The Morning Coffee – 1 March 2013

Here are a few stories to read this morning. The Death of Publishing (Kristine Kathryn Rusch) B&N CEO Lynch: “We’re not going to continue doing what we’re doing” (paidContent) James Patterson – the best seller who doesn’t write his own books (Daily Express) Netherlands: Government Report Says Dutch Libraries Cannot Lend Ebooks (LJ INFOdocket) Ookbee: [...]

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The Changes Nook Media Must Make

The first move Barnes & Noble (aka Nook Media) needs to make is to alert app developers that they will be closing their Nook App Store. It was foolish of them to even create that. They got off the eBook path there and had ambitions beyond their ability to pull them off. They didn’t know [...]

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iTunes U Hits 1 Billion Downloads as Apple Tops 8 Million iPads in Schools

Some Apple news today turned out to be nothing but bollocks but not all. Apple sent out a press release earlier today with a new boast. iTunes U, Apple’s 6-year-old education-focused content store, has just hit 1,000,000,000 downloads. iTunes U has really taken off since Apple spun it out into its own app at the [...]

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press release announcing patent/misappropriation lawsuit might violate Lanham Act

type="html">United Services Auto. Ass’n v. Mitek Systems, Inc., 2013 WL652420 (W.D. Tex.) (magistrate judge)

USAA moved to dismiss Mitek’s false advertising counterclaimand strike its claims of bad faith; the magistrate judge recommended denyingthese motions.  USAA provides variousfinancial services, and alleged that in 2005 it invented a method for consumersto remotely deposit financial documents. It filed patent applications for thisinvention, and chose Mitek as the software vendor for software to read thenumbers on checks.  USAA allegedlydisclosed the invention to Mitek subject to a confidentiality agreement.  In 2008, allegedly unbeknownst to USAA, Mitekfiled a provisional patent application, reciting a claim to a similarinvention.  In 2012, Mitek began tellingUSAA that it was infringing on Mitek’s patents. USAA sued for a declaratory judgment of nonfringement/invalidity/etc. 

Mitek alleged that USAA violated the Lanham Act by accusingMitek of conducting its commercial activities in an unethical manner.  USAA’s press release, “USAA files SuitAgainst Mitek Systems, Inc.,” states:

USAA has filed suit against MitekSystems, Inc. for misappropriation of USAA's proprietary information, breach ofcontract, and fraud, among other claims.

USAA spokesman Paul Berry says,"USAA invented remote deposit capture technology to meet the needs of ourhighly mobile military membership, enabling them to deposit checks with ascanner or smartphone wherever they may be stationed. USAA has investedsubstantial time and money in the development and implementation of aninvention which has revolutionized the banking industry."

"Mitek misappropriated USAA'sproprietary and confidential information while working under contract for USAA,and then took numerous steps to claim it as its own,” says Berry. “USAA filedthis lawsuit to protect USAA members and our Association."

The magistrate judge concluded that this was commercialadvertising or promotion.  It was widelydisseminated and promoted USAA by claiming that USAA developed an inventionthat has “revolutionized the banking industry,” and that USAA is looking outfor its members and filed the suit to “protect” them.  Such statements “go well beyond describing theallegations in a lawsuit and arguably involve an attempt to influence customersto buy USAA's goods and services.”  USAAargued that it was simply identifying its allegations, but the press releasedidn’t specify its allegations or say that USAA was giving its “beliefs,opinions or views." Instead, the press release presented its contents as factual statements "and, bysuggesting that it was protecting its customers in filing suit, USAA intimatesthat Mitek's products and/or services are somehow unsafe or untrustworthy.”  (At a minimum, this conclusion seems in tension with the law surrounding Lanham Act claims based on statements made aboutpending patent lawsuits, though that’s not a “commercial advertising orpromotion” problem.)

USAA then argued that it wasn’t in competition with Mitek.  The magistrate judge found sufficientcompetition: “both companies have apparently sought to develop and implement aproduct to designed to enable mobile banking.” USAA targets individual customers while Mitek targets banks as potentialusers/licensees, but that “hardly [made] a difference; the parties clearly areboth vying for use of the same technology with the intent of selling thisproduct and/or service to itscustomers” (emphasis added).

USAA also argued that it wasn’t trying to influencecustomers with the press release.  (Whosecustomers?  This might bear on the “competition”question, though I also think that the fact that one company has integratedproduction and one supplies just one component of the overall experience isrelevant and might be enough to justify a finding of competition under somecircumstances.)  Mitek, though, arguedthat USAA’s claims jeopardized its well-earned reputation (with whom? Mitek’scustomers or USAA’s customers?).  Themagistrate judge concluded that the press release could be understood “toinfluence customers to continue or commence business with USAA.”

The magistrate judge also concluded that the statements allegingmisappropriation of confidential information concerned thenature/characteristics/qualities of Mitek’s services or commercial activities.

USAA then argued that it accurately described itsallegations.  But the press releasesuggested that Mitek’s actions were unethical and that customers needed “protection.”  “These statements go well beyond merelydescribing the allegations in the complaint and arguably convey a falseimpression of Mitek's goods and/or services, providing USAA with an unfair advantagein the marketplace.”  (The marketplacefor what?)

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Three-Person Relationships

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Such watch: Amazon search results not confusing

type="html">Multi Time Mach., Inc. v. Amazon.com, 2013 WL 638888 (C.D. Cal.)

MTM sells “military style” watches under the marks MTMSpecial Ops and MTM Military Ops through its website and authorizeddistributors.  It doesn’t sell or allowits distributors to sell watches on Amazon. Amazon’s search function nonetheless provides results for a search on “mtmwatch” or similar queries, offering other product listings—here, watches madeby MTM competitors.

When a user searches on Amazon, the user’s search term willappear twice on the search results page: once in the search query box anddirectly below, in what Amazon calls the “breadcrumb.”  The breadcrumb “displays the original queryin quotation marks to provide a trail for the consumer to follow back to theoriginal search.” Below that, Amazon provides “Related Searches,” hereincluding “mtm special ops watch.”  Agray bar separates these three instances from the product listings. For the “mtmspecial ops” search, one of the “Sponsored Links” results included a link for “TacticalWatches By MTM,” with the description “MTM Tactical Watches Worn By Military,Police, Sportsmen,” and another link to MTM's website.

You can’t buy from the search results page, only from aproduct detail page, which includes “a large image of the product, a hyperlinkidentifying the brand of the product, and a title identifying the product inlarger font.”  Thus, the Luminox searchresults for a “mtm special ops” search include large brand identifiers.  On that product detail page, your originalsearch query—here “mtm special ops”—still appears in the search query box, andthere are also links suggested uner “Customers Viewing This Page May BeInterested in These Sponsored Links,” which in this case displayed sponsoredhyperlinks labeled “MTM Watches,” with a link to Yahoo, and “Military WatchesSale,” which went to some sort of shopping site.

The court found this situation to squarely present thequestion posed by Judge Berzon in her Playboyconcurrence:

I walk into Macy's and ask for theCalvin Klein section and am directed upstairs to the second floor. Once I getto the second floor, on my way to the Calvin Klein section, I notice a moreprominently displayed line of Charter Club clothes, Macy's own brand, designedto appeal to the same people attracted by the style of Calvin Klein's latestline of clothes. Let's say I get diverted from my goal of reaching the CalvinKlein section, the Charter Club stuff looks good enough to me, and I purchasesome Charter Club shirts instead. Has Charter Club or Macy's infringed CalvinKlein's trademark, simply by having another product more prominently displayedbefore one reaches the Klein line? Certainly not....

... If I went to Macy's website anddid a search for a Calvin Klein shirt, would Macy's violate Calvin Klein'strademark if it responded (as does Amazon.com, for example) with the requestedshirt and pictures of other shirts I might like to consider as well? I very muchdoubt it.

MTM’s argument was that, to avoid confusing consumers,Amazon was “obliged to inform the consumer that Amazon does not carry anyproducts with that brand before offering products from other brands.”  Amazon responded that, so long as it labeledits results clearly to indicate their brands, consumers get what they wantwithout infringement.  Amazon wins.

The court began with NetworkAutomation, Inc. v. Advanced Systems Concepts, Inc., 638 F.3d 1137 (9thCir. 2011).  Because it found nolikelihood of confusion, it didn’t reach the question of whether Amazon’sinternal use of a term as part of its behavior-based search technologiesconstituted “use in commerce,” though given the breadth of that term the courtindicated that it would likely have found use in commerce.

Though likely confusion is fact-intensive, and rarelyappropriate for summary judgment, it was so here.  MTM argued that Amazon was engaged in passingoff, like serving customers Pepsi when they asked for Coke. In Coca-Cola Co. v.Overland, Inc., 692 F.2d 1250, 1252 (9th Cir. 1982), the court found that menusand posted signs indicating that Pepsi-Cola was the only beverage served in therestaurant were not “sufficiently conspicuous” to avoid liability. But that’s aquestion about confusion, and Sleekcraftstill provides the basic test for confusion. Anyway, this case was different:

It is akin to the consumer askingfor a Coca–Cola and receiving a tray with unopened, labeled, authentic cans ofPepsi–Cola, RC Cola, Blue Sky Cola, Dr. Pepper, and Sprecher Root Beer, and acopy of Coca Kola: The Baddest Chick, by Nisa Santiago. This is a substitution,but given the context it is not infringing because it is not likely to confuse.

In the internet context, the confusion factors should beapplied flexibly. Network Automationsaid that the most important factors in a keyword search case were (1) strengthof the mark, (2) actual confusion, (3) type of goods/degree of care, and (4) labelingand appearance of the ads and the surrounding context on the screen displayingthe results page.  This was a goodstarting point. 

Among other things, the similarity of goods (note that thisisn’t the similarity of the parties’goods, but we’ve all agreed to ignore that usual requirement) was lessimportant if ads are clearly labeled or consumers exercise a high degree ofcare.  A consumer may well type in a termidentical to MTM’s mark, but that too only matters if the consumer ends upconfused.  Though both Amazon and MTMsell watches, “this is misleading only if the consumer is confused, not if theconsumer simply has clearly marked options.” The fact that both Amazon and MTM sell watches on the internet is “toocommonplace” to matter in the likelihood of confusion analysis.  (There are some interesting assumptions aboutconsumer behavior encoded here—we could’ve decided that convergent marketingchannels just increased the risk of confusion generally and thus always weighedagainst a defendant, but instead we’ve expected consumers to adapt to theinternet as a marketing channel—paging FredYen.)  Intent also needed to beconsidered in the context of the clarity of labeling.

Looking at the strength of the marks at issue, the courtdidn’t find them especially strong.  “MTMSpecial Ops” and “Military Ops” referred to watches designed for members of thearmed forces involved in special military operations.  MTM advertised “Special Ops Watches worn bySpecial Ops and Special Forces worldwide,” though to the PTO MTM’s attorneysaid, “The term Special Ops is nothing more tha[n] a suggestive reference tomilitary type watches.”  (MTM claimed ithad two other marks at issue—“American Watch” and “Pro Ops.”  American Watch was used for a company thatsells promotional watches that can be inscribed with company names; no watcheswere branded American Watch.  While thosetwo, and Military Ops, were “arguably distinctive enough” to be protected, theywere also phrases that could be used to search for other products unconnectedwith MTM, and weaker than “MTM Special Ops”; thus the court’s analysis appliedequally to them.)

The marks were not conceptually strong—at best suggestiveand more likely descriptive.  Theaddition of “MTM” might make them protectable, but didn’t neutralize theirdescriptive connection to the product.  Thus, this factor favored Amazon.  (This discussion makes no sense in the contextof product search.  Weak or strong, thequestion is whether it’s clear you’re being offered an alternative.  Compare a search for Xerox that offers Canonproducts as alternatives.)

There wasn’t admissible evidence about MTM’s market share,rendering evidence of its sales and ad expenditures of little significance; MTMdidn’t show evidence of brand recognition. This factor was neutral because,though it was MTM’s burden to show likely confusion, it didn’t need to prevailon each Sleekcraft factor and neitherparty presented evidence of commercial strength.  Overall, given the conceptual weakness andabsence of other evidence, strength favored Amazon.

Amazon argued that there was evidence of a lack ofconfusion, coming from its retained data about how often a consumer's searchfor “mtm special ops” or “mtm special ops watch” results in the consumerplacing a product in a shopping cart or in a purchase.  Amazon compared the same data for queries for “luminox”or “luminox watch.”  Since consumers were21 times more likely to buy a product after searching for Luminox than aftersearching for MTM Special Ops, Amazon argued that there was no confusion: ifthey were confused, one would expect a substantial conversion of MTM searchersinto Luminox buyers.  MTM argued thatAmazon’s data registered only sales/selections made on the same day of thesearch, whereas consumers might put a product into a cart but buy itlater.  Amazon rejoined, persuasively,that there was no reason to think that such behavior differed for Luminox v.MTM searchers.  The court agreed thatthis was evidence of no actual confusion. 

In addition, queries for “mtm” were much more common thanfor “mtm special ops,” and the average price of units sold based on a “mtm”search was dramatically lower than the price of MTM’s competitors’watches.  Thus, this wasn’t evidence ofconfusion. (The court didn’t say so, but I think what this means is that thereare other kinds of “MTM” products—ammo cans turned up high in my Amazon search—thataren’t watches and that, for all that appears, aren’t sold by plaintiff.)

MTM’s president testified that there was actual confusion,but couldn’t present specific instances or records; his testimony was too vagueto count.

MTM’s watches start in the several-hundred-dollar range andgo up; its competitors’ products are likewise relatively expensive, triggeringa high degree of care.  MTM argued thatwatches in general could be pretty cheap, but not so with the least expensivewatch resulting from a “mtm special ops” search, which was $145 (the first fiveresults are more expensive than that).  “[T]herelatively high price of the goods in question, combined with the increaseddegree of care used in Internet purchases, mean that consumers are presumed touse a high degree of care in such purchases.”

As for the key question of labeling and context, this toofavored Amazon. MTM offered an expert report concluding that the search resultswere “ambiguous, misleading, and confusing.” MTM’s expert conducted nostudy.  At most, he could say thatconsumers might be confused about how the site functions, but not about thesource of the products.  “A consumercould, for instance, puzzle over why the search query ‘mtm special ops produceda results page listing ten watches but none of them with the MTM brand withoutalso being confused as to the source of the watches presented on the resultspage.” While not ruling out the possibility that a survey could show confusion in a case like this, the court found thatthere was no such evidence.  The courtalso noted that confusion might result if the products resulting from the searchhad substantially similar marks, which they didn’t here.

No confusion; no liability.

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Lifehack ... or passing off?

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From a list of ways to simplify your life.  I'm not sure that public drinking counts as simplifying, but ok ...

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B&N Nook Hardware Sales Down, eBook Market Share Down

Barnes & Noble, the (currently) largest bookstore chain in the US, released their q3 financial report today and the news is actually worse than I expected. Overall company revenues down last quarter: Third quarter consolidated revenues were $2.2 billion, a decrease of 8.8% as compared to the prior year. Third quarter consolidated earnings before interest, [...]

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When Numbers Lie: Apple iBooks Revenue Estimated to be Over a Billion Dollars

Apple has never been one to give specific details about how much content they are selling, so when I read today that an analyst with Asymco had released a new estimate of iBooks sales I was thrilled. Horace Dediu has a post over on the Asymco blog which claims that apple could be earning an [...]

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Books are signed!

Woah my hand hurts! Yesterday I signed several hundred books for you guys that ordered the Shoe In Money system the first two days and got them shipped out!(sorry, little behind but we needed a final count) If you have not checked out the new Shoe In Money system go here right now and see [...]

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Amazon Expands 70% Royalty Option to Japan, Brazil – But There’s a Catch

Here’s an old piece of news that appears to have gone unreported (I missed it at the time, at least). Remember when Amazon launched the Kindle Store in India, and then started offering the 70% royalty option for any KDP ebooks sold there? That deal came with a catch; in addition to certain pricing restrictions [...]

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Google Play Books Expands to India

Google India announced this morning that Google Play Bookstore was opened to Indian customers for the first time. Previously Indian owners of Android devices could only access the Android app section of Google Play. Indian readers can buy ebooks from the Google Play website or from the Android app, and read them in a desktop [...]

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Lenovo Shows off Its Yoga Moves

Written By: 

Stacy DeBroff

Computer Meets Downward Dog. Well, not really. But the Ideapad “Yoga” laptop/tablet hybrid creation that Lenovo unveiled during the 2013 Consumer Electronics Show, offers up some pretty cool tricks.

The 13.3-inch, high-definition display screen can swivel 360 degrees as it turns from laptop to tablet extraordinaire. With four positions including notebook, tablet, tent, and stand, this versatile device transforms depending on your computing needs and activities.

Converting this laptop to tablet (and vice-versa) makes for convenient use at work or on the go. With the Yoga, which comes equipped with Windows 8, go from note-taking in the tablet position during a meeting to writing e-mails back at your desk in laptop-mode.

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What Is Mechanical Breakdown Auto Repair Insurance – Is It Worthwhile?

These days, drivers keep their cars longer than ever, as the average age of the 240.5 million cars and light trucks in the U.S. is almost 11 years. And since that’s an average, you can assume there are plenty of cars older than that riding down American highways. A car that lasts for years is [...]

What Is Mechanical Breakdown Auto Repair Insurance – Is It Worthwhile? is a post from the Money Crashers personal finance blog.

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The Reply Button is Fixed

This is just a brief note to let my readers know that the broken reply button has been fixed. I’m not quite sure why, but the button which let you respond to an earlier comment (and not the post) somehow broke early this morning. It started working again after I reset the integrated SEO plugin. [...]

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The Morning Coffee – 28 February 2013

Here are a few stories to read this morning. The Ghost Writes Back by Amy Boesky (Kenyon Review Online) The B&N fallacy (Baldur Bjarnason) New York Times gives Starbucks visitors 15 free stories a day (paidContent) Onswipe Data Suggests Kindle Fire Maintained Its Holiday Traffic Bump, While Nexus 7 Shed Share (TechCrunch) Text-to-speech startup iSpeech [...]

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Why B&N Can’t Ever Catch Up to Amazon #2: Usability

Barnes & Noble is probably going to share bad news tomorrow when they release their latest quarterly financial report. I am expecting to hear that Nook sales were poor, and given the general poor financial state and the recent news that B&N CEO Len Riggio has plans to sever the retail stores from the rump [...]

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C.L.U.E. Report – Why Home Buyers & Sellers Should Get One

Many home buyers fall in love with their house, sometimes at first sight. However, it is important to be careful when you open up your heart – otherwise, you may get trapped in a money pit. Your first step to avoid falling into that trap is to complete a thorough home inspection with a reputable, [...]

C.L.U.E. Report – Why Home Buyers & Sellers Should Get One is a post from the Money Crashers personal finance blog.

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5 Unique & Creative Baby Shower Gift Ideas on the Cheap

Babies are always something to celebrate, but if your bank account is running low or you have a ton of friends all having bundles of joy at the same time, buying gifts can really put a dent in your wallet. Since most baby registries boast high-ticket items like strollers, cribs, and high chairs, your excitement [...]

5 Unique & Creative Baby Shower Gift Ideas on the Cheap is a post from the Money Crashers personal finance blog.

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What Is Activated Charcoal – 6 Uses & Health Benefits

Until a few months ago, I’d never even heard of activated charcoal (also known as activated carbon). However, I soon learned that this substance provides a number of amazing benefits. While some people use it to cleanse their skin or whiten their teeth, the true value of activated charcoal is in its ability to remove [...]

What Is Activated Charcoal – 6 Uses & Health Benefits is a post from the Money Crashers personal finance blog.

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Should Social Security Be Privatized? – Pros & Cons

In 1998, conservative think tank The Heritage Foundation reported that an average American household of two earners with a combined income of $52,000 would pay a total of $320,000 in Social Security taxes over their lifetimes (including their employers’ share), and receive about $450,000 after retiring at age 67. The Foundation suggested that the same funds invested [...]

Should Social Security Be Privatized? – Pros & Cons is a post from the Money Crashers personal finance blog.

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Best New Bank Account Promotions, Offers & Free Money

With many financial institutions experiencing a decrease in profits, banks are vying for your business. This is good news for you, because instead of just offering standard perks like no fees, free checking, or a free pen when you sign up for an account, some banks are raising the stakes with cold hard cash, giveaways, and [...]

Best New Bank Account Promotions, Offers & Free Money is a post from the Money Crashers personal finance blog.

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Importance of Medicare and Impacts on Healthcare & the Federal Budget

Imagine a community where all of the physical structures were constructed 50 years ago of wood, have antiquated wiring, and are heated by open fireplaces before the widespread use of home fire alarms. Despite the homeowners’ collective attempts to live safely, fires commonly break out, rapidly moving from house to house, often destroying and damaging [...]

Importance of Medicare and Impacts on Healthcare & the Federal Budget is a post from the Money Crashers personal finance blog.

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The Myths of TLC’s “Extreme Couponing” – How Couponing Really Works

If you’re a reality TV junkie like me, you’ve probably seen the TLC show “Extreme Couponing.” In the show, devout couponers score major deals, procuring items for as much as a full 100% discount. Some shoppers even work the system so they’re essentially paid to take the items from the store, receiving credits, points, and [...]

The Myths of TLC’s “Extreme Couponing” – How Couponing Really Works is a post from the Money Crashers personal finance blog.

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