NEW MEDIA LAWYER (Release.41 - 26.01.2000)
1.0 NEW MEDIA LEGAL NEWS + COMMENTARY
1.1 LEGAL NEWS IN BRIEF
The British Government has confirmed that it will be tabling an amendment to the Interception of Communications Act by the end of this month. The new measure - the Regulation of Investigatory Powers Bill - will incorporate the law enforcement elements relating to encryption that were dropped from the Electronic Communications Bill last year. The RIP Bill needs to be enacted at short notice to ensure the UK doers not fall foul of new European human rights legislation.
The operators of an Internet pornography site were prevented under a temporary restraining order from using Teen magazine's name in the porn site's web address. The magazine's staff discovered the site, www.teenmagazine.com, connected visitors to porn sites and bounced them to other porn sites when they attempted to exit. Petersen Publishing, the magazine's publisher, says the publication received complaints from puzzled teenage girls
The online auction group eBay has commenced legal action against Bidder's Edge, a specialist auction search service in the USA which aims to provide users with a summary of the best deals available across all major web auction sites. e-Bay accuses Bidder's Edge of making unauthorised copies of information displayed on the e-Bay site.
RealNetworks Inc, which produces software allowing users to play back audio and video clips over the Internet, is suing Streambox Inc, alleging that the start-up is in violation of the Digital Millennium Copyright Act for having produced software packages that allow users to copy, decode and convert RealNetworks audio and video files into other formats. The US District Court in Seattle has granted RealNetworks a temporary injunction halting the development, production and sale of three software products by Streambox. RealNetworks was itself ordered to post a US$1 million bond to cover any losses by Streambox, which denies the allegations and says the dispute is part of a larger standards battle between RealNetworks and Microsoft over rival file formats and player systems.
British Telecom has issued a writ against Scoot.com alleging Scoot sales staff made "false and malicious statements", including telling advertisers that BT's rival Internet telephone directory Talking Pages no longer existed, that its name had been changed to Scoot and that the service had been sold to Scoot. BT, which is seeking unspecified damages, is reported to be in the final stages of negotiating an out-of-court settlement.
The US Securities & Exchange Commission has filed a civil action against "Tokyo Joe" Park (the operator of the popular Tokyojoe.com online investment chat room and bulletin board site, as well as the Societe Anonyme e-mail share tipping service) alleging fraud, acting as an unlicensed investment adviser, the illegal touting of shares, failing to declare conflicts of interest and "scalping" (recommending people buy stocks he was wanting to sell). The SEC said it was not prepared to tolerate "fraudulent conduct... by self proclaimed investment gurus". Lawyers for Mr Park say he intends to fight the allegations both on regulatory grounds and on the First Amendment constitutional right to free speech.
US broadcasters are pondering how to react to a new web-based service launched in Canada call iCraveTV.com. The service captures live television broadcasts from 17 North American television channels (10 in Canada, the remainder in the USA) and retransmits them via the Internet.
Although a number of US broadcasters have threatened legal action, the problem is the iCrave service could be legal under a compulsory Canadian licensing law that allows cable and satellite companies to retransmit US signals without permission. But whereas the law was originally intended to benefit just Canadian TV audiences, by offering the service over the web, iCrave has the potential to reach a global audience. A further complication is that the Canadian federal government recently agreed not to try to regulate the Internet. Like the soap operas being broadcast on iCrave, this dispute is expected to run and run.
1.2 MICROSOFT FILES THE MONTY PYTHON DEFENCE
In the build up to Microsoft and the US Justice Department making their final oral arguments in court on 22 February, Microsoft has filed a defence citing a 1976 copyright case involving the Monty Python comedy series. That case held that the ABC television network was not entitled to trim seven minutes from a Monty Python programme - and according to Microsoft this provides legal authority for its argument that PC manufacturers should not be allowed to customise or alter the appearance of the Windows operating system, when it first appears on a user's computer screen. (This would appear to echo the European intellectual property law concept of moral rights.)
1.3 META DATA BOOST FOR FORMER PLAYMATE
In the US District Court for the Southern District of California, Judge Judith Keep has dismissed a lawsuit brought by Playboy Enterprises against Terri Welles, one of Playboy's former employees, for violating Playboy's trademarks in the visible and invisible meta data portions of her web site.
Judge Keep found that Welles - a Playmate of the Month in December 1980 and Playmate of the Year in 1981 - use of the words "playboy" and "playmate" in the text portion of her site and in her meta tags were a "fair use" of Playboy's trademarks because they fairly described and identified her achievements. Judge Keep concluded her opinion with a quote from Supreme Court Justice Oliver Wendell Holmes Jr in a 1924 case: "When the mark is used in a way that does not deceive the public, we see no such sanctity in the word as to prevent its being used to tell the truth."
COMMENT: What the judge in effect said was that if you can fairly use someone's trademark in the visible portion of your web site, then it is also fair to use the same marks in the invisible portion. Playboy Enterprises, which is planning an appeal, argued that Welles' meta tags had the effect of sneakily diverting potential Playboy customers who used search engines to seek officially sanctioned Playboy pictures or services.
1.4 HACK ATTACK
A hacker, calling himself Maxus, posted onto the Internet the credit card details of over 350,000 customers who use the CD Universe web site after his attempt to extort US$100,000 from the owners of the site failed. CD Universe, which has now called in the FBI, has temporarily closed its site and is working with US credit card companies on ways to restore the security of its web site and credit card database. American Express and Discovery are also replacing approximately 300,000 credit cards.
Virgin Net also had to close its web site temporarily and suspend services to 170,000 users after it attempted an unsuccessful attempt by hackers to break into the service. Virgin has also offered users the option to change their e-mail passwords.
Last Friday (21 January) saw the release from prison of the US hacker Kevin Mitnick. At one time described by the FBI as its most wanted computer criminal, he has spent the last five years in jail.
1.5 DOMAIN NAME PROBLEMS STILL MAKING WAVES
The US Supreme Court has declined to review a challenge to the legality of the fees Network Solutions charges to register and maintain Internet domain names. The action (Thomas -v- Network Solutions), which was brought by a number of ISPs in 1997 originally claimed that the fees were unconstitutional as they amounted to an illegal tax however since then Network Solutions has cut its fees and seen them approved by the US Congress.
Also in the United States, battery maker Heritage Carbide has filed a lawsuit in the Los Angeles Federal Court accusing one of its competitors Federal Carbide of unfair competition and trademark infringement, after discovering that Federal's sales manager had already registered the Heritage Carbide domain name. The case is one of the first to be filed since President Clinton signed a new law - Anticybersquatting Consumer Protection Act - in December banning trademark cyberpiracy. Bargainbid.com has also used the new law to obtain a temporary injunction against competitor who allegedly diverted consumers to their site by registering a domain name that used a common misspelling of the word "bargain."
The former Soviet republic of Moldova's communications ministry has developed an interesting commercial sideline, that is starting to bring in a steady flow of hard currency, after the Florida-based Domain Name Trust realised that US doctors might be interested in registering web site addresses via Moldova so they could have an ".md" suffix as part of their domain name. Over 8000 doctors have already registered domains - including www.colitis.md - and Domain Name Trust predict this figure will hit 100,000 by the end of this year.
Edinburgh law firm Anderson Strathern is advising Internet entrepreneur Steven McColl on the auction of 50 web sites addresses, including www.scottish-business.com. And, Dibb Lupton Alsop is currently working with a number of Internet companies lobbying the European Commission on the adoption of a new ".eu" top level domain name.
2.0 NEW MEDIA LAWYERS, DEALS + INDUSTRY NEWS
2.1 PROFESSIONAL NEWS IN BRIEF
Crunch Music, the downloadable music business set up by new media lawyer Liam McNeive, has recruited former AOL UK manager David Phillips as its new CEO. Crunch, which also opened an office in Los Angeles this month, has confirmed that AOL Europe has purchased a small equity stake in the company.
US law firm McDermott Will & Emery has recruited Theodore Goddard's e-commerce and advertising law specialist Rafi Azim-Khan. He will join the new media team at McDermott's London office.
New York lawyer Stephen Axinn, one of the founders of IP and antitrust law boutique firm Axinn Veltrop & Harkrider, has been retained by the US Justice Department to act as a consultant on the potential antitrust issues surrounding the proposed MCI WorldCom buyout of Sprint.
Garban Intercapital's legal director Gillian Switalski has been headhunted to join the new Telstar Internet venture group.
Arnheim Tite & Lewis financial services specialist Joe Coffey has joined Taylor Joynson Garrett as an e-finance partner, where he will be looking after clients wanting to provide financial services via the Internet.
Although it has been reported that some City of London law firms are offering first year associates a starting salary of £33,500, the record for largesse is currently held by Silicon Valley boutique firm Gunderson Dettmer which is offering first year associates a minimum of US$125,000 plus a minimum bonus of US$20,000 - the equivalent of £90,500 a year.
2.2 LATEST DEALS
John Enser led the Olswang team acting for online music web portal Mudhut.co.uk in relation to an exclusive distribution deal with the Acid Jazz recording label - Acid Jazz was advised by John Byrne & Co.
The London office of US firm Latham & Watkins acted for Silicon Valley-based Phone.com in its recent acquisition of the Irish telecoms software developer Apion. L'Estrange & Brett in Belfast and McCann Fitzgerald in Dublin advised Phone.com on Northern Ireland and Irish law respectively. Apion was advised by Goes & Grimes in Dublin.
Morgan Cole claims that its web site was directly responsible for winning a major new international client - the Nigerian attorney general's office, which is involved in a new power generation project - after a Nigerian lawyer surfing for suitable legal advisers, followed a hyperlink through to the firm's energy law page.
Harbottle & Lewis IP/IT partner Mark Owen led the firm's team acting for the Chrysalis Group in the creation of a European joint venture with the Internet company Rivals.com. The Venture Law Group acted for Rivals.
2.3 THE WALLS HAVE EARS
Although the Time Warner/AOL and associated Time Warner/EMI music deals have been attracting headlines for their potential impact on the convergence of the online and offline publishing and music industries, the role of New York lawyers Cravath Swaine & Moore, lead outside counsel to Time Warner in the AOL deal, has also attracted a lot of interest since it was revealed the firm is effectively operating on a contingency fee basis. If the deal goes ahead, the firm will collect approximately US$35 million in fees, if it fails they will collect only nominal fees.
In what looks like becoming a modern-day urban tale, it now appears the reason why news of the deal first appeared on some Internet bulletin boards more than 12 hours before the formal announcement was that one of the outside caterers, serving lunch to the merger team at Cravaths, spotted what was going on and told his uncle, who promptly posted it onto Yahoo! The chef in question is reported to now be pursuing an alternative career.
2.4 VIRTUAL REALITY FIRM WINS SCL AWARD
The UK's Society for Computers & Law has awarded its annual IT award to the Peterborough based Virtual Solicitors Chambers project, which uses a combination of centrally managed IT services and online links to allow small firms and sole practitioners to benefit from modern business systems without having to make a major capital investment in technology and office facilities.
http://www.solicitorschambers.co.uk
2.5 GUIDE TO THE LAW OF ELECTRONIC BUSINESS
The "Hammond Suddards E-Commerce - a guide to the law of electronic business" is now available. Edited by Stephen York and Kenneth Chia, the book provides a comprehensive analysis of e-verything you need to know about law and e-commerce, with chapters on e-rights, e-liability, e-payments, e-tcetera. If you are interested in conducting business over the Internet, from advertising and point-of-sale payment through to dispute resolution, this book covers it. The guide is published by Butterworths (ISBN: 0 406 98263 5), softcover, 320 pages, price £95.00.
A&L LAUNCH THE ONLINE DEAL ROOM
Leading City of London firm Allen & Overy has launched two new secure extranet-based services for its major banking clients. The first of these is NewChange Documents is an online document drafting, assembly and exchange system which the firm estimates can slash the time involved in drafting some documents from 75 minutes to just seven minutes. The second service is NewChange Dealroom, which effectively provides an online forum and progress report service, so clients can both follow the progress and participate in deals on a 24/7 basis. This service will be offered free to clients, with A&O creating new secure dealroom web sites for each transaction.
http://www.newchange.com
Clifford Chance has announced it will be launching a similar secure extranet/online deal room facility, provisionally called Fruit Net, later this spring, as are the three other "magic circle" firms Slaughter & May, Freshfields and Linklaters.
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