A 50-person law firm with a national practice in asbestos litigation found that the text of its Elder Law website was copied verbatim as the basis for a new site for a firm in another part of the state.  The plaintiff firm, Brayton Purcell, filed suit claiming copyright infringement, false advertising, unfair competition and misappropriation.

The two-person defendant firm, San Diego-based Recordon & Recordon, argued that it hired a company to construct its website, and that it was unaware that the content was stolen from a competitor without its knowledge.

They further argued that the case had been filed in the wrong jurisdiction, as the firm doesn’t maintain offices or staff within the jurisdiction of the 9th Circuit Court. Without a business nexus in Southern California, they claimed, the case should have been originally filed in Northern California.

The court ruled that since very few competitors exist in Elder Law, the copied site had been “expressly aimed” to compete with the plaintiff firm.

As glad as I am to see plagiarizing law firms held accountable, I must admit that dissenting Judge Stephen Reinhardt has a valid point:

“… express aiming” in these circumstances leaves every website operator vulnerable to the possibility “he will be hailed into far-away courts based upon allegations of intellectual property infringement, if he happens to know where the alleged owner of the property rights resides,” Reinhardt noted “[d]ue process and basic principles of fairness prohibit such an expansive exercise of personal jurisdiction.”

What if the facts were the same, but the companies were within different national boundaries? Would mere knowledge of a competitor create a sufficient nexus for the website owner to be tried in a foreign court?

Though the original verdict may have been from the wrong court, it was the right decision. Recordon & Recordon was found “one-third responsible for the copyright violation” and ordered to pay $24,000 in statutory damages and nearly $37,000 in fees and costs.

As state real estate and income tax collections head downward, tax collectors have turned their gaze toward online commerce. At the same time, a few states are emerging as havens from taxation.

New York Goes After Affiliate Marketers with the Amazon Tax
New York implemented the so-called Amazon tax. It seeks to change the common interpretation of online tax law, which holds that states don’t have jurisdiction to force sites to collect taxes unless the site has a sufficient presence, or nexus, such as offices or employees, in the taxing jurisdiction.

The New York legislature voted that companies running affiliate marketing programs should be considered as doing business in the jurisdications affiliate websites are operated from. This idea of affiliate liability stretches though issues such as online tax and liablity for trademark infringement by affiliates. Amazon and others are in court fighting this, but New York’s actions have forced many e-commerce sites to start collecting taxes.

Taxing Music Downloads: The iTax
Five states have already levied iTaxes to tax downloads: Nebraska, Tennessee, Indiana, South Dakota, and Utah. Eight states in all have proposed such taxes this year, while others, such as my home state, Massachusetts, are considering this as one way to overcome revenue shortfalls. This failed in California, but expect a second attempt at taxing iTunes later this year.

Of course, like New York’s online taxes, the problem lies in compelling out-of-state websites to collect taxes for the state or municipality.

Continued

As reported back in November, the State of New York is now requiring e-commerce sites “doing business in the state” to collect sales tax.

New Yorkers were previously required to pay sales tax, but previous court rulings had exempted out of state sites from being required to collect that tax, unless they had sufficient manpower or points of presence in New York to be considered to be conducting business there.

The new law classifies promotion of an online store through an affiliate web site based in New York as constituting a sufficient nexus for taxation. Although Amazon.com doesn’t have a store in New York, individuals and organizations in New York get revenue if they refer customers to Amazon. Legislators, in fact, referred to this as the “Amazon Tax”.

Continued

Floyd Abrams published an Op-Ed piece in the Wall Street Journal describing how plaintiffs seeking to suppress protected speech in the US are gaining libel judgements in England.

Rachel Ehrenfeld’s book Funding Evil: How Terrorism is Funded and How to Stop It, had sold only 23 copies in England. But that was enough for a UK court to exercise jurisdiction and find that she had injured the reputation of a Saudi banker who had brought his case in the English courts. Note the absence of a UK citizen as a party in the case.

Continued

The Case:
Domain Magic LLC, a Florida-based company, registered the domain chicagoarchitecturefoundation.org. They developed a website about Chicago-area attractions, then passively generated revenue through Google AdWords. 

The Chicago Architecture Foundation sued for trademark infringement in Illinois. Domain Magic filed a motion to dismiss the case for lack of personal jurisdiction, noting they had not conducted business in the court’s jurisdiction.
Continued