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1 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. Register.com (the Plaintiff), a registrar of Internet domain names,

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Presentation on theme: "1 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. Register.com (the Plaintiff), a registrar of Internet domain names,"— Presentation transcript:

1 1 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. Register.com (the Plaintiff), a registrar of Internet domain names, has filed a lawsuit against Verio, Inc (the Defendant), which is a provider of Internet services, in the U.S. District Court for the Southern District of New York in December 12, [Register.com, Inc. v. Verio, Inc.] The Plaintiff sought an injunction against the Defendant, Verio Inc, as they have violated the terms of use, Service Agreement, trademark of Register.com.

2 2 –Register.com entered into a Registrar Accreditation Agreement with ICANN (Internet Corporation for Assigned Names and Numbers) to be authorised to provide domain name registration services. Pursuant to this agreement, Register.com was required to provide the public with access to a Whois database containing, inter alia, contact information by which one can reach those individuals who utilise Register.com's services to register their domain name. This agreement with ICANN sets forth the restrictions Register.com can place on the uses made by the public of data they obtain from the Whois database. Any organisation, which wishes to become a registrar has to agree to the agreement set by ICANN. –The primary purpose of the WHOIS database is to provide necessary information in the event of domain name disputes, such as those arising from cybersquatting or trademark infringement. Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. KEY FACTS

3 3 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. KEY FACTS The part of the agreement set by ICANN Registrar shall not impose terms and conditions on use of the data provided except as permitted by ICAAN- adopted policy. Unless and until ICANN adopts a different policy, Registrar shall permit use of data it provides in response to queries for any lawful purposes except to: (I) allow, enable, or otherwise support the transmission of mass unsolicited, commercial advertising or solicitations via (spam); or (II) enable high volume, automated, electronic processes that apply to Registrar (or its systems).

4 4 –Register.com prohibited the use of data obtained from the database not only for sending unsolicited electronic mail, as provided for by ICANN, but also for solicitation via regular mail and telephone. Register.com's Terms of Use were displayed together on a click-wrap licence agreement. Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. KEY FACTS

5 5 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. KEY FACTS [B]y submitting a Whois query, you agree that you will use this data only for lawful purposes and that, under no circumstances, will you use this data to: (I) allow, enable or otherwise support the transmission of mass unsolicited commercial advertising or solicitations via direct mail, electronic mail, or by telephone; or (II) enable high volume, automated, electronic processes that apply to Register.com (or its systems). The compilation, repackaging, dissemination or other use of this data is expressly prohibited without the prior written consent of Register.com. Register.com reserves the right to modify these terms at any time. By submitting this query, you agree to abide by these terms. The part of the agreement set by Register.com

6 6 –It is important to note that a user does not see these terms until after he has submitted a Whois query. Verio obtained information concerning the identity and whereabouts of these individuals, in part, by using a search robot to search Register.com's Whois database to market its services. Verio then utilised this information to solicit business from these individuals via telemarketing and e- mail Verio argued that Register.com could not enforce the Terms of Use applicable to its Whois database because such terms violated the Plaintiff’s Register.com's Registrar Accreditation Agreement with ICANN. In addition, Verio Inc. argued direct mail and telephone marketing are permissible under the terms of Registrar Accreditation Agreement. Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. KEY FACTS

7 7 Register.com requested for permanent injunction For permanent injunction, court should decide: (i)A likelihood of success on the merits and the possibility of irreparable injury (ii)The balance of hardships tips in Plaintiff’s favour Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS

8 8 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Breach of Contract Verio argued that Register.com could not enforce the Terms of Use applicable to its Whois database because such terms violated Register.com's Registrar Accreditation Agreement with ICANN. The court held that Verio did not have standing to assert such a claim because the ICANN Registrar Accreditation Agreement specifically disclaimed any intention to vest rights in third party beneficiaries such as Verio.

9 9 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Breach of Contract More importantly, the Court found that Register.com's Terms of Use created a binding contract between Verio and Register.com. The Court reached this conclusion notwithstanding the fact that (i) the user did not see the Terms of Use until after he had performed a search on the Whois database, and (ii) the user was not asked or required, after seeing the terms, to indicate an assent thereto by clicking on an "I agree" icon.

10 10 Click Wrap Licences: Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Breach of Contract Said the Court: Nor can Verio argue that it has not assented to Register.com's terms of use. Register.com's terms of use are clearly posted on its web site. The conclusion of the terms paragraph states "[b]y submitting this query, you agree to abide by these terms." Verio does not argue that it was unaware of these terms, only that it was not asked to click on an icon indicating that it accepted the terms. However, in light of this sentence at the end of Register.com's terms of use, there can be no question that by proceeding to submit a Whois query, Verio manifested its assent to be bound by Register.com's terms of use, and a contract was formed and subsequently breached.

11 11 Trespass to Chattels: Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS A trespasser is liable when the trespass diminishes the condition, quality, or value of personal property. The quality or value of personal property may be diminished even though it is not physically damaged by defendant's conduct.

12 12 Trespass to Chattels : Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Although Register.com was unable to directly measure the amount by which its systems capacity was reduced, the record evidence is sufficient to establish the possessory interference necessary to establish a trespass to chattel claim. Furthermore, Verio's own internal documents reveal that Verio was aware that its robotic queries could slow the response times of the registrars' databases and even overload them. Because of that possibility, Verio contemplated cloaking the origin of its queries by using a process called IP aliasing.

13 13 Trespass to Chattels : Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS As the eBay Court wrote: BE argues that its searches present a negligible load on plaintiff's computer systems, and do not rise to the level of impairment to the condition or value of eBay's computer system required to constitute a trespass. However, it is undisputed that eBay's server and its capacity are personal property, and that BE's searches only use a portion of this property. Even if, as BE argues, its searches only use a small amount of eBay's computer system capacity, BE has nonetheless deprived eBay of the ability to use that portion of its personal property for its Own purposes. The law recognizes no such right to use another personal property. Accordingly, BE's actions appear to have caused injury to eBay and appear likely to continue to cause injury to eBay.

14 14 Trespass to Chattels : Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Register.com's evidence that Verio's search robots have presented and will continue to present an unwelcome interference with, and a risk of interruption to, its computer system and servers is sufficient to demonstrate a likelihood of success on the merits of its trespass to chattels claim. There is no adequate remedy at law for an ongoing trespass and without an injunction the victim of such a trespass will be irreparably harmed. The eBay court specifically held that eBay was entitled to preliminary injunctive relief based on the claim that if such relief were denied, other companies would be encouraged to deploy search robots against eBay's servers and would further diminish eBay's server capacity to the point of denying effective access to eBay's customers.

15 15 Computer Fraud and Abuse Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Register.com claims both that the use of software robots to harvest customer information from its WHOIS database in violation of its terms of use violates 18 U.S.C. §§ 1030(a) (2) (C) and (a) (5) (C), and that using the harvested information in violation of Register.com's policy forbidding the use of WHOIS data for marketing also violates those sections, That is, that both Verio's method of accessing the WHOIS data and Verio's end uses of the data violate the CFAA.

16 16 Computer Fraud and Abuse Act (§ 1030) (Based on the 1996 Act. The new Act was released on 6 th August 2004) (a) Whoever-- … (2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains— … (C) information from any protected computer if the conduct involved an interstate or foreign communication; … (5)(C)intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage; shall be punished as provided in subsection (c) of this section.

17 17 Computer Fraud and Abuse Act (§ 1030) (c) The punishment for an offense under subsection (a) or (b) of this section is– … (2) (A) a fine under this title or imprisonment for not more than one year, or both, in the case of an offense under subsection (a)(2), (a)(3), (a)(5)(C), or (a)(6) of this section which does not occur after a conviction for another offense under this section, or an attempt to commit an offense punishable under this subparagraph; and (2) (B) a fine under this title or imprisonment for not more than 5 years, or both, in the case of an offense under subsection (a)(2), if-- (i) the offense was committed for purposes of commercial advantage or private financial gain; (ii) the offense was committed in furtherance of any criminal or tortious act in violation of the Constitution or laws of the United States or of any State; or (iii) the value of the information obtained exceeds $5,000;

18 18 Computer Fraud and Abuse Act (§ 1030) (e) As used in this section-- (8) the term "damage" means any impairment to the integrity or availability of data, a program, a system, or information, that-- (A) causes loss aggregating at least $5,000 in value during any 1-year period to one or more individuals; (B) modifies or impairs, or potentially modifies or impairs, the medical examination, diagnosis, treatment, or care of one or more individuals; (C) causes physical injury to any person; or (D) threatens public health or safety; …

19 19 Computer Fraud and Abuse Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Because Register.com objects to Verio's use of search robots, they represent an unauthorized access to the WHOIS database. The type of harm that Register.com alleges is caused by the search robots, including diminished server capacity and potential system shutdowns, is better analyzed under § 1030(a) (5) (C), which specifically addresses damages to the computer system.

20 20 Computer Fraud and Abuse Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS If the strain on Register.com's resources generated by robotic searches becomes large enough, it could cause Register.com's computer systems to malfunction or crash. Such a crash would satisfy § 1030(a)(5)(C)'s threshold requirement that a plaintiff demonstrate $5000 in economic damages resulting from the violation, both because of costs relating to repair and lost data and also because of lost good will based on adverse customer reactions.

21 21 Computer Fraud and Abuse Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS A potential harm which cannot be addressed by a legal or equitable remedy following a trial such as the loss of customers that might result from a system shutdown or slowed response times complained of here, constitutes an irreparable injury. Because Register.com has demonstrated that Verio's access to its WHOIS database by means of an automated search robot is unauthorized and caused or could cause $5000 in damages by impairing the availability of data or the availability of its computer systems, Register.com has establish both irreparable harm and a likelihood of success on the merits of its claim that Verio's use of the search robot violated § 1030 (a) (5) (C) of the Computer Fraud And Abuse Act. Register.com is therefore entitled to injunctive relief based upon this claim

22 22 Computer Fraud and Abuse Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS Accordingly, the Court finds that Verio's access to the WHOIS database was unauthorized and that Verio violated S 1030(a)(2)(C) by using that unauthorized access to obtain data for mass marketing purposes. The harvesting and subsequent use of that: data has caused and will cause Register.com irreparable harm. Therefore, because Register.com has demonstrated a likelihood of success on the merits of its claim that Verio's use of its WHOIS data for mass marketing purposes violates § 1030(a)(2)(C) of the Computer Fraud And Abuse Act end has demonstrated irreparable harm stemming from that violation, Register.com is entitled to injunctive relief based on that claim.

23 23 Lanham Act Case Study – Plaintiff : Register.com Defendant : Verio Inc. RESULTS The Court finds on the current record that Register.com is likely to succeed on the merits of its claims of unfair competition and false designation of origin under §43(a) of the Lanham Act with respect to any , telephone, or direct mail solicitation that uses the "Register.com" or "first step on the Web" marks or any similar marks. Register.com is also likely to succeed on Lanham Act claims: claims based on Verio's solicitations that suggest that Verio is calling with regard to the registration of the domain name or any problem arising from that registration. As more fully discussed in the context of the breach of contract claim, these Lanham Act violations may result in the irreparable harm of lost client relationships. Accordingly, the Court enjoins Verio from any future use in its , direct mail, or telephone solicitations of the marks Register.com or "first step on the web" or any similar mark. Furthermore, the Court enjoins Verio from indicating in any affirmative way that it is calling regarding the registration of the customer's domain name, rather than in regard to the provision of web- hosting or other services related to the domain name.

24 24 Lanham Act Case Study – Plaintiff : Register.com Defendant : Verio Inc. INJUNCTION Verio Inc. are enjoined from engaging in the following activities: 1. Using or causing to be used the "Register.com" mark or the "first step on the web" mark or any other designation similar thereto, on or in connection with the advertising, marketing, or promotion of Verio and/or any of Verio's services; 2. Representing, or committing any act which is calculated to or is likely to cause third parties to believe that Verio and/or Verio's services are sponsored by, or have the endorsement or approval of Register.com;

25 25 Lanham Act Case Study – Plaintiff : Register.com Defendant : Verio Inc. INJUNCTION Verio Inc. are enjoined from engaging in the following activities: 3. Accessing Register.com's computers and computer networks in any manner, including, but not limited to, by software programs performing multiple, automated, successive queries, provided that nothing in this Order shall prohibit Verio from accessing Register.com's WHOIS database in accordance with the terms and conditions thereof; and 4. Using any data currently in Verio's possession, custody or control, that using its best effort, Verio can identity as having bean obtained from Register.com's computers and computer networks to enable the transmission of unsolicited commercial electronic mail, telephone calls, or direct mail to the individuals listed in said data, provided that nothing in thin Order shall prohibit Verio from (1) communicating with any of its existing customers, (ii) responding to communications received from any Register.com customer initially contacted before August 4, 2000, or (ii) communicating with any Register.com customer whose contact information is obtained by Verio from any source other than Register.com's computers and computer networks.

26 26 Patents ROLE OF PATENTS ONLINE Patent Fundamentals What can be patented? The Role of Patents in Electronic Commerce Enforcing Patent Rights Online Obtaining a Patent Ownership of Patent Rights. Basile, Andrew, R ‘Role of Patents Online’. In (ed.) Thomas J Smedinghoff. Online Law. Reading, Mass.: Addison-Wesley Developers Press.

27 27 Patents Definition A patent is a right granted to an inventor by the federal government to exclude others from making, using, selling, or importing an invention. Patents are available throughout the world, and are issued on a country-by-country basis. Patents are obtained in the United States by filing a patent application with the federal Patent and Trademark Officer (PTO), pursuant to the Patent Act of 1952.

28 28 Patents Types of Patents Utility Patents: for machines and other useful innovations Design Patents: for ornamental designs Plant Patents: for distinct and new varieties of plants

29 29 Patents Patent Claims A patent might include a claim reciting: A computer network for conducting online transactions, including: 1.A first computer network adapted for entering a sales order 2.A second computer adapted for receiving the sales order, and 3.A communication means for transmitting the sales order from the first computer to the second computer via a microwave signal. DISCUSS If the network had a communication link, but the link connected the computers via a fiber optic signal, would it fall within the literal scope of the claim?

30 30 Patents What can be patented? Patent protection is available for any invention that is: Patentable subject matter –Any “process, machine, article of manufacture, or composition of matter”. Useful –The requirement that an invention be “useful” means that it functions as described and that it fulfils some purpose.

31 31 Patents What can be patented? Novelty –The requirement that an invention be new (or novel) means that the claimed invention, at the time it was invented, was not “known or used by others in this country, or patented or described in a printed publication in this or a foreign country”. Nonobviousness –The invention cannot simply be a trivial variation of the existing art. Software

32 32 Patents Limitations of Patent Rights Claim Scope –The public is free to practise anything disclosed in the specification that is not claimed. Validity Expiration –A utility patent expires in 20 years after the date it is filed in the PTO, and a design patent expires 14 years after it is issued. First-Sale Doctrine Implied License

33 33 Patents Patent Infringement A patent grants its owner the exclusive right to make, use, sell or offer for sale, and import the patented invention. Patent infringement occurs when another person or organisation performs one of these acts without the patent owner’s permission.

34 34 Patents Patent Infringement A patent is ‘literally’ infringed by the unauthorised use, manufacture, or sale of a device or process (the ‘accused device’) that falls within the literal scope of any of the patent’s claims. A patent may also be infringed under the ‘doctrine of equivalents’ if the accused device includes every claim element or its equivalent, and it performs the same function as the claimed invention in the same manner to achieve the same results.

35 35 Patents The Role of Patents in Electronic Commerce Interfaces –Graphic symbols of user interfaces, logical structure of the interface Communication Protocols –Many protocols are in the public domain. However, it is possible to patent a protocol. Data Compression –Unisys has patented GIF and TIFF compression standards (LZW patent). Encryption and Security Procedures –The basic idea of public key encryption was patented in 1980, and the RSA system was patented in 1983.

36 36 Patents The Role of Patents in Electronic Commerce Electronic Sales System –Interactive Gift Express obtained a patent directed to a method for electronic distribution of information products such as software and music. Information Processing and Retrieval –Compton’s NewMedia obtained a patent directed to a technique for searching and retrieving information from a multimedia database. However, the PTO rejected Compton’s claims, after the multimedia industry claimed that the Compton’s patent was too broad – that is the claimed techniques that were already known in the art.

37 37 Patents Geographic Scope of Patent Monopoly A US patent is enforceable only in the United States and its territories and possessions. In particular, a US patent could be infringed by a company that induces or contributes to the direct infringement of others, even if this direct infringement takes place outside the United States. Such liability may apply in these cases if: –The defendant supplies components of a patented invention from the United States; –The components are combined outside the United States in a manner that would infringe the patent if such combination occurred within the United States; and –The defendant actively induces or knowingly contributes to the combination.

38 38 Patents Ownership of Patent Rights Inventions by Contractors –If the contractors do not assign the patent application to the contracting company, then the contractor – not the company- will have legal title to the issued patent. Inventions by Employees –Generally, the employer owns inventions made within the scope and purpose of the employee ’ s employment

39 39 Patents Obtaining a Patent Qualified Applicant Patent Search 1. USPTO Web Site 2. PTO Depository Libraries 3. Internet 4. International Filing the Application Filing the Application The patent application has the following subparts: 1. The patent inventor; 2. The specification (the part of the patent application that describes the invention) 3. The claims (which define the scope of the patent application); 4. The patent application drawings; and 5. The inventor's oath.

40 40 Patents Obtaining a Patent Qualified Applicant Patent Search Filing the Application Filing the Application Patent Prosecution Patent Prosecution 1. The first office action, 2. The applicant's Amendment and Response, and 3. The final office action.

41 41 Patents Obtaining a Patent Qualified Applicant Patent Search Filing the Application Filing the Application Patent Prosecution Patent Prosecution Patent Issuance Patent Issuance 1. Payment of the Issue Fee, 2. Marking products with the patent number, and 3. Payment of Maintenance Fees.

42 42 Patents Obtaining a Patent Qualified Applicant Patent Search Filing the Application Filing the Application Patent Prosecution Patent Prosecution Patent Issuance Patent Issuance Rights Granted Rights Granted

43 43 Patents Copyrights, Design Patent, Trademark Non-functional –Copyright –Trademarks –Design Patents Functional –Utility Patterns


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