)(4), permits copyright notice to be affixed to containers
that are permanent receptacles for software copies. Website designers, software
developers, and others working in technology should ensure that copyright notice
appears affixed to any works that may be protected by copyright law.
COPYRIGHT REGISTRATION
Like copyright notice, copyright registration is also voluntary. Even though the law
does not require copyright registration, registration has several advantages. One of the
benefits of copyright registration is that registration is a prerequisite to a copyright
infringement lawsuit. Entitlement to statutory damages, legal costs, and attorneys’ fees
in an infringement suit are also advantages to copyright registration. Another benefit is
that registration establishes a public record of the work and provides notice that the
work is owned by the registrant. The certificate of registration is prima facie evidence
that the work is original and owned by the registrant. With registration, naming an
employer as the owner of a work can eliminate future confusion and possible litigation
as to who owns the work.
There are three different methods for registering a copyright with the U.S.
Copyright Office. Regulations governing copyright registration with the U.S. Copyright
Office are contained in Title 37 of the Code of Federal Regulations (CFR). The primary
registration method with the U.S. Copyright Office is the Copyright Office online system
and registration with the Electronic Copyright Office (eCO). One advantage of the online
registration is a lower filing fee for a basic claim. The next best option for registering basic
Chapter 2 • Copyright Law in the Digital Age
claims is to complete the fill-in Form CO. A third option is to complete the registration
with a paper form. Paper versions of Form TX (literary works); Form VA (visual arts
works); Form PA (performing arts works, including motion pictures); Form SR (sound
recordings); and Form SE (single serials) are available. For more information and tutorials
for registration of a copyright, visit the U.S. Copyright Office website at http://www.
copyright.gov/forms/.
While the time to process an application with U.S. Copyright Office varies, those
who file the online application will have the fastest processing time. The application time
also varies depending on the number of applications the U.S. Copyright Office is
currently receiving and the extent of questions associated with the application. Many
online filers should receive a certificate within six months, and many will receive their
certificates earlier.
The U.S. Copyright Office will not always accept the application. In Darden v. Peters,
488 F.3d 277 (4th Cir. 2007), a website designer challenged a rejected application with the
U.S. Copyright Office. Plaintiff William Darden created a website called “appraisers.com,”
an online referral service for consumers to locate real estate appraisers throughout the
United States. The website features a series of maps that enable visitors to find an appraiser
in a desired location by pointing to and clicking on the appropriate map. The homepage of
appraisers.com features a stylized map of the United States that serves as a link to a
separate page displaying a detailed map of any state selected by the user. The state maps,
in turn, are divided into counties; the consumer can retrieve a list of local appraisers by
selecting the appropriate county. The Examining Division of the Copyright Office rejected
the application for copyright, concluding that the work lacked the authorship necessary to
support a copyright claim. The federal appeals court upheld the examiner’s decision and
concluded that the webpage designer’s additions to preexisting, standard census maps,
such as color, shading, and labels using standard fonts and shapes, fell within the narrow
category of works that lacked even a minimum level of creativity and, thus, did not meet
the minimum standard of originality required for a copyrightable claim under 17 U.S.C.
§ 102(a)(5).
If the application meets the requirements under the Copyright Act, the Register of
Copyrights will issue a certificate of registration to the applicant. But if the application
does not meet the requirements for copyrightable material, the Register will reject the
registration. A party can challenge the decision of the Register, but courts will only
reverse and set aside the decision if it was arbitrary or capricious and there has been an
abuse of discretion.
Plaintiffs in a copyright infringement action must register the work as a
prerequisite to filing a copyright infringement action. In 2010, the U.S. Supreme Court
held in Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010), that the Copyright Act’s
registration requirement in 17 U.S.C. § 411(a) is merely a precondition to suing for
copyright infringement, and does not deprive a federal court of subject matter
jurisdiction to decide a class action lawsuit for infringement claims involving both
registered and unregistered works. In Reed Elsevier, Inc. v. Muchnick, freelance authors
who contracted with publishers to author works for publication in print media, and
who retained the copyrights in those works, brought a class action lawsuit against the
publishers, such as the New York Times, alleging electronic reproduction of the works by
the publishers infringed their copyrights. The trial court dismissed the action based on
lack of subject matter jurisdiction, and the U.S. Court of Appeals affirmed that decision,
but the U.S. Supreme Court reversed and held that courts cannot dismiss an action
based on lack of subject matter jurisdiction to approve a class action settlement
agreement encompassing the alleged infringement of both registered and unregistered
works. While copyright registration is not required, there are many reasons why
owners should register a copyright.
21
22
Chapter 2 • Copyright Law in the Digital Age
COPYRIGHT DURATION
Copyright Term
Extension Act (CTEA)
Act passed by Congress
in 1998 that extended the
duration of copyright
protection by 20 years
for works copyrighted
after January 1, 1923.
17 U.S.C. §§ 302–304.
As a general rule, for works created after January 1, 1978, copyright protection lasts
for the life of the author plus an additional 70 years. For works made for hire and
anonymous and pseudonymous works created after 1978, the duration of copyright
is 95 years from first publication or 120 years from creation, whichever is shorter
(unless the author’s identity is later revealed in Copyright Office records, in which
case the term becomes the author’s life plus 70 years).6 A “work made for hire” is
either (1) a work prepared by an employee within the scope of his or her
employment; or (2) a work specially ordered or commissioned and created by
an independent contractor. For example, works created by employees of
DreamWorks Animation for the movie Shrek and sequels would be considered works
made for hire since the work was prepared by employees within the scope of their
employment.
In 1998, Congress extended the duration of copyright protection for certain works
with the Sonny Bono Copyright Term Extension Act (CTEA).7 Walt Disney Company’s
copyright on Mickey Mouse, who first debuted in the 1928 cartoon short “Steamboat
Willie,” was set to expire in 2003. Disney’s rights to Pluto, Goofy, and Donald Duck
were also set to expire a few years later. Congress passed the Sonny Bono Copyright
Term Extension Act (CTEA) in 1998. The CTEA extended the duration of copyright
protection by 20 years for works copyrighted after January 1, 1923.
Once the duration for copyright protection expires, the work falls into the
public domain. Works that are not protected by intellectual-property rights and are
therefore available for anyone to use without liability for infringement are considered part of the public domain. Amazon’s Kindle, a device for reading e-books, has
a vast library of older, out-of-copyright, pre-1923 books in its free book collection.
With nearly 2 million titles in Amazon’s free book collection, including classics
such as Uncle Tom’s Cabin by Harriet Beecher Stowe and Sense and Sensibility by
Jane Austen, the public domain covers a vast array of original works where
copyright protection has expired. It will be many years before the Harry Potter
fantasy book series, written by J.K. Rowling, will fall into the public domain. Since
the Harry Potter books were created after 1978 and Rowling is still alive, the Harry
Potter books will not fall into the public domain until Rowling dies and then
another 70 years pass.
DIGITAL MILLENIUM COPYRIGHT ACT
In 1998, Congress passed the Digital Millennium Copyright Act (DMCA) to protect
copyright owners and respond to the increase in popularity and usage of digital
content. 8 The DMCA limits copyright liability for Internet service providers and
expands the ability of software owners to copy programs. The DMCA also extends
copyright protection to computer programs, movies, and other audiovisual works
worldwide. The statute also attempts to regulate cyberspace and forbids devices
whose purpose is to evade digital antipiracy tools. The DMCA also bars the production or distribution of falsified copyright-management information.
The DMCA includes a “safe harbor” provision that allows websites and Internet
service providers to avoid liability for copyright infringement if they follow certain
procedural safeguards. The DMCA “safe harbor” provision in 17 U.S.C. § 512(c), (m) and
(n) is designed to relieve websites from the burden of checking user-generated material
before the content is posted. In Viacom Intern. Inc. v. YouTube, Inc., 718 F. Supp. 2d 514
Chapter 2 • Copyright Law in the Digital Age
(S.D.N.Y. 2010), U.S. District Court Judge Louis Stanton said that the popular video
website YouTube, purchased by Google in 2006, could not be held responsible when
people post clips from productions such as Viacom’s The Daily Show with Jon Stewart
without Viacom’s consent. Judge Stanton found that since Google “identifies an agent to
receive complaints of infringement, and removes identified material when he learns it
infringes” the DMCA safe harbor provision applies. YouTube received the DMCA
takedown notices and removed the material. YouTube has also implemented a policy
of terminating a user after warnings from YouTube (stimulated by its receipt of DMCA
notices) that the user has uploaded infringing matter (a “three strikes” repeat-infringer
policy). Other websites that seek to take advantage of the DMCA safe harbor provision should follow YouTube’s lead and quickly remove content after receiving a
DMCA takedown notice and should also delete user accounts that repeatedly upload
infringing matter.
The DMCA safe harbor provision also requires that any person filing a complaint
for a takedown notice must declare, under penalty of perjury, that they are authorized to
represent the copyright holder, and that they have a good-faith belief that the use is
infringing. The notification must do more than identify infringing files. The holding in
Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), now more fully protects fair use
content under the DMCA’s notice-and-takedown system. A DMCA compliant takedown
notice must include the copyright owner’s good faith statement that the user’s content is
unauthorized by law and that the copyright owner must consider fair use to make this
good faith statement.
Under the DMCA safe harbor provision in 17 U.S.C. § 512(c), notification of
claimed infringement must be a written communication provided to the designated
agent of a service provider that includes substantially the following:
i. A physical or electronic signature of a person authorized to act on behalf of the
owner of an exclusive right that is allegedly infringed.
ii. Identification of the copyrighted work claimed to have been infringed, or, if
multiple copyrighted works at a single online site are covered by a single
notification, a representative list of such works at that site.
iii. Identification of the material that is claimed to be infringing or to be the subject
of infringing activity and that is to be removed or access to which is to be
disabled, and information reasonably sufficient to permit the service provider
to locate the material.
iv. Information reasonably sufficient to permit the service provider to contact the
complaining party, such as an address, telephone number, and, if available, an
electronic mail address at which the complaining party may be contacted.
v. A statement that the complaining party has a good faith belief that use of the
material in the manner complained of is not authorized by the copyright
owner, its agent, or the law.
vi. A statement that the information in the notification is accurate, and under
penalty of perjury, that the complaining party is authorized to act on behalf of
the owner of an exclusive right that is allegedly infringed.
For the full text of the safe harbor provision in the 17 U.S.C. § 512 Safe Harbor
Provision, see Appendix A at the end of the book. The DMCA also provides for criminal
penalties for copyright infringement. Chapter 7 provides additional discussion of the
criminal aspects with the DMCA.
23
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Chapter 2 • Copyright Law in the Digital Age
COPYRIGHT INFRINGEMENT
Copyright Infringement
The act of violating any
of a copyright owner’s
exclusive rights granted
by the Copyright Act.
If a person or entity has used a copyrighted work without permission, the copyright
owners may file an action for copyright infringement. A plaintiff in a copyright
infringement lawsuit has a number of remedies available against the defendant:
1. Monetary damages. The plaintiff may recover actual damages and lost profits
from unauthorized use of the copyrighted material.
2. Statutory damages. Co…
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