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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Website Development - Internet Library of Law and Court Decisions - Updated January 19, 2008

This section of the Internet Law Library contains a host of court decisions addressing disputes between website developers and their customers over websites they are hired to develop, or services - such as search engine registration - they are hired to provide.  This section also analyzes lawsuits brought against website developers as a result of content displayed in such websites, on theories of copyright infringement and improper disclosure of trade secrets, among others.

2007 WL 4207923 (S.D. Cal., Nov. 20, 2007)

After trial, court dismissed copyright infringement claims advanced by plaintiff against a competitor as a result of defendant’s alleged use of elements of plaintiff’s website on its own website.  Both parties operated websites at which they sold ‘changing portraits’ that contained antique photos that ‘changed’ into haunted spirits when viewed from different angles.  The court found that plaintiff did not possess a copyright in the individual elements of his site, which included unoriginal fonts, a ‘buy it now’ button, and the frame used to display the ‘changing portraits’ offered for sale on plaintiff’s website.  The court held that plaintiff did possess a copyright in the assembled compilation of these elements on his website.  Because defendant’s website was not ‘substantially similar’ to plaintiff’s, however, the court found that defendant was not guilty of copyright infringement.

The court spent the balance of its opinion addressing claims each of the competitors asserted against the other arising, inter alia, out of derogatory statements each made concerning the other, and claims and statements they made concerning their own activities, history and accomplishments.  These claims, including claims for defamation, false advertising and unfair competition, are of little interest to the legal community at large, and will not be discussed here.  Those interested can read the court’s decision which, in large part, dismissed these claims and counterclaims.

Civ. Act. No. 04-CV-3740 (E.D. Pa., March 30, 2005)

Court holds that defendants, who hired web developer to update their websites, have implied non-exclusive license to use resulting updated websites, and thus are not infringing any copyright developer had therein by making sites available for viewing on the Internet.  The Court accordingly granted defendants' motion for summary judgment, and dismissed copyright infringement claims brought by web developer against his former clients.

Case No. 06cv1445 BTM (S.D. Cal., August 16, 2007)

Website containing compilation of online deals is protected by copyright as a compilation, as a result of plaintiff’s selection and arrangement, inter alia, of the deals included in the compilation.  Because the individual listings of the deals themselves are not protected by plaintiff’s copyright, however, in the absence of “bodily appropriation of [plaintiff’s] expression” or the “unauthorized use of substantially the entire item,” the use of a portion of those deals in the website of another will not rendered the defendant guilty of copyright infringement.  As a result, the court dismissed most of the copyright infringement claims advanced by Bensbargains.net, a website which posts compilations of online deals, against a competitor, which it accused of copying its listings of deals.  While the defendant did post on its site a number of the deals found in plaintiff’s compilations, it also posted other deals.  As to all compilations as to which the defendant copied less than 70% of the listings, the court dismissed plaintiff’s copyright infringement claim, finding defendant’s site was not sufficiently similar to sustain an infringement claim.  Only plaintiff’s claims as to those compilations as to which defendant copied over 70% of the listings, and those listings, in turn, comprised over 70% of defendant’s own compilation, were allowed to proceed.

478 F.Supp.2d 1240, No. C06-1002RSL (W.D. Wash., Jan. 18, 2007)

Court allows plaintiff Blue Nile to proceed with trade dress infringement claims against direct competitors arising out of their alleged creation of a web site that copied the "look and feel" of plaintiff Blue Nile's web site.  The Court denied defendants' motion to dismiss the trade dress claim, which motion was grounded on defendants' assertion that it was preempted by Copyright Act.  The Court held it could not resolve the preemption issue at the outset of the litigation given the limited factual record developed to date.  It also rested its decision on the precept that claims raising novel issues should not be resolved on motions to dismiss, without the benefit of a development of a complete factual record.

The Court did dismiss so much of plaintiff's complaint that alleged that defendants had violated the Washington Consumer Protection Act, and asserted claims for unfair competition, unjust enrichment and restitution.  These claims were all grounded on defendants' alleged copying of copyrighted elements of plaintiff's web site, and were thus preempted by the Copyright Act.  Notably, this copying formed the basis of copyright infringement claims that were also asserted in the complaint, and were not the subject of the instant motion.

827 N.E. 2d 1173 (Ind. Ct. of Appeals, May 24, 2005)

Indiana Court of Appeals holds that neither website developer's utilization of contents of commercial web site he created for plaintiffs to set up a competitive online business, nor his appropriation of domain names that had previously been used to direct traffic to plaintiffs' sites, constituted a violation of Indiana's Trade Secrets Act, because plaintiffs had made no effort to keep this information secret.  The Appellate Court accordingly reversed the trial court's grant of injunctive relief to plaintiffs.  It should be noted that much of the content found on plaintiffs' sites consisted of promotional materials created by the manufacturers of products both parties sold to the public, for which plaintiffs obtained display licenses for their own web sites.

File No. 5:05-CV-102 (W.D. Mich., February 8, 2006)

Court dismisses plaintiffs' claim for $3 million in lost profits arising out of Ameritech's failure to register plaintiffs' website with search engines, holding such claims barred by the limitation of liability clauses contained in the parties' contracts.  These clauses limited recoverable damages to the $1,600 in fees paid by plaintiffs to Ameritech under the parties' agreements in this case.  In reaching this result, the Court rejected plaintiffs' claim that these limitation of liability provisions were unconscionable, and hence unenforceable.  This claim failed because the services provided by Ameritech that were the subject of the parties' agreements were available from multiple sources and hence Ameritech had the right to offer its services on such terms as it saw fit.  This claim also failed because the limitation on liability contained therein did not 'shock the conscience', particularly in light of the fact that plaintiffs themselves could have performed the very services defendants failed to provide - the registration of their website.

399 F.3d 33 (1st Cir., Feb. 22, 2005)

In this dispute over a failed web site development project, the First Circuit, affirming the court below, holds that defendant Plaut Consulting Co. Inc. ("Plaut") breached its web site development contract with plaintiff Uncle Henry's Inc. ("Uncle Henry's") and affirms an award of $402,000 in damages to plaintiff as a result of this breach of contract as recompense for costs Uncle Henry's incurred in having a third party perform the web development work required under the parties' contract.  The First Circuit also affirmed the lower court's award of an additional $77,382.99 to Uncle Henry's as damages resulting from Plaut's negligent misrepresentation of the date by which it could complete the project, which sum represented the cost of servers Uncle Henry's purchased in reliance on such misrepresentation, outside of the parties' contract, for use in hosting the web site at issue.  The First Circuit also affirmed an award to plaintiff of attorneys fees as the non-breaching party in the amounts specified in the parties' agreement, together with prejudgment interest on plaintiff's contract damages.

Finally, the First Circuit affirmed the lower court's award of $240,000 in damages to Plaut on a theory of quantum meruit.  This award compensated Plaut for work performed after Uncle Henry's declared a default under the parties' contract, on the theory that such work, undertaken while the parties were attempting to negotiate an amended agreement which would allow the project to go forward, was performed with the expectation that it would be paid for by Uncle Henry's even if such negotiations ultimately failed.  Uncle Henry's had claimed that the value of this work to it was $0, pointing to the fact that its replacement contractor did not attempt to complete the web site Plaut had started.  The First Circuit rejected this contention, holding that the proper measure of quantum meruit damages is not the benefit of the services rendered to the recipient, but rather the value of the services themselves.

Quick Hits

SMC Promotions, Inc., et al. v. SMC Promotions, et al.
355 F. Supp.2d 1127 (C.D. Cal. 2005)

Court finds web developer guilty of copyright infringement by copying without authorization plaintiff Specialty Merchandise Corporation’s (“SMC”) copyrighted photographs and descriptions of its products, and an uploading them on clients’ websites, who are authorized distributors of plaintiffs’ products.  In reaching this result, the Court held the web developer was not authorized to engage in such activity, notwithstanding the fact that its clients were licensed by SMC to place the photos on their own websites.  This license was expressly limited by SMC to the distributor, who was not allowed to “delegate or authorize any other person to do so, whether on [the distributor’s] behalf, or otherwise.”  Because the web developer had copied works in which plaintiff SMC held copyright without authorization, it was found guilty of copyright infringement.

The Court also found the web developer guilty of trademark infringement, by using plaintiff’s ‘SMC’ trademark in the domains of various websites at which it advertised it web development services for SMC distributors.  These domains included SMCPromotions.com, SellSMC.com, and SMCForums.com.  The Court found that defendants’ use was likely to cause consumer confusion.  In reaching this result, because the matter arose ‘in the context of the Internet,’ the Court relied on three of the 9th Circuit’s eight ‘Sleekcraft’ factors for evaluating consumer confusion, known as the ‘internet trinity.’  Each of these three factors, held the Court – the similarity of the marks used, the related nature of the parties’ goods and services, and the parties’ simultaneous use of the internet as a marketing channel – pointed strongly in favor of a finding of likely consumer confusion.  Notably, defendants were competing with an affiliate of SMC, plaintiff eMerchants Club, which also offered web development services to SMC distributors.  The use on defendants’ site of a disclaimer, disclaiming affiliation with plaintiffs, and the addition of generic terms such as ‘sell’ ‘promotion’ or ‘forum’ in the domain names, did not alter this conclusion.  Said the Court:

The use of such confusingly similar marks in Defendants' domain names and on their websites creates initial interest confusion, regardless of Defendants' use of a disclaimer on their websites that they are not "owned, operated, endorsed or recommended" by Plaintiffs.

The Court’s finding was buttressed by the presence of actual confusion on the part of a SMC distributor who thought defendants were affiliated with plaintiffs when he hired them.  Because the remaining five “Sleekcraft” factors did not ‘weigh strongly’ against a finding of likelihood of confusion, the Court found defendants guilty of copyright infringement. 

Plaintiff SMC and its affiliates import and distribute various products through a network of distributors known as members.  The products plaintiffs sell are depicted in catalogues, which contain copyrighted photos and descriptions of those products.  Members can access these photographs and descriptions on a secure portion of plaintiff’s website, and are allowed to display them on their own website.  Plaintiff SMC’s affiliate offers SMC members web development services.  Defendants were attempting to compete with this affiliate for the web development business of SMC members, which efforts gave rise to this suit.

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