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Internet Law and Practice in California

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

  • Intellectual property rights in cyberspace
  • Launching and operating a website
  • Electronic contracting; privacy issues
  • Licenses and development agreements
  • Advertising on the Internet
  • Cybersecurity
  • Tort and criminal liability, First Amendment issues
  • Jurisdiction; litigation issues; e-discovery
  • Sample attorney-drafted forms to save you time
Print BU33580

Package includes single user online access, 2 looseleaf print volumes (approx. 1000 pages), and Forms CD, updated 7/18

 

This book is out of stock through 7/23/2019.

 

If you are signed in and a new attorney, your adjusted cost appears below.

$ 500.00

The only resource on Internet law and practice designed especially for California lawyers, this guide will help you advise your clients doing business online.

  • Intellectual property rights in cyberspace
  • Launching and operating a website
  • Electronic contracting; privacy issues
  • Licenses and development agreements
  • Advertising on the Internet
  • Cybersecurity
  • Tort and criminal liability, First Amendment issues
  • Jurisdiction; litigation issues; e-discovery
  • Sample attorney-drafted forms to save you time

1

Copyrights and the DMCA

  • I.  COPYRIGHTS
    • A.  Introduction  1.1
    • B.  Subject Matter of Copyright Law
      • 1.  Generally  1.2
      • 2.  Special Subject Matter: Music  1.3
      • 3.  Special Subject Matter: Characters  1.4
      • 4.  Special Subject Matter: Websites  1.4A
      • 5.  Special Subject Matter: Databases  1.4B
      • 6.  Special Subject Matter: Output of Computer Programs  1.4C
    • C.  Creation and Term of Copyright  1.5
    • D.  Ownership of Copyrighted Work, Joint Works, and Works Made for Hire
      • 1.  Joint Works  1.6
      • 2.  Works Made for Hire  1.7
    • E.  Rights of Copyright Holder  1.8
      • 1.  Reproduction Rights  1.9
      • 2.  Distribution Rights  1.10
      • 3.  Performance Rights  1.11
      • 4.  Display Rights  1.12
    • F.  Copyright Notice  1.13
    • G.  FBI Anti-Piracy Warning Seal  1.14
    • H.  Copyright Registration
      • 1.  Advantages of Registration  1.15
      • 2.  Registration Procedures; Standing to Sue  1.16
      • 3.  When to Register  1.17
    • I.  Preregistration  1.18
    • J.  Transfer of Copyrights
      • 1.  Generally  1.19
      • 2.  Form: Copyright Assignment  1.20
      • 3.  Form: U.S. Copyright Office Cover Sheet  1.21
    • K.  Infringement
      • 1.  Generally  1.22
      • 2.  Direct, Contributory, and Vicarious Liability
        • a.  Generally  1.23
        • b.  Direct Infringement; Volitional Act Requirement  1.24
        • c.  Contributory Infringement  1.25
          • (1)  Inducement  1.26
          • (2)  Material Contribution  1.27
            • (a)  Online Service Providers  1.27A
            • (b)  Payment Processors  1.27B
          • (3)  Site and Facilities Test  1.28
        • d.  Vicarious Infringement  1.29
      • 3.  Selected Defenses
        • a.  Statute of Limitations  1.30
        • b.  Laches  1.31
        • c.  Express License  1.31A
        • d.  Implied License  1.32
        • e.  Estoppel  1.33
        • f.  De Minimis Use  1.33A
      • 4.  Safe Harbor for Certain Copies of Computer Programs  1.34
      • 5.  Remedies  1.35
      • 6.  Sovereign Immunity  1.36
      • 7.  Compulsory Licenses
        • a.  Broadcast Television  1.37
        • b.  Sound Recordings; Digital Music Rights  1.38
    • L.  Fair Use
      • 1.  Introduction  1.39
      • 2.  Purpose and Character of Use  1.40
        • a.  Transformative Use  1.41
          • (1)  Human-Made Uses
            • (a)  Parody/Satire   1.42
            • (b)  Appropriation Art  1.43
            • (c)  Digital Music Sampling  1.44
            • (d)  News Reporting  1.45
            • (e)  Reaction Videos  1.45A
          • (2)  Technological Fair Use
            • (a)  Time- and Space-Shifting  1.46
            • (b)  Search Engines  1.47
            • (c)  Conversion of Text for Data Mining  1.48
            • (d)  Reverse Engineering  1.49
        • b.  Commercial Use  1.50
      • 3.  Nature of Copyrighted Work  1.51
        • a.  Informational or Creative Inquiry  1.52
        • b.   Published or Unpublished  1.53
      • 4.  Amount and Substantiality of Portion of Work Used  1.54
      • 5.  Effect of Use on Market  1.55
    • M.  First Sale  1.56
    • N.  Family Entertainment and Copyright Act  1.56A
  • II.  DIGITAL MILLENNIUM COPYRIGHT ACT
    • A.  Introduction  1.57
    • B.  Status of Pre-1972 Sound Recordings  1.58
    • C.  Anti-Circumvention of Technological Protection Measures
      • 1.  Anti-Circumvention Prohibitions (17 USC §1201)  1.59
      • 2.  Copyright Management Information (17 USC §1202)  1.60
      • 3.  Exceptions to Anti-Circumvention Prohibitions  1.61
      • 4.  Remedies  1.62
    • D.  Limitations of Liability for Online Service Providers—Infringement Safe Harbors  1.63
      • 1.  General Conditions for Safe Harbors
        • a.  Service Provider  1.64
        • b.  Repeat Infringer Policy  1.65
          • (1)  Adoption of Policy  1.66
          • (2)  Informing Users of Policy  1.67
          • (3)  Reasonably Implement the Policy  1.68
        • c.  Interference With Standard Technical Measures  1.69
        • d.  Designating Agent to Receive Notifications  1.70
        • e.  No Duty to Police or Monitor  1.71
      • 2.  Transitory Digital Network Communications Safe Harbor (17 USC §512(a))  1.72
      • 3.  System Caching Safe Harbor (17 USC §512(b))  1.73
      • 4.  Safe Harbor for Information Residing on Systems or Networks at Direction of Users (17 USC §512(c))
        • a.  Generally  1.74
        • b.  Storage at Direction of User  1.75
        • c.  Lack of Knowledge (17 USC §512(c)(1)(A))  1.76
          • (1)  Actual Knowledge  1.77
          • (2)  “Red Flag” Knowledge  1.78
          • (3)  Willful Blindness  1.79
        • d.  Right and Ability to Control (17 USC §512(c)(1)(B))
          • (1)  Right and Ability to Control  1.80
          • (2)  Direct Financial Benefit  1.81
        • e.  Expeditious Removal or Disabling Access to Infringing Material (17 USC §512(c)(1)(C))  1.82
        • f.  Notification of Claimed Infringement (17 USC §512(c)(3))
          • (1)  Requirements for Notifications; “Good Faith Belief”  1.83
          • (2)  Safeguards Against Fraudulent Infringement Claims  1.83A
        • g.  Counter-Notification by Subscriber; Restoration of Material  1.84
        • h.  Checklist: Notice and Take-Down Checklist  1.85
      • 5.  Information Location Tools Safe Harbor (17 USC §512(d))  1.86
    • E.  Subpoena Power (17 USC §512(h))  1.87
    • F.  Impact on Internet Service Providers  1.88
    • G.  Checklist: Company DMCA Compliance Policy  1.89

2

Patents and Trade Secrets

  • I.  PATENTS
    • A.  Introduction  2.1
    • B.  What Is a Patent?  2.2
    • C.  What Is Patentable; Types of Patents  2.3
    • D.  Term of Patents  2.4
    • E.  Additional Requirements for Patentability
      • 1.  Overview  2.5
      • 2.  Origination  2.6
      • 3.  Utility  2.7
      • 4.  Novelty  2.8
      • 5.  Nonobviousness  2.9
    • F.  Patent Applications
      • 1.  Overview of Patent Application Procedures  2.10
      • 2.  Specification; Enablement; Best Mode  2.11
      • 3.  Claims  2.12
      • 4.  Statutory Time Bars  2.13
    • G.  “First to File” Versus “First to Invent”; Other International Issues  2.14
    • H.  Transferring Patents
      • 1.  Introduction  2.15
      • 2.  Form: Patent Assignment  2.16
      • 3.  Form: U.S. Patent & Trademark Office Cover Sheet (Patents Only)  2.17
    • I.  Litigation Issues  2.17A
    • J.  Special Topics for Internet Businesses
      • 1.  Business Method Patents
        • a.  Business Methods  2.18
        • b.  Business Method Patents in the Courts  2.18A
        • c.  Practical Guidance  2.18B
      • 2.  Software Patents  2.19
      • 3.  The Internet of Things   2.19A
  • II.  TRADE SECRETS
    • A.  Introduction  2.20
    • B.  Definition of Trade Secret
      • 1.  Statutory Definition  2.21
      • 2.  Examples of Trade Secrets  2.22
      • 3.  Computer Source and Object Code  2.22A
      • 4.  Recipes, Manufacturing Processes  2.22B
      • 5.  Customer Lists  2.23
    • C.  Loss of Trade Secret Protection  2.24
    • D.  Protection of Trade Secrets  2.25
      • 1.  Departing Employees  2.26
      • 2.  Practical Safeguards
        • a.  Firewalls and Encryption  2.27
        • b.  Physical Security  2.28
        • c.  Managing Documents and Files  2.29
    • E.  Sample Company Policy on Trade Secret Protection
      • 1.  Introduction  2.30
      • 2.  Form: Company Policy on Trade Secret Protection  2.31
    • F.  Confidentiality Agreement
      • 1.  Introduction  2.32
      • 2.  Form: Confidentiality Agreement  2.33
    • G.  Misappropriation of Trade Secrets
      • 1.  Asserting Claim of Misappropriation Under UTSA  2.34
      • 2.  Defenses  2.35
      • 3.  Damages  2.36
      • 4.  Privilege and Disclosures Due to Litigation  2.37
      • 5.  Economic Espionage Act of 1996  2.38
      • 6.  Defend Trade Secrets Act of 2016  2.39

3

Domain Names and Trademark Issues

  • I.  DOMAIN NAMES
    • A.  Introduction  3.1
    • B.  Selecting Domain Name and Suffix
      • 1.  Domain Name  3.2
      • 2.  Suffix (Top-Level Domain Name)  3.3
      • 3.  ICANN gTLD Trademark Clearinghouse  3.3A
    • C.  Due Diligence
      • 1.  Domain Name as Trademark  3.4
      • 2.  Where to Look? Registered and Unregistered Trademark Searches  3.5
    • D.  Registration of Domain Name
      • 1.  Registration Procedures  3.6
      • 2.  Purchasing Registered Domain Name
        • a.  How to Purchase Registered Domain Name  3.7
        • b.  Form: Domain Name Purchase Agreement  3.8
    • E.  Maintaining and Preventing Loss of Domain Name  3.9
    • F.  Transferring Ownership of Domain Names  3.10
    • G.  Infringing Domain Names
      • 1.  Bringing Claim of Infringement  3.11
      • 2.  Uniform Domain Name Dispute Resolution Policy (UDRP)  3.12
        • a.  Elements of UDRP Claim  3.13
        • b.  Selection of Arbitrators  3.14
        • c.  Procedure Under UDRP  3.15
        • d.  Damages and Fees  3.16
        • e.  Model Form of UDRP Complaint
          • (1)  Introduction  3.17
          • (2)  Form: UDRP Complaint  3.18
        • f.  Model Form of UDRP Response
          • (1)  Introduction  3.19
          • (2)  Form: UDRP Response  3.20
        • g.  Appeals  3.21
      • 3.  Anticybersquatting Consumer Protection Act  3.22
        • a.  Elements of Cause of Action  3.23
        • b.  ACPA Remedies  3.24
      • 4.  Whether to Proceed Under UDRP or ACPA?  3.25
  • II.  TRADEMARKS, SERVICE MARKS, AND TRADE NAMES
    • A.  Introduction  3.26
    • B.  Definitions of Trademarks, Service Marks, Collective Marks, Certification Marks, Trade Dress, and Trade Names  3.27
    • C.  Characterization of Marks  3.28
    • D.  Priority and Limitations to Priority  3.29
    • E.  Registration Procedure
      • 1.  Why Federal Registration?  3.30
      • 2.  Common Law and State Trademark Rights  3.31
      • 3.  Unregistrable Trademarks  3.32
      • 4.  Trademark Searches  3.33
      • 5.  Principal and Supplemental Registers  3.34
      • 6.  Intent-to-Use Applications  3.35
      • 7.  Form of Application  3.36
      • 8.  Application Procedure  3.37
      • 9.  Contents of Application  3.38
        • a.  Applicant Information  3.39
        • b.  Verification  3.40
        • c.  Identification and Classification of Goods and Services; Filing Fees  3.41
        • d.  Bases for Filing  3.42
        • e.  Drawing Requirement  3.43
        • f.  Description of Mark  3.44
      • 10.  Registration of Domain Names as Trademarks
        • a.  Requirements  3.45
        • b.  Reasons for Refusal of Registration of Domain Names  3.46
        • c.  Hashtags  3.46A
      • 11.  Trade Names  3.47
    • F.  Madrid Protocol  3.48
    • G.  Grant or Denial of Registration
      • 1.  Opposition, Cancellation, or Registration  3.49
      • 2.  Appeals From Denials of Registration  3.50
    • H.  Use of Trademark Symbol  3.51
    • I.  Duration and Renewal  3.52
    • J.  Preservation of Trademark Rights  3.53
    • K.  Trademark Licensing  3.54
      • 1.  Form: Trademark Guidelines  3.55
      • 2.  Form: Trademark License Agreement  3.56
    • L.  Assignments of Trademarks
      • 1.  Generally  3.57
      • 2.  Form: Trademark Assignment  3.58
      • 3.  Form: U.S. Patent and Trademark Office Cover Sheet (Trademarks Only)  3.59
    • M.  Violations of Trademark Rights
      • 1.  Trademark Infringement  3.60
      • 2.  Contributory Trademark Infringement  3.60A
      • 3.  False Designation or Description  3.61
      • 4.  ACPA  3.62
      • 5.  Remedies for Trademark Infringement  3.63
      • 6.  Defenses to Trademark Infringement  3.64
      • 7.  Dilution of Famous Mark  3.65
        • a.  Factors Bearing on Whether Mark Is Famous  3.66
        • b.  Cybersquatting and Dilution  3.67
      • 8.  Remedies and Defenses to Anti-Dilution Claims  3.68
      • 9.  Sample Cease and Desist Letter
        • a.  Introduction  3.69
        • b.  Form: Sample Cease and Desist Letter  3.70
  • III.  METATAGS AND SEARCH TERMS
    • A.  Introduction  3.71
    • B.  Nominative Fair Use  3.72
    • C.  Initial Interest Confusion Test  3.73
    • D.  Protection of Fanciful Marks  3.74
    • E.  Misspellings of Trademarks and Direct Competitors  3.75
    • F.  “English Words”  3.76
  • IV.  TRADE DRESS
    • A.  Introduction  3.77
    • B.  Website User Interfaces  3.78
    • C.  Trade Dress Infringement  3.79
      • 1.  Nonfunctionality
        • a.  Overview of the Doctrine  3.80
        • b.  Functionality and Nonfunctionality in the Courts
          • (1)  Outside the Ninth Circuit  3.80A
          • (2)  Ninth Circuit  3.81
        • c.  Doctrine of Aesthetic Functionality  3.82
        • d.  Functionality and Website User Interfaces  3.83
      • 2.  Inherent Distinctiveness or Secondary Meaning
        • a.  Inherent Distinctiveness Test  3.84
        • b.  Product Designs and Product Packaging  3.85
        • c.  Website User Interfaces: Product Design or Product Packaging?  3.86
      • 3.  Likelihood of Confusion in Trade Dress  3.87

4

Human Resources

  • I.  EMPLOYEES AND EMPLOYMENT ISSUES
    • A.  Introduction  4.1
    • B.  Ethical Considerations  4.2
    • C.  “At Will” Employment  4.3
    • D.  Offer Letter to Prospective Employee
      • 1.  Introduction  4.4
      • 2.  Form: Offer Letter to Prospective Employee  4.5
    • E.  Confidentiality and Invention Assignment Agreements
      • 1.  Employee Confidentiality Agreements  4.6
      • 2.  Employee Inventions  4.7
        • a.  Federal “Work for Hire” Doctrine  4.8
        • b.  Employer Ownership of Employee Inventions Under State Law  4.9
      • 3.  Invention Assignment Agreements  4.10
      • 4.  Form: Confidentiality and Invention Assignment Agreement  4.11
    • F.  Employee Overtime—Special Rules for Computer Programmers  4.12
  • II.  INDEPENDENT CONTRACTORS
    • A.  Introduction  4.13
    • B.  Classification of Independent Contractors  4.14
      • 1.  Behavioral Control  4.15
      • 2.  Financial Control  4.16
      • 3.  Type of Relationship  4.17
    • C.  Intellectual Property Issues in Independent Contractor Relationships  4.18
    • D.  Form: Independent Contractor Consulting Agreement  4.19
    • E.  Independent Contractor Nondisclosure Agreement
      • 1.  Introduction  4.20
      • 2.  Form: Nondisclosure Agreement  4.21
  • III.  ADVISORY BOARDS
    • A.  Introduction  4.22
    • B.  Form: Advisory Board Letter Agreement  4.23

5

Website Development

  • I.  ACQUISITION OF INTELLECTUAL PROPERTY
    • A.  Introduction  5.1
    • B.  Assignment of Intellectual Property by Company Founder  5.2
    • C.  Form: Agreement for Transfer and Assignment of Intellectual Property  5.3
  • II.  WEBSITE DEVELOPMENT AGREEMENTS
    • A.  Introduction  5.4
    • B.  Ethical Considerations  5.5
    • C.  Preparing for Negotiations  5.6
    • D.  Types of Website Developers  5.7
      • 1.  Freelancers  5.8
      • 2.  Website Development Specialists  5.9
      • 3.  General Technology Companies  5.10
    • E.  Understanding Issues of Ownership
      • 1.  Conflicting Ownership Interests  5.11
      • 2.  Why a Website Probably Is Not a “Work Made for Hire”  5.12
      • 3.  Domain Name Registration and Ownership  5.13
    • F.  Drafting Website Development Agreement  5.14
      • 1.  Responsibilities of Parties  5.15
      • 2.  Deliverables and Timelines for Delivery  5.16
      • 3.  Ownership and License Grants  5.17
        • a.  Ownership  5.18
        • b.  License Rights  5.19
        • c.  Confidentiality  5.20
      • 4.  Representations and Warranties of Developer  5.21
      • 5.  Ongoing Obligations of Developer  5.22
    • G.  Website Development Agreements
      • 1.  Independent Contractor Agreements  5.23
      • 2.  Form of Website Development Agreement
        • a.  Introduction  5.24
        • b.  Form: Website Development Agreement  5.25
  • III.  WEBSITE UPGRADES  5.26
  • IV.  WEBSITE ACCESSIBILITY ISSUES  5.27

6

Hosting and Related Services; Cloud Computing

  • I.  HOSTING AGREEMENTS
    • A.  Introduction  6.1
    • B.  Negotiating Hosting Agreement  6.2
    • C.  Key Hosting Agreement Terms
      • 1.  Responsibilities of Host  6.3
        • a.  Website Hosting  6.4
        • b.  Monitoring  6.5
        • c.  Access to Software  6.6
        • d.  Content Uploading and Maintenance  6.7
        • e.  Data Collection and Reporting  6.8
      • 2.  Responsibilities of Customer  6.9
    • D.  Warranties  6.10
    • E.  Form of Hosting Services Agreement
      • 1.  Introduction  6.11
      • 2.  Form: Hosting Services Agreement  6.12
  • II.  CO-LOCATION AGREEMENTS
    • A.  Introduction  6.13
    • B.  Decision to Co-Locate  6.14
    • C.  Co-Location Services and Customer Responsibilities
      • 1.  Overview  6.15
      • 2.  Customer Responsibilities  6.16
      • 3.  Provider Warranties  6.17
    • D.  Form of Co-Location Agreement
      • 1.  Introduction  6.18
      • 2.  Form: Co-Location Agreement  6.19
    • E.  Equipment Considerations  6.20
  • III.  SERVICE LEVEL AGREEMENTS
    • A.  Introduction  6.21
    • B.  Use of Service Level Agreements Generally
      • 1.  Content  6.22
      • 2.  When to Request Service Level Agreement  6.23
      • 3.  Monitoring and Enforcement of Service Level Agreement Terms  6.24
    • C.  Standard Service Level Agreement Terms
      • 1.  Availability; Uptime  6.25
      • 2.  Service Levels  6.26
        • a.  Low-Priority Requests  6.27
        • b.  Medium-Priority Requests  6.28
        • c.  High-Priority Requests  6.29
      • 3.  Response Times and Response Actions  6.30
      • 4.  Service Credits and Chronic Problems  6.31
      • 5.  Additional Terms  6.32
        • a.  Customer Support  6.33
        • b.  Performance Measurement  6.34
        • c.  Reporting  6.35
    • D.  Service Level Agreement Forms
      • 1.  Sample Short Form Service Level Agreement
        • a.  Introduction  6.36
        • b.  Form: Short Form Service Level Agreement  6.37
      • 2.  Sample Website Hosting Service Level Agreement
        • a.  Introduction  6.38
        • b.  Form: Website Hosting Service Level Agreement  6.39
  • IV.  TECHNICAL SUPPORT
    • A.  Introduction  6.40
    • B.  Obtaining Technical Support from Vendors  6.41
    • C.  Key Issues in Obtaining Support From Vendors
      • 1.  Upgrades and New Versions  6.42
      • 2.  Support Services  6.43
      • 3.  Training and Help Desk Support  6.44
    • D.  Technical Support and Maintenance Agreement
      • 1.  Introduction  6.45
      • 2.  Form: Technical Support and Maintenance Agreement  6.46
    • E.  Providing Technical Support to Customers  6.47
    • F.  Basic Technical Support Exhibit
      • 1.  Introduction  6.48
      • 2.  Form: Basic Technical Support Exhibit  6.49
  • V.  Cloud Computing
    • A.  Introduction  6.50
    • B.  Statutory Limitations  6.51
    • C.  Data Security, Privacy, and Confidentiality
      • 1.  Overview  6.52
      • 2.  Access to Data  6.53
      • 3.  Voluntary or Compelled Disclosure
        • a.  General Considerations  6.54
        • b.  National Security Letters  6.55
      • 4.  Data Security  6.56
      • 5.  Duty of Confidentiality  6.57
    • D.  Service Levels  6.58
    • E.  Indemnification, Warranty, and Liability  6.59
    • F.  Data Portability and Deletion  6.60
    • G.  Guidance for Specific Industries  6.61
    • H.  Sample Cloud Services Agreement  6.62

7

Electronic Contracting

  • I.  INTRODUCTION  7.1
  • II.  ENFORCEABILITY OF SHRINK-WRAP, CLICK-WRAP, AND BROWSE-WRAP AGREEMENTS
    • A.  Shrink-Wrap Software Licenses  7.2
    • B.  Click-Wrap Agreements  7.3
    • C.  Browse-Wrap Agreements  7.4
    • D.  Embedded Links  7.4A
  • III.  E-SIGN
    • A.  Introduction  7.5
    • B.  Electronic Signatures  7.6
    • C.  Consumer Protection Features  7.7
    • D.  Electronic Record Retention  7.8
  • IV.  UNIFORM ELECTRONIC TRANSACTIONS ACT (UETA)
    • A.  Overview; Federal Preemption Issue  7.9
    • B.  Consent to Conduct Transactions Electronically Required  7.10
    • C.  Authentication of Electronic Signatures  7.10A
  • V.  UNIFORM COMPUTER INFORMATION TRANSACTIONS ACT (UCITA)  7.11
  • VI.  ALI SOFTWARE CONTRACT PRINCIPLES  7.12
  • VII.  EUROPEAN UNION DIRECTIVES  7.13
  • VIII.  CREATING ENFORCEABLE ELECTRONIC AGREEMENTS
    • A.  Six Basic Principles  7.14
    • B.  Additional Practical Considerations  7.15
    • C.  Amendments  7.16

8

Terms of Use; Online Agreements; Linking; Downloading; Social Networking

  • I.  INTRODUCTION  8.1
  • II.  TERMS OF USE
    • A.  Drafting Considerations  8.2
    • B.  Form: Website Terms of Use  8.3
  • III.  ONLINE SOFTWARE LICENSE AGREEMENTS
    • A.  Introduction  8.4
    • B.  Form: Online End-User Software License Agreement  8.5
    • C.  Online Beta User Evaluation Agreement
      • 1.  Introduction  8.6
      • 2.  Form: Online Beta User Evaluation Agreement  8.7
    • D.  Open Source Licensing
      • 1.  Introduction  8.8
      • 2.  Form: Open Source Software License Agreement  8.9
    • E.  Software Evaluation License Agreement
      • 1.  Introduction  8.10
      • 2.  Form: Evaluation License Agreement  8.11
    • F.  Online Software Developer Toolkit License Agreement
      • 1.  Introduction  8.12
      • 2.  Form: Online Software Developer Toolkit License Agreement  8.13
  • IV.  LINKING ARRANGEMENTS
    • A.  Introduction  8.14
    • B.  Linking and Framing
      • 1.  Generally  8.15
      • 2.  Copyright Infringement Issues  8.16
      • 3.  Potential Liability for Trespass to Chattels  8.17
    • C.  Form: Linking Agreement  8.18
  • V.  DOWNLOADING AND UPLOADING CONTENT
    • A.  Generally  8.19
    • B.  Copyright Infringement Issues  8.20
    • C.  Music on the Internet
      • 1.  Introduction  8.21
      • 2.  Technologies  8.22
      • 3.  Federal Statutes  8.23
        • a.  Audio Home Recording Act of 1992 (AHRA)  8.24
        • b.  Digital Performance Right in Sound Recordings Act of 1995 (DPRA)  8.25
        • c.  No Electronic Theft Law  8.26
        • d.  Internet Piracy (Pen C §653aa)  8.26A
        • e.  The Family Entertainment and Copyright Act  8.26B
      • 4.  Case Law  8.27
      • 5.  RIAA Litigation Strategy  8.28
  • VI.  SOCIAL NETWORKING
    • A.  Overview  8.29
    • B.  Social Networking and the Law  8.30
    • C.  Copyright Issues
      • 1.  Infringement; Fair Use  8.31
      • 2.  Practice Guidelines  8.31A
    • D.  Privacy Issues
      • 1.  Generally  8.32
      • 2.  FTC Actions Concerning Privacy of User Information on Social Networks  8.32A
      • 3.  California Privacy Laws Protecting Social Media Users’ Privacy  8.32B
    • E.  Need for Valid End-User License Agreements (EULAs)  8.33
    • F.  Social Media in the Workplace  8.34
    • G.  Violation of Nonsolicitation Agreements  8.35

9

Privacy Law and Privacy Policies

  • I.  INTRODUCTION  9.1
  • II.  PRIVACY LAWS AFFECTING ONLINE BUSINESS  9.2
    • A.  How Businesses Obtain Customer Information Online
      • 1.  Willing Disclosure  9.3
      • 2.  Cookies  9.4
      • 3.  Web Bugs  9.5
      • 4.  Tracking Software  9.6
      • 5.  Adware  9.6A
      • 6.  Spyware  9.6B
      • 7.  Phishing  9.6C
    • B.  Federal Privacy Laws
      • 1.  United States Constitution  9.7
      • 2.  Federal Legislation  9.8
        • a.  Federal Trade Commission Initiatives  9.8A
          • (1)  Privacy Policies  9.9
          • (2)  Data Security: FTC Actions  9.9A
          • (3)  The FTC’s “Red Flags Rule”  9.9B
          • (4)  Unwanted Adware  9.9C
          • (5)  The Internet of Things  9.9D
          • (6)   FTC Guidelines  9.9E
        • b.  Health Insurance Portability and Accountability Act (HIPAA)
          • (1)  Privacy Aspects of HIPAA and Supporting Regulations  9.10
          • (2)  Protected Health Information, Contract Requirements  9.11
        • c.  Gramm-Leach-Bliley Act  9.12
        • d.  Right to Financial Privacy Act  9.13
        • e.  Computer Fraud and Abuse Act  9.14
        • f.  Electronic Communications Privacy Act  9.15
        • g.  Video Privacy Protection Act  9.15A
        • h.  Fair Credit Reporting Act  9.15B
        • i.  Consumer Privacy Bill of Rights   9.15C
    • C.  California Privacy Laws
      • 1.  California Constitution
        • a.  Constitutional Right of Privacy  9.16
        • b.  Standing Issue in Privacy Litigation  9.16A
      • 2.  Common Law Right of Privacy  9.17
      • 3.  California Legislation  9.18
        • a.  Online Privacy Protection Act (Cal-OPPA) (Bus & P C §§22575–22579)
          • (1)  Privacy Policy Posting Requirement  9.19
          • (2)  Required Contents of Privacy Policy  9.20
          • (3)  Failure to Comply With Act  9.21
          • (4)  California Attorney General’s Recommended Best Practices for Mobile App Developers  9.21A
        • b.  “Anti-Paparazzi” Statute  9.21B
        • c.  California Financial Information Privacy Act  9.22
        • d.  California Right to Financial Privacy Act (Govt C §§7460–7493)  9.23
        • e.  Song-Beverly Credit Card Act  9.23A
        • f.  Required Notice of Security Breaches
          • (1)  Civil Code Provisions  9.24
          • (2)  Potential Safe Harbor  9.25
          • (3)  Obligation to Maintain Security  9.25A
        • g.  Civil Code §1798.83  9.26
        • h.  Consumer Protection Against Computer Spyware Act (Bus & P C §§22947–22947.6)  9.26A
        • i.  California Electronic Communications Privacy Act  9.26B
        • j.  Student Online Personal Information Protection Act  9.26C
        • k.  Unfair Competition Law  9.27
        • l.  “Revenge Porn”  9.27A
    • D.  Other States’ Data Protection Programs  9.27B
    • E.  Special Legal Protections for Children  9.28
      • 1.  Children’s Online Privacy Protection Act (COPPA)  9.29
        • a.  Application of COPPA  9.30
        • b.  Requirements for Online Collection of Information From Children  9.31
        • c.  Parental Consent  9.32
        • d.  FTC Enforcement Actions  9.33
        • e.  Safe Harbor  9.34
      • 2.   Final FTC Rule Under COPPA  9.34A
      • 3.  Dot-Kids Act  9.35
      • 4.  FTC’s Children’s Privacy Website  9.36
      • 5.  California Legislation  9.36A
        • a.  Prohibition on Certain Advertising to Minors (Bus & P C §22580)  9.36B
        • b.  “Eraser Button” Law  9.36C
    • F.  European Data Protection Directive
      • 1.  Scope of Directive  9.37
      • 2.  EU-U.S. Privacy Shield  9.38
  • III.  WEBSITE PRIVACY POLICIES
    • A.  Need for Privacy Policies  9.39
    • B.  Content of Privacy Policies  9.40
    • C.  Enforceability of Privacy Policies  9.41
    • D.  Additional Resources  9.42
    • E.  Basic Website Policy
      • 1.  Introduction  9.43
      • 2.  Form: Basic Website Privacy Policy  9.44
    • F.  Commercial Website Policy
      • 1.  Introduction  9.45
      • 2.  Form: Commercial Website Privacy Policy  9.46

10

E-Commerce Transactions and Tax Issues

  • I.  E-COMMERCE TRANSACTIONS
    • A.  Introduction  10.1
    • B.  Electronic Contracting  10.2
    • C.  Forms of Payment
      • 1.  Credit Cards  10.3
      • 2.  Debit Cards  10.4
      • 3.  Internet Checks  10.5
      • 4.  Virtual Currency  10.5A
      • 5.  Blockchain Technology  10.5B
      • 6.  Initial Coin Offerings  10.5C
      • 7.  Other Electronic Payment Services  10.6
    • D.  Additional Payment and Security Issues  10.7
      • 1.  Secure Transaction Processing Software  10.8
      • 2.  Fraud Prevention Tools  10.9
      • 3.  Phone and Fax Orders  10.10
      • 4.  Security Certificates  10.11
      • 5.   Purchases by Children  10.11A
    • E.  Shopping Cart Services
      • 1.  Overview  10.12
      • 2.  Evaluating Shopping Cart Services  10.13
    • F.  Sample Website End User Payment Terms
      • 1.  Introduction  10.14
      • 2.  Form: Sample Clauses re Payment of Subscription Fees  10.15
    • G.  FTC’s Mail, Internet, or Telephone Order Merchandise Rule  10.16
    • H.  Restore Online Shoppers’ Confidence Act  10.16A
    • I.  Subscription Offers: Business and Professions Code §17602  10.16B
  • II.  TAX ISSUES
    • A.  Formulation of E-Commerce Tax Policy  10.17
      • 1.  International Tax Policy  10.18
      • 2.  United States Federal Tax Policy
        • a.  Role of Treasury Department  10.19
        • b.  The Internet Tax Freedom Act  10.20
        • c.  The Streamlined Sales Tax Agreement  10.20A
      • 3.  California Tax Policy  10.21
    • B.  Sales and Use Taxes
      • 1.  General Principles  10.22
      • 2.  Constitutional Restrictions on Sales and Use Tax Collection  10.23
      • 3.  Sales to Out-of-State Residents  10.23A
      • 4.  California Sales and Use Taxes  10.24
      • 5.  The "Amazon Tax"  10.24A
      • 6.  California Sales and Use Tax Treatment of Software Sales and Related Services  10.25

11

Strategic Alliances

  • I.  INTRODUCTION  11.1
  • II.  TYPES OF ALLIANCES  11.2
  • III.  FORM: SAMPLE LETTER OF INTENT RE STRATEGIC ALLIANCE  11.3
  • IV.  SAMPLE STRATEGIC ALLIANCE AGREEMENT
    • A.  Introduction  11.4
    • B.  Form: Strategic Alliance Agreement  11.5
  • V.  SAMPLE CO-BRANDING AGREEMENT
    • A.  Introduction  11.6
    • B.  Form: Co-Branding Agreement  11.7

12

Software License Agreements

  • I.  INTRODUCTION  12.1
  • II.  KEY ISSUES IN SOFTWARE LICENSING
    • A.  Exclusive Licenses  12.2
    • B.  Nonexclusive Licenses  12.3
    • C.  Scope of License
      • 1.  Scope of Rights Granted  12.4
      • 2.  Number of End Users  12.4A
    • D.  Payment Structures  12.5
  • III.  SAMPLE SOFTWARE LICENSE AGREEMENT
    • A.  Introduction  12.6
    • B.  Form: Software License Agreement  12.7
  • IV.  DRAFTING EXCLUSIVE LICENSES
    • A.  General Considerations
      • 1.  Restrictions on Scope or Field of Use  12.8
      • 2.  Performance Milestones; Minimum Royalties  12.9
    • B.  Form: Exclusivity Clause  12.10
  • V.  BANKRUPTCY CONSIDERATIONS
    • A.  Introduction  12.11
    • B.  Executory Contracts and Bankruptcy Code §365(n)  12.12
    • C.  Drafting Considerations  12.13

13

Software Development Agreements

  • I.  INTRODUCTION  13.1
  • II.  OWNERSHIP ISSUES  13.2
  • III.  FORM: SOFTWARE DEVELOPMENT AGREEMENT  13.3
  • IV.  SOFTWARE EVALUATION
    • A.  Introduction  13.4
    • B.  Form: Software Test and Evaluation Agreement  13.5

14

Content Clearances, Licensing, and Fair Use

  • I.  INTRODUCTION  14.1
  • II.  STEP 1: IDENTIFY THIRD PARTY ELEMENTS  14.2
  • III.  STEP 2: DETERMINE IF THIRD PARTY ELEMENTS ARE PROTECTED BY COPYRIGHT OR OTHER INTELLECTUAL PROPERTY LAWS  14.3
  • IV.  STEP 3: FOR PROTECTED ELEMENTS, DETERMINE WHICH OF OWNER’S EXCLUSIVE RIGHTS ARE IMPLICATED  14.4
  • V.  STEP 4: DETERMINE IF USE IS EXEMPT FROM INFRINGEMENT LIABILITY
    • A.  Public Domain  14.5
    • B.  Fair Use  14.6
  • VI.  STEP 5: IDENTIFY OWNERS OF WORK  14.7
  • VII.  STEP 6: OBTAIN RIGHTS NECESSARY TO USE WORK  14.8
    • A.  Individual Release (Videotape of Testimonial)
      • 1.  Introduction  14.9
      • 2.  Form: Endorsement Agreement  14.10
    • B.  Still Photograph License
      • 1.  Introduction  14.11
      • 2.  Form: Still Photograph License  14.12
    • C.  Reprint Rights License
      • 1.  Introduction  14.13
      • 2.  Form: Digital Reprint Rights License  14.14
    • D.  Streaming Video License
      • 1.  Introduction  14.15
      • 2.  Form: Streaming Video License  14.16
    • E.  Special Issues in Music Licensing  14.17
    • F.  Creative Commons and Other Innovative Licensing Solutions  14.18

15

Source Code Escrows

  • I.  INTRODUCTION  15.1
  • II.  FORM: SOURCE CODE ESCROW AGREEMENT  15.2

16

Financing an Online Business

  • I.  EARLY-STAGE EQUITY FINANCING
    • A.  Introduction  16.1
    • B.  Equity Versus Debt
      • 1.  Equity  16.2
      • 2.  Debt  16.3
    • C.  Sources of Equity Funding  16.4
      • 1.  Founders, Friends, and Family  16.5
      • 2.  “Angel” Investors  16.6
      • 3.  Venture Capital and Other Institutional Investors  16.7
    • D.  Structure of Venture Capital Financings  16.8
    • E.  Venture Capital Financing Term Sheet
      • 1.  Introduction  16.9
      • 2.  Form: Term Sheet for Preferred Stock Financing  16.10
  • II.  DEBT FINANCING
    • A.  Introduction  16.11
    • B.  Types of Debt Financing  16.12
      • 1.  Working Capital Loans  16.13
      • 2.  Term Loans  16.14
      • 3.  SBA Loans  16.15
      • 4.  Lease Financings  16.16
      • 5.  Corporate Credit Cards  16.17
      • 6.  Convertible Debt  16.18
      • 7.  Customer Advances  16.19
    • C.  Qualifying for Loan  16.20
    • D.  Elements of Simple Loan Transaction
      • 1.  Overview  16.21
      • 2.  Usury Issues for Non-Bank Lenders  16.22
    • E.  Loan Agreement and Promissory Note  16.23
      • 1.  Form: Loan Agreement  16.24
      • 2.  Form: Promissory Note  16.25
    • F.  Security Interests in Intellectual Property Collateral
      • 1.  Generally  16.26
      • 2.  Security Interests in Copyrights  16.27
      • 3.  Security Interests in Patents  16.28
      • 4.  Security Interests in Trademarks  16.29
      • 5.  Security Interests in Domain Names  16.30
      • 6.  Security Interests in Trade Secrets  16.31
      • 7.  Form of Security Agreement (Intellectual Property)
        • a.  Introduction  16.32
        • b.  Form: Security Agreement (Intellectual Property)  16.33
    • G.  Convertible Promissory Notes
      • 1.  Generally  16.34
      • 2.  Form: Convertible Promissory Note  16.35

17

Advertising on the Internet

  • I.  INTERNET ADVERTISING REGULATION
    • A.  Introduction  17.1
    • B.  Overview of Applicable Laws  17.2
      • 1.  Lanham Act  17.3
      • 2.  Federal Trade Commission Act  17.4
        • a.  FTC’s Dot Com Disclosure Guidelines  17.5
        • b.  Liability for Deceptive Advertising; FTC Enforcement Actions  17.6
        • c.  Examples of FTC Enforcement Actions  17.7
        • d.  Endorsements and Testimonials  17.7A
        • e.  Native Advertising  17.7B
      • 3.  Restore Online Shoppers’ Confidence Act  17.7C
      • 4.  State Laws  17.8
        • a.  Laws Prohibiting False or Misleading Advertising Generally  17.9
        • b.  Laws Regulating Telephone, Internet, and Catalog Sales  17.10
        • c.  Laws Regulating Online Advertising to Minors  17.10A
    • C.  Attorney Internet Advertising
      • 1.  Overview  17.10B
      • 2.  California Rules of Professional Conduct  17.10C
      • 3.  ABA Model Rules of Professional Conduct  17.10D
      • 4.  ABA Best Practice Guidelines for Legal Information Providers  17.10E
    • D.  Unsolicited E-Mail (“Spam”)  17.11
      • 1.  Federal Legislation: CAN-SPAM Act
        • a.  Generally  17.12
        • b.  E-Mail Subject to CAN-SPAM Act  17.13
        • c.  CAN-SPAM Act: Basic Requirements for Commercial E-Mail Messages  17.14
          • (1)  Identification as Advertisement  17.15
          • (2)  Notice and Opt-Out Mechanism  17.16
          • (3)  Postal Address  17.17
          • (4)  Affirmative Consent  17.18
          • (5)  Forwarding Commercial E-Mails  17.18A
        • d.  Deceptive E-Mail Practices  17.19
        • e.  Sexually Oriented Materials  17.20
        • f.  Attribution Rules  17.21
        • g.  Enforcement of CAN-SPAM  17.22
        • h.  National “Do Not E-Mail” Registry  17.23
        • i.  Commercial E-Mails Sent to Wireless Devices  17.23A
        • j.  Criminal Liability Under CAN-SPAM  17.23B
      • 2.  State Anti-Spam Laws
        • a.  Generally  17.24
        • b.  California Anti-Spam Laws  17.25
        • c.  Scope of Preemption of California Law by CAN-SPAM Act  17.26
        • d.  Penal Code §502(c)  17.27
      • 3.  Anti-Spam Litigation  17.28
      • 4.  Practical Methods of Blocking Spam E-Mail  17.29
    • E.  Search Engine Optimization
      • 1.  Overview  17.29A
      • 2.  Optimization Tools and Techniques  17.29B
    • F.  Behavioral Advertising  17.29C
  • II.  INTERNET ADVERTISING AGREEMENTS
    • A.  Overview  17.30
    • B.  Banner Advertising  17.31
    • C.  Form: Banner Advertising Agreement  17.32
    • D.  Internet Service Directories or Referral Sites  17.33
    • E.  Form: Internet Advertising Agreement  17.34
    • F.  Portal Agreements  17.35
    • G.  Form: Interactive Marketing Agreement  17.36

18

Cybersecurity

  • I.  TYPES OF CYBERATTACKS  18.1
  • II.  LEGAL LANDSCAPE  18.2
    • A.  Federal Legislation
      • 1.  Computer Fraud and Abuse Act
        • a.  Overview  18.3
        • b.  As Applied to Spam  18.4
        • c.  As Applied to Conduct Exceeding Terms of Use  18.5
          • (1)  Violations of Terms of Use  18.5A
          • (2)  Sharing Single-User Password  18.5B
          • (3)  Access After Cease and Desist Letter  18.5C
        • d.  As Applied to Tracking Software  18.6
        • e.  As Applied to Improper Use of E-Mail  18.7
        • f.  As Applied to Wireless Networks  18.7A
      • 2.  Electronic Communications Privacy Act
        • a.  Overview of Title I and Title II  18.8
        • b.  Title I, Wiretap Act  18.8A
          • (1)  As Applied to Cookies  18.9
          • (2)  As Applied to Tracking Software  18.10
          • (3)  As Applied to Unauthorized Wireless Access  18.10A
        • c.  Title II, Stored Communications Act  18.11
          • (1)  Authorized Versus Unauthorized Access  18.11A
          • (2)  E-Mails and “Electronic Storage”  18.11B
      • 3.  USA Patriot Act  18.12
      • 4.  Digital Millennium Copyright Act  18.13
      • 5.  Other Federal Statutes  18.14
      • 6.  Cybersecurity Guidance for Companies  18.14A
    • B.  State Legislation
      • 1.  Shine the Light Law (Civil Code §§1798.80–1798.84); Notice of Security Breach  18.15
      • 2.  Obligation to Maintain Security (CC §1798.81.5)  18.15A
      • 3.  Penal Code §502: Computer Crimes  18.16
      • 4.  Ransomware  18.16A
      • 5.  Wireless Devices  18.16B
    • C.  Trespass to Chattels  18.17
      • 1.  eBay Inc. v Bidder’s Edge, Inc.  18.18
      • 2.  Intel Corp. v Hamidi  18.19
      • 3.  Ticketmaster Corp. v Tickets.com, Inc.  18.20
      • 4.  Thrifty-Tel, Inc. v Bezenek  18.21
  • III.  HOW TO RESPOND TO AN ATTACK
    • A.  General Considerations  18.22
    • B.  Checklist: Responding to a Cyberattack  18.23

19

Jurisdiction; Conflicts of Law

  • I.  INTERNET JURISDICTION
    • A.  Introduction  19.1
    • B.  Personal Jurisdiction  19.2
      • 1.  State Long-Arm Statutes  19.3
      • 2.  Federal Rules of Civil Procedure  19.4
      • 3.  Constitutional Limits on Personal Jurisdiction
        • a.  Due Process Clause  19.5
        • b.  Minimum Contacts Test  19.6
        • c.  Reasonableness  19.7
      • 4.  General and Specific Personal Jurisdiction
        • a.  General Personal Jurisdiction  19.8
        • b.  Specific Personal Jurisdiction  19.9
        • c.  Specific Jurisdiction in Cyberspace  19.10
    • C.  In Rem Jurisdiction; Anticybersquatting Consumer Protection Act  19.11
    • D.  Choice-of-Forum Clauses
      • 1.  Enforceability  19.12
      • 2.  Form: Choice-of-Forum Clause  19.13
  • II.  CONFLICTS OF LAW; CHOICE-OF-LAW CLAUSES
    • A.  Conflicts of Law
      • 1.  Generally  19.14
      • 2.  Constitutional Analysis  19.15
      • 3.  Is There a Choice-of-Law Clause?  19.16
      • 4.  Governmental Interest Analysis  19.17
      • 5.  Conflicts of Law on Internet  19.18
    • B.  Choice-of-Law Clauses
      • 1.  Enforceability
        • a.  California Statutes  19.19
        • b.  Nedlloyd Lines, B.V. v Superior Court and Later Cases  19.20
      • 2.  Drafting Considerations  19.21
      • 3.  Form: Choice-of-Law Clause  19.22

20

Tort and Criminal Liability;First Amendment Issues; ADA Issues; Insurance

  • I.  INTRODUCTION  20.1
  • II.  TORT LIABILITY
    • A.  Defamation  20.2
      • 1.  Cyberspeech: Libel or Slander? Fact or Opinion?  20.3
      • 2.  ISP Liability for Defamation by Subscribers
        • a.  Distributor/Publisher Distinction in Early Cases  20.4
        • b.  Communications Decency Act: Protection for “Good Samaritans”  20.5
        • c.  Scope of Immunity Under CDA  20.6
          • (1)  When Distributor Edits Material  20.6A
          • (2)  How Is Material Collected?  20.6B
          • (3)  Design and Structure of Website  20.6C
          • (4)  When Material Infringes Intellectual Property Rights  20.6D
          • (5)  When Distributor Blocks Objectionable Material  20.6E
          • (6)  No Immunity for Sex Trafficking  20.6F
        • d.  CDA Preemption of Inconsistent State Law  20.7
    • B.  Rights of Privacy and Publicity
      • 1.  Right of Privacy  20.8
      • 2.  Right of Publicity  20.9
    • C.  Trespass to Chattels  20.10
    • D.  Conversion  20.11
  • III.  CRIMINAL LIABILITY
    • A.  Generally  20.12
    • B.  Child Pornography  20.13
  • IV.  FREEDOM OF SPEECH
    • A.  Introduction  20.14
    • B.  First Amendment  20.15
    • C.  Obscenity  20.16
    • D.  Child Pornography  20.17
      • 1.  Communications Decency Act: Constitutionality Issues  20.18
      • 2.  Child Pornography Prevention Act  20.19
      • 3.  Child Online Protection Act  20.20
      • 4.  Children’s Internet Protection Act  20.21
    • E.  California Penal Code  20.22
    • F.  California Education Code  20.22A
    • G.  Filtering Software and the First Amendment  20.23
    • H.  Free Speech Rights in Anonymous Communications  20.24
    • I.  Spam  20.24A
    • J.  California Anti-SLAPP Statute  20.25
  • V.  DISABILITY ACCOMMODATION ISSUES  20.25A
  • VI.  INTERNET COMPLAINT SITES
    • A.  Overview  20.26
    • B.  Potential Causes of Action  20.27
      • 1.  Defamation  20.28
      • 2.  Trademark Infringement and Dilution  20.29
      • 3.  Cybersquatting: Federal and State Law
        • a.  UDRP  20.30
        • b.  Anticybersquatting Consumer Protection Act  20.31
        • c.  California’s Anticybersquatting Statute  20.32
    • C.  Practical Solutions  20.33
  • VII.  INSURANCE ISSUES FOR ONLINE BUSINESSES
    • A.  Introduction  20.34
    • B.  Commercial Form General Liability Insurance  20.35
      • 1.  Loss of Tangible Property: Is Computer Data “Tangible Property?”  20.36
      • 2.  Loss of Tangible Property: Has There Been a “Loss”?  20.37
      • 3.  “Physical Loss or Damage”  20.38
      • 4.  Intellectual Property Infringement  20.39
    • C.  Business Interruption Coverage  20.40
    • D.  Industry Response  20.41
    • E.  Cyberinsurance  20.42
    • F.  Practical Advice  20.43

20A

Discovery of Electronically Stored Information

Alexander H. Lubarsky

  • I.  INTRODUCTION  20A.1
  • II.  MANAGING ELECTRONICALLY STORED INFORMATION BEFORE LITIGATION
    • A.  Retention of ESI
      • 1.  Regulatory Obligations  20A.2
      • 2.  In Absence of Statute or Regulation  20A.3
    • B.  Document Retention Policies  20A.4
    • C.  Special Problems Concerning E-Mail  20A.5
    • D.  The CLOUD Act: Electronic Information Stored on Foreign Servers  20A.5A
  • III.  FEDERAL RULES ON ELECTRONIC DISCOVERY  20A.6
    • A.  Rule 16: Scheduling Orders; Case Management  20A.7
    • B.  Rule 26: General Discovery Provisions; Duty of Disclosure
      • 1.  Initial Voluntary Disclosure  20A.8
      • 2.  “Clawback” of Privileged Material  20A.9
      • 3.  Meet-and-Confer Requirements  20A.10
      • 4.  Safe Harbor if ESI Not Reasonably Accessible  20A.11
    • C.  Rule 33: Interrogatory Responses  20A.12
    • D.  Rule 34: Production of Documents and Things
      • 1.  Rule 34(a): Inspection, Copying, Testing, and Sampling  20A.13
      • 2.  Rule 34(b): Specifying Format for Production  20A.14
    • E.  Rule 37: Duty to Comply With Court Order; Safe Harbor for Routine Deletion  20A.15
    • F.  Rule 45: Response to Subpoenas  20A.16
    • G.  Federal NIT Warrants  20A.16A
  • IV.  CALIFORNIA LAW
    • A.  Rules of Court  20A.17
    • B.  Electronic Discovery Act  20A.18
      • 1.  ESI From Sources Not Reasonably Accessible  20A.18A
      • 2.  Safe Harbor for Lost Information  20A.18B
      • 3.  Disclosure of Privileged Information  20A.18C
      • 4.  Form of Production  20A.18D
      • 5.  Court-Imposed Limits on Production  20A.18E
  • V.  ADVANCE PREPARATION FOR DISCOVERY OF ESI
    • A.  ESI Survey and Retention Policy  20A.19
    • B.  Identifying Key Personnel  20A.20
  • VI.  RETENTION OF ESI WHEN LITIGATION IS PENDING
    • A.  Notice of Litigation  20A.21
    • B.  Duty to Preserve Evidence  20A.22
    • C.  Legal Hold Letter to Client
      • 1.  Legal Holds  20A.23
      • 2.  Form: Legal Hold Letter to Client  20A.24
    • D.  Litigation Hold Letter to Opponent
      • 1.  Litigation Holds  20A.25
      • 2.  Form: Litigation Hold Letter to Opponent  20A.26
    • E.  Manner of Preservation  20A.27
    • F.  Sanctions for Failure to Preserve  20A.28
  • VII.  DISCOVERY OF ESI
    • A.  Identifying Data for Discovery
      • 1.  Need to Understand ESI Infrastructure  20A.29
      • 2.  Drafting a Request for Production  20A.30
    • B.  Collecting Data
      • 1.  Defensible Collection Strategies  20A.31
      • 2.  Paper-Based Versus Electronic Production  20A.32
      • 3.  Forensic Data Professionals  20A.33
      • 4.  Electronic Data Discovery Software  20A.34
      • 5.  Risks in ESI Collection  20A.35
      • 6.  Metadata  20A.36
      • 7.  ESI Seized by Law Enforcement Through Search Warrants   20A.36A
      • 8.  Forensic or Mirror Images  20A.37
      • 9.  Right to On-Site Inspection  20A.38
    • C.  Form of Production  20A.39
      • 1.  Production in Native Format  20A.40
      • 2.  Production of Image Files  20A.41
        • a.  Copying Electronic Files  20A.42
        • b.  Handling Metadata  20A.43
    • D.  Privileged Information  20A.44
    • E.  Federal Rule of Evidence 502  20A.44A
    • F.  Data Processing, Storage, and Review
      • 1.  De-Duplication  20A.45
      • 2.  Litigation Support Platforms  20A.46
      • 3.  Hosting  20A.47
      • 4.  Data Security  20A.48
    • G.  Costs of E-Discovery  20A.49

21

International Issues

  • I.  INTERNATIONAL E-BUSINESS ISSUES
    • A.  Introduction  21.1
    • B.  Hague Conference on Private International Law  21.2
    • C.  Applicable Law in International Disputes  21.3
    • D.  Jurisdiction of Foreign Courts  21.4
    • E.  Comity: Enforcing Foreign Judgments Against U.S. Companies  21.5
    • F.  Content Filtering by Foreign Governments  21.6
    • G.  How to Target or Not Target Certain Countries  21.7
    • H.  International Electronic Contracting  21.8
    • I.  International Intellectual Property Protection  21.9
    • J.  European Union Directives
      • 1.  Introduction  21.10
      • 2.  EU Data Protection Directive and Related Developments
        • a.  EU Data Protection Directive  21.11
        • b.  General Data Protection Regulation (GDPR)  21.11A
        • c.  EU-US Privacy Shield  21.11B
        • d.  Compliance With EU General Data Protection Regulation
          • (1)  Self-Certifying Under the Privacy Shield Framework  21.12
          • (2)  Consequences of Noncompliance  21.12A
          • (3)  Case-by-Case Compliance; Model Contract Clauses  21.13
      • 3.  Other EU Directives
        • a.  Distance Selling  21.14
        • b.  E-Commerce Directives  21.15
        • c.  VAT Directive  21.16
        • d.  Specific Industry Directives  21.17
        • e.  EU Data Retention Directive  21.18
        • f.  Right to Be Forgotten  21.18A
    • K.  Self-Regulation
      • 1.  Trustmarks  21.19
      • 2.  International ADR  21.20
  • II.  Cybersecurity Law of the People’s Republic of China  21.20A
  • III.  EXPORT AND IMPORT CONTROLS
    • A.  U.S. Export Controls  21.21
      • 1.  Export Administrative Regulations (EAR)  21.22
      • 2.  Scope of EAR; Commerce Control List (CCL)  21.23
      • 3.  Definition of “Export”  21.24
    • B.  Compliance Challenges  21.25
    • C.  Export Control Compliance Programs  21.26
    • D.  Violations   21.27
    • E.  Export Controls of Other Nations  21.28
    • F.  Import Controls  21.29
    • G.  Form: Export Control Compliance Clause  21.30

22

Acquisitions and Sales of Internet-Based Businesses

  • I.  INTRODUCTION  22.1
  • II.  PRELIMINARY ISSUES  22.2
  • III.  INTELLECTUAL PROPERTY DUE DILIGENCE
    • A.  Introduction  22.3
    • B.  Due Diligence Procedures
      • 1.  Confidentiality Agreement  22.4
      • 2.  Due Diligence Checklist  22.5
      • 3.  Seller’s Internal Response Team  22.6
      • 4.  Responding to Request  22.7
      • 5.  Advance Preparation by Seller  22.8
      • 6.  Buyer’s Due Diligence Report  22.9
      • 7.  Analyzing Information  22.10
      • 8.  Disposition of Information  22.11
    • C.  Sample Due Diligence Checklist
      • 1.  Introduction  22.12
      • 2.  Checklist: Due Diligence Information Request  22.13
    • D.  “Open Source” Software
      • 1.  Introduction  22.13A
      • 2.  Checklist: Acquiring Open Source Software  22.13B
    • E.  Sample Due Diligence Report
      • 1.  Introduction  22.14
      • 2.  Form: Due Diligence Report re Intellectual Property Matters  22.15
  • IV.  REPRESENTATIONS AND WARRANTIES RE INTELLECTUAL PROPERTY RIGHTS
    • A.  Introduction  22.16
    • B.  Form: Representations and Warranties re Intellectual Property  22.17
  • V.  CHANGING OWNERSHIP OF DOMAIN NAMES
    • A.  Introduction  22.18
    • B.  Form: Internet Domain Name Assignment Agreement  22.19

INTERNET LAW AND PRACTICE IN CALIFORNIA

(1st Edition)

July 2018

TABLE OF CONTENTS

 

File Name

Book Section

Title

CH01

Chapter 1

Copyrights and the DMCA

01-020

§1.20

Copyright Assignment

01-085

§1.85

Checklist: Notice and Take-Down Checklist

01-089

§1.89

Checklist: Company DMCA Compliance Policy

CH02

Chapter 2

Patents and Trade Secrets

02-016

§2.16

Patent Assignment

02-031

§2.31

Company Policy on Trade Secret Protection

02-033

§2.33

Confidentiality Agreement

CH03

Chapter 3

Domain Names and Trademark Issues

03-008

§3.8

Domain Name Purchase Agreement

03-018

§3.18

UDRP Complaint

03-020

§3.20

UDRP Response

03-055

§3.55

Trademark Guidelines

03-056

§3.56

Trademark License Agreement

03-058

§3.58

Trademark Assignment

03-070

§3.70

Sample Cease and Desist Letter

CH04

Chapter 4

Human Resources

04-005

§4.5

Offer Letter to Prospective Employee

04-011

§4.11

Confidentiality and Invention Assignment Agreement

04-019

§4.19

Independent Contractor Consulting Agreement

04-021

§4.21

Nondisclosure Agreement

04-023

§4.23

Advisory Board Letter Agreement

CH05

Chapter 5

Website Development

05-003

§5.3

Agreement for Transfer and Assignment of Intellectual Property

05-025

§5.25

Website Development Agreement

CH06

Chapter 6

Hosting and Related Services; Cloud Computing

06-012

§6.12

Hosting Services Agreement

06-019

§6.19

Co-Location Agreement

06-037

§6.37

Short Form Service Level Agreement

06-039

§6.39

Website Hosting Service Level Agreement

06-046

§6.46

Technical Support and Maintenance Agreement

06-049

§6.49

Basic Technical Support Exhibit

CH08

Chapter 8

Terms of Use; Online Agreements; Linking; Downloading; Social Networking

08-003

§8.3

Website Terms of Use

08-005

§8.5

Online End-User Software License Agreement

08-007

§8.7

Online Beta User Evaluation Agreement

08-009

§8.9

Open Source Software License Agreement

08-011

§8.11

Evaluation License Agreement

08-013

§8.13

Online Software Developer Toolkit License Agreement

08-018

§8.18

Linking Agreement

CH09

Chapter 9

Privacy Law and Privacy Policies

09-044

§9.44

Basic Website Privacy Policy

09-046

§9.46

Commercial Website Privacy Policy

CH10

Chapter 10

E-Commerce Transactions and Tax Issues

10-015

§10.15

Sample Clauses re Payment of Subscription Fees

CH11

Chapter 11

Strategic Alliances

11-003

§11.3

FORM: SAMPLE LETTER OF INTENT RE STRATEGIC ALLIANCE

11-005

§11.5

Strategic Alliance Agreement

11-007

§11.7

Co-Branding Agreement

CH12

Chapter 12

Software License Agreements

12-007

§12.7

Software License Agreement

12-010

§12.10

Exclusivity Clause

CH13

Chapter 13

Software Development Agreements

13-003

§13.3

FORM: SOFTWARE DEVELOPMENT AGREEMENT

13-005

§13.5

Software Test and Evaluation Agreement

CH14

Chapter 14

Content Clearances, Licensing, and Fair Use

14-010

§14.10

Endorsement Agreement

14-012

§14.12

Still Photograph License

14-014

§14.14

Digital Reprint Rights License

14-016

§14.16

Streaming Video License

CH15

Chapter 15

Source Code Escrows

15-002

§15.2

FORM: SOURCE CODE ESCROW AGREEMENT

CH16

Chapter 16

Financing an Online Business

16-010

§16.10

Term Sheet for Preferred Stock Financing

16-024

§16.24

Loan Agreement

16-025

§16.25

Promissory Note

16-033

§16.33

Security Agreement (Intellectual Property)

16-035

§16.35

Convertible Promissory Note

CH17

Chapter 17

Advertising on the Internet

17-032

§17.32

Banner Advertising Agreement

17-034

§17.34

Internet Advertising Agreement

17-036

§17.36

Interactive Marketing Agreement

CH18

Chapter 18

Cybersecurity

18-023

§18.23

Checklist: Responding to a Cyberattack

CH19

Chapter 19

Jurisdiction; Conflicts of Law

19-013

§19.13

Choice-of-Forum Clause

19-022

§19.22

Choice-of-Law Clause

CH20A

Chapter 20A

Discovery of Electronically Stored Information

20A-024

§20A.24

Legal Hold Letter to Client

20A-026

§20A.26

Litigation Hold Letter to Opponent

CH21

Chapter 21

International Issues

21-030

§21.30

Export Control Compliance Clause

CH22

Chapter 22

Acquisitions and Sales of Internet-Based Businesses

22-013

§22.13

Checklist: Due Diligence Information Request

22-013B

§22.13B

Checklist: Acquiring Open Source Software

22-015

§22.15

Due Diligence Report re Intellectual Property Matters

22-017

§22.17

Representations and Warranties re Intellectual Property

22-019

§22.19

Internet Domain Name Assignment Agreement

 

Selected Developments

July 2018 Update

Copyright

Currently, it is unresolved whether a computer program’s copyright protection extends to its output, but such an extension appears unlikely or limited to narrow circumstances. The Ninth Circuit has noted a split in authority regarding this topic: Some courts have created a per se rule saying no, while others grant protection “if the program ‘does the lion’s share of the work’ … and the user’s role is so ‘marginal’ that the output reflects the program’s contents.” Design Data Corp. v Unigate Enter., Inc. (9th Cir 2017) 847 F3d 1169, 1173 (citations omitted). See §1.4C.

Two jurisdictions—New York and Florida—have already determined that their state law does not recognize a public performance right for pre-1972 sound recordings. See Flo & Eddie, Inc. v Sirius XM Radio, Inc. (Fla 2017) 229 So3d 305; Flo & Eddie, Inc. v Sirius XM Radio, Inc. (2016) 28 NY3d 583, 70 NE3d 936. See also Flo & Eddie, Inc. v Sirius XM Radio, Inc. (2d Cir 2017) 849 F3d 14. The Ninth Circuit has certified the question of whether California law recognizes a public performance right in pre-1972 sound recordings to the California Supreme Court, which has granted review. Flo & Eddie, Inc. v Pandora Media, Inc. (9th Cir 2017) 851 F3d 950. See §1.11.

In Goldman v Breitbart News Network, LLC (SD NY, Feb. 15, 2018, No. 17–cv–3144 (KBF)) 2018 US Dist Lexis 25215, the federal district court rejected the Ninth Circuit’s approach and held that HTML instructions do implicate the public display right in some circumstances. This holding is at odds with Ninth Circuit and Seventh Circuit law. See Perfect 10, Inc. v Amazon.com, Inc. (9th Cir 2007) 508 F3d 1146, 1159; Flava Works, Inc. v Gutner (7th Cir 2012) 689 F3d 754, 757. Practitioners are advised to follow Goldman v Breitbart closely, as the Second Circuit may grant interlocutory review. Should the Second Circuit affirm, the Supreme Court will need to intercede to resolve the circuit split. See §1.12.

The issue of ownership of the copyright is one of standing. A plaintiff only has standing if the plaintiff is the “legal owner” or “beneficial owner” of an exclusive right that the defendant has violated. 17 USC §501(b). “The classic example of a beneficial owner is ‘an author who has parted with legal title to the copyright in exchange for percentage royalties based on sales or license fees.’” DRK Photo v McGraw-Hill Global Educ. Holdings, LLC (9th Cir 2017) 870 F3d 978, 988 (citations omitted). “By contrast, an author who receives royalties for a work created under a work-for-hire agreement, and thus who never had ownership of the work, is not a beneficial owner.” 870 F3d at 988. If ownership of an exclusive right is claimed by an assignment, the agreement must be in writing. 17 USC §204. A defendant may not “raise noncompliance with 17 USC §204(a)’s writing requirement as a defense to a copyright transfer where the parties to the transfer do not dispute its existence[.]” 870 F3d at 986. The language of a document that purports to transfer ownership is not conclusive; rather, courts “must consider the substance of the transaction.” 870 F3d at 986. For example, exclusive licensing agent agreements are sufficient to confer standing to sue for copyright infringement, but nonexclusive agreements do not. 870 F3d at 983. See §1.22.

In most cases, direct evidence of copying will not be available. Therefore, a plaintiff may establish copying by showing that (1) the infringer had access to the work and (2) the two works are substantially similar. Narell v Freeman (9th Cir 1989) 872 F2d 907, 910. Courts apply a sliding-scale analysis to the two elements. Access can be proven in three ways: (1) establishing a causal link establishing the defendant’s access to the work; (2) widespread dissemination of the work; or (3) when the allegedly infringing work shares “striking similarity” (i.e., is “virtually identical” to the copyrighted work). Unicolors, Inc. v Urban Outfitters, Inc. (9th Cir 2017) 853 F3d 980, 987; Loomis v Cornish (9th Cir 2016) 836 F3d 991, 995. See §1.22.

In Goldman v Breitbart News Network, LLC (SD NY, Feb. 15, 2018, No. 17–cv–3144(KBF)) 2018 US Dist Lexis 25215, the U.S. District Court for the Southern District of New York rejected the Ninth Circuit’s “server test” to determine infringement of the public display right. In Goldman, the court held that the act of embedding implicates the public display right, regardless of whether the defendant is in possession of the work (i.e., regardless of whether the work resides on the defendant’s servers). The court found that (1) the possession requirement was not supported by the definition of “display” in 17 USC §101; (2) the legislative history did not support a possession requirement; and (3) the U.S. Supreme Court’s decision in American Broad. Cos. v Aereo, Inc. (2014) 573 US ___, 134 S Ct 2498, did not support a possession requirement either. This holding is at odds with Ninth Circuit and Seventh Circuit law. See Perfect 10, Inc. v Amazon.com, Inc. (9th Cir 2007) 508 F3d 1146, 1159; Flava Works, Inc. v Gutner (7th Cir 2012) 689 F3d 754, 757. If the Second Circuit grants interlocutory review and affirms, the U.S. Supreme Court will need to intercede to resolve the circuit split. See §1.23.

The “material contribution” theory of contributory infringement requires a showing that the service provider could take simple measures to prevent infringement but failed to do so. Perfect 10, Inc. v Amazon.com, Inc. (9th Cir 2007) 508 F3d 1146, 1172. These measures must constitute a “reasonable and feasible means” of preventing further damage to the copyrighted work. 508 F3d at 1172. Methods that are “unreliable and burdensome” do not satisfy this requirement. Perfect 10, Inc. v Giganews, Inc. (9th Cir 2017) 847 F3d 657, 671. For example, automated processes aimed at preventing infringement may satisfy this requirement, while manual processes will not. See 847 F3d at 671. See §1.27A.

A key question in fair use analysis is whether “a ‘reasonable copyright owner’ would have consented to the use, i.e., where the ‘custom or public policy’ at the time would have defined the use as reasonable.” Oracle Am., Inc. v Google LLC (Fed Cir 2018) 886 F3d 1179, 1234, citing Wall Data Inc. v Los Angeles County Sheriff’s Dep’t (9th Cir 2006) 447 F3d 769, 778. See §1.39.

A reaction video is a video in which a person reacts to excerpts or the entirety of an audiovisual work. Reaction videos usually involve the person reacting to another work that was posted online or to a film trailer. Often, but not always, the person reacting will provide comment and criticism on what they are watching. The extent of comment and criticism can vary greatly. A federal district court in the Central District of California first analyzed whether reaction videos qualify for fair use in Equals Three, LLC v Jukin Media, Inc. (CD Cal 2015) 139 F Supp 3d 1094. The court denied the copyright holder’s motion for summary judgment on the issue of fair use on 17 out of 18 reaction videos. See §1.45A.

In Oracle Am., Inc. v Google LLC (Fed Cir 2018) 886 F3d 1179, 1197, the court held that the highly commercial and nontransformative nature of Google’s use of Oracle’s Java application programming interface in Google’s Android operating system weighed against a finding of fair use. The court also ruled that the functional as distinct from the creative aspects of the copyrighted software were substantial and important, thus favoring fair use, but this factor was less significant in the overall analysis See §§1.50, 1.51.

In Disney Enters., Inc. v VidAngel, Inc. (9th Cir 2017) 869 F3d 848, the Ninth Circuit held the first sale doctrine was inapplicable to uploading lawful copies of a copyrighted work to a server. 869 F3d at 856. See §1.56.

Digital Millennium Copyright Act

The Family Entertainment and Copyright Act of 2005 (Pub L 109–9, 119 Stat 218) (part of which is known as the Family Home Movie Act) creates a defense for copyright infringement for certain forms of movie filtering and movie filtering technology. See 17 USC §110(11). In Disney Enters., Inc. v VidAngel, Inc. (9th Cir 2017) 869 F3d 848, 857, the Ninth Circuit held that an online service provider that streamed filtered motion pictures was ineligible for the defense. The service provider’s copying infringed the plaintiff’s exclusive reproduction right because the provider did not filter authorized copies of the films. Instead, the provider streamed from a master file copy that it created after circumventing the plaintiff’s technological protection measures in violation of the Copyright Act (17 USC §§101–1332) and the Digital Millennium Copyright Act (Pub L 105–304, 112 Stat 2860). See §1.56A.

To determine whether copyrighted content has been stored at the “direction of a user” under 17 USC §512(c), the critical inquiry is “the service provider’s role in making material stored by a user publicly accessible on its site.” Mavrix Photographs, LLC v Livejournal, Inc. (9th Cir 2017) 873 F3d 1045, 1053. The Ninth Circuit in Mavrix explained (873 F3d at 1056):

Infringing material is stored at the direction of the user if the service provider played no role in making that infringing material accessible on its site or if the service provider carried out activities that were “narrowly directed” towards enhancing the accessibility of the posts. [Citations omitted.] Accesibility-enhancing activities include automatic processes, for example, to reformat posts or perform some technological change.

See also Ventura Content, Ltd. v Motherless, Inc. (9th Cir 2018) 885 F3d 597, 605, in which the court held that the safe harbor protection is not eliminated if the ISP alters the file format to make it accessible before posting, enables users to apply search tags to uploads, or facilitates user access to files posted by other users. The ISP is not required to be merely an electronic storage locker. See §1.75.

In Mavrix Photographs, the Ninth Circuit applied the law of agency to hold that the actions of voluntary moderators may be attributable to the website, and not the user, when the website exerts sufficient control and the moderators review and post user submissions in accordance with the website’s polices. See 873 F3d at 1052. See §1.75.

“Red flag” knowledge occurs when a service provider is “subjectively aware of facts that would have made the specific infringement ‘objectively’ obvious to a reasonable person.” Columbia Pictures Indus., Inc. v Fung (9th Cir 2013) 710 F3d 1020, 1043. The “objective” aspect of this test is defined as “whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances.” UMG Recordings, Inc. v Veoh Networks, Inc. (9th Cir 2013) 718 F3d 1006, 1026. Under this standard, the “infringement must be immediately apparent to a non-expert” (i.e., “apparent from even a brief and casual viewing”). Mavrix Photographs, LLC v Livejournal, Inc. (9th Cir 2017) 873 F3d 1045, 1057. See also Ventura Content, Ltd. v Motherless, Inc. (9th Cir 2018) 885 F3d 597, 610 (“for red flag knowledge, infringement must be apparent, not merely suspicious”). “Red flag” knowledge may occur when the website’s agents see a “generic watermark” or a watermark containing identifying information of the copyright holder, such as its website. 873 F3d at 1058. See §1.78.

Patent

In Visual Memory LLC v NVIDIA Corp. (Fed Cir 2017) 867 F3d 1253, the patent claims were directed to the nonabstract concept of configuring memory system based on the type of processor connected to it, which the court found to be a technological improvement with multiple benefits and advantages. See §2.18A.

For companies seeking guidance on the application of patent principles to the Internet of Things, the court’s reasoning in the Fitbit case offers some insights. See Fitbit, Inc. v AliphCom (ND Cal 2017) 233 F Supp 3d 799. The patent claims at issue related to pairing a wireless device (such as a wearable activity tracker) through a server to a client (such as a smartphone) when the server regulates the list of eligible devices and the end user validates the connection by “tapping” on the wearable device screen. 233 F Supp 3d at 804. The court in Fitbit found the claims recited significantly more than an abstract idea. First, the court reasoned that the small form of the FitBit wristband could not accommodate a traditional keyboard or buttons, so the tapping method to complete user validation without a keyboard was an inventive concept addressing a real-world problem. 233 F Supp 3d at 812. Second, interposing a server between the wearable and client devices to determine the possible portable devices eligible for pairing was an inventive concept to the traditional pairing steps. 233 F Supp 3d at 813. Companies seeking to patent IoT inventions directed to consumer wearables should take note of the court’s focus on improving the human interface and solving real-world problems, which seemed to be persuasive in the Fitbit case. See §2.19A.

Trademark

A generic second level domain (SLD) combined with a top level domain suffix such as “.com” or “.biz” (TLD) can create a descriptive mark that is eligible for protection on proof that it has acquired distinctiveness or secondary meaning. See Booking.com v Matal (ED Va 2017) 278 F Supp 3d 891. See §3.45.

A “hashtag” is a form of metadata consisting of a word or phrase prefixed with the symbol “#” (e.g., #chicago, #sewing, and #supremecourtdecisions). Hashtags are often used on social networking sites to identify or facilitate a search for a keyword or topic of interest. See Trademark Manual of Examining Procedure (TMEP) §1202.18. Research conducted by Thomson Reuters CompuMark found that the number of worldwide hashtag trademark applications in 2016 increased by 64 percent over the previous year. It notes that the first hashtag trademark application was filed in 2010, with over 5000 applications since then. Two thousand two hundred of those were filed in 2016 alone. See http://www.compumark.com/insights/hashtag-trademark-applications-rise-64-just-one-year/. The USPTO permits registrations of a hashtag as a trademark, but “only if it functions as an identifier of the source of the applicant’s goods or services.” See TMEP §1202.18. See §3.46A.

In Elliott v Google, Inc. (9th Cir 2017) 860 F3d 1151, the Ninth Circuit rejected a petition for cancellation of the Google trademark based on a “genericide” theory, that the word “google” had become synonymous with the verb “search the Internet,” holding that “a claim of genericide must relate to a particular type of good or service and …verb use does not necessarily constitute generic use.” 860 F3d at 1156. The court stated that the plaintiff would have to show that there was no way to describe Internet search engines without calling them “googles.” Because not a single Google competitor calls its search engine “a google,” and because members of the consuming public recognize and refer to different Internet search engines, the plaintiff did not show that there was “no available substitute for the word ‘google’ as a generic term.” 860 F3d at 1162. See §3.53.

Electronic Contracting

In Tompkins v 23andMe, Inc. (9th Cir 2016) 840 F3d 1016, the court upheld the enforceability of terms of a clickwrap agreement because, during the account creation and registration processes, users were required to click a box near a hyperlink to the terms of service to indicate their acceptance of those terms. See §7.3.

In Meyer v Uber Technols., Inc. (2d Cir 2017) 868 F3d 66 (applying California law), the Second Circuit upheld an arbitration clause in the context of a mobile app in which the text of the terms and conditions was only reachable via a hypertext link. The court held that the hyperlink was conspicuous and put users on inquiry notice of the terms, including the mandatory arbitration provision. The court explained that inquiry notice depends on the “[c]larity and conspicuousness of arbitration terms,” and that “clarity and conspicuousness are a function of the design and content of the relevant interface.” 868 F3d at 75 (citations omitted). The court focused on the “uncluttered” appearance of the mobile app screen, the clarity of the request made to the user (to click a button marked “Register” underneath text that read “by creating an Uber account you agree to the TERMS OF SERVICE & PRIVACY POLICY” with hyperlinks to the Terms of Service and Privacy Policy), and the use of prominent contrasting text. 868 F3d at 78. See §7.4.

Social Media

Individuals often use social media to promote themselves, locate new jobs, and connect and network with others. When employees leave an employer, they may have ongoing contractual obligations not to solicit their former employer’s customers or other employees. Courts have looked at the impact an individual’s social media use has on the former employer’s rights. In BTS USA, Inc. v Executive Perspectives, LLC (Conn App 2016) 142 A3d 342, the court held that merely providing a “status update” on social media announcing a new position and contact information did not violate a nonsolicitation obligation in the absence of an express contractual provision restricting communications via social media to the former employer’s customers and staff. See also Bankers Life & Cas. Co. v American Sr. Benefits LLC (Ill App 2017) 83 NE3d 1085 (generic requests to connect with individuals over social media without additional targeted content did not violate nonsolicitation agreement). See §8.35.

Privacy

In Robins v Spokeo, Inc. (9th Cir 2017) 867 F3d 1108, cert denied (2018) ___ US ___, 138 S Ct 931, the court analyzed the question of Article III standing in the context of the Fair Credit Reporting Act (FCRA) (15 USC §§1681–1681x). Robins alleged that Spokeo (a website that compiles information on consumers) published inaccurate information concerning his age, marital status, educational background, and employment history, but no specific injury. The test for standing articulated by the Ninth Circuit has two prongs: “(1) whether the statutory provisions at issue were established to protect his concrete interests (as opposed to purely procedural rights); and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm, to such interests.” 867 F3d at 1112. The court found both prongs were met. The inaccuracies created a material risk of harm to Robins’s interest in accurate reporting to potential employers or credit reporting agencies, thus resulting in sufficiently concrete injuries to establish standing. Although this decision appears limited to the FCRA, its rationale could be extended to other privacy statutes. See §9.16A.

California’s Unfair Competition Law (UCL) (Bus & P C §§17200–17210) provides remedies for a wide range of unfair business practices, including, potentially, misrepresentation by a company of its privacy or data collection practices. However, a risk of future harm resulting from a data breach is not sufficient to constitute “lost money or property” under the UCL. In re Yahoo! Inc. Customer Data Sec. Breach Litig. (ND Cal, Aug. 30, 2017, No. 16–MD–02752–LHK) 2017 US Dist Lexis 140212. See §9.27.

The Children’s Online Privacy Protection Act of 1998 (COPPA) (15 USC §§6501–6506) requires that website operators obtain parental consent before collecting “personal information” (see §9.31) from any child. COPPA applies to the growing list of connected devices that make up the Internet of Things, such as connected toys and other products intended for children that collect personal information, e.g., voice recordings or geolocation data. See https://www.ftc.gov/tips-advice/business-center/guidance/childrens-online-privacy-protection-rule-six-step-compliance#step1. See §§9.29, 9.30.

In its first action involving the Internet of Things and Internet-connected toys, the FTC targeted VTech’s electronic learning products when parents registered accounts online both for themselves and their children. Children used the accounts to communicate with contacts established by their parents by text, audio files of the child’s voice, and photographs of the child’s image. At the time of the enforcement action, about 2.25 million parents had registered and created accounts for nearly 3 million children. Among other things, the FTC found that the company did not take reasonable steps to protect the information it collected, did not implement adequate safeguards and security measures, and failed to have intrusion prevention or detection systems to alert the company of an unauthorized intrusion of its network In settlement, VTech agreed to pay $650,000 in civil penalties and implement a data security program subject to audit for the next 20 years. See https://www.ftc.gov/news-events/press-releases/2018/01/electronic-toy-maker-vtech-settles-ftc-allegations-it-violated. See §9.33.

E-Commerce and Taxation

In December 2017, the Securities and Exchange Commission (SEC) issued a public statement concerning the risks associated with cryptocurrency trading and so-called initial coin offerings, available at https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11. See also the SEC’s investor alert, available at https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_coinofferings, and §10.5C. The Commodity Futures Trading Commission has taken similar action, and a federal district court has ruled that virtual currencies are commodities subject to federal regulation under the Commodity Exchange Act (7 USC §§1–27f). See Commodity Futures Trading Comm’n v McDonnell (ED NY 2018) 287 F Supp 3d 213. See §10.5A.

A discussion of blockchain technology has been added in §10.5B. A discussion of initial coin offerings has been added in §10.5C.

In 2017, the Federal Trade Commission (FTC) settled claims against AdoreMe, an online seller of subscription-based lingerie products, for violating the Federal Trade Commission Act (15 USC §§41–58) by misrepresenting its store credit policy, and the Restore Online Shoppers’ Confidence Act (ROSCA) (15 USC §§8401–8405), by failing to provide consumers with a simple mechanism to stop recurring charges. AdoreMe’s “VIP” membership program was a “negative option” program. Membership cost $39.95 per month unless, in the first 5 days of each month, the member bought something or clicked an online button to “skip” that month. The company’s website stated, “If you do not make a purchase or skip the month by the 5th, you’ll be charged a $39.95 store credit that can be used anytime to buy anything on Adore Me.” However, in practice, AdoreMe forfeited unused credit amounts if a member cancelled the membership or initiated chargebacks with financial institutions to dispute their transactions with the company. The FTC also found that AdoreMe made it hard to cancel memberships, e.g., by limiting how consumers could submit cancellation requests, understaffing its customer service department, and putting consumers through drawn-out cancellation request processes. The FTC’s order required AdoreMe to notify and provide refunds of forfeited store credit to eligible customers, and imposed a $1,378,654 fine to be used to pay refunds to consumers under the order. See https://www.ftc.gov/news-events/press-releases/2017/11/online-lingerie-marketer-prohibited-deceiving-shoppers-about. See §10.16A.

A new discussion of Bus & P C §17602, regulating subscription offers and other automatic renewal offers, has been added in §10.16B. Online businesses that wish to implement automatic renewal or subscription offers should study carefully the requirements of Bus & P C §17602, as well as the requirements of ROSCA discussed in §10.16A, to ensure that their practices conform with these laws. Many lawsuits have been filed recently concerning subscription or automatic renewal programs for failure to comply with federal and state disclosure, consent, and acknowledgment requirements. See §10.16B.

The obligations of California e-businesses to collect sales and use taxes in out-of-state sales are likely to be affected by a pending U.S. Supreme Court case. South Dakota v Wayfair, Inc. (cert granted 2018) ___ US ___, 138 S Ct 735. See §10.23.

Advertising on the Internet

The “unfair or deceptive acts or practices” standard has been applied to find liability for using false “click bait” deceptive practices to drive potential customers to product advertising sites. See FTC v LeadClick Media, LLC (2d Cir 2016) 838 F3d 158. In that case, LeadClick, an affiliate marketing network operator for LeanSpa, lured consumers to LeanSpa’s online store through fake news websites designed to trick consumers into believing that genuine news outlets and real customers, rather than paid advertisers and actors, had reviewed and endorsed LeanSpa’s products. The court found that LeadClick “had the authority to control the deceptive content of these fake news sites, but allowed the deceptive content to be used in LeanSpa advertisements on its network.” 838 F3d at 171. The court thus ruled that LeadClick was liable under 15 USC §45. See §17.4.

In 2017, in the FTC’s first enforcement action against individual social media influencers, two video bloggers owned an online business allowing users to gamble using collectible virtual items as currency. The owners posted YouTube videos of themselves gambling on their website and encouraging others to use the service, but did not disclose their connection to the business. They also had an influencer program that paid others between $2500 and $55,000 to promote the gambling service through social media. The FTC’s order prohibited the owners and the business from misrepresenting that any endorser was an independent user or ordinary consumer of a product or service and required clear and conspicuous disclosures of any material connections with endorsers. See https://www.ftc.gov/news-events/press-releases/2017/09/csgo-lotto-owners-settle-ftcs-first-ever-complaint-against. See §17.7A.

Cybersecurity

Ransomware is a type of malicious software that infects and locks down access to a computer to deny the owner’s use until a ransom is paid. Ransomware typically infects the host computer through phishing e-mails and exploits unpatched security vulnerabilities in software. See https://www.us-cert.gov/sites/default/files/publications/Ransomware_Executive_One-Pager_and_Technical_Document-FINAL.pdf. In 2017, Microsoft estimated that the “Wanna Cry” ransomware variant was found in over 150 countries and infected over 300,000 computers across 100,000 businesses in multiple industries including retail, manufacturing, transportation, healthcare, and finance. See https://enterprise.microsoft.com/en-us/articles/industries/health/wannacry-ransomware-attack-lessons-learned. See §18.1.

Perhaps the most egregious cyberattack to date was the one against Equifax, one of the three major national consumer credit reporting agencies. On September 7, 2017, the company announced that the Social Security numbers, birth dates, and other personal data of up to 143 million persons in the United States had been accessed without authorization over a period from March through July 2017. In addition, credit card numbers for 209,000 consumers and dispute documents related to 182,000 consumers were accessed. Consumers in Great Britain and Canada were also affected. The company discovered the breach on July 29, 2017, but waited several weeks to disclose it. See http://www.latimes.com/business/technology/la-fi-tn-equifax-data-breach-20170907-story.html. See §18.1.

In In re Facebook Internet Tracking Litig. (ND Cal 2017) 263 F Supp 3d 836, the court dismissed class action litigation accusing Facebook of tracking its users’ Internet activity. Plaintiffs alleged that Facebook’s cookies allowed it to identify users and correlate their identities with their browsing activity even when they were logged out of Facebook. The court held that Title II of the Electronic Communications Privacy Act of 1986 (ECPA) (18 USC §§2701–2712), known as the Stored Communications Act (SCA), did not apply to Facebook’s cookies because they are information in local storage on a user’s computer, rather than information that is temporarily stored “incident to [the] transmission” of a communication.” 263 F Supp 3d at 845. In addition, the court held that personal computers are not “facilities” under the SCA through which an electronic communications service is provided. 263 F Supp 3d at 845. See §18.11.

The National Institute of Standards and Technology (NIST) has provided guidance on security and privacy controls for devices connected to the Internet (the so-called Internet of Things) in both the public and private sectors. It has listed technical and procedural safeguards designed to protect individuals, organizations, and systems when creating or operating “smart” devices. See https://csrc.nist.gov/csrc/media/publications/sp/800-53/rev-5/draft/documents/sp800-53r5-draft.pdf. See §18.14A.

In Oracle USA, Inc. v Rimini St., Inc. (9th Cir 2018) 879 F3d 948, 962, the Ninth Circuit held that “taking data using a method prohibited by the applicable terms of use, when the taking itself generally is permitted, does not violate” Pen C §502. See §18.16.

Tort and Criminal Liability

In ZLTechnologies, Inc. v Does 1–7 (2017) 13 CA5th 603, 611, the court held that anonymous online reviews constituted a legally sufficient basis for a defamation claim, supporting discovery of the identities of posters despite First Amendment concerns, because the posts contained provably false statements of fact. See §§20.2, 20.3, 20.24.

In Gonzalez v Google, Inc. (ND Cal 2017) 282 F Supp 3d 1150, 1168, the court held that Google was not liable as a publisher of video content facilitating recruitment and commission of terrorist acts by ISIS agents because it is protected by Communications Decency Act of 1996 (CDA) (47 USC §230). Further, provision of “neutral tools,” such as targeted advertising adjacent to videos, does not equate to content development under §230. See §20.6.

Practitioners faced with the question of how to handle negative reviews of a client’s product or service should carefully review the Consumer Review Fairness Act of 2016 (CFRA) (15 USC §45b). The CRFA protects honest consumer assessments, including online reviews, social media posts, uploaded photos, and videos. See §20.5.

In Yelp Inc. v Superior Court (2017) 17 CA5th 1, 13, the court held that website hosts such as Yelp have standing to assert the First Amendment rights of posters of anonymous online reviews, as against efforts to compel Yelp to identify posters. See §20.24.

A new discussion of cyberinsurance has been added in §20.42.

Website Accessibility

In Robles v Dominos Pizza LLC (CD Cal, Mar. 20, 2017, No. CV 16–06599 SJO (SPx)) 2017 US Dist Lexis 53133, *16, the court dismissed a website accessibility lawsuit because the U.S. Department of Justice had failed to issue clear guidelines for website accessibility under the Americans with Disabilities Act of 1990 (ADA) (42 USC §§12101–12213); thus, Domino’s due process rights were violated. See §20.25A.

In 2017, the U.S. Department of Justice halted all rulemaking activity concerning website accessibility. The lack of clear rules is likely to lead to more litigation and inconsistent results among jurisdictions. See https://www.reginfo.gov/public/do/eAgendaInactive and Vu, Seyfarth & Shaw, DOJ Places Website Rulemaking on the “Inactive” List (July 21, 2017), available online at https://www.adatitleiii.com/2017/07/doj-places-website-rulemaking-on-the-inactive-list/, referencing inactive list at https://www.reginfo.gov/public/jsp/eAgenda/InactiveRINs_2017_Agenda_Update.pdf. See §20.25A.

E-Discovery

The U.S. District Court for the Northern District of California, in U.S. v Votman (ND Cal, Dec. 16, 2016, No. 16–cr–00210–TEH–1) 2016 US Dist Lexis 175235, decided that a governmental request for an “NIT” warrant (Network Investigative Technique), giving the FBI and other agencies the ability to “hack” into websites and other suspect media, was not overbroad, even though it impacted all user accounts of the suspected website, Playpen, which allowed for the exchange of child pornography. See §20A.5.

If a producer of an electronic data production does not object or propose an alternative to the production format specified by the requesting party, California courts have held that the “speak now or forever hold your peace” theory applies and bars the producing party from producing requested materials in a noncompliant format. This is true even if it appears in the eyes of the noncomplying producing party that its preferred format would be more appropriate and lend to better ease of review. See Morgan Hill Concerned Parents Ass’n v California Dep’t of Educ. (ED Cal, Feb. 2, 2017, No. 2:11–cv–3471 KJM AC) 2017 US Dist Lexis 14983, *31 (motion to compel granted; government defendant to produce e-mails in native format with all metadata attached, as requested, subject to valid privilege arguments). See §20A.14.

International Issues

In Google LLC v Equustek Solutions Inc. (ND Cal, Nov. 2, 2017, No. 5:17–cv–04207–EJD) 2017 US Dist Lexis 182194, the court issued a preliminary injunction (later made permanent; see 2017 US Dist Lexis 206818) against a Canadian Supreme Court ruling that ordered Google to de-index certain search results, not only in Canada but on a global basis. The case began with a complaint from a British Columbia company, Equustek Solutions, that a group of its distributors (Datalink) was selling counterfeit Equustek products online. Datalink continued to sell the goods globally, even after the Canadian court ordered it to stop, which prompted Equustek to ask Google to de-index certain Datalink webpages. Google initially de-indexed several hundred webpages associated with Datalink on google.ca. Equustek then sought and obtained an injunction, which was upheld by the Canadian Supreme Court, to prevent Google from displaying any of the Datalink websites on any of its search results worldwide. In the face of this global injunction, Google asked the U.S. District Court for the Northern District of California to intervene, arguing (among other things) that the order “violates principles of international comity, particularly since the Canadian plaintiffs never established any violation of their rights under U.S. law.” In granting the injunction, the U.S. district court found that the Canadian ruling “undermines the policy goals of Section 230 [of the Communications Decency Act] and threatens free speech on the global internet.” See §21.5.

In its first annual review of the EU-US Privacy Shield, the European Commission concluded that the U.S. provides an adequate level of protection for personal data transferred under the Privacy Shield. See Report from the Commission to the European Parliament and the Council on the First Annual Review of the Functioning of the EU-U.S. Privacy Shield, dated October 18, 2017. See http://ec.europa.eu/newsroom/just/item-detail.cfm?item_id=605619. See §21.11B.

About the Authors

CLARA RUYAN MARTIN received her B.A. degree from the University of California, Berkeley, in 1985 and her J.D. degree from the University of Michigan Law School in 1989. She was a founding partner of the Los Angeles law firm Cadence Law Group LLP. She specializes in structuring, drafting, negotiation, and implementation of complex corporate and technology transactions. Her corporate work includes mergers and acquisitions, joint ventures, corporate finance, and venture representation. Her technology practice is broad, ranging from software licensing and development to strategic alliances and e-commerce. Ms. Martin is an adjunct professor at the University of Southern California School of Law. She has served on the Cyberlaw Committee of the State Bar of California and is a frequent lecturer on topics such as software licensing agreements, Internet-related agreements, complex joint ventures, venture finance, and mergers and acquisitions.

DAVID B. OSHINSKY received his B.A. degree from Yale University in 1991 and his J.D. degree from Columbia Law School in 1996, where he was a member of the Columbia Law Review. He is a founding partner of the Los Angeles law firm Cadence Law Group LLP. Mr. Oshinsky works with many start-up and early-stage companies, for which he provides counsel regarding their early operational, financing, and intellectual property requirements. He regularly assists clients with venture capital financing; technology transactions; and mergers, acquisitions, and related corporate transactions. In particular, his practice involves the structuring, drafting, and negotiating of technology licenses, website policies and agreements, software development agreements, and strategic alliances. Mr. Oshinsky has written and lectured on a broad range of technology topics, including website development agreements, strategic alliances, intellectual property issues in mergers and acquisitions, and Internet law in California.

About the 2018 Update Authors

JACK LERNER is Clinical Professor of Law at the University of California, Irvine, School of Law, and Director of the UCI Intellectual Property, Arts, and Technology Clinic. Professor Lerner received his B.A., with distinction, in English from the University of Kansas and his J.D. from Harvard Law School. He clerked for Judge Fred I. Parker on the U.S. Court of Appeals for the Second Circuit and Judge G. Thomas Van Bebber in the U.S. District Court for the District of Kansas. He practiced intellectual property law with the Palo Alto law firm Wilson Sonsini Goodrich & Rosati, P.C., and has taught at the University of California, Berkeley, School of Law and the University of Southern California Gould School of Law. In 2016, Professor Lerner was awarded the California Lawyer Attorney of the Year award for his work obtaining exemptions to the copyright laws that affect documentary filmmakers and authors nationwide. Professor Lerner is Co-Executive Editor of this update and a 2018 update author of chapters 1 and 14.

ALEXANDER H. LUBARSKY received his B.A. from Lewis and Clark College and his J.D. and L.L.M. from Golden Gate University School of Law. Mr. Lubarsky is a practicing litigator, electronic discovery consultant, and author. He has litigated hundreds of cases involving electronic discovery and has received numerous awards in the industry, including the TechnoLawyer @ Award. Mr. Lubarsky has been elected to the Executive Committee of the Law Practice Management and Technology Section of the State Bar of California and is on the editorial boards of several technology publications. He has consulted for numerous companies that provide electronic discovery support services, including Summation Legal Technologies, Inc.; Fios, Inc.; Guidance Software, Inc.; Daticon, LLC; and Zantaz, Inc. Mr. Lubarsky regularly consults with large law firms and Fortune 500 corporations in the area of ESI retention, e-discovery best practices, and litigation holds. Mr. Lubarsky is the author and 2018 update author of chapter 20A.

CLARA RUYAN MARTIN received her B.A. from the University of California, Berkeley, in 1985 and her J.D. from the University of Michigan Law School in 1989. She specializes in the structuring, drafting, negotiation, and implementation of complex corporate and technology transactions. Her corporate work includes mergers and acquisitions, joint ventures, corporate finance, and venture representation. Her technology practice is broad, ranging from software licensing and development to strategic alliances and e-commerce. Ms. Martin is an adjunct professor at the University of Southern California Gould School of Law. She has served on the Cyberlaw Committee of the State Bar of California and is a frequent lecturer on topics such as software licensing agreements, Internet-related agreements, complex joint ventures, venture finance, and mergers and acquisitions. Ms. Martin is the author and 2018 update author of chapters 1–20 and 21–22.

ROM BAR-NISSIM received his B.F.A. from Florida Atlantic University in 2002 and his J.D. from the University of Southern California Gould School of Law in 2013, where he received the Norma Zarky Memorial Award for excellence in entertainment law. Mr. Bar-Nissim’s practice focuses on the Internet, media, and entertainment industries, with an emphasis on copyright. He has coauthored several public comments and amicus briefs concerning copyright and digital issues. In 2014, he coauthored, with Professor Jack Lerner, a chapter on law enforcement practices for the American Bar Association publication Whistleblowers, Leaks and the Media: National Security and the First Amendment. Mr. Bar-Nissim is Co-Executive Editor of this update and a 2018 update author of chapters 1 and 14.

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