Do you or your clients sell goods from a retail location in Virginia?  Do you collect and sell the information you collect about your purchasers?  Do your purchasers know? 

A recent, newsworthy First Amendment case in the 4^th Circuit provides an opportunity to visit these questions.  Incidentally, the case involved a privacy activist who was concerned about being charged under the Virginia Personal Information Privacy Act, VA CODE §§ 59.1-442 - 444 for putting up a website that highlighted public documents bearing social security numbers, including those of certain government officials.  The court found First Amendment protections in that case, as may be seen in the above links. 

But the scope of the Personal Information Privacy Act is not limited to social security numbers.

Some common marketing practices of average retailers may have a bit more difficulty under the Personal Information Privacy Act.  This statute requires merchants to give notice to its purchasers when it sells information about its purchasers:

No merchant, without giving notice to the purchaser, shall sell to any third person information which concerns the purchaser and which is gathered in connection with the sale, rental or exchange of tangible personal property to the purchaser at the merchant's place of business.

Id. § 59.1-442.  Online or ecommerce merchants - who often transact business in multiple jurisdictions - generally expect to face such a requirement, and are well advised to include such notice within their website privacy policies.  However, this statute defines a merchant as “any person or entity engaged in the sale of goods from a fixed retail location in Virginia.”  Id.  A suggested approach for compliance is the posting of a sign (or any other reasonable method of giving notice).  The image inspired is that of a brick and mortar business posting a busy sign detailing a fine print privacy policy.  Of course, financial and certain other regulated institutions may already provide something similar in seeking to comply with the financial privacy notice requirements (e.g., Gramm Leach Bliley Act). 

Under the Virginia Personal Information Privacy Act., an aggrieved person may be entitled to $100 per violation, reasonable attorney’s fees, and court costs.  Id. § 59.1-442.  Violations are also considered a prohibited practice under the Virginia Consumer Protection Act, which offers additional remedies.

 On August 3, Judge Gerald Bruce Lee of the Eastern District of Virginia issued his much-anticipated memorandum opinion in Rosetta Stone v. Google, revealing the reasoning behind his award of summary judgment to defendant Google on counts of, inter alia, direct, contributory, and vicarious trademark infringement.

As discussed in previous blog entries, plaintiff Rosetta Stone had alleged that Google’s sale of Rosetta Stone’s trademarks as keywords, triggering advertisements by third parties promoting counterfeit Rosetta Stone products, both directly and indirectly infringed such trademarks under Virginia law and the Lanham Act.

In finding for Google with respect to direct infringement, the court held that “no reasonable trier of fact” could find that such a practice “creates a likelihood of confusion as to source or origin.”

Specifically, the court held (a) that there was no intent on the part of Google, either to confuse its users or to pass its own goods off as those of Rosetta Stone; (b) that “Rosetta Stone’s evidence of actual confusion – testimonies of five individuals out of more than 100,000 impressions over six years – [was] de minimis”; (c) that none of the interviewed witnesses “who allegedly purchased counterfeit Rosetta Stone products after conducting a search … were confused about the source of their purchase,” even if they were confused about the authenticity of the products purchased; and (d) that "consumers who are willing to spend hundreds of dollars on language-learning software" are likely to be knowledegable and sophisticated.  And, in any event, the court held that functionality doctrine precludes a finding of infringement, as Google’s use of Rosetta Stone’s marks “to identify relevant sponsored links” is “no different than the use of a Google search query to trigger organic search results relevant to the user’s search.”

Judge Lee also disagreed with Rosetta Stone’s claim that Google “intentionally induces or knowingly continues to permit” known counterfeiters to purchase Rosetta Stone marks as keywords.  Although Google’s Query Suggestion Tool, which generates a filtered list of keyword ideas, was developed to simplify use of its AdWords program and attract additional advertisers, such an economic incentive does not, by itself, “indicate intent to induce infringement.”  The court then considered the Second Circuit’s reasoning in Tiffany, Inc. v. eBay, Inc. (2010) in holding that Google did not have the sort of “specific contemporary knowledge” of infringing activity necessary to find liability.  In Tiffany, the Second Circuit failed to find liability despite the fact that eBay had received "thousands of Notice of Claimed Infringement Forms." By contrast, Google had been notified of "200 instances of Sponsored Links advertising counterfeit Rosetta Stone products" over a six-month period.

The court further declined to impose vicarious liability on Google.  To prevail on this claim, Rosetta Stone needed to show that Google “[had] joint ownership or [controlled] the alleged infringing advertisements.”  The court, however, refused to find such control based on the “mere fact that Google [had] a financial relationship with the alleged infringers.”

Nor did the court agree with Rosetta Stone that Google’s sale of its trademarks as keywords impaired the distinctiveness or reputation of the trademarks.  Rosetta Stone’s brand awareness had, in fact, “only increased since Google revised its trademark policy in 2004.”  Moreover, the court found no evidence suggesting that “those who purchased the allegedly counterfeit software had a reduced opinion” thereafter of the Rosetta Stone marks and brand.

As stated in prior blog entries, Rosetta Stone may consider an appeal to the Fourth Circuit upon review of the Memorandum Opinion.

Other discussions of the case can be found at Eric Goldman's blog here, at MediaPost here, and at WebProNews here.

In mid-July, 2010, an Eastern District of Virginia jury returned a $26 million verdict in favor of Florida underground mining tire designer and distributor Tire Engineering & Distribution, LLC (d.b.a. Alpha Tire Systems) and its owner, Jordan Fishman, in a trade secret case against China-based tire manufacturer Shandong Linglong Rubber Co., Ltd. and United Arab Emirates-based distributor Al Dobowi Tyre Co., LLC.

The plaintiffs had alleged that, in 2005, former Tire Engineering sales and marketing manager Sam Vance disclosed trade secrets to the defendants, that the parties had conspired to steal these secrets, and that that the defendants had infringed the plaintiffs’ copyrights and trademarks.  Reportedly, Vance had provided defendants with plaintiffs’ “design blueprints, customer lists, and pricing information,” and defendants had used these to develop a competing enterprise.

On July 20, subsequent to the jury verdict, the defendants filed a renewed motion for judgment as a matter of law pursuant to Rule 50(b) of the Federal Rules of Civil Procedure.  The memorandum in support of its motion argues in part that the plaintiffs had staked jurisdictional claims on allegations that “a conspiracy was commenced at a meeting in Virginia” in 2005 between several of the defendants and their representatives.  The defendants deny that such a conspiracy was commenced, as well as that the defendants engaged in any conspiracy through email, and on these and other bases argue that the EDVA lacks jurisdiction.  The defendants further dispute that any valid secrets have been stolen, that any valid IP has been infringed, and that the award is reasonable.

The EDVA jury’s award comes on the heels of a default judgment and $59 million award for Tire Engineering in a related case in Florida state court that was subsequently and recently reversed on appeal for want of jurisdiction over defendant Vance.  The default judgment had been entered after Vance failed to appear in court.  Tire Engineering’s counsel has been granted leave to amend the complaint, and reportedly plans to refile.

Virginia Lawyers Weekly reported on the EDVA case here.

Virginia Lawyers Weekly reports here that the EDVA is in fact still the fastest docket in the country.  According to the article, which cites to the Judicial Business 2009 Report from the US Courts website, cases in the EDVA had a median time from filing to trial of 10.2 months, and the EDVA had a total of 38 jury trials for the twelve months from September 30, 2008, to September 30, 2009. 

Although nearly three months have passed since Judge Lee granted Google’s motion for summary judgment and dismissed Rosetta Stone’s trademark infringement suit against the search engine, the parties still await Judge Lee’s accompanying Memorandum Order.

Rosetta Stone had argued that Google’s use of its trademarks to trigger sponsored ads by known counterfeiters of Rosetta Stone products, despite Rosetta Stone’s repeated notices to Google of such counterfeit products, was infringing.  Google had countered that, in short, it had no particular responsibility to independently determine the authenticity of the products advertised through AdWords.

Rosetta Stone indicated at the time of Judge Lee’s decision that it would consider an appeal to the Fourth Circuit upon reading Judge Lee’s Memorandum.  In June, its general counsel intimated that an appeal is still planned.

In the interim, there have been a couple of developments.

On May 5, Rosetta Stone filed objections in response to Magistrate Judge Buchanan’s denial of its motion for sanctions against Google for having failed to timely produce one thousand responsive documents pursuant to a February 4, 2010 order.  Rosetta Stone claims that Judge Buchanan’s denial was “based on her ... belief that Rosetta Stone would have an opportunity to utilize the late-produced documents [at trial] to demonstrate Google’s liability,” and that there would be no prejudice to Rosetta Stone.  As Rosetta Stone maintains in its filed objection, however, it was precluded from using the documents by Judge Lee’s dismissal of the case on summary judgment.

We previously blogged about the Rosetta Stone v. Google case here.

As we have blogged about here, Tecsec and IBM are engaged in a large patent dispute in the Alexandria Division. The parties disagreed as to what kind of order should be entered by the Court governing the search for and production of electronic information. Ultimately, the Court entered IBM's proposed Order. This is one of the most detailed ediscovery orders that I have seen. The Order finds that "the review of emails in this case will be unduly burdensome unless a search protocol is implemented to narrow the universe of email…." The Order then establishes the following procedure for the search and production of email:  The parties will exchange topics for searching; once the Court approves or the parties agree, the producing party will then provide a list of custodians and search terms.  The parties will meet and confer, and then run the search.  Notably, the Order states that the producing party "may at its option, but need not, review the search results for responsiveness" before producing, and if it elects not to, it can simply designate all documents HIGHLY CONFIDENTIAL and produce them, relying on the clawback provision in the protective order if it needs to. The Order then contemplates an additional meet and confer among the parties to refine the results, but after that, and upon production of the data, the Order states: "A Producing Party's obligation to conduct a reasonable search for email and attachments in response to a Requesting Party's discovery requests shall be deemed to be satisfied by producing non-privileged email and attachments identified by utilizing the search protocol described herein, absent a post-search review."

ActiveVideo Networks sued Verizon in the EDVA for patent infringement of five patents relating to cable television technology, including interactive cable.  In the Complaint, ActiveVideo identified the following accused products:  "interactive television systems, devices, and/or services, including the FIOS system...."  Verizon responded with a motion to dismiss based on Ashcroft v. Iqbal, for ActiveVideo's failure to allege which Verizon products are accused of infringement.  The motion has been fully briefed (motion, opposition, and reply), before Judge Jackson in the Norfolk Division.  The Court's ruling may well be instructive as to how Judges in the Rocket Docket approach the application of Iqbal to patent infringement cases.

Not necessarily, although the Court has considered prior claim construction decisions in arriving at its own conclusion.  In a recent claim construction ruling by Judge Payne in ePlus, Inc. v. Lawson Software, Case No. 3:09cv620 (E.D. Va. 2010), the Court dealt with the issue of construing claims of patents that had been construed in two previous cases in the District.  Judge Brinkema construed certain terms in the context of summary judgment motions in ePlus, Inc. v. Ariba, Inc., Civil No. 1:04cv612 (E.D. Va. 2005).  In addition, Judge Spencer construed some of the claim terms at issue in ePlus, Inc. v. SAP America, Inc., Civil No. 3:05cv281 (E.D. Va. 2006), but that claim construction opinion was later vacated. 

For some of the claim terms construed, the Court noted that the newly adopted construction was consistent with the construction in the prior lawsuits.  The Court also noted that ten of the eleven means-plus-function terms at issue were construed in the 2005 decision, and because they were “based on sound logic and are linked to the specification,” the Court adopted them.  However, the Court also stated in a footnote that while the claim constructions from the 2006 decision were helpful, it was preferable not to rely on them because that claim construction decision was vacated after the case was settled. 

The Court of Appeals for the Federal Circuit found no violation by defendant Solo Cup for falsely marking 21 billion cup lids as being covered by expired patents, affirming the Eastern District of Virginia’s prior determination as to liability and stating that Solo Cup lacked “the requisite intent to falsely mark its products.”

As we have previously blogged here, here, here, and here, Pequignot v. Solo Cup was one of many qui tam actions pending in the wake of the Federal Circuit’s December decision in The Forest Group v. Bon Tool, 590 F.3d 1295 (Fed. Cir. 2009).  In Forest Group, the CAFC interpreted 35 U.S.C. § 292 to impose a fine for each falsely marked product, as opposed to the singular decision to falsely mark all products.  

In Solo Cup, plaintiff Matthew A. Pequignot had charged that the cup lids were “unpatented articles” and that Solo Cup had “falsely marked [them] … for the purpose of deceiving the public[,]” as required under § 292(a) to trigger the fines prescribed by the statute.  The CAFC agreed with Pequignot that the cup lids were indeed “unpatented articles,” but disagreed that Solo Cup had intended to deceive the public.

Solo Cup had argued that the legislative history of § 292 revealed Congress’ rejection of “a proposed amendment to change the word ‘unpatented’ to ‘not at the time secured by a patent’” and that this evidenced Congress’ intent to exclude any previously patented articles from its definition of “unpatented articles.”  The Federal Circuit was unmoved by this argument, agreeing with the EDVA that “an article that is no longer protected by a patent is not ‘patented,’ and is more aptly described as ‘unpatented’” and that the cup lids were, at the time of suit, unpatented within the meaning of § 292.

With respect to Solo Cup’s alleged intent to deceive, Pequignot had argued that the existence of the falsely marked cup lids, combined with Solo Cup’s statement on its packaging that the lids “may be covered” by one or more patents, created a rebuttable presumption of an intent to deceive.  The Federal Circuit agreed with Pequignot on this point, but held that Solo Cup had “successfully rebutted the presumption” by proffering evidence that (a) it had developed a policy whereby it would gradually replace the mold cavities containing the expired patent numbers, (b) it had obtained a favorable opinion of counsel as to the permissibility of such policy, and (c) it had been advised by counsel to include the “may be covered” language on its packaging.

Solo Cup’s good faith reliance on the advice of counsel in this case, the Federal Circuit concluded, amounted to more than mere “blind assertions of good faith” given its plan to replace the molds, albeit gradually so "to reduce costs."  Rather, such evidence confirmed that Solo Cup’s “purpose was not to deceive the public.”

Finally, the Federal Circuit addressed the meaning of the term “offense” as it is used in § 292(a).  Depending on the interpretation of the term, Pequignot had argued, Solo Cup may have been liable for multiple offenses based on its awareness of the falsely marked articles, its persistence in spite of such awareness, and its inclusion of the “may be covered” language on its packaging.  The Federal Circuit held that, in light of its finding of no violation in this case, this question was moot.

Dennis Crouch has also blogged about the Solo Cup decision here.