Letter from AmeriKat

Oprah, Oz, Acai!

Yesterday morning the AmeriKat flew out into the sunshine and bounded to her local café for a smoothie. Ten minutes later ‘Smoothie Number 2’ consisting of blended passion fruit, mango and acai berry was served to her with a slice of banana cake. Belonging to the ‘yuppier’ end of the fruit scale, the acai berry’s attributes are meant to include its detoxifying and diuretic character.

It was these characteristics that found themselves the subject of a trade mark suit filed last Wednesday in federal court by Oprah Winfrey via her production company Harpo Entertainment Group and Dr Mehmet Oz. Dr Oz regularly features on Oprah in segments concerning diet and food choices that can lead to better health. In a segment last year, Dr Oz praised the acai berry’s attributes. Like anything Oprah touches, the acai berry quickly turned to gold and a market in the acai berry was born. Without the Oprah/Oz endorsement however, the acai berry was a virtual ‘nobody’ in fruit society. Inevitably, internet distributors began to sell acai products implicating the Oprah/Oz endorsement although neither party had ever licensed their likeness or trade mark for such use.

Subsequently, Oprah’s website received numerous complaints relating to the acai berry from those who had mistakenly believed the product they purchased was endorsed by Oprah or Dr Oz to those who were defrauded when their ordered products never arrived. Following these complaints, Oprah’s team, lead by Illinois Attorney General Lisa Madigan begun an investigation into what Forbes described as the “shadowy cottage industry of resveratrol (an anti-aging substance) sellers.” Following this investigation Madigan herself filed three consumer fraud lawsuits against five of these companies.

The suit filed by Oprah and Dr Oz last week against more than 50 internet marketers alleged trade mark infringement, copyright infringement, false advertising, and cybersquatting for domain names confusingly similar to Oprah and Oz’s marks, such as www.oprahdietsecret.com. Marc Rachman, a lawyer for Harpo, stated in Business Week that in the past lawyers would target individual website operators, but “then another would pop up where the affiliate changed the Web address by a letter or a dash…[w]e didn’t want to engage in a whack-a-mole. We want these practices to stop” and “consumers to get their money back.”

The AmeriKat believes that this case and Madigan’s consumer fraud lawsuits may act as a much-needed warning shot to these types of internet marketing practices.

The More the Merrier

Microsoft, Amazon and Yahoo! have joined the Internet Archive, library and publishing associations and the Open Book Alliance in the fight to stop the Google Book Search Settlement from being approved (see AmeriKat’s previous posts on the Google Book Search here and here). The Open Book Alliance’s lawyer, Gary Reback, no stranger to antitrust cases following his involvement in the famous antitrust case brought against Microsoft in the late 1990s, now finds himself fighting alongside the computing giant. Reback was quoted in the New York Times as stating that the settlement has “enormous, far-reaching anti-competitive consequences that people are just beginning to wake up to.” There has yet been a formal announcement from these three technology giants, but the AmeriKat is interested to see what Microsoft, Amazon and Yahoo! have to say about their motivation for participation. The AmeriKat reminds readers that the deadline to file submissions in support or opposition of the settlement is 5 September 2009.

Sony BMG’s Failure to LAUNCH

Following a lawsuit brought by recording companies owned by Sony Corp. in 2001, the United States Court of Appeal for the Second Circuit in New York ruled last Friday that Yahoo! is not required to pay royalties for songs played over its Internet radio, LAUNCHcast. The lawsuit claimed that LAUNCHcast was ‘interactive’ in that it permitted users to skip past songs and customize their radio stations. As the first federal appellate court to address the issue of whether an webcasting service that provides users with individualized and user-controlled content constituted an ‘interactive service’ under the definition in 17 USC § 114(j)(7), the court’s judgment was eagerly anticipated by the recording industry. If held to be an ‘interactive service’ under the definition then the service would be required to pay for licences for the sound recordings to the recording companies. If LAUNCHcast fell outside the definition, they would only be liable to pay the statutory licence fee as set by the Copyright Royalty Board. The music industry, in facing declining record sales and revenue, was obviously eager that the court construe Yahoo!’s activities as falling within the definition.

The full definition of an ‘interactive service’ under the statute is

one that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected by or on behalf of the recipient. The ability of individuals to request that particular sound recordings be performed for reception by the public at large, or in the case of a subscription service, by all subscribers of the service, does not make a service interactive, if the programming on each channel of the service does not substantially consist of sound recordings that are performed within 1 hour of the request or at a time designated by either the transmitting entity or the individual making such request. If an entity offers both interactive and noninteractive services (either concurrently or at different times), the noninteractive component shall not be treated as part of an interactive service.

In short, the court stated that LAUNCHcast would be ‘interactive’ under the statute if a user can either:

1. request and have played a particular sound recording, or
2. receive a transmission of a program ‘specially created’ for the user.

Given that a LAUNCHcast user could not request and expect to hear a specific song on demand, the defendant fell outside the first definition. It was the second definition that caused the district and appellate court the most problems, given the phrase ‘specially created’. Following extensive discussion regarding Congress’s intent that this provision be aimed at protecting the recording industry against file-sharing programs like Napster, the court held that LAUNCHcast’s services did not satisfy the second definition either. The court stated that LAUNCHcast

“does not provide sufficient control to users such that playlists are so predictable that users will choose to listen to the webcast in lieu of purchasing music, thereby – in the aggregate – diminishing record sales.”

The AmeriKat agrees with this analysis. Having previously used LAUNCHcast she can personally vouch for the unpredictability of her personal customized station. Despite repeatedly clicking to “Never” hear any song by The Counting Crows, the AmeriKat’s radio station persisted in constantly playing their songs, much to her annoyance.

The AmeriKat disagrees with some commentary that this judgment is necessarily unhelpful in any way and believes that the judgment was in fact unsurprising, given the unpredictability of LAUNCHcast’s programming (in its present form, at least). The definition, it seems, will not include those services where a user only exercises a minimal choice of electing a musical genre, but may include services like Spotify where a user can play ‘on-demand’ user-requested songs and compile personalized playlists. The AmeriKat suggests two articles (here and here) in Wired regarding the proposed launch of Spotify in the US.