The Legal Intelligencer Blog

New Year Brings New Privacy Requirements for Businesses

By Ashley Kenney Shea
Special to the Legal

Businesses need to examine their privacy practices as we head into the new year. California, which has emerged over the years as a leader when it comes to online privacy, recently enacted new legislation that applies to all businesses that collect any personally identifiable information (PII) about California residents on the Web and/or by mobile app. Practically speaking, this means that the law applies to any U.S. business that operates a commercial website or app and collects as little as first and last names.

The new law, which is an amendment to the California Online Privacy Protection Act (CalOPPA), requires that privacy policies now include whether and how a business’ website responds to a Web browser’s do-not-track signal and whether the business allows third parties to collect PII about users over time and across different websites. The enactment is set to become effective Jan. 1, 2014, with fines of up to $2,500 for those businesses that fail to comply. Each download of a mobile app will constitute a violation, according to the California attorney general. Before any fine is imposed, however, businesses will be warned and given 30 days to become compliant.

CalOPPA already obligates a business that collects PII to conspicuously post a privacy policy describing the categories of PII that it collects, with whom it shares that information, and how it will notify consumers of changes to the policy.

Commentators on the new amendment have said that the impetus dates back to 2011, when Mozilla offered the do-not-track feature for Firefox, enabling users to indicate that they did not want websites tracking their Internet surfing in order to serve targeted advertising. Other providers like Google and Apple adopted the feature, but all along there has been no requirement that websites honor such requests under the law, nor is there any requirement that websites let users know that they do not honor such requests. The amendment falls short of requiring websites to honor do-not-track requests, but it does put pressure on websites to do so since their policy must now be announced to users. Further, websites that claim to honor do-not-track requests, and then do not, may be penalized by the Federal Trade Commission.

Before the start of 2014, businesses would be well advised to verify what, if any, tracking services they use and how they respond to do-not-track settings. They should also determine whether third parties, such as advertisers on their site, track users through the use of cookies or other functionality. Finally, the privacy policy should be updated to clearly communicate these elements to visitors of the site.

For more information, please contact Dina Leytes ([email protected] or 215-732-3924), Kathryn Goldstein Legge ([email protected] or 215-618-3722) or Ashley Kenney Shea ([email protected] or215-501-7843).

Pinterest’s Deal With Getty to Address Infringement Concerns

By Ashley Kenney Shea
Special to the Legal

When social networking site Pinterest first gained popularity, IP lawyers everywhere raised their eyebrows at the copyright infringement issues attendant with the site. In a nutshell, when users pin content that they do not own on Pinterest, Pinterest makes a copy of the full-size image to its servers. This action entails reproducing the image, often without the permission of the content owner, and with possible copyright infringement. Pinterest is distinct in this way from other social media websites like Facebook and Tumblr, where users generally post content that they own or link directly to third-party sources.

Pinterest has largely avoided copyright problems to date because many content owners find that its value as a promotional tool outweighs the negative effects of the reproductions. For most content owners, Pinterest pins do not result in a reduction of the market for the content; rather, the pins drive traffic to the content owner’s website, resulting in more hits, sales, followers, etc. According to social media analytics company Shareaholic, Pinterest is the second-largest referrer of traffic on the Internet after Facebook, with referrals to online publishers increasing by 66.52 percent from September 2012 to September 2013.

However, potential for liability has lingered both for Pinterest as a facilitator for mass infringement and also for users, since Pinterest’s terms purport to shift all responsibility for infringement to its users. (The terms state that users “assume all of the risk” of “pinning” content, and must “indemnify Pinterest in the event of a lawsuit,” even though many users are likely unaware of this fact.)

Now we may be seeing Pinterest begin to address some of its copyright issues. The company recently struck a licensing deal with Getty Images, the stock photo agency that owns the rights to approximately 80 million images, for an untold amount, in exchange for an agreement by Getty not to sue for infringement for use of its images on Pinterest. Under the deal, Getty receives photo credits on all images pinned on Pinterest boards as well as a link back to its site. Getty will use image recognition technology to identify Getty images on Pinterest, and update those photos with metadata that includes the time and location of the photo, the photographer, a caption, an image ID and licensing information. The licensing fee from Pinterest will be distributed between Getty and Getty’s photographers and illustrators. This benefits Getty, which unlike consumer-oriented websites, gains little value from Pinterest traffic.

Pinterest will benefit to some extent from the deal as well. The Getty metadata can be used to suggest more pins to Pinterest users for similar images. In turn, users will likely spend more time “pinning” on Pinterest, resulting in a network of linked data that can be more easily monetized by the site for advertisers. What about the users? They will enjoy a reduced risk of liability and more information about the images they pin—a win-win.

Griesing Law advises businesses and nonprofit organizations on intellectual property and new media matters. For more information, please contact Dina Leytes ([email protected] or 215-732-3924), Kathryn Goldstein Legge ([email protected] or 215-618-3722) or Ashley Kenney Shea ([email protected] or 215-501-7843).

Product Descriptions Can Amount to ‘Creative Works’

By Ashley Kenney Shea
Special to the Legal

Few people would compare the descriptions of everyday products we buy online like furniture and electronics to traditional “creative works” like books, photographs or music. Yet a new case out of the Midwest suggests that indeed, even the very humdrum descriptions that businesses create to sell products online may be entitled to copyright protection, just as long as they are ever-so- slightly more than purely factual descriptions. What is more significant is the fact that business owners who copy such descriptions could be personally liable for the infringement.

In Asher Worldwide Enterprises v. Housewareonly.com, the plaintiff, an online retailer of discount commercial kitchen equipment, accused Housewaresonly.com, a competitor, of copying and pasting AWE’s product descriptions, feature listings and promotions onto its website. The defendant was owned by a husband and wife team named Stuart and Marcia Rubin, who, over the course of a few years, appeared to have copied and pasted hundreds of AWE’s descriptions in order to sell their own comparable goods.

After the case was filed, the Rubins abandoned their website and liquidated their corporation, the original defendant. In response, the plaintiffs added the couple to the case individually. The Rubins filed a motion to dismiss, claiming they could not be liable for the infringement of their corporation. In deciding the issue, the court cited the U.S. Court of Appeals for the Seventh Circuit’s opinion in Dangler v. Imperial Machine for the proposition that “It is when an officer acts willingly and knowingly — that is, when he personally participates in the manufacture or sale of the infringing article … or when he uses the corporation as an instrument to carry out his own willful or deliberate infringements … that officers are held jointly with the company.” Since the company had only two employees, Stuart and Marcia Rubin, the court said there was sufficient evidence that the owners personally participated in the deliberate infringement and they could be personally liable.

The case raises two areas of caution for business owners: (1) unprotected “factual information” for purposes of copyright infringement is very narrowly construed, so that even mundane product descriptions on the Internet may very well be considered protectable “creative works” under the law; (2) and courts can “pierce the corporate veil” and hold corporate officers personally liable for copyright infringement if enough evidence exists that the officers personally and willfully participated in the infringement. Business owners must avoid the temptation to cut corners and write their own copy on their websites. If they do not, they may face serious damages for infringement if and when copied materials are discovered.

Griesing Law advises businesses and nonprofit organizations on cost-effective strategies for navigating the new gTLDs. Contact a member of Griesing Law’s intellectual property and new media team, Dina Leytes ([email protected] or 215-732-3924), Kate Legge ([email protected] or 215-618-3722) or Ashley Kenney Shea ([email protected] or215-501-7843).

Enforcing Trademark Rights in the New Internet Age

By Dina Leytes
Special to the Legal

From the earliest days of the Internet, trademark owners have taken steps to enforce their trademark rights and prevent bad-faith actors from registering domain names that are confusingly similar to their legitimate trademarks. An upcoming change to the domain name landscape will require trademark owners to revisit their online enforcement strategies.

Until now, the most popular generic top level domains (gTLDs) have included .com, .org and .edu. However, the organization that oversees the world’s global Internet, the Internet Corporation for Assigned Names and Numbers (ICANN), has approved an unprecedented expansion of available domain names by creating a process for private entities to buy their own “.anything” online space. Over 1,900 new gTLD applications were received by ICANN in the first application round, including brands — .google, .nike, .bmw – and common words — .app, .home, .book. The first of these new gTLDs will start going live later this year.

As a result of this watershed domain name expansion, a third party may seek to register a trademark owner’s mark — or confusingly similar variants — to the left of the “dot” for hundreds of new gTLDs. In a difficult economic climate, trademark owners will need to prioritize the most serious cases in order to efficiently manage risk.

The gTLD process envisions several newly created rights-protection mechanisms for trademark owners that are meant to complement the existing Uniform Domain Name Dispute Resolution Policy (UDRP). The UDRP was adopted by ICANN following an initiative by the World Intellectual Property Organization (WIPO) and provides an inexpensive, straightforward alternative to litigation for clear cases of cybersquatting. All new gTLDs are required to offer the UDRP. In addition, ICANN has created two new rights-protection mechanisms, the Trademark Clearinghouse (TMCH) and Uniform Rapid Suspension System (URS), which are important for trademark owners to understand from the outset.

The TMCH is a central repository of authenticated trademark information. For a fee, trademark owners may now record with the TMCH (1) nationally or regionally registered marks, (2) court-validated marks or (3) marks protected by statute or treaty. When a new gTLD launches, trademark owners that recorded their marks with the TMCH will have the opportunity to register domain names corresponding to those marks before the general public may do so during a sunrise period. Additionally, if a third party attempts to register a domain name that is identical to a mark that a trademark owner recorded with the TMCH, that applicant will receive notice providing information about the mark recorded and warning the applicant about the possibility of infringement. While the notice will not stop the domain name from being registered, if the third party ultimately registers the domain name, the trademark owner will be alerted to the registration.

As an alternative to the UDRP, trademark owners can utilize the URS, a system that parallels the UDRP but is distinct in a few key ways. Perhaps the most critical difference is that while a URS filing is less expensive than a UDRP filing, a party prevailing under the URS does not acquire the infringing domain name and may be forced to assert its rights on a repeating basis, potentially making the URS process time-consuming and burdensome.

Griesing Law advises businesses and nonprofit organizations on cost-effective strategies for navigating the new gTLDs. Contact a member of Griesing Law’s intellectual property and new media team, Dina Leytes ([email protected] or 215-732-3924), Kate Legge ([email protected] or 215-618-3722) or Ashley Kenney ([email protected] or 215-501-7843).