In an earlier article, we discussed the danger posed to an impartial jury system by the “Googling Juror.” In his article titled “Lawyers’ Use of Internet to Influence Jurors” (New York Law Journal, 6/12/12), Michael Hoenig cautions that “the danger to fair trials posed by Internet-surfing jurors is exacerbated by lawyer ‘advertising’ of their prowess or success on websites, by publishing case-specific information on firm sites or blogs or other Internet outlets, and by skillfully weaving inaccurate, misleading or self-serving messages, and ‘depositing’ them where straying jurors can ‘find’ them.” 

Hoenig concludes that these can be purposeful stratagems or innocent puffing. He points out that despite First Amendment protections, courts can and should restrict prejudicial speech by attorneys. He cautions that lawyers must be diligent in reviewing whether their adversaries (or agents) might be depositing messages about case facts or party litigants, or extraneous, non-admissible information on websites, blogs or other internet locations with the expectation that a straying juror would find the information. Even if the specific facts of a case at trial are not discussed, prospective or sitting jurors can still peruse the attorney’s website, noting biographical information, the firm’s specialties, featured clients and the “war stories,” crusades or victories many firms describe. Hoenig believes that this information likely will be passed to other jurors.

Lawyers do have First Amendment rights to a wide range of speech but they are also subject to reasonable restrictions as officers of the court. Further, lawyers are bound by ethical rules. Rule 3.6 of the Model Rules of Professional Conduct prohibits an attorney from making an “extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.” Rule 8.4 prohibits “conduct involving dishonesty, fraud, deceit or misrepresentation” and also states, “a lawyer or law firm shall not: (a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce to do so, or do so through the acts of another.”  The article discusses the facts of some of the cases that are emerging in this important area of the law. 

Thus, it is essential that trial counsel perform their own internet investigation concerning both the subject matter of their upcoming trials, and their adversaries' internet materials, to determine whether prejudicial information available to prospective jurors has been posted.

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Trademark owners agonizing over internet search engine technology and their ability to protect their brand scan step back from the ledge, at least for the moment. The fact that their trademarks may serve important indexing or advertising functions for internet search engine companies, like Google or Bing, does not serve to immunize search engine providers from liability for trademark infringement. On Monday, April 9th, the Fourth Circuit breathed new life into Rosetta Stone’s trademark suit against Google, vacating in large part the Eastern District of Virginia’s 2010decision dismissing Rosetta Stone’s claims against Google on summary judgment. The Fourth Circuit remanded Rosetta Stone’s claims for direct trademark infringement, contributory infringement, and trademark dilution for further proceedings.


Rosetta Stone’s appeal to the Fourth Circuit was widely-followed, in part because of the district court’s novel application of the functionality doctrine to the search engine context. The district court concluded that the functionality doctrine protected Google’s use of Rosetta Stone’s marks as keyword triggers as a matter of law. According to the district court, keywords, including trademarks such as “Rosetta Stone,” serve an “essential indexing function” for Google, allowing it to readily identify websites or information relevant to an online user’s search query. The district court found that the use of such keywords also served an “advertising function” that provides consumers with “a highly useful means of searching the internet for products at competitive prices.” The online functions articulated by the district court would apply to virtually any (if not every) trademark imaginable, as trademarks are meant to identify products, brands, and suppliers. An order approving the district court’s functionality analysis would have had far-reaching implications. Where adopted, it would have effectively immunized internet search engine providers selling trademarks as keywords from trademark infringement liability.

The Fourth Circuit unequivocally rejected the district court’s reliance on the functionality doctrine.  It found it irrelevant whether Google’s search engine may function better through the use of trademarked keywords, such as Rosetta Stone’s marks. The relevant inquiry is not whether use of the mark makes Google’s product more useful or functional, but whether the mark itself or the trademark holder’s use of the mark is functional. According to the Fourth Circuit, there was clearly nothing functional about Rosetta Stone’s use of its mark. Rosetta Stone uses its mark as a classic source identifier for its products. Accordingly, the Fourth Circuit explicitly rejected the functionality doctrine as a possible affirmative defense.

It remains to be seen whether Rosetta Stone will ultimately prevail in its claims against Google. Numerous key issues remain for trial, including Google’s intent, the extent of actual customer confusion, the sophistication of consumers of Rosetta Stone’s products, as well as the potential application of the nominative fair use defense. What is clear is that trademark owners are not yet relegated to actions solely against the infringing advertisers using internet search engines. Companies, such as Google, that provide the search engine services will remain key targets and their ability to rely upon functionality as a defense has taken a significant blow.

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Last week, the Wall Street Journal Law Blog wrote about a recent New York ethics opinion approving legal advertising on Groupon and other group coupon sites.  These services allow consumers to pay one price up front for a service that is more valuable. A restaurant, for example, may offer a $50 meal for $25 that is paid immediately. An attorney, like this one, for example, may offer to provide a will for $99.  New York wasn’t the first state to weigh in on the issue--South Carolina has, too--and it probably won’t be the last. 

Both New York and South Carolina have approved groupon lawyer advertising per se despite claims that it constitutes the improper sharing of legal fees with a non-lawyer. However, and probably of more practical use to one considering running a groupon lawyer deal, the opinion of each state shows that it is essentially a path fraught with dangerous ethical pitfalls.  For example, New York identified a laundry list of issues aside from fee-sharing that may be implicated in the typical scenario depending on the facts, including improper payment for referral, excessive fees, advertising violations, improper creation of the lawyer-client relationship, conflicts of interest, and improper scope of representation.

With these potential ethical pitfalls in mind, not to mention the questionable effectiveness and taste of such advertising, it is doubtful that legal service groupons will ever become too common. 

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Insurance coverage scholarship discussing cyber-liability and cyber-coverage has recently exploded, with authors catastrophizing the lawsuits arising out of social media and Web 2.0 (social networking sites and online platforms including Facebook, MySpace, and Twitter) and prophesying that insurers are somehow ill-equipped to respond to these claims.  Granted, we are seeing an increase in cybertort claims, likely due to the proliferation and tremendous growth of social networking sites and Web 2.0 media.  Cybertort claims may include a defamation claim based on insulting words posted on a Facebook page, a "bodily injury" claim against an online dating service, a disparagement claim based upon rumors and grievances aired by a consumer against a restaurant or automotive repair shop on Yelp.com, sexual harassment/hostile work environment claims arising out of inappropriate emails, products liability claims as a result of drug purchases over the Internet, and critical comments about one’s law firm on Abovethelaw.com. 

However, like "The Law of the Horse", cybertort claims are not all that different than those involving brick-and-mortar institutions and live persons that coverage practitioners have analyzed and evaluated for centuries.  While there are certain aspects of these cybertort claims that may lead to an uptick in number of suits filed, given how much easier it is to establish that the defendant published the words at issue, the coverage framework for addressing these suits remains the same-- and correctly so.  Based on well-established Coverage B jurisprudence, combined with a smattering of time-tested tort principles, insurers should know that they have all the needed tools at their disposal to determine coverage for these cybertort claims.

"The Law of the Horse" is a helpful analogy to understand why insurers should not be overly concerned about cybertort claims.  In the mid-1990s, as the Internet started gaining mainstream prominence, academics opined whether "cyberspace" would radically transform the legal landscape, e.g., employment contracting, antitrust and trade regulation, privacy law, international trade, consumer protection, healthcare, taxation, securities regulations, etc., and thereby require a legal framework with new and different rules and norms to account for its unique aspects.  Some academics even pushed for courses, textbook, treatises, and scholarship devoted entirely to "cyberlaw".  

Judge Frank Easterbrook of the Seventh Circuit vociferously disagreed with the notion of a unique legal framework for "cyberlaw" and compared it to "The Law of the Horse".  Judge Easterbrook analogized that centuries ago, when the problems du jour were disputes involving horses, legal scholarship devoted to horse law, i.e., disputes regarding the sale of horses, the care given by veterinarians to horses, and injuries suffered by individuals kicked by horses, would have been intellectually irresponsible.  Rather, an academic discipline of property law, tort law, and commercial transaction law would have provided the necessary knowledge to understand horse disputes as well as transactions and torts involving other common goods and services.  Likewise, Judge Easterbrook explained that cyberspace disputes are best understood through the prism of property, torts, and contracts, rather than a new and distinct legal framework.  Fifteen years later, these suggestions provide much needed guidance as coverage practitioners grapple with the disputes arising from social media and Web 2.0.

Although the new developments in connection with the Internet are exciting and may seem to be groundbreaking, given the idiosyncrasies of Web 2.0, the coverage questions are highly similar to those pre-Facebook.  For instance, whether someone slandered or libeled another; disparaged a business' goods, products, or services; or violated a person’s right of privacy (i.e., definitions d. and e. of the ISO definition of "personal and advertising injury") is not all that different now with sending Tweets than it was a century earlier with signs posted in the town square (obviously, the speed and distance this material travels is exponentially greater now).  E.g., Hoffman, LLC v. Community Living Solutions, LLC, 795 N.W.2d 62 (Wis. App. 2010) (where website did not mention or reference the plaintiff, there can be no libel or disparagement).  Further, the decision calculus for whether an act was an "accident" or whether a publication was made with knowledge of its falsity is no different for cybertorts and brick-and-mortar torts.  E.g., Four Corners Comms., Inc. v. Graphic Arts Mut. Ins. Co., 25 Misc. 3d 1236A, 906 N.Y.S.2d 772 (2009) (use of a website to compare a competitor to a douche product was an opinion and did not implicate the knowledge of falsity exclusion); Baxter v. Doe, 868 So. 2d 958 (La. App. 2d Cir. 2004) (publication of knowingly false and defamatory statements on an Internet website was uncovered intentional conduct).  The medium in which these claims arise may change, but the governing principles remain the same.

Web 2.0 should nonetheless have a pronounced impact on "advertising injury" coverage.  At a minimum, the Internet should make satisfying the ISO definition of "advertisement" much easier because these sites substantially lower the barriers to disseminating material to a large, geographically diverse swath of people.  Virtually every comment, posting, or submission on these sites is capable of being viewed by a large audience, even though the material may be intended for one person.  

One thing is certain: Web 2.0-based claims will continue to present challenges for insurers.  Still, insurers should feel confident that standard policy language and the existing legal framework applicable to brick-and-mortar institutions provide an adequate framework for addressing coverage for these emerging claims.

 

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Categories: Insurance Law | Internet

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