Cyberlaw Predictions: Competition, Trademarks, Online Contracts

This post is the sixteenth and final entry in a series of predictions from legal and business experts about the directions cyberlaw policy might take in 2013, solicited by editors of BNA's Electronic Commerce & Law Report during the closing weeks of 2012. We asked that the remarks be brief -- something along the lines of a Twitter "tweet" or an elevator pitch. Over 100 attorneys, law professors, online business executives, policy advocates and other cyberlaw experts responded, producing 307 separate assessments, predictions, or just plain complaints regarding any of the many legal subject areas that affect online businesses.

The comments collected here deal with a cyberlaw topic that is certain to gain public scrutiny in the next few years; namely, competition issues that are percolating to the surface as the world transitions from the public switched telephone networks to all-IP voice and data networks, from physical storefronts to websites, from paper-based to electronic media, from broadcasting to sharing: competition among the dwindling number of internet service providers, competition among electronic content distributors, competition for scarce IP addresses and domain names, and competition among online advertising platforms. Also in this space: the persistent "digital divide" and the free speech rights of internet service providers and their customers.

sumo wrestlers competition

The online trademark case that captured everyone's attention in 2012, Rosetta Stone v. Google, a case raising the issue of whether Google is liable for trademark infringement for selling search engine keywords containing trademarked terms, settled, leaving a wide disparity of opinion over the state of the law in this area. The U.S. Patent and Trademark Office published advice regarding the use of website specimens and, according to one commenter, missed an opportunity to reign in trademark bullying.

No big online contracting cases were decided in 2012, though online contracting as a way of doing business is bigger than ever. Arbitration as a contract remedy is finding its way into more deals than ever, including electronic contracts.

Lastly, we received comments remarking on legal developments outside the United States.

The experts' views:

Competition, Regulation in Internet Space

Next #FCC chair will have to confront inadequate & uncompetitive internet access turning US into a #captiveaudience. Susan Crawford, @scrawford, Visiting Professor, Harvard Kennedy School, Cambridge, Mass.

Legacy number concerns should be addressed in 2013--especially if we want to reduce artificial scarcity in the IPv4 space. Kathryn Kleiman, @KleimK, Internet Counsel, Fletcher Heald & Hildreth, Arlington, Va.

The petitions filed by AT&T and the NTCA at the FCC to facilitate the transition from legacy copper networks to IP networks will become central to telecom policy discussions in 2013. Yaron Dori, @yarondori, Partner, Covington & Burling LLP, Washington, D.C.

Antitrust is becoming a key question for Internet platforms. Apple is fighting serious lawsuits on e-book pricing; the other shoe is expected to drop on Google any day now. James Grimmelmann, Professor of Law, New York Law School, New York, N.Y.[*]

AT&T's announcement it will shift to an all IP-network in the next few years will radically alter the telecom regulatory landscape. With Congress unable to act, the FCC will muddle through with its existing authority on just about every area in telecom from carrier of last resort to interconnection to privacy to universal service. Harold Feld, @haroldfeld, Senior Vice President, Public Knowledge, Washington, D.C.

Deep vertical integration of tech giants raises q: Is choice of a platform at birth our last choice? Susan Crawford, @scrawford, Visiting Professor, Harvard Kennedy School, Cambridge, Mass.

Regulators and policymakers on both sides of the Atlantic will be reviewing antitrust and competition issues raised by the new gTLD program throughout the coming year. Philip Corwin, @vlawdc, Founding Principal, Virtualaw LLC, Washington, D.C.

Look for the 10th Circuit to reverse and remand portions of the FCC's Transformation Order addressing intercarrier compensation and universal service reform in 2013. Yaron Dori, @yarondori, Partner, Covington & Burling LLP, Washington, D.C.

Wireless policy took a radical turn in 2012 as formerly unspeakable ideas went mainstream. The Department of Justice and the FCC decided "there will be 4 national wireless carriers, and there will be enough spectrum for them to stay viable." Suddenly, regulation to promote competition is cool again, with the result that Deustsche Telekom and Softbank have put in $25 billion in new investment into T-Mobile and Sprint in the last few months. Harold Feld, @haroldfeld, Senior Vice President, Public Knowledge, Washington, D.C.

Calls to divide content/conduit will increase as telecoms claim "speaker" status under 1st Amend. for transmitting bits. Susan Crawford, @scrawford, Visiting Professor, Harvard Kennedy School, Cambridge, Mass.

(Non-Domain Name) Trademark Issues

Is my soul a red sole? Will I know you by your soul or the sole you wear? Whatever you choose--dress, shoe or scarf--you can tell me who you are with the color of your identity. Louboutin v. Yves St. Laurent (2nd Circuit 2012), Katherine M. Basile, Partner, Novak Druce & Quigg LLP, Cupertino, Calif.

January 2013 will bring a Canadian trademark data validation and foreign filing platform that bridges the Madrid gap into Canada …. Follow @madridfiler for game changer developments and launch date. Claire Wilson, @ollip_PC, Trademark Coordinator, Ollip PC, Ottawa, Ontario, Canada.

The USPTO has finally published guidelines for when a webpage can function as an acceptable specimen for the display of goods associated with a trademark. A webpage may be acceptable if it: (1) contains a picture or textual description of the identified goods; shows the mark sufficiently near the picture or description of the identified goods to associate the mark with the goods; and (3) provides information necessary to order the identified goods. Otherwise, the webpage is merely an advertisement that promotes the goods without allowing them to be purchased. Timothy D. Casey, Partner, Woodcock Washburn LLP, Seattle.

Will trademarks mimic patents? In patent cases, if the patent owner doesn't like where he's been sued, he can promise not to sue for the current product and tell the court it lacks jurisdiction; when the next version comes out, the owner sues where he wants to. In a variation on that theme, Nike argued before the U.S. Supreme Court that because it dismissed its trademark infringement case and promised broadly not to sue defendant again, defendant no longer had standing to maintain its counterclaim for declaratory relief to cancel Nike's federal trademark registration--defendant could take up its grievance with the TTAB. Many trademark attorneys expect Nike to prevail, but stay tuned. Nike v. Already (U.S. Supreme Court, argued 11/2012), Katherine M. Basile, Partner, Novak Druce & Quigg LLP, Cupertino, Calif.

The settlement in the Rosetta Stone v. Google trademark dispute announced in October over the Google AdWords program leaves the legality of that program uncertain, which is the way Google apparently wants it. Andrew Berger, @IpInBrief, Counsel, Tannenbaum Helpern Syracuse & Hirschtritt LLP, New York, N.Y.

Trademark law will continue to grapple with aesthetic functionality, as the impact of Louboutin and Betty Boop ripple across the Circuits. David Bernstein, Partner, Debevoise & Plimpton LLP, New York, N.Y.

The PTO's pathetic punt on the issue of trademark bullying was also a big disappointment--unsurprising but still remarkable for its lack of intellectual honesty. Ronald Coleman, @roncoleman, Partner, Goetz Fitzpatrick LLP, New York, N.Y.

Courts are continuing to grapple with what constitutes confusion on the internet. Is mere momentary confusion actionable? In Rosetta Stone v. Google, the Fourth Circuit affirmed that clicking on a link that makes use of a trademark can give rise to infringement liability if the context makes consumers likely to conclude that the trademark's owner endorsed the link. Howard S. Hogan, Partner, Gibson, Dunn & Crutcher LLP, Washington, D.C.

INTA will embark on a new era next year, as Alan Drewsen's brilliant leadership of the International Trademark Association comes to a close in 2013 and a new chief executive officer takes the helm of the world's leading association for the advancement of trademark law. David Bernstein, Partner, Debevoise & Plimpton LLP, New York, N.Y.

Online Contracting

The Supreme Court's recent decision in Nitro-Lift Technologies LLC v. Howard may inspire more employers to mandate arbitration and favorable forum selection provisions in their noncompete agreements, particularly in jurisdictions where noncompetes are difficult to enforce. Robert B. Milligan, @tradesecretslaw, Partner, Seyfarth Shaw LLP, Los Angeles.

Courts continue to struggle with online contracting practices. In particular, courts are having problems in determining whether a contract was made in the first place, and are using artificial "clickwrap" and "browsewrap" constructs. But there really is no need to make a distinction for purposes of determining whether an enforceable contract has been created. Just use this four part test: (1) the user is provided with adequate notice of the existence of the proposed terms; (2) the user has a meaningful opportunity to review the terms; (3) the user is provided with adequate notice that the taking of a specified action manifests assent to the terms; and (4) the user takes the action specified in the notice. John E. Ottaviani, Partner, @jottaviani, Edwards Wildman Palmer LLP, Providence, R.I.

Watch for clickwrap agreements used by cloud providers and social media networks to become even more one-sided, with patent-related covenants not to sue and other previously atypical terms becoming common. Watch for an increase in companies seeking to challenge one-sided clickwrap agreements entered into with cloud providers and social media networks. John F. Delaney, @MoFoSocMedia, Partner, and editor of SociallyAwareBlog, Morrison & Foerster LLP, New York, N.Y.

Multiple decisions enforcing arbitration clauses with class action waivers, but not where arbitration clause appears only in website TOS that the website does not require to be read and accepted Jeffrey Jacobson, Partner, Debevoise & Plimpton LLP, New York, N.Y.

Latin America

In 2013 Peru will likely enact the long awaited complementary regulations to its Data Protection Act from 2011. This will bring a whole new set of obligations for companies and public entities that will need to adjust their databases and information security protocols to a new set of legal standards. Fines can reach US$139,500. Oscar Montezuma @montezumaypanez, Partner, Montezuma & Panez Consultores Legales, Lima, Peru.

According to the Peru-United States Trade Promotion Agreement, Peru should implement a DMCA styled legal framework regulating ISP liability for copyright infringement. The drafting process just started and 2013 may likely see a final draft for public debate in the Congress. Oscar Montezuma, @montezumaypanez, Partner, Montezuma & Panez Consultores Legales, Lima, Peru.


Asia is the region to watch in 2013. New laws in Malaysia, Philippines, Singapore will take effect in 2013. Miriam Wugmeister, Partner, Morrison & Foerster, New York, N.Y.

As China's relatively young competition regime continues to develop, use of IPR to compete and win market share will likely face greater scrutiny in the coming year. Grace Chen, @twobirdsIT, Partner, Bird & Bird LLP, Beijing.

As more and more B2B and B2C commercial transactions take place in cyberspace, during the next year, we would expect to see very significant developments in cyberlaw in China, focusing on e-commerce, online contracts, etc. Grace Chen, @twobirdsIT, Partner, Bird & Bird LLP, Beijing.

[*] On Jan. 3, after Prof. Grimmelmann submitted his comment, the other shoe did drop. It was a flip flop.

(photo credit: Edward Dahlmulder on flickr)


Follow @tjotoole on Twitter Follow me on Twitter at @tjotoole.