Supreme Court Rules On Copyright Registration: What Does It Mean?

By Dave Rein

I previously wrote that I was hoping the United States Supreme Court’s decision in Reed Elsevier Inc. v. Muchnick would finally answer the question of whether copyright registration is necessary for courts to have subject matter jurisdiction. We now have a ruling – it is not jurisdictional -- but the impact of the decision is somewhat unclear.  Certainly, some will cheer (can anyone say Google?) the decision, but for the vast majority of copyright cases, will the decision matter? Maybe, but probably not.

The courts have been split as to whether to dismiss copyright cases for the lack of subject matter jurisdiction if the plaintiff has not registered its copyrighted works. The Supreme Court ruled that registration is not jurisdictional because Section 411(a) did not “clearly state” that it is jurisdictional. 

Instead of jurisdictional, registration is a precondition to filing a lawsuit or similar to a “claim-processing rule.” In other words, a plaintiff needs to comply with the requirements of the statute to proceed, but the failure to do so does not deny the court subject matter jurisdiction. 

Presumably, if the plaintiff sues for a work that is not yet registered, a defendant will now bring a motion to dismiss the claim for the failure to state a claim. If you are in a jurisdiction that previously dismissed cases for lack of subject matter jurisdiction, a court may likely still dismiss the case although the reason for dismissal will change to “failure to state a claim.” Only the label or rationale change. Likewise, if you are in a jurisdiction that took a different approach to registration, the court will likely continue to apply that approach.

The instances of where it does matter are probably few and far between. The background of the Reed Elsevier case illustrates at least one category of cases, i.e. settlements of certain class actions, that will feel the impact of this case. 

In Reed Elsevier, a group of publishers who wanted to publish certain works digitally reached a settlement with almost all of the members of a class of freelance authors – some of whose works were registered and some whose were not. When the district court approved the settlement, some freelance authors objected and appealed. The Second Circuit held that the district court did not have authority to approve the settlement because some of the works were not registered. The Supreme Court reversed and in effect, allowed the district court to approve the settlement even though some class members never registered their copyrights.

Sounds pretty narrow. Who else would care? The thousand-pound gorilla of copyright – Google. If the Supreme Court had said that a court cannot approve a settlement of copyright claims whose class included unregistered works, how would have changed the proposed Google Books Search Settlement?  If the final settlement proposal does not include unregistered works (except foreign works), then perhaps not much.  But, does anyone think that the book search is the last expansive project Google will take on?  I doubt it.

 

Google Takes Keywords Global -- Making Lawyers Around The World Happy

By Dave Rein

We previously wrote that the Second Circuit handed Google a defeat in its efforts to sell trademarks of competitors for its lucrative keyword advertising scheme.  Apparently undeterred by that setback or ongoing action with Louis Vuitton which is now in the European Court of Justice, we learn from our favorite blog on all things IP in the European world, IPKat, that Google announced that it will expand sales of keyword advertising (including the sale of a competitor's trademarks) to 194 more countries.

The Internet World Club reports that the move to expand keyword advertising globally is not going to make Google many friends among the companies with stables of thoroughbred trademarks and will add new fuel to the Louis Vuitton case.  The Vegas betting line is that Google will lose the action before the European Court of Justice which, according to IPKat, is expected to announce its decision on the same day that Google is expanding its keyword advertising scheme.

While I do not profess to hold a crystal ball of any renown, I can already envision IP lawyers from around the globe rejoicing and powering up their computers to prepare lawsuits against Google.  Likewise, I suspect Google has received one or two phones calls and e-mails from IP defense counsel offering their services.  Meanwhile, I suspect that Microsoft is enjoying a brief moment of respite from being the center of controversy. For the rest of us, we can watch what is sure to be some exciting clashes over the issue of keyword advertising.

Can Google Sell Trademarks As Keywords To Trigger Advertising?

By Dave Rein

If I search for "Delta Airlines" on Google so I can book my flight to Washington D.C. to see the cherry blossoms, can Google sell American Airlines the "Delta" trademark as a keyword to ensure that American's advertisement appears with my search results?  It does not appear that American Airlines does this, but other companies do and litigation ensues.

The Second Circuit waited until the American Bar Association's Intellectual Property conference and the bloom of the cherry trees to release its long-awaited decision in Rescuecom Corp. v. Google Inc.  -- the first circuit court to directly address the issue of keyword advertising. 

For the uninitiated, Google sells keywords to advertisers -- including the trademarks of an advertiser's competitors -- which it calls contextual advertising so that when a user types a keyword into a Google search, the advertiser's link will appear in an area above or to the right of the natural search results labeled "Sponsored Links."  So a business could "buy" its competitor's trademark as a keyword to trigger its own advertising in the Sponsor Links section.  

One of Rescuecom's competitors paid Google the right to use the RESCUECOM trademark as a keyword to trigger its advertising. Rescuecom sued Google for trademark infringement, dilution and other claims.  The district court ruled in Google's favor as had every other district court in the Second Circuit.  The court held that there is no cause of action because, in part,  the user never sees the RESCUECOM trademark -- the Google results do not show the trademark in the Sponsored Links section.  But, decisions outside of the Second Circuit held that selling a trademark as a keyword to trigger advertising does state a cause of action for trademark infringement.  For those of you who are a glutton for punishment, you can find the main briefs filed with the circuit court at Professor Eric Goldman's blog, Technology & Marketing Law Blog.

Apparently, the Second Circuit put a lot of thought in its decision as it took exactly one year to the day from the time it was argued for the court to release its decision.  The decision reversed the district court and held that Rescuecom did state a cause of action and could proceed with proving the rest of the requirements to establish trademark infringement.  Professor Goldman provides one early analysis of the decision.  As the Wall Street Journal noted, however, the Second Circuit decision only allows the case to go forward. 

Rescuecom still has to prove the rest of its case before it can declare victory which the Progress & Freedom Foundation (which Google appears to be a member of), does not believe is likely.  Regardless, the decision is noteworthy as the first circuit court to weigh in on whether selling a competitor's keyword to trigger advertising can be the basis for a trademark infringement lawsuit.  I suspect it will also initiate a new round of litigation against Google in an effort to claim some of the advertising revenue Google receives under this program.

One curious part of the thirty-four page decision is that on page fifteen, the Second Circuit concludes its analysis.   To what do we owe these extra nineteen pages?  An Appendix.  Usually, an appendix is the place to dump graphs, pictures and incomprehensible data.  But in this case, the court examines the real nut of the advertising keyword debate. After an exhaustive examination of the statute and legislative history, the court concludes that it can't reach a conclusion because the statute, the Lanham Act, and its history are just too ambiguous to reach a conclusion! 

The court, in the Appendix, then calls on Congress to fix the problem.  Given that Congress is preoccupied with the economic crisis, two wars and a handful of other social issues, I wouldn't hold my breath while waiting for that to happen.  Perhaps someone at the court decided that the research that they did on the issue should not be buried somewhere never to be seen again, but the Appendix still strikes me as odd.

While we wait for Congress, I suspect that someone in Las Vegas would be willing to take a bet as to which circuit court will be the next one to weigh in on this issue.  My money is on the Ninth Circuit.  What's your bet?