Court Allows Right of Publicity Claims to Proceed Against Video Game Manufacturer

Keller v. Electronic Arts, Inc., No. C 09-1967 CW, N.D. Cal., Feb. 8, 2010

Facts:

Plaintiff Samuel Michael Keller is a former starting quarterback for the Arizona State University and University of Nebraska football teams.
Defendant Electronic Arts, Inc. (“EA”) develops interactive entertainment software, including the video game at issue in this case, “NCAA Football,” in which consumers simulate football games between college teams.
Plaintiff alleges that EA designs the virtual football players to look like the real-life college players, including himself.
Plaintiff complains that one of the virtual players bears his jersey number, has similar physical characteristics and comes from the same home state.

Allegations:

Plaintiff alleges that EA uses his likeness without his consent and that the NCAA facilitated this use.
He charges both entities with various violations of the Indiana and California Right of Publicity statutes, respectively, as well as assorted state and common law claims.
Defendants EA and the NCAA moved separately to dismiss the claims against them.

Court Decision:

The court failed to find merit in EA’s claim that its use of plaintiff’s likeness was protected by the First Amendment.
In order to successfully defend the use of another’s likeness, that use must be transformative or a protected public interest use.
The court found that under California Law, EA’s use of plaintiff’s likeness was neither transformative nor a protected public interest use.
As for why it was not transformative, the court noted that, “EA does not depict Plaintiff in a different form; he is represented as what he was: the starting quarterback for Arizona State University.”
The public interest exception allows the transmission of information on celebrities or public figures that can be considered akin to reporting or publishing information and/or statistics -- similar to the news.
Explaining why the use at issue was not so protected, the court noted that “EA’s game provides more than just the players’ name and statistics; it offers a depiction of the student athletes’ physical characteristics and, as noted, enables consumers to control the virtual players on a simulated football field.”
The court also denied EA’s Public Affairs Exemption argument (under California Civil Code Section 3344(d)) because “its use of Plaintiff’s image and likeness extends beyond reporting information about him.”
The court dismissed the Indiana Right of Publicity action against the NCAA.

Summary:

Using a celebrity’s likeness is delicate territory. Here, the court refused to accept EA’s First Amendment defenses to using such likeness.
There are certain limited fair use exceptions available under the law. These fair use exceptions must be thoroughly explored before using another’s likeness in almost any commercial arena.

E-mail Marketer Agrees to Stop Sending Commercial Email to Comcast Subscribers in the Absence of Affirmative Consent

e360Insight LLC v. Comcast Corp., No.08 C 0340, N.D. Ill, Jan. 19, 2010

Background:

e360Insight is an email marketing firm.
In 2008, e360Insight brought an action against Comcast for improperly filtering commercial email messages that e360Insight was sending to Comcast subscribers.
Comcast counterclaimed by alleging various federal and state law claims under the CAN-SPAM Act, the Illinois Electronic Mail Act and the Computer Fraud and Abuse Act.
The parties agreed to settle the suit out of court.

The Settlement:

e360Insight agreed to refrain from sending commercial email messages to any Comcast email address unless the recipient has provided affirmative consent to e360Insight to receive such messages.
In addition to other prohibitions contained under the agreement, e360Insight may not send commercial email messages to Comcast email addresses that contain false or misleading header information that are likely to mislead or misrepresent the content or subject matter of the message.
Further, any commercial email must also provide clear and conspicuous notice of the opportunity to decline to receive further email messages from the sender.
e360Insight is also prohibited from sending email that identifies the “sender” of the message only as a domain name and/or that lacks a valid physical postal address of the sender, as well as the actual name of the sender.
e360Insight also agreed not to send any commercial email that otherwise violates the CAN-SPAM Act.

Eleventh Circuit Upholds Local Community Standard For Judging Obscenity of Internet-Based Materials

United States v. Little, _No. 08-15964, 2010 WL 357933 (C.A. 11), Feb. 2, 2010

Facts:

Appellants Paul Little and Max World Entertainment, Inc. produced and sold sexually-explicit videos.
The videos were marketed online at sexually-explicit websites that they created and maintained.
The Department of Justice conducted an investigation focusing on the content of these websites, including “trailers” for videos being offered for sale by appellants.
As part of the investigation, the U.S. Postal Inspection Service office in Tampa ordered several DVDs from the appellants’ websites which were ultimately shipped to a post office box in Tampa.
Appellants were convicted on several counts of violating federal obscenity statutes.

Appeal:

Appellants moved to dismiss their indictments on two (2) grounds: (1) that the obscenity laws under which they were convicted are unconstitutional; and (2) that the obscenity test established in Miller v. California, 413 U.S. 15 (1973), could not be applied to materials published on the Internet

Miller Standard:

In order to determine whether a work is obscene, the trier of fact must ask: “(a) whether the average person, applying contemporary community standards, would find that the work, taken as a whole, appeals to the prurient interest, (b) whether the work depicts or describes, in a patently-offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value.”

Arguments:

Appellants argued specifically that: (1) the obscenity statutes violate a due process right of sexual privacy protected by the Fourteenth Amendment; and (2) that a local community standard is not the proper approach for judging Internet-based materials as it violates First Amendment rights.
Appellants argued that the district court should have applied a national or Internet community standard rather than the local community standard for the Middle District of Florida.
Appellants argued that it would be improper to apply the community standard for the strictest of communities where, as here, an Internet publisher never made any specific effort to direct the materials at the subject community.

Court of Appeals:

The Court of Appeals found no merit in appellants’ arguments.
The court first pointed out that under Miller, “obscene material is unprotected by the First Amendment.” Further, neither the U.S. Supreme Court, nor the Eleventh Circuit Court of Appeals, has ever ruled that the government is precluded from regulating obscene materials passing in interstate commerce.
As for the appropriate standard, the court declined to follow the reasoning in the recent decision, U.S. v. Kilbride, 584 F.3d 1240 (9th Cir. 2009)¹, which interpreted an earlier U.S. Supreme Court decision (Ashcroft v. ACLU, 535 U.S. 564 (2002)) as mandating a national community standard for Internet-based material.
The court in Kilbride relied on dicta, rather than the ruling of the court in the Ashcroft decision, in applying a national community standard to materials published on the Internet.
The court ultimately held that the district court did not err when it instructed the jury to judge the materials on the basis of how “the average person of the community as a whole -- the Middle District of Florida -- would view the material.”

¹ We covered the Kilbride decision in our November, 2009 issue. For more information, click here.

Summary:

Presently, there is a split among the Circuits (9th and 11th) as to the appropriate standard to be applied when judging the obscenity of Internet-based materials.
This issue is likely to come up again and we will keep you apprised of any new developments.

New York Attorney General Announces Investigation of 22 Online Retailers for Links to Discount Sites

New York Attorney General’s Office
Press Release
January 27, 2010

Attorney General Investigates:

Attorney General Andrew M. Cuomo announced that his office is currently investigating 22 online retailers that allegedly deceptively link consumers to fee-based membership programs that charge unauthorized fees.
According to the Attorney General’s Press Release, when consumers shop online, they may be presented with a discount or cash-back incentive offer as they complete their purchase.
When clicking on one of these discount or incentive links, the Attorney General alleges that consumers are then directed to a membership program web page that is separate from the online retailer’s site.
Next, the consumer is instructed to accept the discount or incentive.
The Attorney General further claims that information about joining the membership program and its implications is listed in fine print.
Finally, after accepting one of the offers, consumers then begin receiving small and recurring charges on their credit or debit card bills.

The Subpoenas:

After receiving complaints from consumers alleged to have incurred such unauthorized charges, the Attorney General’s office issued subpoenas to 22 merchants that have marketing deals with three (3) companies offering these discount programs: Webloyalty, Affinion/Trilegiant and Vertrue.
The subpoenas request the following information:
- retailer practice of sharing consumers’ account information with membership program companies;
- retailer knowledge of any deceptive solicitations; and
- compensation received from the membership companies.
According to the Attorney General’s Office, membership program companies enter into deals with retailers and banks, which bring in revenue when their customers click on the incentives or become enrolled in the membership programs.
The Attorney General also reported that consumers may enter into these programs via postal mail: membership program sellers mail checks to consumers that when cashed, will effectively enroll the consumer in a membership program with a monthly fee.

Related Fandango Agreement:

Online movie ticket retailer, Fandango, agreed with the Attorney General’s Office to permanently end the practice of sharing customers’ credit and debit card information with discount program sellers.
Fandango has also agreed to institute methods to protect online shoppers from these programs.
Fandango will pay $400,000 into a consumer redress fund.
The company agreed to implement further reforms in an effort to protect consumers.

Summary:

We will continue to track the progress of the Attorney General investigation and report back with any new developments.

Website Not Required to Comply with Third-Party Injunction to Remove Defamatory Statements

Blockowicz v. Williams, No. 09-3955, N.D. Ill., Dec. 21, 2009

Facts:

Plaintiffs brought an action against the defendants for defamation based on statements that they had posted on assorted websites.
In October 2009, the court found defendants in default for failure to answer the complaint and issued a permanent injunction requiring defendants to remove the subject defamatory postings.
The injunction further provided that plaintiffs’ counsel “may directly contact third-party hosts of their websites, who shall make reasonable efforts to ensure the false statements are removed.”
Unable to contact the defendants, plaintiffs contacted the third-party website providers for their help in removing the postings.
All but one of the websites -- ripoffreport.com -- agreed to delete the defamatory statements.
In turn, the court granted plaintiffs’ next motion under Federal Rule of Civil Procedure (“FRCP”) 65 to compel third-party enforcement of an injunction.
Under FRCP 65(d)(2), an injunction binds parties and non-parties who act with them.
The order sought to compel Ed Magedson and Xcentric Ventures, LLC (“Xcentric”), the operators of ripoffreport.com, to remove the subject postings from their website.
Xcentric refused to remove the posts, disputing the court’s authority under FRCP 65 to compel its compliance.

Issue of First Impression:

According to the court, whether it can enforce a permanent injunction against third-party website providers to compel them to remove defamatory material from their sites seems to be an issue of first impression.
In reviewing the relevant case law, the court found that in order to enforce the injunction against a non-party under FRCP 65(d), that party must be acting in concert or legally identified with the enjoined party.

Ripoff Report’s Terms of Service:

Ripoff Report’s Terms of Service expressly prohibit the posting of defamatory information and provide for the obligation to indemnify Ripoff Report under certain circumstances.
Plaintiffs claim Xcentric’s promise to publish and never to remove the defamatory statements in exchange for indemnification, and an exclusive copyright license to those statements, demonstrates that Xcentric is in active concert and/or participation with defendants.

The Court Decision:

The court denied plaintiffs’ motion to enforce the injunction against Xcentric, noting that plaintiffs are asking the court to ignore the terms of the agreement, which expressly prohibit defamatory postings, and to instead interpret the Terms of Service as a deliberate announcement to potential defamers that ripoffreport.com is a safe haven for defamation.
The court noted that plaintiffs have failed to provide such evidence and found that Xcentric’s tenuous connection to defendants was insufficient to compel its compliance with the court’s injunction order.

Summary:

Under the facts presented in this case, Xcentric could not be required to comply with the FRCP 65(d) order for permanent injunction against third parties.
Please be advised that the ruling in this case may be limited to the particular facts at issue.

Rhode Island Supreme Court Holds Shrinkwrap Terms Enforceable if Consumer Accepts After Reasonable Opportunity to Review

DeFontes v. Dell Computers Corp., 984 A.2d 1061, November 17, 2009
(R.I. Sup. Ct. Dec. 14, 2009)

Facts:

Plaintiffs brought a class action against Dell Computers Corp. (“Dell”) alleging that its collection of taxes on the purchase of optional service contracts violated the Deceptive Fair Trade Practices Act.
Dell moved to stay the proceedings and compel arbitration under an arbitration provision contained within the Dell computer products Terms and Conditions (the “Terms”).
Specifically, Dell argued that the arbitration clause was part of the Terms which the plaintiffs agreed to upon accepting delivery of the goods.
Dell pointed out that plaintiffs had the following three (3) opportunities to review the Terms: by selecting a hyperlink on the Dell website, by reading the Terms that were included in the acknowledgment/invoice that was sent to plaintiffs sometime after placing their orders, or by reviewing the copy of the Terms that Dell included in the packaging of its computer products.
The hearing justice found that although plaintiffs had these three (3) chances to review the Terms, none was sufficient to establish a contractual obligation.
While the hearing justice noted that courts generally recognize “shrinkwrap agreements,” the crucial test is “whether a reasonable person would have known that return of the product would serve as rejection of those terms.”
A shrinkwrap agreement refers to the common commercial practice of including additional terms and conditions either on the outside of a package or within the package when it is shipped to the consumer.
Dell’s failure to include an express Terms agreement disclaimer (no reasonable notice of a method of rejection of the Terms) meant that they could not prove that plaintiffs knowingly consented to the Terms.
Accordingly, plaintiffs could not be compelled to arbitrate their disputes.

Supreme Court Decision:

The Rhode Island Supreme Court agreed with the hearing justice and the lower court by holding that plaintiffs did not agree to be bound by the Terms.
The court adopted the majority view on the enforceability of shrinkwrap terms, noting that a contract is fully formed when a consumer accepts the full terms after receiving a reasonable opportunity to refuse them.
Specifically, the court noted that Dell’s return policy does not mention a consumer’s ability to return based on their unwillingness to comply with the Terms.
Further, the court elaborated: “[W]e are not persuaded that a reasonably prudent offeree would understand that by keeping the Dell computer he or she was agreeing to be bound by the terms and conditions agreement and retained, for a specified time, the power to reject the terms by returning the product.”

Summary:

Although the court adopted the majority view upholding the general enforceability of shrinkwrap terms, certain language must be included in such an agreement in order to properly inform a consumer of his or her rights to refuse the terms.
Here, where the consumer was not sufficiently made aware of his or her right of refusal, the court was unwilling to enforce Dell’s Terms.
This decision highlights the importance of drafting Terms and Conditions in the proper fashion so that constituent contractual terms will be enforceable in court.