"If the Price is too Good to be True, it Probably is” - ICE Director John Morton

Photo by: mollyali's 

A coordinated government effort to crackdown on websites selling counterfeit goods is in full force, most recently seizing 150 websites on Cyber Monday 2011. The rationale for the seizures is based on the idea that these websites steal creative ideas, cost our economy jobs and revenue, and can threaten the health and safety of American consumers by selling inferior goods in the market. Opponents argue the seizures are unconstitutional because the government does not afford the site owners adequate due process protection prior to seizing the sites.

Operation in our Sites is the effort of DOJ and DHS/ICE to halt intellectual property crimes at the national level. ICE is leading the charge, and derives its authority from the seizure and forfeiture laws of 18 U.S.C § 981 and 2323. As Margaret A. Esquenet and Justin A. Hendrix explain, (http://www.ecommercetimes.com/story/72344.html) “Under Section 2323, property used to a commit federal crime, such as criminal trademark or copyright infringement, is subject to forfeiture to the U.S. government. Under Section 981, the government can apply to a federal court for a warrant to seize that property. To obtain the warrant, the government must show there is probable cause that the website violates federal criminal law. The owner of the domain name may challenge the seizure warrant in the district court that issued it. During a later forfeiture proceeding, the owner also may challenge the basis for forfeiture.”

To carry out the Operation, ICE agents make undercover purchases of various products covered by trademark, including professional sports jerseys, golf equipment, DVD sets, footwear, handbags, and sunglasses. Once the goods arrive and the trademark holders confirm that the purchased products are counterfeit, seizure orders are obtained. The intent of ICE is to protect the economy and consumers, and ensure that revenue is flowing to the rightful parties instead of to those who steal intellectual property. The objective is a good one, and the websites are property used to commit a federal crime, so the seizures and the process by which they are carried out are legitimate under federal statute.

ICE may need to revisit the effectiveness of some their procedures to reach that end, though. In February 2011, the department rightfully seized 10 sites before the Super Bowl that were accused of offering illegal streaming video of sporting events, and before Valentine’s Day, it seized 18 sites selling counterfeit luxury goods. But somehow along with those, it shut down 84,000 other legitimate sites and posted a notice that the reason was for “advertisement, distribution, transportation, receipt, and possession of child pornography.” Not good. The error may have had to do with linking sites, but the owners of the legitimate sites deserve a more robust due process procedure so as to avoid future errors.

Operation in our Sites is certainly a complicated technological effort without introducing administrative hurdles. But there is likely little harm (expense notwithstanding) in an email notice to domain name owners that their site is subject of investigation and will be shut down in 48 hours without further action on their part.

Will The Real "App Store" Please Stand Up?

On March 18, 2011 Apple commenced a lawsuit against Amazon for Amazon’s use of the word “appstore” (Apple Inc. v. Amazon.com Inc., 11-1327, U.S. District Court, Northern District of California). Bloomberg news broke the story on March 22, 2011. Apple had filed the term “App Store” as a service mark in 2008 in conjunction with its release of the iPhone 3G. A few days before the release of the Amazon Appstore for Android, Apple filed a claim that Amazon’s use of the name “Amazon Appstore” would mislead customers. The question before the court will be whether an “app store” is a generic term commonly used in trade and cannot be trademarked.

Trademarks include symbols that are used in commerce to indicate the source of goods and services,

Back on January 10, 2011 Microsoft filed a motion with the USPTO to refuse registration of the term “app store”. Microsoft argued that the term “app” by itself is a generic term for a product that is in common usage and used in several dictionaries as a short hand way of saying “application”. Further, Microsoft argued that a generic name for a product followed by the word “store” is itself a generic way of describing a store that sells that product. In several previous cases, the USPTO had held that these types of marks were generic, such as “The Computer Store” or the “Shoe Warehouse.” Microsoft notes that CEO of Apple Steve Jobs himself has used the term “app store” generically, such as in Apple’s October 2010 earnings call where Jobs said:

In addition to Google's own app marketplace, Amazon, Verizon, and Vodafone have all announced that they are creating their own app stores for Android -- so there will be at least four app stores on Android, which customers must search among to find the app they want.

Of course, many are puzzled by the fact that Microsoft is arguing that Apple should not be able to trademark “app store”, especially in light of the fact that Microsoft itself has stringently defended its trademark of the term “Windows”.

One thing is certain – regardless of what you call them, a new breed of stores has risen in the marketplace and will continue to flourish as long as people want to buy “apps”.

On March 18, 2011 Apple commenced a lawsuit against Amazon for Amazon’s use of the word “appstore” (Apple Inc. v. Amazon.com Inc., 11-1327, U.S. District Court, Northern District of California). Bloomberg news broke the story on March 22, 2011. Apple had filed the term “App Store” as a service mark in 2008 in conjunction with its release of the iPhone 3G. A few days before the release of the Amazon Appstore for Android, Apple filed a claim that Amazon’s use of the name “Amazon Appstore” would mislead customers. The question before the court will be whether an “app store” is a generic term commonly used in trade and cannot be trademarked.

Trademarks include symbols that are used in commerce to indicate the source of goods and services,

Back on January 10, 2011 Microsoft filed a motion with the USPTO to refuse registration of the term “app store”. Microsoft argued that the term “app” by itself is a generic term for a product that is in common usage and used in several dictionaries as a short hand way of saying “application”. Further, Microsoft argued that a generic name for a product followed by the word “store” is itself a generic way of describing a store that sells that product. In several previous cases, the USPTO had held that these types of marks were generic, such as “The Computer Store” or the “Shoe Warehouse.” Microsoft notes that CEO of Apple Steve Jobs himself has used the term “app store” generically, such as in Apple’s October 2010 earnings call where Jobs said:

In addition to Google's own app marketplace, Amazon, Verizon, and Vodafone have all announced that they are creating their own app stores for Android -- so there will be at least four app stores on Android, which customers must search among to find the app they want.

Of course, many are puzzled by the fact that Microsoft is arguing that Apple should not be able to trademark “app store”, especially in light of the fact that Microsoft itself has stringently defended its trademark of the term “Windows”.

One thing is certain – regardless of what you call them, a new breed of stores has risen in the marketplace and will continue to flourish as long as people want to buy “apps”.