Recent developments in Weblaw
Article by Jonathan Berman.
This has been a very exciting time for would be Web lawyers. We are by now quite blasé at the number of American cases involving Internet law, but there has been a marked lack of UK cases. Well I can report that in the last few months we have had one English and one Scottish authority. I will be looking at these two cases and the issues which gave rise to them. There is also an older Scottish authority which raises some interesting issues. The 3 areas I will comment on are: Domain names, Copyright and Shrink wrap/Click wrap licences.
Harrods v UK NETWORK SERVICES LIMITED AND OTHERS or Cybersquatters get their comeuppance.
Ever since the now infamous Mr. Joshua Quittner, a journalist for Wired magazine registered Macdonalds .com as a domain name and Ronald@Macdonalds.com as his Email address there has been an ongoing battle between corporations and what has now come to be known as Cybersquatters or Netnappers. These are individuals who on the face of it have no cause to register the domain names they chose , but do so in the hope of getting money out of the companies in exchange for releasing those corporate names or trade marks they have registered.
By now the concept of domain names ought to be familiar to most of you, but just in case there is the odd individual who is unfamiliar with the concept I will provide a short synopsis. Each page of information on the World Wide Web (WWW) requires a unique address. This is assigned in the form eg.142.56.89.43, but as this is not particularly memorable for the average human brain, a system developed to associate numerical addresses with English ones e.g. Microsoft.com, weblaw.co.uk (our domain name) or even Harrods.com. Internic in the USA is responsible for registering .com (for American and world wide corporations) .gov (Government organisations) And a number of other first lever domain names. In the UK, Nominet is responsible for amongst others, .co.uk domain names for UK companies. In the beginning and still arguably as far as Nominet is concerned, names were allocated on a first come first served basis, with no regard to entitlement. This was not a problem until the business community discovered the www. and realised that they could not as of right use their corporate names or trade marks as domain names if they had been allocated to someone else.
Internic developed a policy whereby they put a domain name on hold if a corporation can show that they have a prior registered Federal or foreign trade mark, which is the same as the domain name registered to someone else. The two parties are then entitled to fight it out in court, the winner getting the domain name. If a corporation has not registered its name as a trade mark then the Internic policy does not apply. From a legal point of view however, it is generally thought that domain names are addresses and not trade marks. Well that was certainly the belief before the Harrods decision.
Harrods had registered Harrods.co.uk but found that Harrods.com had been registered by someone resident in the UK. Not surprisingly Harrods did not take this lying down and proceedings were issued to aquire the domain name. It seems that the Harrods.com domain name had not in fact been renewed by the owners, at the time of the hearing, but this did not seem to be a factor, in this decision. The case came before Mr. Justice Lightman. He was a good choice as far as Harrods was concerned as he had previously been very unsympathetic in a similar case involving Glaxo Wellcome who found that after the merger when they came to register their name at companies house, someone had got there before them.
The application was for summary judgement which it seems was not very strenuously fought by the defendants. It seems the only document put to the Judge was a letter from one of the defendants. All I have seen is the press release from Harrods' solicitors and the order that was made by the court. The press release states "In what is believed to be the first case in England, Mr Justice Lightman held that the actions of Mr Lawrie and his associates 'clearly constituted infringements of Harrods' registered trade marks and passing off'." The defendants were ordered to release the domain name to Harrods. Internic had said in evidence before the court that they would be bound by the decision.
The press release appears to state that this issue as a general principle of law is now decided. I believe that we would need a full hearing, contested by the defendants with a fully reasoned judgement before we could say that this issue is finally settled. There are a number of annoying questions that were not addressed. If the name was only registered but not used on the www. where is the trade mark infringement? Even if it is used as the domain name it is not necessarily a foregone conclusion that this amounts to use as a trade mark. How could the mere registration of the domain name amount to passing off, which requires that consumers are mislead into thinking that services or goods offered are those of another which leads to damage to the business or goodwill?
Shetland Times Ltd v Jonathan Wills and Another
The plaintiff owned and published a newspaper which carried local, national and international news. They also set up a web site (who is not, these days) which carried items which appeared in the printed editions of the paper. Apparently the plaintiff intended to sell advertising space on their home page in the future. The defendants also set up a web site headed "The Shetland News". They carried advertisements on their home page. They also carried (and this was their undoing) headlines taken directly from the Shetland Times and by clicking on one of the headlines the net surfer was taken to the corresponding article on the web site run by the Shetland Times, which circumvented the plaintiff's' home page. The plaintiff made an application for an interim injunction to stop the defendants doing this.
There were two grounds for the application:
From a legal perspective, there are many issues. Some of the most important contractual issues to check are as follows:
- The headlines made available on the Shetland Times' web site were cable programmes within section 7 of the Copyright Design and Patents Act 1988, that the plaintiff was offering a cable programme service within section 7 and that the defendants' actions had constituted an infringement within the terms of section 20 of the Act; and
- the headlines were literary works and that the defendants had committed a breach of copyright within the terms of section 17. Copying being in the form of storing the works by electronic means.
In reaching the decision there was an interesting argument as to who was sending the information to whom, and what the nature of the web site was. This involved a discussion of the definition of "cable programme" and "cable programme service" in section 7 of the Act.
The act defines "cable programme service" as a service which consists wholly or mainly in sending visual images, sounds or other information by means of a telecommunications system, otherwise than be wireless telegraphy, for reception…
The court decided that information was sent by the plaintiff to the "caller" as the court termed the web surfer. It made no difference that the information arrived as a result of a link placed on the defendants' web site, the information was still sent by the plaintiff. The plaintiff was providing a cable programme service.
There is an exception in the act to definition of "cable programme service" in section 7(2)(a) relating to interactive services. The court decided that the web site was not an interactive service, its primary function being to distribute news. This was the case even though visitors to the Shetland Times site were invited to make comments as this was a severable part of the plaintiffs' cable programme service.
The court held that the use of the headline was a copyright infringement, within section 20 of the act. This demonstrates how little has to be copied for there to be a breach of copyright.. This is a salutary lesson for any web site owners. It should be mentioned that Scottish law is different from English law and that this case is only persuasive and would not necessarily be followed by an English court in a similar case coming before it. However it is likely that it would be. Some of the most interesting points arising out of this case did not fall to be decided by the court. Would it still have been a breach of copyright if the defendants had only placed a link to the articles on the Shetland Times' site and not incorporated headlines from the web site? With the use of frames together with links it is not necessarily clear to the web surfer that he has left one site and is viewing another site. This becomes a real issue where you incorporate trade marks from another web site by means of a link and your trade mark still appears as part of the frame. Would this amount to a trade mark infringement? Did you know that as owners and operators of a web site you were providing a cable programme service? If the inclusion of the headline itself was sufficient to amount to a breach of copyright, then could not the case have been decided on this one point?
The whole notion of copyright is in focus at the moment as there have been moves by WIPO, the World Intellectual Propery Organisation to extend and expand the concept of copyright in the context of the www. a subject I will be dealing with in a future article.
Shrink wrap, Click wrap and Intelligent agents.
This is a wonderfully weird and complex area of law with some very far reaching implications for all users of the WWW as we face the rapid rise in commercial activity, particularly with regard to the purchase of software on line, delivered down the Internet. I will return to this topic in future articles but I would just like to sketch out the framework for now.
We are all used to buying off the shelf software from Dixons, PC World and other similar emporia. It now appears since the case of ST ALBANS V ICL, that this transaction constitutes a sale of goods. You buy the disks which contain the software. The problem from a legal perspective is that software is intellectual property which appears to be exempt from the Sale of Goods Act 1979. In contrast the Scottish case of BETA COMPUTERS V ADOBE stated that the sale of software did not constitute a sale of goods but was a unique form of contract.
It now seems to be the case, since ST ALBANS that buying off the shelf software is similar to buying a book. You own the book, but you are still constrained from copying the contents by virtue of copyright law. This is where the shrink wrap licence comes in. It defines the boundaries within which you may use the software. By opening the package you buy you are told that you are entering into an agreement with a third party eg. Microsoft or whoever is the vendor. There is no English authority on the validity of shrink wrap licences. There is however the ADOBE case, upholding the validity of such agreements, but which was decided on a principle of law which is not found in English law. In England the doctrine of privity of contract prevents you being bound by third parties i.e. the software vendors, which may cast some doubt as to their validity. However the recent American case of PROCD V ZEIDENBERG upheld the validity of shrink wrap agreements, overturning a lower court finding.
In the world of the www. click wrap agreements are the equivalent of shrink wrap agreements and therefore their validity may depend on the validity of shrink wrap agreements. It is now very common to be invited when surfing to read the contents of an agreement and to click on the "I accept" button to signify that you are bound by the terms of the agreement. If you are purchasing software on line from the vendor, this a direct contract with the vendor and therefore not a third party. If you are buying from a supplier the issue is still a live one. The question is to what extent are you bound by the terms of a click wrap agreement? This issue is yet to come before any court for a decision.
Incidentally the court in the ST ALBANS case distinguished between off the shelf software and that purchased on line as far as the Sale of Goods Act is concerned. In the absence of the software being provided on a medium eg. a disk, the court decided that this was not a sale of goods and therefore the implied terms of satisfactory quality and fitness for purpose would not apply. It would be categorised as a supply of services, with the lower obligation of skill and care in the provision. These points were made obiter and were not necessary in reaching the decision in the case, as the court found that ICL were in breach of an express term of the contract.
The final Point I would like to touch on is one for the future. We are now witnessing the arrival of intelligent agents, software that assists in finding information and can be used for cybershopping. The question I wish to pose is; to what extent would you be bound by your intelligent agent accepting the terms of a click wrap contract, it comes across while you are asleep in bed and it is on the loose on the WWW?
© This article is copyright Sprecher Grier Halberstam LLP.2008 and should not be construed as legal advice or opinion in any specific facts or circumstances. The contents are intended for general information purposes only. You are urged to contact a suitably qualified lawyer for specific advice.