Presence of encryption software relevant evidence in criminal conviction

Anyone who tracks court decisions related to the Internet knows that criminal cases involving improper conduct with a minor are quite common, and generally have little or no legal significance. A recent decision of the Court of Appeals of Minnesota in the case of State v. Levie, however, is worth noting in that the decision affirmed a controversial evidentiary ruling. The trial court judge had allowed into evidence the mere fact that the defendant had the encryption software PGP installed on his computer. The judge had determined that the presence of the software was relevant evidence to show that the defendant had engaged in improper conduct with a minor.

The decision is puzzling for a couple of different reasons. The forensic report prepared by the police revealed that nothing on the defendant’s computer had been encrypted. Furthermore, the police officer who prepared the forensic report admitted that PGP “may be included on every Macintosh that comes out today.” Given the evidence of widespread use of PGP and the lack of any evidence to show the defendant had used the encryption software in connection with any crime, one is left to wonder why the court would find it, as it stated, “at least somewhat relevant.”

Apparently, the court believed that the mere ability to conceal wrongdoing showed an actual intent to commit a crime. But such a conclusion is troubling. How is the mere presence of PGP on the defendant’s computer any different than him having a lock on his front door? Would the court have drawn the same conclusion regarding relevancy if the defendant was on trial for something less heinous, say, securities fraud?

[More coverage here.]

State v. Levie, 2005 Minn. App. LEXIS 476 (May 3, 2005).

Web content and domain names denied trade secret status

Dynamic Scales hired Ivan Paramanandam (“Ivan”) and his consulting firm to develop an online retail store to sell scales. Ivan developed the site, and registered a staggering 400 domain names to be used in connection with it. Eventually the Dynamic Scales site became the largest online retail store in the scale industry.

After a dispute over compensation for his work, Ivan informed Dynamic Scales that he wished to get out of the scale business, and his relationship with Dynamic Scales was terminated. A few days later, however, Dynamic Scales learned that Ivan had set up his own online retail store. Ivan’s new site was “practically identical in both content and appearance” to the Dynamic Scales site.

Despite the striking similarities between the websites, Dynamic Scales forsook an action in federal court for copyright infringement, and instead filed an action in state court for violation of Indiana’s trade secrets statute [Ind. Code § 24-2-3-1 et seq.]. The complaint alleged that Ivan had misappropriated “[t]he information contained on [the Dynamic Scales] website” and the “domain names developed, created, and maintained by and for Dynamic Scales.”

Dynamic Scales sought a preliminary injunction against Ivan, and the trial court granted the request. Ivan sought review of the trial court’s award, and the appellate court reversed. It concluded that Dynamic Scales had failed to present a prima facie case of misappropriation of trade secrets.

One of the owners of Dynamic Scales had testified that it had taken no steps at all to protect the content of its website. To the contrary, he testified that “[w]e chose to show all our cards to our competition.” He further testified that information was “left out for the general public to see.” Given the lack of reasonable efforts to maintain the secrecy of the information, and the fact that the 400 domain names had been registered to make the site readily available to potential customers, the court held that the district court abused its discretion in awarding injunctive relief.

Paramanandam v. Herrmann, — N.E.2d —, 2005 WL 1220162 (Ind.App., May 24, 2005).

Dastar case applied to dismiss suit against web developer

The U.S. District Court for the District of Maryland has dismissed a copyright infringement and Lanham Act suit against a web developer for using in her online portfolio work done for a previous employer. The court held that it was without subject matter jurisdiction to hear the case where the plaintiff had not obtained copyright registrations over the works in issue, and that Section 43(a) of the Lanham Act could not apply to cover an alleged misappropriation of the “idea, concept or communication” embodied in the works at issue.

On January 5, 2005, Robin Euler left her job as a senior graphic and web designer for Mays & Associates (“Mays”), a “Maryland based, full service web and print design, marketing and communications company.” She then set up shop on her own using the name Red Robin Design [www.redrobindesign.com]. On her new company’s website, Euler placed a portfolio of her work, which included websites and print advertisements she had designed while working for Mays.

On February 11, 2005, Mays filed applications with the U.S. Copyright Office, seeking to register its copyrights in the websites and brochures Euler was using in her portfolio. Three days later, Mays filed suit in federal court in Maryland, alleging copyright infringement, unfair competition under Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), and various state law claims. Euler moved to dismiss on the basis of lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. The court granted Euler’s motion and dismissed the case.

Euler’s motion was based on two principal arguments: (1) that the court was without subject matter jurisdiction over the copyright claim, as Mays had not yet received registrations at the time of suit, and (2) that Mays’s cause of action under Section 43(a) of the Lanham Act was preempted by copyright law as called for in the U.S. Supreme Court case of Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 123 S.Ct. 2041 (2003).

In ruling in favor of Euler’s motion on the subject matter jurisdiction issue, the court held that Section 411 of the Copyright Act (17 U.S.C. § 411) requires a plaintiff to have actually received copyright registrations for the works at issue before filing suit. The court looked to the “ordinary, contemporary, and common meaning” of the words in Section 411(a) to determine that Congress intended to require “something more than application for a copyright prior to filing suit.” Because Mays had only applied for copyright protection and had not yet received registrations, the court was without subject matter jurisdiction.

On the Section 43(a) issue, the court held that Euler’s use on the Red Robin site of work she had done while employed by Mays could not constitute a false designation of origin. The court noted that under Dastar, Section 43(a) does not cover “any idea, concept, or communication” embodied in goods (and presumably services) offered for sale. Any misappropriation or other wrongdoing in this context would be covered by copyright law.

Mays & Associates Inc. v. Euler, — F.Supp.2d —, 2005 WL 1172326 (D.Md. May 18, 2005).

FMLA policy on company intranet sufficient notice to employee

In the retaliatory discharge case of Dube v. J.P. Morgan Investor Services, plaintiff Dube alleged, among other things, that he had not been given proper notice of his rights under the Family and Medical Leave Act of 1993, 29 USCA § 2601 et seq. (“FMLA”). The employer moved for summary judgment. In granting the employer’s motion, the court found that prior to Dube’s period of absence, the company’s human resource policies (including information about the FMLA) had been provided to all employees via the company’s intranet website. The court concluded that the posting on the intranet adequately gave notice to Dube of both his and his employer’s obligations under the FMLA.

Dube v. J.P. Morgan Investor Services, 2005 WL 1140766 (D.Mass., May 13, 2005).

No dog-gone jurisdiction over New Jersey resident

Paws With a Cause, Inc., a Michigan non-profit corporation, sued Paws For a Cause, LLC, a New Jersey entity, for trademark infringement in federal court in Michigan. Plaintiff operates the website pawswithacause.com, while defendant operates pawsforacause.com. The defendant moved to dismiss under Fed. R. Civ. P. 12(b)(2), citing a lack of personal jurisdiction.

The defendant explained that it had “never ever conducted business of any type with anyone from the State of Michigan.” The plaintiff, however, claimed that it suffered a tortious injury in Michigan from the defendant’s operation of the website with a confusingly similar domain name. The plaintiff also argued that the defendant had caused injury in Michigan by maintaining an unauthorized link from its website to the plaintiff’s website. Finally, the plaintiff argued that it suffered injury resulting from the defendant’s “telephonic threat to pursue a criminal investigation unless plaintiff withdrew its complaint.”

The court rejected the plaintiff’s arguments. It held that even if the potential confusion caused by the similarities in the parties’ names caused some sort of tortious injury in Michigan, the defendant’s contacts with Michigan were too attenuated to satisfy due process. As for the threat of criminal prosecution, the court noted that although it lacked diplomacy, it “was not totally unjustified.” In any event, the threat couldn’t give rise to personal jurisdiction, as the plaintiff’s claims did not arise from the communication.

Paws With a Cause, Inc. v. Paws For a Cause, LLC, 2005 WL 1118114 (W.D.Mich., May 11, 2005).

Statements on law firm website result in attorney suspension

New Hampshire’s Supreme Court Committee on Professional Conduct accused the respondent of violating New Hampshire Rule of Professional Conduct 7.1, which provides that a lawyer is prohibited from making a “false or misleading communication about the lawyer or the lawyer’s services.” Under the rule, a communication is false or misleading if it “contains a material misrepresentation of fact or law.”

The website for the respondent’s law firm “suggested that he had experience in helping small businesses file direct public offerings, although [he] had only drafted offerings that had never been filed.” The referee appointed to the case determined that the language on the website “advertised [the respondent’s] expertise in financing and raising capital even though ‘he did not have any special training or experience in securities law.'” The referee determined that such statement was a violation of Rule 7.1, and the state’s Supreme Court affirmed the decision.

Richmond’s Case, — A.2d —, 2005 WL 1048105 (N.H., May 6, 2005).

Morgan Freeman wins transfer of morganfreeman.com from cybersquatter

Perhaps Morgan Freeman never learned about the high profile domain name disputes involving celebrity names (e.g., Madonna, Bruce Springsteen and Julia Roberts), because he didn’t register morganfreeman.com before it was snatched up by Mighty LLC in April 2003. After learning about Mighty LLC’s cybersquatting, Freeman filed a complaint before a WIPO arbitration panel under the Uniform Domain Name Dispute Resolution Policy.

Mighty LLC didn’t respond to Freeman’s complaint, so the decision never had the opportunity to be very instructive. Prior to the filing of the complaint, Freeman’s attorneys contacted Mighty LLC, to which Mighty LLC responded: “Your client isn’t the only Morgan Freeman. Why do you think he/she is entitled to the domain name?”

The panel found that Freeman’s long and successful career made his name distinctive for use in connection with movies and entertainment services. The panel also recognized Freeman’s rights in the domain name based on a pending United States trademark application for MORGAN FREEMAN [Serial No. 78/531,828]. The panel further held that the circumstances indicated Mighty LLC had no rights or legitimate interests in the domain name, and that it was registered in bad faith.

A regular reader of this weblog (or listener to the podcast) will recognize that Mighty LLC is no stranger to domain name disputes.

Freeman v. Mighty LLC, Case No. D2005-0263 (April 28, 2005).

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