The Mishpat-Update #23


Welcome to the twenty third issue of the weekly Mishpat Update, Law on
the net from http://mishpat.net

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In this issue:

1. Introduction
2. The epix.com domain name
3. Online complaint generator
4. Cyberlaw news and updates

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################
1. Introduction
################

I would like to welcome the 12 new subscribers who joined the list this
week. 

This week's feature article takes another look at the connection
between trademarks and domain. We tell the story of two companies
wanting to use epix.com as their web address. Since only one can hold
the domain name, the court sided with the trademark owner. The lesson
to be learned from this case is: don't forget to get a trademark for
your sites' domain name.

There is a lot of cyberlaw news in this week's news section, which is
located at the end of the newsletter, right after a humorous look at
the online complaint generator. If you have any comments, or would like
to point out a good story don't forget to send an email to
mailto:editor@mishpat.net


The Mishpat Update archive (issues 1-19) is available at:
http://mishpat.net/mailing-lists/update

Feel free to use any of the material, or forward the newsletter to a
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############################
2. The epix.com domain name
############################

In previous issues of the Mishpat Update we have looked at the
connection between domain names and trademarks. In most cases, the
dispute involved cybersquatters (a person registering a trademarked
domain and then selling it for profit to the trademark owner). The
cybersquatters have no intention of using the domain name, they look
for profit from selling it. In contrast, the epix.com dispute is
between two companies that wanted to use the domain name for promoting
their business. Following, is a summary of the decision by the court of
appeals.


Epix  Inc. manufactures and sells video imaging hardware and software,
and provides consulting services to customers with regard to its
products. Epix registered "EPIX " with the U.S. Patent and Trademark
Office (PTO) in 1990, claiming a first use date of November 1984. The
"EPIX" trademark acquired incontestable status in December, 1996. The
registration does not relate to Epix's consulting services, although in
an application filed April 1997 for registration of "EPIX" as a trade
and service mark. The PTO has not issued a decision on Epix's recent
service mark application.

On November 4, 1996, Interstellar Starship Services, Ltd. (ISS) applied
for registration of "EPIX" as a trade and service mark for use on
computer graphics design services and computer graphics, although ISS
now contends this was an error on the part of its attorney, who should
have  applied to register not "EPIX," but "epix.com." The PTO denied
the application, and ISS is currently appealing that denial to the
Trademark Trial and Appeals Board. 

ISS registered the domain epix.com. On the epix.com site ISS posted
pictures of a drama group called the "Clinton Street Cabaret". At some
point, the web pages included information about how the pictures were
transferred to a computer and made ready for posting, but that
information was removed from the site. The site also included a link
which permitted visitors to read about ISS and its business, that link
was also removed.

Epix sought to have Network Services, Inc. (NSI), the registrar of
domain names, cancel the epix.com  registration. Under NSI's
domain name dispute policy, when Epix supplied NSI with a certified
copy of its registration of the "EPIX" trademark, NSI informed ISS that
it would lose its right to use epix.com unless it could present NSI
with a declaratory judgment of non infringement of Epix's trademark.

The district court held that ISS's maintenance of an internet web page
at "epix.com" did not infringe Epix's registered trademark "EPIX," and
granted summary declaratory judgment to ISS. 

Epix appealed the decision to the U.S. Court of Appeals for the Ninth
Circuit. Judge Stephen S. Trott delivered the opinion of a three judge
panel. 



Judge Trott agreed with the district court, that a word used as a
second-level domain name in a web site address can present a cause of
action for trademark infringement. (.com .net are called top-level
domain names. For example in www.yahoo.com com is the top-level domain
name, yahoo is the second-level domain name, and www is the third-level
domain name. The name bought from NSI is second level domain, Third
level domains can be set up by network system administrator. following
the previous example, Yahoo can set up another computer as
shopping.yahoo.com without any payment to NSI)  


Both parties agreed that Epix has a valid and protectable trademark in
"EPIX", the dispute was over the probability of customer confusion. In
examining whether a likelihood of confusion exists, the court
considered the eight factors used in trademark disputes:
[1] similarity of the conflicting designations; [2] relatedness or
proximity of the two companies' products or services; [3] strength of
[Epix]'s mark; [4] marketing channels used; [5] degree of care likely
to be exercised by purchasers in selecting goods; [6] [ISS]'s intent in
selecting its mark; [7 ] evidence of actual confusion; and [8]
likelihood of expansion in product lines.

As to the first factor, Judge Trott agreed with the district court that
epix.com is, "for all intents and purposes, identical in terms of
sight, sound, and meaning" to EPIX. Because both ISS and Epix market on
the internet, the marketing channels (factor number 4) are identical.

Because Epix's customers are sophisticated industry and university
researchers, and Epix's goods cost in the range of several thousand to
tens of thousand dollars, the court assumed that they should eventually
be able to find exactly what they are searching for (factor number 5).

In considering the similarity of products and services Judge Trott
wrote:
"Evidence indicates that the web site explained how photographs of the
"Clinton Street Cabaret" were altered and displayed on the internet.
This evidence supports an inference that ISS markets video imaging
services on the "epix.com" site. When we consider the doctrine of
initial interest confusion [editors note: a doctrine that permits a
finding of a likelihood of confusion although the consumer quickly
becomes aware of the source's actual identity and no purchase is made
as a result of the confusion], this evidence becomes even more
compelling. An Epix customer might read about ISS on the "epix.com"
site and decide to give ISS's services a try, permitting ISS to
capitalize on the goodwill Epix developed in its trademark -- even if
the customer is never confused about Epix's lack of connection to
epix.com."

In questioning the possible confusion the court used ISS's server logs
(referrer logs show which site referred the visitors to the web site.
The logs can also show search terms used by visitors who arrive from
search engines). The logs indicated that numerous Epix customers
reached the epix.com web site when searching for Epix on the search
engines and directories. The court concluded that at the very least,
this is substantial circumstantial evidence of initial customer
confusion.

After checking the eight different factors (some of which were omitted
from this summary) Judge Trott decided that:
"We hold that Epix must have the opportunity to go to trial on its
claims of trademark infringement and unfair competition. Because
evidence on the record would permit a rational factfinder to find a
likelihood of confusion, the district court erred in granting summary
judgment to ISS on the declaratory judgment and trademark infringement
claims."

The moral of the story is simple: don't forget to register your
domain name as a trademark. 


The full text of Epix Incorporated v. Interstellar Starship Services
Limited, is available at: http://www.patents.com/epix/appeal.txt



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##############################
3. Online complaint generator
##############################

Scott Pakin's Automatic complaint letter generator at
http://www-csag.cs.uiuc.edu/individual/pakin/complaint , is an easy to
use tool that will enable you to automatically generate a complaint
about any politician, boss, coach, teacher etc. The site service has
been around for several years, but I first learned of it from the
LawZONE Newswire at http://www.lawzone.co.uk (aimed mainly for British
lawyers)

All you have to do is supply a name and choose the length of the letter
(1-10 paragraphs). Within seconds the program randomly constructs an
angry complaint letter from a database of more than a thousand words
and phrases. A new letter emerges every time you use it. The results 
are surprisingly coherent: for one of my professors I got the 
following exact description: " His demands are perpetuated by an ethos 
of continuous reform, the demand that one strive permanently and 
painfully for something which not only does not exist, but is alien 
to the human condition."

This isn't exactly a substitute for the traditional complaint letters
that many of you (especially the lawyers) write, but it's fun. So don't
forget to visit http://www-csag.cs.uiuc.edu/individual/pakin/complaint
and generate you own complaint letter.



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#############################
4. Cyberlaw news and updates
#############################

Each week Mishpat-Update brings you the latest news about
online and computer law, with links to the full reports available
on the web.


* Mitnick sentenced to 46 months *
U.S. District Court Judge Marianna Pfaelzer sentenced the most famous
hacker, Kevin Mitnick to 46 months in prison. Mitnick was also ordered
to pay 4,125 USD in restitution -- a fraction of the 1.5 million
federal prosecutors sought.  With credit for good behavior, Mitnick
could be free by January 2000. Once released, Pfaelzer ordered the
hacker not to touch a computer or cellular telephone without the
written approval of his probation officer. 
The sentence was governed by a plea agreement between Mitnick, who
admitted to cracking computers at cellular telephone companies,
software manufacturers, ISPs and universities, and his prosecutors, and
will run on top of the 22 months he already received for cell phone
cloning and a probation violation, for a total of 68 months in prison. 
The plea agreement left open the amount of restitution Mitnick would
have to pay. The government asked the court, as reported here last
week, to order Mitnick to pay 1.5 million USD to his victim companies.  
Pfaelzer said she believed the damages were much larger, but agreed
with a defense argument that Mitnick's earnings potential was limited
and ordered the hacker to pay 4,125 dollar. 
http://www.computerworld.com/home/news.nsf/CWFlash/9908102mitnick


* 3Com's Palm won an  injunction against Olivetti's DaVinci *
3Com's Palm Computing Inc. (PCI) has obtained a preliminary injunction
prohibiting Olivetti Office and its Royal subsidiary from selling its
rival DaVinci handheld device, which 3Com claims was copied from the
Palm operating system. On issuing the preliminary injunction against
Olivetti, U.S. District Judge James Ware issued said excerpts of the
operating system source code that are reproduced in the daVinci
operating software development kit are copied verbatim from PCI's
copyrighted Palm OS and source code. Royal introduced the 99 US Dollar
handheld last August as low price alternative to 3Com's PalmPilot.
Royal said it is working on developing a version of its product not
affected by the injunction. 
http://www.lawnewsnetwork.com/stories/A4443-1999Aug12.html


* Amazon and NY Times settle *
In a settlement agreement the New York Times agreed to allow Amazon
(the largest online bookstore) to continue to use its bestseller list
as a promotional tool. As reported in previous issues of the Mishpat
Update, the NY Times had complained that the Amazon was infringing on
its trademark by offering 50 percent discounts on titles that were on
the newspaper's bestseller list (the Times has an agreement with
Amazon's main competitor Barnesandnoble.com that advertises on the
Times' web site).
According to the new agreement, Amazon can continue to post the list on
its site, and will continue to supply the Times with its sales data.
Amazon will delay posting the bestseller list until the Times makes it
available to the general public. Amazon must also post a disclaimer
saying that the Times is not affiliated and does not endorse Amazon.
Amazon will also continue to list bestsellers in alphabetical order,
instead of by the books' sales ranking. 
http://www.seattletimes.com/news/technology/html98/amaz_19990809.html
Disclaimer: Mishpat-Net is an Amazon.com associate


* Online bookstores accused of selling Nazi books in Germany *
In other not connected news, Amazon.com and Barnesandnoble.com were
accused of selling banned books in Germany. The Simon Wiesenthal
Center, that monitors world wide anti-Semitism, mailed letters to both
companies, informing them that one of the organization's
representatives in Germany had ordered Adolf Hitler's 'Mein Kampf' and
three other hateful books through their sites. The sale of Mein Kampf
and other anti-Semitic literature is banned in Germany, which has
strict laws governing anything that glorifies or incites violence. The
Wiesenthal Center letter also points out that in 1995 German
authorities prosecuted and jailed for four years Gary Lauk, an American
citizen who was said to be distributing illegal literature that
encouraged racial hatred. 
Amazon claims that these books were ordered from its U.S. site and not
its' German site (Amazon.de), in which these books are not listed.
Amazon's spokesman said it is the buyers' responsibility to comply with
local laws, and is not the bookstore's responsibility. 
Amazon's claims will probably not help it in a German court, because
Amazon can simply refrain from shipping these books to countries in
which they are Illegal. In a previous case Amazon announced it will not
ship a book to the U.K., after it was banned on defamatory grounds.
These cases teach internet commerce companies, the importance of
complying with laws of all nations in which they operate.
http://www.nytimes.com/library/tech/99/08/biztech/articles/09mein.html
(Free registration with the NY Times required)
http://www.computerworld.com/home/news.nsf/CWFlash/9908113bertel


* Florida court - live online *
When 68 year old Shirley Egan goes on trial on Monday on charges of
fatally shooting her daughter, she will be center stage in the first
trial the US judicial system has ever broadcast over the Internet. 
http://www.wired.com/news/news/politics/story/21279.html


* Hackers from Taiwan hacked Chinese sites *
Hackers from Taiwan have inserted pro Taiwan messages, such as
"Taiwan does not belong to China", into several Communist Chinese
government Web sites in retaliation for a similar attack on Taiwan
government sites by a mainland Chinese hacker. The Web attacks sparked
concern from military authorities who said an Internet war could add to
already simmering tension over Taiwan's drive for equal status with the
mainland.
http://www.news.com/News/Item/0%2C4%2C40316%2C00.html



* Cybercrime up but prosecution stays low *
A new study, by attorney David Banisar shows that although U.S.
Federal law enforcement agencies referred a record number of computer
crime cases for prosecution last year, most of them were rejected by
government attorneys. Investigators from the FBI and other agencies
offered 419 computer crime cases to federal prosecutors in 1998, up 43
percent from 1997, and more than three times as many as in 1992. At the
same time, prosecutors filed charges in only 83 cases. That ratio of
referrals to prosecutions, approximately 5 to 1, is significantly lower
than the overall rate for federal prosecutions in all categories. In
1998, Banisar said, there were 132,772 referrals at the federal level,
and 82,071 prosecutions, or about one prosecution for every 1.6
referrals. Some of the problems in computer cases are jurisdictional
issues, lack of criminal intent, difficulty in proving the crime. 
http://www.almdc.com/
http://www.abcnews.go.com/sections/tech/DailyNews/cybercrime990813.html


* FBI announces fingerprint database *
The FBI today unveiled a new 680 dollar million Integrated Automated
Fingerprint Identification System. The agency said, that the system
aimed at streamlining local, state, and federal agencies' processes for
sharing fingerprint data, is expected to cut fingerprint query response
time down from two weeks to two hours.
http://www.news.com/News/Item/0%2C4%2C40332%2C00.html


* IBM facing tax inquires in the U.K. *
 IBM said it is being audited by British tax officials, which are
probing to see if the computer giant improperly avoided paying taxes. A
report by the Wall Street Journal said that IBM avoided paying as much
as about 500 million dollar in U.K. taxes between 1991 and 1996 by
raising to 12 percent from 8 percent the royalties its British unit
paid to the U.S. parent on goods and services sold in Britain.
http://www.computerworld.com/home/news.nsf/CWFlash/9908065itax


* Ticketmaster sues over deep linking *
Ticketmaster Online CitySearch Inc. filed a suit against a competitor
Tickets.com Inc., alleging that Tickets.com site featured links that
went deep into its own site, bypassing introductory pages and
advertising. Ticketmaster also said Tickets.com has repeatedly
plagiarized editorial material from Ticketmaster Online and misled
consumers about ticket availability. Ticketmaster says that because it
generates revenue by selling advertising on its front pages, sites that
use deep links diminish the value of that space. Tickets.com claims
that deep linking helps users get a better service, since it takes them
directly to the desired destination. 
http://www.nytimes.com/library/tech/99/08/cyber/articles/10tickets.html
(Free registration with the NY Times required)
Since deep linking hasn't yet been decided by any court, I will
probably write more about it and explain what it is about, in one of
the future Mishpat Update issues.


* Summaries of facts in the Microsoft antitrust trial *
In proposed findings of fact sent to U.S. District Judge Thomas
Penfield Jackson, Microsoft argued that the evidence proves its actions
benefited consumers, while the government said the software giant
thwarted competition so it could hold onto its dominant position in the
software market. The Justice Department, and the 19 states that joined
the antitrust suit, said that the evidence proves Microsoft proposed
dividing markets with three companies, bundled separate products, and
cut off distribution channels for competing products -- in violation of
antitrust laws -- to eliminate threats posed to "Windows" the dominant
operating system. 
http://www.news.com/News/Item/0%2c4%2c40330%2c00.html


* Security site hacked *
Another security site has been hacked only days after hackers, as
reported in last week's Mishpat Update, altered the Web site for
Symantec Corp., whose software is used by millions of consumers to
protect against viruses and electronic snoops. In the latest incident,
a hacker using an Internet account in Russia successfully tricked
AntiOnline's computer to load hidden software code from elsewhere onto
one of its own Web pages. AntiOnline is a site specializing in news
about hackers and security. 

http://www.nandotimes.com/technology/story/0,1643,78430-123828-873810-0,00.html


* Clinton sets up an Internet crime task force *
U.S. President Clinton has issued an executive order to establish a
working group to inspect unlawful conduct on the Internet. The group
will look into the effectiveness of current online laws in areas such
as child pornography, fraud and the sale of guns, explosives,
controlled substances, and prescription drugs. It will also examine
tools that legal authorities might use to investigate offenses, and the
potential for empowering parents, teachers, and others to prevent or to
minimize the risks from unlawful conduct that involves the use of the
Internet.  
The text of Clinton's Executive Order on Internet Conduct can be found
at http://www.usnewswire.com/topnews/Current_Releases/0807-107.htm


* SEC imposes Y2K fines *
The U.S. Securities and Exchange Commission (SEC) has, for the first
time, fined four brokerages a total of 170,000 dollar for failing to 
file full year 2000 disclosure reports on time. 
http://www.computerworld.com/home/news.nsf/CWFlash/9908091secfines


* Ontario commission is pro private crypto *
Unlike U.S. authorities, the Ontario (Canada) Information and Privacy
Commission said it wants everyone to learn to use encryption. The
commission's pamphlet, which also points readers to crypto software
vendors, is part of an initiative to get Ontarians to protect their
privacy with personal encryption. 
http://www.wired.com/news/news/politics/story/21140.html


* U.S. Senate approved Anti-Cybersquatting act *
The U.S. Senate unanimously passed legislation that would allow
trademark holders to obtain civil damages from individuals who register
domain name identifiers that are identical or similar to their mark.
The Anti-Cybersquatting Consumer Protection Act gives the trademark
holder the ability to recover damages of at least 1,000 dollar but not 
more than 100,000 dollar  per domain name identifier. The new law will 
also enable the owner of a mark to bring an "in rem" action against the 
domain name identifier itself. Thus a mark owner can go after many 
domains in one suit, without having to sue every domain holder (as some 
readers may recall, a few months ago Porsche tried this tactic in order 
to cancel 160 domain names held by many different owners. Porsche was
unsuccessful because current law does not allow "in rem" suits against
domains).
http://www.techserver.com/noframes/story/0,2294,78512-123980-874430-0,00.html


* Net domain and the San Francisco elections *
A web design firm from San Francisco, snapped up domain names with
obvious utility to the Internet campaigns of the city's three leading
mayoral candidates: incumbent Willie Brown, former Mayor Frank Ordan,
and Clint Reilly. Brown's supporters discovered that not only had
virtually all of their man's logical domain names been taken (names
such as williebrown.com, williebrownjr.com and williesucks.com), but
the guy who took them was subsequently hired by the Reilly campaign.
The Brown campaign is currently using reelectwilliebrown.com for its
official Web site. 
http://www.wired.com/news/news/politics/story/21201.html

If you know of any cyberlaw updates, please send them to
mailto:news@mishpat.net

That's all for this time,
see you next week

Yedidya M. Melchior 
Editor 

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