WEB & ENTERTAINMENT LEGAL NEWS
by Patsy Sakuma

COURT REELS IN BAIT- AND-SWITCH SPAM

On April 16, 2002, in FTC vs. BTV Industries, a Nevada federal court granted a temporary restraining order enjoining an alleged deceptive email practice where recipients were sent a prize notification for a free Sony PlayStation 2 or other prize. When consumers responded to this e-mail they were then connected to a web page that imitated an authentic Yahoo page. The consumer was then instructed to download a program that would allow them to claim their prize. Instead the recipient was routed to a pornography website charging them $3.99 per minute through a 900-number.

The Federal Trade Commission filed the complaint in the Nevada federal district court on March 27, 2002 against defendants Rick Covell, Adam Lewis, BTV Industries, National communications Team Inc., LO/AD Communications Corp. and Nicholas Loader for allegedly violating the FTC Act and the Pay-Per-Call Rule, which supplements the Telephone Disclosure and Dispute Resolution Act of 1992.

This case is one of many other cases initiated through a new International Netforce comprising of the FTC, eight state-law enforcement agencies in Alaska, Oregon, Montana, Washington State, and Wyoming, and four Canadian enforcement agencies.

$1M INTERNET LIBEL CASE ADVANCES TO THE GEORGIA SUPREME COURT

On April 19, 2002, the Georgia Supreme Court agreed to hear the internet libel case of Bruce Mathis, of Crisp County, Georgia, who posted three allegedly libelous messages on a Yahoo message board. In his messages, Mathis called Thomas C. "Chris" Cannon, a vice-president of Waste Industries Inc., a subsidiary of TransWaste Services Inc., of Raleigh, N. Carolina, a "thief" and a "crook," and accused the waste company of wasting Crisp county taxpayers' money and polluting the county's lands by allowing out-of-county garbage into Crisp County Solid Waste Management Authority sites.

Cannon sued Mathis in Crisp County's superior court asking for unspecified compensatory damages and $1M in punitive damages. On February 13, 2001, Judge T. Christopher Hughes held that Mathis had committed "libel per se." The Georgia Court of Appeals in November 2001 affirmed the lower court's ruling. The Georgia Supreme Court will now decide Cannon's $1M judgment against Mathis, whether Internet publishers are shielded by Georgia laws protecting newspapers and broadcast companies from punitive damages if a retraction is made, and who is a public figure. Mathis is arguing that Cannon is a public figure and, thus, has less privacy rights than private figures.

The debate over who is a public figure has created interest because of the recent libel case, Atlanta Journal-Constitution vs. Jewell, which is up for appeal to the U.S. Supreme Court. Richard Jewell, whom the FBI had targeted as the alleged Atlanta-Olympic bomber, even though it later dropped all charges against the former security guard, lost his libel case against the Atlanta newspaper because the Georgia Appeals Court found he was a "public" figure by virtue of him granting one photo shoot and 10 interviews to the media.

COMPAQ AWARDED A RECORD $2.7M ATTORNEY FEES IN FAIR-USE COPYRIGHT CASE

In Compaq Computer Corp. vs. Ergonome Inc., a Houston federal district court on May 1, 2002, awarded Compaq more than $2.7 million in attorneys' fees after the computer giant won a declaratory judgment that its copying of portions of the defendant-publisher's book on ergonomics, "Preventing Computer Injury: The HAND Book," by Stephanie Brown (a principal in Ergonome Inc.) in its own ergonomic's manual, Compaq's Safety and Comfort Guide, was fair-use, and thus no copyright infringement occurred.

This may be the highest attorney-fee award for a copyright infringement case, and surpasses the approximately $1.3 million award in a case involving musician John Fogerty (Creedence Clearwater Revival).

MIRRORING INTERNET FAQs RULED NOT COPYRIGHT INFRINGEMENT

In Mist-On Systems, Inc. vs. Gilley's European Tan Spa, Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin, on May 2, 2002, held that frequently-asked-questions posted on Web sites do not fall under copyright protection. Here, the plaintiff, Mist-On Systems, Inc. alleged that a competitor, defendant Gilley's European Tan Spa, had mirrored its FAQs Web page on defendant's FAQs Web page, in a scheme to beat out the competition.

Even though the court found that defendant Gilley's FAQs provided similar information on the spray-on form of sunless tanning, similar words and format, the court still held these similarities were "short of proving copyright infringement because it concluded that FAQs by their nature do not contain the elements of original works.

DMCA'S CRIMINAL PROSECUTION GETS GREENLIGHT IN CASE AGAINST ELCOMSOFT

On May 8, 2002, Judge Ronald Whyte of the U.S. District Court in San Jose, California, denied defendant-Elcomsoft's motion to dismiss the criminal case against it. As reported in our last issue, the federal government indicted the Moscow-based technology company for selling software that allows users to break the encrypted protection-codes on Adobe Systems' eBooks and PDF files.

Judge Whyte ruled that the DMCA is neither too vague under the Fifth Amendment as to conduct it prohibits nor too restrictive under the First Amendment finding the law's restrictions on speech were content neutral, which warranted the use of the intermediate scrutiny rather than highter, strict scrutiny test. The judge thus found that the law "does not burden substantially more speech than is necessary to achieve the government's asserted goals of promoting electronic commerce, protecting copyrights, and preventing electronic privacy."

The judge also rejected the defense argument that under the DMCA companies like Adobe eBooks prevent the fair-use of the copyrighted work citing that certain fair-use may become merely more difficult, not prohibited. Judge Whyte went on to state it just means consumers must rely on the "old fashioned" ways of doing things, such as retyping rather than transferring files or cutting or pasting.

CONGRESSIONAL DRAFT BILL TO CRIMINALIZE FALSE DOMAIN-NAME REGISTRATION INFORMATION

Congressional Representatives Howard Coble, R-N.C., and Howard Bernman, D-Calif., have submitted a draft bill for the House of Representatives to consider that would "provide criminal penalties for providing false information in registering a domain name on the Internet. Washington insiders believe the reality of the bill becoming law is great in light of the escalating fraud and deceit on the Internet.

BANKRUPTCY BLUES HIT NAPSTER

The long and winding road of Napster now leads to bankruptcy. The online music company filed for Chapter 11 bankruptcy (reorganization) on June 3, 2002, in the U.S. Bankruptcy Court in Wilmington, Delaware. Shawn Fanning's Napster, once attracted 4.9 million users per month to its music-swapping Web site. Major record labels, including A&M, convinced a federal judge to shut it down in July 2001 because its company's service violated copyright laws.

NO CHEERS OVER THE NEW, REDUCED
MUSIC-WEBCAST RATES

The U.S. Copyright Office decided on June 20, 2002, to charge webcasters 70 cents per song heard by 1,000 listeners applicable to radio station simulcasts on the Web and Internet-only broadcast.

The new rate reduces by half the $1.40 charge that a governmental arbitration panel had earlier proposed in February 2002. In May, James H. Billington, who oversees the Copyright Office, rejected the $1.40 rate. Spokeswoman, Julie Brett, stated that Billington thought the difference in rates was "arbitrary and not supported by the record of evidence." Neither Internet-music broadcasters nor their opponents in the recording industry seemed happy with the results. Representatives from the Internet-music broadcasters believe the new rate is still too high, while representatives from the recording industry believe its too low.

The new ruling can be appealed to the U.S. Court of Appeals for the D.C. Circuit within 30 days. The court could either modify the ruling or set it aside if it finds it was highly unreasonable.

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