Chicago Business Lawyer Blog

The Internet has opened a new legal frontier; businesses must now be as concerned about online ownership, trademark and copyright issues as they are about their brick-and-mortar operations.

In some cases, businesses survive and thrive entirely online. In all case, protecting the online name and reputation of your business is critical to success. Annual Internet sales are increasing by double digits each year -- and passed $100 billion a year in 2007. When issues involving intellectual property and technology threaten the health and welfare of your business, a Chicago business law firm familiar with Internet issues must be contacted at the earliest stages of such cases.

In Go Pets Ltd. v. Hise, GoPets LTD. filed a lawsuit against Joseph Hise and a California corporation over www.gopets.com. The suit was filed under the Anticybersquatting Consumer Protection Act.

The court ruled Hise registered the domain in 1999, long before GoPets LTD registered its service mark, and therefore he was not in violation of the cyber squatting laws. The law was put in place to prevent individuals from buying domain names for a few dollars each and then holding them hostage for outrageous fees.

Where the court found Hise in violation, was for registering additional domain names. The U.S. Court of Appeals for the Ninth District found he had acted in bad faith and affirmed the district decision that Hise violated the Lanham Act with his use of www.gopets.com. The case was returned to the district court for a determination of damages.

In this case, the defendant had registered the domain and built a business plan as part of a marketing class in 1999. The defendant, together with a relative who was a veterinarian, also owned a company that had owned and registered more than 1,300 domain names. Most seemed to be geared toward plausible businesses but were not the names of existing corporations.

By 2004, a South Korean company, Go Pets Ltd., had made several attempts to register the name. In 2005, the companies filed a dispute over ownership of the domain with the Internet Corporation for Assigned Names and Numbers (ICANN), which oversees domain names. A dispute was also later field with the World Intellectual Property Organization (WIPO), which administers ICANN's dispute policy. A WIPO arbitrator found in favor of Edward Hise. It was ruled Hise had been registering the name for years and had not initially registered it in bad faith.

Hise later sent a letter stating that Go Pets Ltd's registration of www.gopetslive.com could confuse consumers and hurt the www.gopets.com name. While purchase of the name could clear up any confusion and provide for less search result competition. The letter offered to sell the domain for $5 million. Meanwhile, screen captures of Internet archives reveal that Hise began building site content for the domain and turning it into a viable web property. After the decision by WIPO, company owned by Hise began registering other names similar to www.gopets.com

In 2007, the South Korean company filed the complaint in U.S. District Court, claiming a violation of the cybersquatting statute and unfair competition under the Lanham Act. The Lanham Act violation stems from putting content on the site and calling it the "Official GoPets site." The Act contains the statutes covering federal trademark law.

In other words, the court found Hise may have had the right to the domain name but did not have the right to conduct business or infringe upon the trademark rights of GoPets Ltd.

Continue reading "Go Pets Ltd. v. Hise Highlights Importance of Internet Property Rights for Chicago Businesses" »

Internet users are very familiar, of course, with ".com," ".org," and ".net." These are examples of some of the existing generic top-level domains ("gTLDs"). There are now only twenty-two of these gTLDs available. However, a recent decision by the Internet Corporation for Assigned Names and Numbers ("ICANN") provides that starting from January of 2012, domain registers will essentially have unlimited access to all the words in the English language, as well as access to virtually any type of character when choosing a domain name. For example, your business name could serve as a new gTLD.

Although it may seem like just about anyone can apply for a new domain name, this is not the case with these expanded domain names. Not only does the registration process include a complicated 200-page application, but it also comes with a hefty price tag. Applying for a new gTLD alone will cost $185,000; this does not even include the additional $25,000 yearly fee. The procedures will include measures to protect trademark rights.

The existence of essentially an unlimited number of domain names has important implications for business recognition and branding. For a large business, the expansion means an opportunity to reinforce one's brand name. For a small business, the expansion means the ability to pick domain names that are no longer "available" at the dotcom level. This translates into an opportunity to enhance business recognition.

It is important to remember, however, that if businesses fail to register as many domain names as possible that "match their brands," they may fall victim to competitors who will try to lure customers away from their site. Such pressure to protect their brands may cause businesses to unnecessarily register too many domain names.

Our Chicago business attorneys advise you to decide if, based on the expense and burden, application for a gTLD is a feasible option. If it is, you should anticipate and prepare responses to potential competitors and/or third-party gTLD applicants.

Our Chicago Interent lawyers can help you assess the merits of pursuing a new gTLD. For instance, there are uncertainties currently surrounding the issue. It is not clear how ICANN will handle two companies that apply for the same gTLD. And, business owners should keep in mind the benefits of registrations to prevent cybersquatters from obtaining control of a desirable domain name. Although it is not feasible to register every possible important term, it is important to consider the most common ones.

This post was prepared by summer research assistant Yelena R. Please contact us to discuss this or any other Internet or other information technology law matter.

Apple Inc. has sent a letter to Congress, saying it must collect the controversial tracking data that has some privacy experts warning consumers about the iPhone and iPad tracking their whereabouts, according to The Consumerist.

Chicago technology attorneys understand how important it is to make sure user service agreements, privacy statements, and other legal documents protect companies from legal penalties as they deploy next-generation technologies. In this case, Apple prudently made sure its end user agreement or clickwrap agreement provided it with the authority to collect and maintain user location data.

Bloomberg News reports the revelation that the company tracks up to a year's worth of a user's movements, and stores them in an unencrypted file, could lead to greater regulatory scrutiny in both the United States and Europe.

Apple has said it saves the location of WiFi hotpots and cell phone towers used by the equipment to provide a better user experience (such as not having to login a password each time you use a wireless system at home or work).

PC Magazine reports that Apple has agreed to encrypt the data in the next version of its operating system. The company acknowledged that the data is sent to Apple, so that it can maintain a crowd-sourced list of wi-fi hotspots and cell phone towers. But it said the actual location of the user can be up to 100 miles away, depending on a tower's location and other variables.

Google's Street View mapping service has run up against similar privacy concerns. The company was fined $147,000 in France last month for violating that country's privacy rules.

Continue reading "Apple's Consumer-Tracking Controversy Illustrates Importance of End User Agreements" »

The service interruptions experienced by Amazon this month has companies debating the merits of using remote computer services that are beyond their control, according to The New York Times.

A Chicago business lawyer should be consulted when establishing such third-party agreements or when a company fails to fulfill their obligations under a terms of service level agreement (SLA). Such contracts and agreements in Chicago should address system availability, redundancy and compensation. Remedies should also be addressed as part of outsourcing agreements.

"This is a wake-up call for cloud computing," analyst Matthew Eastwood told the Times. "It will force a conversation in the industry."

Not only should companies take a look at what services they are sending off site, they should carefully determine what crucial information or services need to remain inhouse. They must also take a look at the contracts covering cloud computing services, as well as how much to pay for backup and recovery services.

Amazon has a side business offering computer resources to businesses and is now an early leader in the growing business of cloud computing for companies large and small, including Netflix and Pfizer. The companies hit hardest by Amazon's service interruption were reportedly newer companies focused on growth, which are less likely to have extensive backup and recovery services.

Businesses reported various problems, from being unable to access data, to sites being shut down. The problems appear to have originated from Amazon's data center in Northern Virginia, near Dulles airport. Data center experts likened the interruption to the computing equivalent of an airline crash.

Continue reading "Chicago Business Attorneys Best Suited to Handle Technology Agreements" »

Yesterday, I was excited to speak with a writer for Crain's Chicago Business, the pre-eminent regional business newspaper and publisher of ChicagoBusiness.com, on the subject of the April 2010 Comcast case, which endangered the policy of the Federal Communications Commission supporting "net neutrality." The U.S. Court of Appeals ruling essentially held that regardless of the desirability of the FCC's goal of limiting broadband companies interference with relatively equal access to, use of and pricing for the Internet for all, it was not clearly authorized by federal law. The interview is for an upcoming special issue in December on important trends.

For a good summation of the background, policies and challenges involved in regulating the Internet, I recommend reviewing The Third Way: A Narrowly Tailored Broadband Framework, which is a May 6, 2010 statement prepared by Julius Genachowski, Chairman of the FCC. He summarizes the legal issue as follows:

The recent court opinion in Comcast v. FCC does not challenge the longstanding consensus about the FCC's important but restrained role in protecting consumers, promoting competition, and ensuring that all Americans can benefit from broadband communications. Nor does it challenge the commonsense policies we have been pursuing.

But the opinion does cast serious doubt on the particular legal theory the Commission used for the past few years to justify its backstop role with respect to broadband Internet communications. The opinion therefore creates a serious problem that must be solved so that the Commission can implement important, commonsense broadband policies, including reforming the Universal Service Fund to provide broadband to all Americans, protecting consumers and promoting competition by ensuring transparency regarding broadband access services, safeguarding the privacy of consumer information, facilitating access to broadband services by persons with disabilities, protecting against cyber-attacks, ensuring next-generation 911 services for broadband communications, and preserving the free and open Internet.

The legal theory that the Comcast opinion found inadequate has its roots in a series of controversial decisions beginning in 2002 in which the Commission decided to classify broadband Internet access service not as a "telecommunications service" for purposes of the Communications Act, but as something different--an "information service."

As a result of these decisions, broadband became a type of service over which the Commission could exercise only indirect "ancillary" authority, as opposed to the clearer direct authority exercised over telecommunications services. Importantly, at the time, supporters of this "information services" approach clearly stated that the FCC's so-called "ancillary" authority would be more than sufficient for the Commission to play its backstop role with respect to broadband access services and pursue all sensible broadband policies.

The Commission's General Counsel and many other lawyers believe that the Comcast decision reduces sharply the Commission's ability to protect consumers and promote competition using its "ancillary" authority, and creates serious uncertainty about the Commission's ability, under this approach, to perform the basic oversight functions, and pursue the basic broadband-related policies, that have been long and widely thought essential and appropriate.

Although the legal underpinning has been threatened, the Chairman believes there is widespread acceptance of the FCC's approach:

Over the past decade and a half, a broad consensus in the public and private sectors has developed about the proper role and authority for the FCC regarding broadband communications. This bipartisan consensus, which I support, holds that the FCC should adopt a restrained approach to broadband communications, one carefully balanced to unleash investment and innovation while also protecting and empowering consumers.

It is widely understood--and I am of the view--that the extreme alternatives to this light-touch approach are unacceptable. Heavy-handed prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation.

The consensus view reflects the nature of the Internet itself as well as the market for access to our broadband networks. One of the Internet's greatest strengths--its unprecedented power to foster technological, economic, and social innovation--stems in significant part from the absence of any central controlling authority, either public or private. The FCC's role, therefore should not involve regulating the Internet itself.

Consumers do need basic protection against anticompetitive or otherwise unreasonable conduct by companies providing the broadband access service (e.g., DSL, cable modem, or fiber) to which consumers subscribe for access to the Internet. It is widely accepted that the FCC needs backstop authority to prevent these companies from restricting lawful innovation or speech, or engaging in unfair practices, as well as the ability to develop policies aimed at connecting all Americans to broadband, including in rural areas.

Jeremy A. Gibson is a metropolitan Chicago Internet, technology and e-commerce lawyer with substantial expertise in the domain name registration, trademark, marketing, privacy, security, contract and other legal aspects of conducting business online. We would be pleased to discuss your Illinois Internet law or technology law questions or needs. We have a variety of convenient Chicago corporate attorney law office locations and we work with businesses throughout the northern Illinois region, including Arlington Heights, Buffalo Grove, Deerfield, Des Plaines, Evanston, Glenview, Highland Park, Hinsdale, Lake Forest, Libertyville, Mount Prospect, Naperville, Northbrook, Oak Brook, Palatine, Rolling Meadows, Schaumburg, Skokie, Oak Brook, Oak Park, Vernon Hills, Waukegan, Wheeling and Wilmette.

A federal district court judge's ruling last week in favor of Google's YouTube demonstrates that it can be difficult to hold online service providers liable for copyright infringement for content posted by users.

Viacom had sued YouTube (before it was acquired by Google) for more than $1 billion in damages arising from numerous instances of Viacom television shows or other content made available on the website. Viacom argued that YouTube should be secondarily liable for copyright infringement because executives knew that such conduct was occurring and desired such postings to help drive the growth of YouTube.

The federal Digital Millennium Copyright Act struck a balance to protect both internet service providers ("ISPs") and copyright holders. ISPs generally have a safe harbor for liability from infringing content posted by users so long as: (1) they do not financially benefit directly from the infringing activity; (2) they are not aware of the infringing material or circumstances that would make such material apparent; and (3) they remove (or "take down") purported infringing material with reasonable speed upon receiving notice.

Although the court acknowledged that YouTube management knew some infringement was happening and may have felt the infringing content helped bring contributors or viewers to the website, the judge found that overall YouTube did not have specific knowledge of which uploads constituted copyright infringement and YouTube took down thousands of posts promptly upon receiving notice from Viacom. (YouTube has since taken more aggressive efforts to monitor and police infringing material in the first place.)

Accordingly, unless the ruling is overturned on appeal, it will serve as a powerful precedent to protect diligent ISPs, who generally are easier targets with deeper pockets than the individuals who post infringing content.

Jeremy A. Gibson is an attorney experienced in handling Internet and intellectual property matters, such as the copyright infringement issues noted above. We are available to serve and meet with clients in Chicago and Deerfield and other areas. Contact us for a complimentary consultation with a Chicago business lawyer.

Online retailers should prepare for a new front as state lawmakers and revenue authorities become more creative in finding ways to make sure that Internet transactions don't escape sales or similar taxes. Catalog companies should pay attention to this as well.

State officials have been frustrated by their inability to require e-commerce vendors like Amazon and the like collect sales taxes when they do not have a physical presence in a state. (Note: for clarification, consumers in states where Amazon or a similar vendor has a distribution center, for example, do have to pay sales tax.) In recessionary times, this seems like a major loss of revenue. And, local bricks-and-mortar retailers, who must collect sales taxes, feel at competitive disadvantage to their virtual peers.

Some states have mounted litigation to overcome Supreme Court precedent about taxing out-of-state merchants. But others aren't waiting for resolution of such efforts and are trying a new tack. They are looking to the "use" tax, which is what consumers are supposed to pay when purchasing from out-of-state sellers. However, it has been much easier to enforce the sales tax from relatively few retailers, compared to policing the use tax against all citizens.

In a twist, there are recent reports that state authorities are trying to require online retailers to provide customer data so that tax bodies can pursue use tax claims against them. For instance, North Carolina recently made a request for such information to Amazon that sent alarm bells ringing, including about potential privacy claims.

It is too early to say how this will all play out. However, sooner or later, in this time of state budget deficits, it is quite likely that the loophole for online (and catalog) sales will be plugged one way or another.

Jeremy A. Gibson & Associates, P.C. handles trademark, trade secret, domain name and other intellectual property matters such as the one discussed above. We are available to serve and meet with clients throughout the Chicago, Illinois area, including Arlington Heights, Buffalo Grove, Deerfield, Des Plaines, Evanston, Glenview, Highland Park, Hinsdale, Lake Forest, Libertyville, Mount Prospect, Naperville, Northbrook, Oak Brook, Palatine, Rolling Meadows, Schaumburg, Skokie, Oak Brook, Oak Park, Vernon Hills, Waukegan, Wheeling and Wilmette. Contact us anytime for a complimentary consultation with a Chicago business attorney.