The program enables individuals and companies to register a Facebook URL with an address format of www.facebook.com/[username].  Applicant for usernames are generally allowed to choose them freely, without need to prove any connection or ownership to the name itself.  This wide-open nature raises potential concerns for intellectual property rights holders, particularly trademark owners, worried about unauthorized use of their trademarks in connection with the service. 

Facebook has sought to maintain as much of control over the usernames as possible, including the right to remove or reclaim a username at any time for any reason.  This strong proactive stance is probably partially motivated by a desire to preempt and prevent widespread buying or selling of usernames, and the cyber-squatting practices that follow.  (Such concerns are not unfounded; Facebook usernames are already up for sale on Assetize, an online website specializing in the buying and selling of online accounts.)

But back to the ownership issue–Can Facebook actually “own” a username that contains a registered and widely used trademark owned by someone else?  And if Facebook “owns” the username, what happens when a trademark owner seeks to register the username containing its mark?  Is “ownership” (i.e., title) to the username conveyed?  Or does Facebook license the username?  Take for example the username “facebook.com/burgerking”.  As of the date of this posting, Burger King has not yet registered the username, but if it does choose to register it, is it accurate to say that Facebook is transferring ownership over the username to Burger King?  Or is it licensing it?  Either way, how can Facebook transfer to Burger King something Burger King already owns?

Also, Facebook claims that when a Facebook account is cancelled, that account’s username will not become available to anyone else.  If Burger King registers for the user name, and then cancels it, can Facebook prevent Burger King from re-registering the user name if it later changes its mind?  In the end it is not clear or likely that Facebook can legitimately assert power over trademark holders when it comes to the use of their trademarks in the Usernames program. 

Facebook’s terms of service do not help to clarify the matter.  They make no mention of the Usernames program.  On the other hand, Facebook’s “Help Center” does have a section devoted to answering common questions about the program.  When the program was launched, the Help Center materials contained a few scant paragraphs of information.  Since that time, it has become much more developed, but that initial lack of clarity exemplifies the legal ambiguity with which the initiative got off the ground.  The uncertainties surrounding the Usernames program may be of particular concern for businesses in light of their increasing reliance on Facebook as an avenue through which to connect with customers (and concerns about businesses’ dependence on Facebook are not new).

We will eventually see if Facebook’s experience with the Usernames program proves a cautionary tale as to the pitfalls of rolling out new programs without fully anticipating the potential legal issues.  As the Username feature develops and more companies become aware of it, Facebook may see both disputes and angry markholders multiply. 

This may turn into yet another cyber-battleground over trademarks.  Numerous trademark infringement claims have been brought against Google in connection with its search ad business.  The claims are based on Google’s sale of trademarked keywords through its AdWords program.  In large part, the plaintiffs have asserted that such sales constitute trademark infringement because consumers could be confused by links to competitors’ ads that pop up alongside a search for the plaintiff’s marks.  While Google suffered a litigation setback in April when the Second Circuit reversed a dismissal of a suit brought by Rescuecom Corp., two separate actions against Google, one by Daniel Jurin and the other by Ascentive LLC, were both recently dismissed.

We will continue to monitor these matters and keep an eye out for developments.  In the meantime, our group would be happy to discuss any specific questions you might have about the impact of Facebook’s Usernames program on your trademark portfolio and help you develop strategies to protect your intellectual property rights.

*  We would like to thank Yoshinori Sasao, a summer associate at the Firm, who assisted in preparing this article.

The question of retroactive licensing has been considered in a number of district court cases, however, Daviswas the first time the issue had been considered by an appellate court.  The case centered around two songs written by Mary J. Blige, Bruce Miller and others, all of whom were defendants in the case.  The plaintiff, Sharice Davis, claimed that Blige’s songs infringed her copyright in two songs she co-authored with Bruce Chambliss, the step-father of Blige and father of Miller.  Miller however, claimed that Chambliss, who was not a party to the case, wrote the disputed compositions on his own and orally agreed to give all rights in the music to Miller.  However, the crux of the case turned on a written agreement between Miller and Chambliss, created two days before Chambliss’ first deposition.  The agreement purported to retroactively transfer all rights in Chambliss’ works to Miller from the date of their composition.  This would make Miller a co-owner in the two disputed compositions and validate the licenses he gave to Blige to use the works.  If the Court of Appeals had upheld the agreement, as the District Court did, Davis would have lost all of her claims for past infringement against the other defendants. 

The Second Circuit overturned the District Court decision, holding that a co-author cannot immunize a third party for past infringements by retroactively issuing a license for the infringed work.  To support its decision, the Court of Appeals used the property theory of joint tenancy as a model for the rights of copyright co-owners.  Each copyright co-owner had independent rights to use and license the work, subject only to a duty to account to the other co-owners for any profits that are made.  A co-owner can only convey as much as he possesses and cannot, therefore, transfer or assign the rights of other co-owners.  The court held that a retroactive transfer would effectively allow a co-owner to assign away another co-owner’s right to sue for accrued infringements.  While Chambliss could release Miller and the others from liability from him for past infringements, he could not transfer or assign any rights Davis had against the defendants for accrued causes of action. 

By holding that licenses can only be issued prospectively, the court drew a line between a co-owners right to sue for past and future infringements.  A copyright co-owner can unilaterally issue a non-exclusive license which prevents a co-owner from suing the licensee for any future use.  However, a co-owner cannot issue a retroactive license that would prevent a co-owner from suing for infringements that have already occurred.  This holding, the court believed, provides certainty for co-owners dealing with infringement actions and discourages infringement by ensuring that retroactive licenses aren’t used to lower the cost of infringement.   

In Sybersound, the Ninth Circuit dealt with the question of a co-owner’s right to license their copyright from a different perspective.  Where Davis dealt whether a co-owner could unilaterally issue a retroactive license in order to cure past infringements, the question in Sybersound was whether a co-owner can unilaterally grant an exclusive license that gives the licensee co-ownership in the copyright. 

Sybersound had brought claims of infringement against five of its competitors in the karaoke industry for allegedly infringing Sybersound’s copyrights in nine songs.  Sybersound had acquired its rights in these songs by way of agreement with TVT, a co-owner the copyrights along with other publishing companies.  The agreement stated that TVT was making Sybersound the “exclusive assignee of TVT’s copyrighted karaoke use interest and of TVT’s right to sue,” purportedly making Sybersound a co-owner in the copyright.  The Ninth Circuit held that the agreement was invalid because TVT could not exclusively assign what it did not exclusively possess.  TVT was only a co-owner of the copyright, and therefore, “as a co-owner of the copyright, TVT could not grant an exclusive right interest.”  For Sybersonic to acquire an exclusive license, each of the co-owners of the copyright would have to agree to the transfer.  Since TVT could only unilaterally grant a non-exclusive license, Sybersonic did not have standing to sue and the infringement claims were dismissed.    

It had been a common practice in the media industry to obtain licenses after the fact.  However, after Davis, that practice has become much more uncertain.  The Sybersound decision might have a dampening effect on similar transactions as it seemingly makes it impossible for a copyright co-owner to grant an exclusive license of his proportional share in a copyright without the consent of his fellow co-owners.   

Left undiscussed in these decisions was the issue of the representations made by the co-owner of the copyrights in the underlying license agreements.  One can assume that the licensees sought and obtained a representation that the licensors had the authority to grant the underlying rights and that use by the licensee of the copyrighted works would not infringe or violate any third party’s rights.  Obviously these rulings have rendered those representations false, exposing the co-owners to potential claims under the license agreements, including claims for indemnification.

In confronting the commercial landscape created by these rulings, it is critical for licensees to carefully consider the rights they are obtaining in copyrighted works with multiple owners, particularly when rights are being granted on a retroactive or exclusive basis, to ensure that they will be able to exploit the rights as intended.  For copyright co-owners, it is important that any representations they make be tailored to reflect their limitations on the rights they can grant so that they are not promising more than they can deliver.

Our New Media, Entertainment and Technology practice group has extensive experience assisting our clients in understanding and analyzing the impact of new developments in the law on the design, development, implementation and operation of their respective business initiatives across all new media platforms, and we will continue to stay apprised of and routinely report on further developments in the treatment of co-ownership by the courts in this regard.     

* We would like to thank Kate O’Donnell, a Summer Associate at the Firm, for her assistance in preparing this article.

The new DOJ regulations implement the expanded age-verification requirements enacted in the Adam Walsh Act.  Now primary and secondary producers of depictions of “simulated sexually explicit conduct” and “lascivious exhibition” must also comply with age-verification record keeping requirements. The regulations define a primary producer as the individual who records the depiction of the sexually explicit conduct, whether it’s by videotape, photography, or a digitally manipulated image.  Primary producers also include anyone who digitizes an image of sexually explicit conduct.  A secondary producer includes anyone who “produces, assembles, manufactures, publishes, duplicates, reproduces, or reissues a book, magazine, periodical, videotape, or digitally or computer-manipulated image, picture, or other matter” that is intended for commercial distribution.  This definition also encompasses anyone who includes sexually explicit depictions on a computer site or service or otherwise manages the sexually explicit content on a computer site or service.  The breadth of the initial definition of secondary producer raised protest from the media industry and it was later amended to exclude those who merely distribute sexually explicit conduct, without altering or editing the content. Simulated sexually explicit conduct includes conduct that would cause a reasonable viewer to believe that the performers were actually engaged in sexually explicit conduct.  However, the depiction must amount to more than the mere suggestion of sexually explicit conduct.  While lascivious exhibition is not defined within the regulations, the DOJ website describes a few components of a lascivious depiction: “(1) the focal point is on the subject’s genitalia or pubic area, (2) the setting of the visual depiction is sexually suggestive . . . (3) the visual depiction suggests sexual coyness or a willingness to engage in sexual activity; or (4) the visual depiction is intended to elicit a sexual response in the viewer.”  Under this description, producers who show only fleeting nudity might still be subject to the age-verification recording procedures. 

The new regulations require the primary producer to examine a government issued photo ID of every performer before the production of the sexually explicit depiction.  The producer must then make a record of the performer’s name, aliases, date of birth, the date of the production of the sexually explicit image, and make a photocopy of the identification.  These records must be maintained in accordance with specific requirements and the visual depiction must be labeled with the location of the record.  A secondary producer of sexually explicit content must obtain all age-verification records from the primary producer, but does not have to independently verify the age of the performers.

While these requirements might have proven burdensome for mainstream media, the DOJ regulations contain an important safe harbor which offsets some of this burden:  Specifically, the record keeping provisions do not apply to a producer of simulated sexual conduct or lascivious images if the images are intended for commercial distribution as part of a commercial enterprise and they meet one of two requirements: (1) if the visual depiction is not “produced, marketed, or made available in circumstances such that an ordinary person would conclude that the matter contains a visual depiction that is child pornography” or (2) the depiction is subject to regulation by the FCC in its regulation of the broadcast of obscene, indecent, or profane programming. 

Producers seeking eligibility for the exemption must send a letter of certification to the Attorney General. The certification letter must state the statutory basis for eligibility, and, in the required language, state that the producer, in the regular course of business, collects and maintains identifying information for all performers. The letter must be signed by an executive officer of the entity or, if the entity does not have executive officers, by a senior manager who oversees the entity’s activities.  There are specific requirements for foreign entities seeking certification, or entities which have used foreign performers. 

The deadline for submitting the certification is June 16, 2009.  For all production that begins after June 16, 2009, the certification is due within 60 days of the start of the production.   After the initial certification, there is no need to recertify unless there are any material changes to the information provided in the certification.  In that case, a subsequent certification must be filed within 60 days of the material change. 

Our New Media, Entertainment and Technology practice group has been closely monitoring these regulations and would be happy to answer any questions regarding the impact of the same on your content production, broadcast and distribution initiatives or assist you in filing your own certification letters. 

We would like to thank Kate O’Donnell, a summer associate with the Firm, for her assistance in the preparation of this alert.

  Pending Class Action Points to Potential Pitfalls

While not directly involving mobile digital content provides, a class action lawsuit pending in Federal court in Massachusetts has brought into focus a practice that such providers must be aware of and protect themselves against. At issue in Knox and Esparza v. m-Qube, Inc. is “cramming” pursuant to which a cellular subscriber is automatically billed for mobile content services that were not purchased.

The plaintiffs in Knox allege that m-Qube, a third-party provider of billing services for wireless carriers, unlawfully billed for services that the plaintiffs did not order. Specifically, the plaintiffs allege that m-Qube continued to bill for services that had been purchased by prior subscribers using their mobile phone numbers, which were “recycled” or “refurbished” after the prior subscriber terminated his or her cellular contract. The parties have briefed a motion to dismiss, on which oral argument is scheduled to be heard at the end of the month.

Curiously, while the complaint alleges wrongdoing on the part of the content mobile digital providers themselves (in particular, negligently failing to determine when authorization was provided for billing for the mobile content), no content providers were named as defendants. Notwithstanding that fact, the allegations of the case do provide critical guidance to mobile digital content providers when entering into agreements with wireless carriers.

Typically, wireless carriers and/or their third-party billing vendor(s) assume primary responsibility for obtaining authorization from subscribers to bill such subscribers for the content purchased, whether on a subscription, per-view or per-download basis, as well as for managing the billing and collections. The content provider is paid a portion of the revenue remitted by the subscriber and collected by the carrier and/or third-party vendor for the content purchased.

But what happens when, as in Knox, the subscriber claims he or she did not request the content and/or authorize being billed for it? Could the content provider be held liable under those circumstances, where it has received the economic benefit of such unauthorized transaction?

The law currently is unclear on this subject. However, mobile digital content providers may mitigate their risk under these circumstances by ensuring that their content license agreements with wireless carrier and mobile content aggregator partners clearly provide that the carrier or aggregator, as applicable, will indemnify the content provider for any claims that may arise as a result of such billing practices and that such partners’ independently procure and maintain sufficient insurance coverage for losses incurred in connection with any such claims .

While an argument could be made that the indemnification provisions of many content license agreements can be broadly construed to cover such a situation (e.g. where the carrier must indemnify the content provider for claims arising as a result of the carrier’s wireless service generally), a better practice would be to expressly cover claims related to billing and other potential disputes that may arise between the subscriber and the carrier and/or its agents.