The National Law Review is proud to announce that Aimée Scala of Brooklyn Law School is one of our Student Legal Writing Contest Winners for March of 2011. Aimee’s article focuses on what constitutes a “transformative” work for purposes of fair use under copyright law.
In January 2011, artist Shepard Fairey and the Associated Press reached a settlement out of court regarding Fairey’s ubiquitous Hope poster (now in the collection of the National Portrait Gallery in Washington, D.C.), created and used during Barack Obama’s presidential campaign. Fairey’s image was based on a photograph of Obama, then an Illinois senator, taken by photographer Manny Garcia for the Associated Press. The A.P. accused him of copyright infringement because of the substantial similarity between the two images. In response, Fairey brought suit seeking a declaration that his use of the photograph was not infringement, but instead a fair use of the copyrighted image, a statutory exception to the exclusive grants given to authors and creators under federal copyright law. Because the parties settled their dispute, the merits of Fairey’s fair use claim were not addressed. Some commentators, however, have argued that the case would have turned primarily on whether Fairey’s use of the photograph was “transformative.” Though this case made headlines, another fair use case, one whose holding has far-reaching implications for artists and others that rely on the doctrine, fell largely under the radar of popular media.
The case of Gaylord v. United Statesi addressed and refined some of the blurry borders surrounding the fair use doctrine, particularly what constitutes a “transformative” work for purposes of fair use. Because the judicial determination of whether use of a copyrighted work in another work is “fair” requires balancing both law and fact, predicting the outcome in a specific set of circumstances is difficult, if not outright impossible. Indeed, the fair use doctrine has been described as “the most troublesome in the whole law of copyright.”ii Accordingly, artists who incorporate copyrighted material into their works often don’t know until a suit arises whether their use will be labeled infringement or protected artistic expression. The uncertainty surrounding the doctrine necessarily increases the risk of using any copyrighted material and artists are beginning to express concern. In Gaylord, the Center for Internet & Society filed an amicus brief on behalf of the Warhol Foundation, the Warhol Museum, Barbara Kruger, Thomas Lawson, Jonathan Monk, Allan Ruppersberg, and eleven law professors urging the court to affirm the lower court’s finding of fair use and reject the standard for “transformative” that it subsequently adopted.
The case involved the Korean War Memorial in Washington DC, in particular a sculpture by artist Frank Gaylord known as The Column, consisting of nineteen stainless steel statues of foot soldiers in staggered formation. Dedicated in 1995, the Memorial was commissioned and funded by the United States and constructed by Cooper-Leckey Architects. Shortly thereafter, amateur photographer and military officer John Alli photographed the monument as a retirement gift for his father, a Korean War veteran. Alli took hundreds of photographs of the sculpture using different angles, lighting, shutter speeds, varying both the time of the year and time of day. The photograph he ultimately chose for his father, which he titled Real Life, captured the monument at dawn during a snowstorm
Alli explained at trial that the he felt the subdued early morning light and falling snow evoked a surreal sensation, drawing the viewer into the photograph and communicating the harsh, freezing conditions soldiers in the Korean conflict were forced to endure. Before Alli began selling prints of his photograph, he reached out to Cooper-Leckey for permission. Though Cooper-Leckey granted a license in exchange for royalties, Gaylord sued him in 2006. Alli settled the dispute by agreeing to give Gaylord 10% of any net sales.
The photograph was selected in 2002 by the United States Postal Service for use on a stamp to commemorate the Korean War. The Postal Service contacted Alli for the image, and he sold it to them for $1500. Alli suggested that the Postal Service contact both Cooper-Leckey and Gaylord for permission, but they did not contact anyone about licensing. They altered Real Life so as to make it monochromatic and grey, and sold the stamps until 2005 when they decided to retire it.
In 2006 Gaylord sued the United States for copyright infringement in Federal Claims Court. The court found the United States’ use of the copyrighted material in the stamp qualified as fair use, and Gaylord appealed. The Court of Appeals for the Federal Circuit reversed and remanded the case for an assessment of damages.
The decision largely turned on whether the Postal Service’s use of the copyrighted sculpture in the stamp was “transformative.” Fair use is determined by balancing four non-exclusive factors that are weighed together with an eye towards the fundamental purposes of copyright.iii The first factor, the purpose and character of the use,iv asks, among other things, whether the second work is “transformative.”vIf it is indeed found to be a transformation of the copyrighted material, the factor will weigh in favor of a finding of fair use.
By ultimately concluding that the Postal Service’s use of Alli’s image of The Column was not fair use, the Court of Appeals narrowed what constitutes a transformative work in the fair use context. The court explained that the use was not transformative because “the stamp did not use The Column as part of a commentary or criticism.”vi This understanding of the meaning of “transformative” poses severe limits on what may now be considered fair use of copyrighted materials. Unlike the Court of Appeals for the Second Circuit in Blanch v. Koonswhich explained that a subsequent work could use copyrighted works as “raw materials” to further creative or communicative objectives and still be considered transformative,vii the Federal Circuit—by narrowing transformative to include only comment or criticism of the copyrighted work—dismisses wholesale a broad range of established artistic practices and ignores the constitutional mandate that grounds U.S. copyright law, namely that exclusive intellectual property rights be granted to authors and inventors for limited times “to promote the progress of science and the useful arts.”viii The intent behind the intellectual property clause is to benefit society and encourage a flourishing of artistic practice by creating incentives. The holding of Gaylord may strangle creative energy and stifle previously protected artistic expression with the ominous threat of legal repercussions while rejecting important and established artistic practices
The idea that by changing context one can radically change the meaning of an object is a well-established notion in modern and contemporary art. Indeed, one landmark work that aptly illustrates the point is Marcel Duchamp’s 1917 workFountain. Probably his most famous readymade, replicas of Fountain (the original was lost) are housed in museum collections the world over. Fountain consists only of a found object the artist installed with no changes apart from his scrawling of “R. Mutt” onto the side. As Duchamp biographer and art critic Calvin Tomkins notes, “it does not take much stretching of the imagination to see in the upside-down urinal’s gently flowing curves the veiled head of a classic Renaissance madonna or a seated Buddha or, perhaps more to the point, one of Brâncuşi’s polished erotic forms.”ix Once the object was placed in an art exhibition, it ceased to be a functional item and was transformed into an object of beauty.
Further, appropriation art, a movement that gained popular ground in the late 1970s, makes broad uses of found images (or photographs of them). Sometimes incorporating images wholesale with little or no alteration, this type of practice again emphasizes that changing the context of an image, from being seen on a billboard to the wall of a gallery, is transformative because the image becomes a work of art. Artist Richard Prince’s work Spiritual America, 1983, appropriated a photograph of a young Brooke Shields, originally the work of commercial photographer Gary Gross, while the work’s title is borrowed from a 1923 photograph by Alfred Stieglitz. The subject of a retrospective at the Guggenheim Museum in 2007, Richard Prince’s influence on art history is undisputed. Unfortunately, because this work and others like it do not explicitly comment on or criticize the incorporated copyrighted material, they could very well be considered infringing under the standard the Federal Circuit has adopted.
Renowned jurist Oliver Wendell Holmes Jr. once stated that:
“[i]t would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations.”x
Though oft-quoted, his candid and self-aware remark seems to have lost its footing within contemporary copyright jurisprudence. As the boundaries of the copyright “monopoly” continuously expand like a snowball rolling down a mountain, a broad conception of fair use becomes increasingly important to promoting artistic expression. Our contemporary jurists should take heed of Holmes’s remarks as well as consider the constitutional principles on which copyright law is grounded—not exclusively to protect authors and creators, but instead to provide an incentive for individuals to make creative works for the benefit the public.
This delicate balance requires an interpretation of fair use that allows artists to feel free to “quote” from other works, and it requires judges to acknowledge that perhaps it is the place of art historians, viewers, or artists themselves, to determine whether the intent behind work is transformative. Indeed, art history has long recognized that changing the context of a work changes its meaning: something largely worthless, once altered to become an art object, becomes invaluable. Though no explicit comment or criticism is made about the original work, a new work is created whose transformative nature has been acknowledged by art historians for almost a century. Courts must recognize that people draw creative inspiration from the world around them to make new works that benefit our society, and that world includes other people’s creative endeavors.
i 595 F.3d 1364 (Fed. Cir. 2010).
ii Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661,662 (2nd Cir. 1939).
iii Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577-78 (1994).
iv 17 U.S.C. § 107 (1) (2006).
v Campbell 510 U.S. at 578-79.
vi Gaylord 595 F.3d at 1373 (Fed. Cir. 2010).
vii Blanch v. Koons 467 F.3d 244, 253 (2nd Cir. 2006) (internal quotation marks and citations omitted).
viii U.S. Const., Art. I, § 8, cl. 8.
ix Calvin Tompkins, Duchamp: A Biography (New York: Henry Holt, 1998). 186
x Bleistein v. Donaldson Lithographing Co. 188 U.S. 239, 251 (1903).
Aimée Scala © Copyright 2011
The National Law Review is proud to announce that Laura Katherine Layton of Georgetown University Law Center is one of our Student Legal Writing Contest Winners for March of 2011. Laura’s article focuses on whether there should be a federal reporter’s shield law and whether it should apply to bloggers.
In 2005, New York Times reporter Judith Miller garnered national attention for her refusal to disclose the identity of her source outing Valerie Plame Wilson as an operative of the Central Intelligence Agency. The D.C. Circuit rejected Miller’s claim that the identity of the source was protected by a reporter’s privilege. Her refusal to comply with a grand jury subpoena meant she was in contempt of court, and she spent eighty-five days in jail as a result.
While Miller’s case reignited the public debate of the merits of a reporter’s privilege, the current issue for state and federal courts is defining the scope of the reporter’s shield law. Generally, areporter’s shield law is a “statutory privilege which allows a news gatherer to decline to reveal sources of information” and newsgathering materials. Like the attorney/client and doctor/patient privileges, the reporter’s privilege attempts to foster the flow of information into public discussion. The aim of the reporter’s privilege is to “increase the flow of information in circumstances in which society wishes to encourage open communication.” The rationale for allowing nondisclosure about a reporter’s confidential source is based on the idea that forcing a reporter to reveal his source will cause sources to communicate less openly with reporters as a result of “fear of exposure” and will simultaneously cause “editors and critics to write with more restrained pens” due to “fear of accountability.” The Second Circuit characterized the purpose of shield laws as the “public interest in the maintenance of a vigorous, aggressive and independent press capable of participating in robust, unfettered debate over controversial matters…” To date, thirty-six states and the District of Columbia have enacted reporter shield laws codifying a reporter’s privilege, though the scope of protection varies by state. Congress has considered adopting a federal shield statute many times in the last forty years but has yet to pass the legislation. Though in Branzburg v. Hayes the Supreme Court refused to recognize a special First Amendment privilege for journalists not to reveal their sources in the grand jury context, it remains unclear whether a reporter’s privilege exists in criminal and civil proceedings.
Most states define the shield law protection by referring to a reporter or traditional news gatherer based on employment with an established media entity. Currently, many courts are grappling with the scope of reporter’s shield laws due to the difficulty of defining who qualifies as a reporter, which is because of the changing nature of journalism—including the rise of internet publication of news by citizen journalists. There is a growing concern on how to define “journalist” so that current, unemployed, or freelance journalists are covered by the shield laws while “pajama-clad bloggers” are not entitled to invoke such a privilege. There must be some limitation on the scope of the privilege; a shield law cannot apply to anyone with the ability to publish a blog on the internet. As renowned media attorney Floyd Abrams stated, “If everybody’s entitled to the privilege, nobody will get it.” Congress should pass a shield law granting a qualified privilege to persons who gather and disseminate information to the public with a true intent to do so at the outset of the newsgathering process.
If Congress were to draft a federal shield law, the main issue would be centered on how to define journalists. Implicit in that debate would be whether to include bloggers as persons covered by the privilege. Part I examines how state statutes have traditionally defined the privilege and how state courts have determined its scope. Part II analyzes the changing nature of journalism. Part III discusses the arguments in favor of and against including bloggers as journalists for shield law purposes, concluding that bloggers should qualify for protection. Part IV recommends how to appropriately tailor the privilege for citizen journalists publishing online. Part V weighs the costs and benefits of enacting a federal reporter’s shield law. Part VI recommends that Congress adopt a two-part test for a federal shield law for reporters that includes nontraditional journalists.
I. Defining “Journalist”: Who is covered by Reporter’s Shield Laws
The struggle to define exactly who should be covered by reporter’s shield laws is not new. Since state shield laws have existed since 1896, few shield laws explicitly include electronic news media. Courts have extended the scope of shield laws beyond only covering reporters working at newspapers to people working in magazines, radio, and television. Because many antiquated state shield laws define the privilege by medium, courts have decided whether publishing electronically meets the statutory definition. For example, California courts had to decide whether a website that conveyed confidential information about new Apple products was protected from divulging its sources by the shield law, which is codified in the state constitution. The appellate court held the online publication constituted a “periodical publication” entitled to protection of the shield law because it published regularly. States have amended their shield laws for advancing technologies of radio, television, and now the internet. Because the medium of communication is constantly changing, the medium of communication should not determine the scope of the privilege.
Instead of defining who qualifies to invoke the reporter’s privilege based upon a particular medium, some states embrace a definition of reporter based on the function of journalism. While some state statutes only provide the reporter’s privilege to persons employed by an established media entity, other states apply to any “person who is or has been directly engaged in the gathering, procuring, compiling, editing, or publishing of information for the purpose of transmission, dissemination, or publication to the public.” State legislatures have rightly extended the privilege to all persons who gather and disseminate news to the public rather than limiting protection to only professional journalists.
Some courts have also embraced an intent standard based upon the function of journalism. In von Bulow, the Second Circuit held the privilege only protected a person who has the intent to disseminate the information to the public at the inception of the newsgathering process. In this case, Andrea Reynolds invoked the reporter’s shield law to cover an unpublished manuscript of a book based on the notes she took as a paralegal to Claus von Bulow, who was charged with murdering his wife. The court rejected the claim that Reynolds’ manuscript and notes were privileged since she had not indicia of a freelance author and did not demonstrate that her intent to use the materials to disseminate the information to the public existed at the beginning of the newsgathering process. The court emphasized a person invoking a journalist’s privileged need not be “associated with the institutionalized press because the ‘informative function asserted by representatives of the organized press is also performed by lecturers, political pollsters, novelists, academic researchers, and dramatists.’” The privilege can be invoked by a novice, according to the Second Circuit; it is not limited to those who have a history of journalism, although “prior experience as a professional journalist may be persuasive evidence of present intent to gather for the purpose of dissemination.”
Other courts have adopted the intent-based test when deciding whether a person protected by a journalist’s privilege. The First Circuit and the Ninth Circuit applied the von Bulow intent test when extending the privilege to a professor and to a non-fiction writer of investigative books.  In determining whether the persons invoking the privilege were covered, both circuits analogized the function of an academic or of an author to the reporter’s role—the ultimate purposes are to aid investigative newsgathering. According to the Ninth Circuit: “[t]he journalist’s privilege is designed to protect investigative reporting, regardless of the medium used to report the news to the public. Investigative book authors, like more conventional reporters, have historically played a vital role in bringing to light ‘newsworthy’ facts on topical and controversial matters of great public importance.” Basing its decision on the intent-based inquiry, the First Circuit extended the privilege to academic researchers because they “too are information gatherers and disseminators. Just as a journalist, stripped of sources, would write fewer, less incisive articles, an academician, stripped of sources, would be able to provide fewer, less cogent analyses.”
State courts have also wrestled with whether a reporter’s privilege covers non-traditional journalists, including freelance writers, authors, documentary filmmakers, academics, and independent research consultants. Hawaii is the only state to specifically include whether bloggers are protected by its shield law if certain conditions are met: “Non-traditional news gatherers, e.g., bloggers, are protected if (1) the individual invoking the privilege regularly participates in reporting or publishing news of significant public interest, (2) the person holds a position similar to a traditional journalist or newscaster, and (3) the public interest is served by extending the protection of the statute.” 
II. Defining “Journalist”: The Changing Nature of Journalism
The Supreme’s Courts rejection of the press as the “fourth estate” of government in Branzburg was “remarkably (although unintentionally) prescient. As means of communication become more interactive and accessible to the public the ‘press’ of the twenty-first century is rapidly becoming more difficult to define.” Because of the advent and ubiquity of the Internet, more people are able to contribute to the public discourse. The number of people contributing their ideas and opinions on the Internet has grown exponentially, including the number of blogs and blog-readers. There were over 34.5 million blogs at last count.
While blogs blur the line between online diaries and news reporting, the influence of blogs on the mainstream media and the public dialogue cannot be overemphasized. Matt Drudge, the author of the Drudge Report, is but one example of a person setting the trend of breaking news by blogging. He does not consider himself a journalist, but his website was the first to break the story of President Clinton’s affair with Monica Lewinsky. His blog also was the first to report that presidential candidate Bob Dole chose Jack Kemp as his running mate in the 1996 election, as well as that CBS fired Connie Chung. Other examples of blogs leading the national discussion include: bloggers recognized Senator Trent Lott’s controversial comments at Strom Thurmond’s one-hundredth birthday celebration, which led Lott’s resignation as Senate Majority Leader; bloggers revealed Dan Rather’s documents about President George W. Bush’s National Guard service were forged; bloggers uncovered James Frey fictionalized portions of his memoir and also exposed the contents of inappropriate emails sent to House pages by Representative Mark Foley.
Moreover, mainstream media outlets are embracing the changing nature of technology by incorporating the citizen journalism into reporting. Many mainstream media companies support blogs, and many reporters have their own blogs. Most every news website encourages readers to leave comments online, and many mainstream media websites provide links to surveys and responses as well. News organizations encourage members of the public to contribute content for publication by sharing photographs and stories of current events. CNN promotes citizen journalism by asking viewers to submit pictures and videos of catastrophic weather events such as Hurricane Dennis. Most recently, CNN encouraged people in Egypt to report on the uprisings in the country using Twitter, photographs, or videos. CNN.com also created iReport, a section of its website “where people take part in the news with CNN. Your voice, together with other iReporters, helps shape how and what CNN covers every day.”When one enters the site, the disclaimer pop-up on the browser declares: “So you know: iReport is the way people like you report the news. The stories in this section are not edited, fact-checked or screened before they post. Only ones marked ‘CNN iReport’ have been vetted by CNN.”  As part of a conscious effort to increase its circulation numbers by capitalizing on the popularity of blogs, Gannett, which owns over eighty newspapers around the United States, announced in November 2006 it was preparing to use non-journalists to develop content for its publications.
The nature journalism is evolving; in fact, the notion of an institutional press is diminishing, if not vanishing. The inclusion of citizens as reporters of the news changes the role the mainstream media plays in our democracy.
III. Should Bloggers Be Included as Journalists?
The purpose of a reporter’s shield law indicates that citizen journalists should be able to invoke the privilege. By allowing bloggers who disseminate information to the public to invoke a privilege to keep sources confidential, the purpose of the privilege is served: “to encourage sources to come forward with information for public debate while, at the same time, preventing both professional and non-profession journalists from becoming agents of the government, criminal defendants, or civil litigants.” The purpose of the First Amendment, and thus journalists, is to enhance democracy through open, free debate. Citizen journalists who publish their content for the general public should qualify for the privilege. Because bloggers serve the essential purpose of disseminating news to the public, Mr. Abrams thinks many should be able to invoke privilege of traditional publishers:“I think a blogger…is not less deserving than a journalist who may communicate with a smaller audience through a small-town newspaper.” According to the media attorney, “There should be protection so long as information was obtained for the purpose of dissemination to the public at large in some sort of analogous way to what journalists do.”
In addition, Supreme Court precedent suggests bloggers should qualify for the privilege. Though at the time of Branzburg the Internet did not exist, the Court stated freedom of the press is “not confined to newspapers and periodicals” or “the large metropolitan publisher” but “necessarily embraces pamphlets and leaflets” and “every sort of publication which affords a vehicle of information and opinion.” Indeed, the Court expressed a special concern for the “lonely pamphleteer who uses carbon paper or a mimeograph…” Today’s version of the lonely pamphleteer is the “pajama-clad” blogger expressing his ideas and opinions in an online publication.
Some people argue that bloggers do not actually engage in journalism, but they are the next extension of the expanding categories of non-traditional journalists. State and federal courts have already found that the journalist’s shield law covers student journalists, professors, authors, and freelancers because these professions perform essentially the function as reporters: to gather and disseminate information to the public. Additionally, freedom of the press “is a right which belongs to the public; it is not the private preserve of those possess the implements of publishing.” Moreover, claiming bloggers should not be able to invoke the privilege because they are “not trained,” do not “work as journalists full-time,” and/or are not “sufficiently dedicated to contributing to the public debate,” seems like a empty criticism at a time when “mainstream media organizations have substantially eroded their own credibility” with scandals such as Jayson Blair’s fabrication of sources and Dan Rather’s report based on inaccurate records. 
Many people criticize blogs as “opinion without expertise, without resources, without reporting.” Blogs are often criticized as unreliable since bloggers, unlike journalists, do not have to submit their work to editors for approval before publication. David Shaw, of the Los Angeles Times, complained “[m]any bloggers…don’t seem to worry much about being accurate. Or fair. They just want to get their opinions—and their ‘scoops’—out there as fast as they pop into their brains.” Other critics carp that it is difficult for readers to differentiate between accurate and inaccurate blogs.
Advocates of citizen journalism respond that many bloggers have incentives to report accurately, and mistakes are corrected as soon as they are posted. Bloggers, like journalists, are liable for defamation; the threat of litigation “has a civilizing influence on the Internet communications by improving the quality of the discourse.” In addition, blogs have the advantage of mustering the knowledge of millions of people, drawing upon the “wisdom of the crowds.”  Blogs certainly do not have a “monopoly on error” as demonstrated by defamation suits filed against mainstream media companies. Bloggers, like journalists, are concerned about their reputations with their readers. When interviewed by the Wall Street Journal, blogger Jeff Jarvis said, “[w]hen I make a mistake, people jump on me like white blood cells on a germ. If I don’t correct it, my reputation’s going to suffer.” Additionally, conditioning the protection of a reporter’s shield on the accuracy of the individual claiming the privilege would be contrary to First Amendment principles espoused in New York Times v. Sullivan as “accuracy is relevant only in defamation actions, and even then there is no strict liability for falsehoods.”  Requiring accuracy would be “particularly troubling in the context of blogging, where the benefits of the medium do not come from complete accuracy of each posting but rather in its interactive nature with readers and critics.”
Furthermore, blogs are not the only publications that are regarded with differing levels of trust; mainstream media outlets are subject to the same criticism. Many critics object that major media entities are “too close to the corporations and politicians they cover to be trusted as watchdogs.” Ironically, it may be that the escalation in the number and popularity of blogs is due to the public’s lack of confidence in mainstream journalism. While the USA Today may be a more trusted source than the National Enquirer, reporters working for either publication “equally claim the title of ‘journalist.’” Courts have refused “to segregate the media into tiers based on perceived quality or trustworthiness” and should continue to do so when analyzing whether the reporter’s privilege applies to citizen journalists. The O’Grady court recognized the danger of a court evaluating the quality of journalism and thus “decline[d] the implicit invitation to embroil ourselves in questions of what constitutes ‘legitimate journalis[m]. The shield law is intended to protect the gathering and dissemination of news.” Because the court could “think of no workable test or principle that would distinguish ‘legitimate’ from ‘illegitimate’ news,” it rejected “[a]ny attempt by courts to draw such a distinction” and warned that an attempt to draw such a distinction “would imperil a fundamental purpose of the First Amendment, which is to identify the best, most important, and most valuable ideas not by any sociological or economic formula, rule of law, or process of government, but through the rough and tumble competition of the memetic marketplace.”
In its discussion of journalism, the California court also denied limiting the privilege to publications on matters of public concern. Though some have proposed a reporter’s privilege be available only to persons who publish information involving matters of public concern, the “administrative and theoretical difficulties”of this approach are overwhelming. In the context of defamation law, the Supreme Court spent over fifteen years endeavoring to make a legal distinction based on “whether the content is a matter of public concern or newsworthy.” According to Justice Douglas, “‘[P]ublic affairs’ includes a great deal more than merely political affairs. Matters of science, economics, business, art, literature, etc., are all matters of interest to the general public. Indeed, any matter of sufficient general interest to prompt media coverage may be said to be a public affair.”It is imprudent to adopt an amorphous standard to limit the scope of a reporter’s privilege since it has been unworkable in the defamation context.
IV. Defining “Journalist”: How to Include Bloggers in a Federal Shield Law
Since it is “neither possible nor prudent to limit a reporter’s privilege to professional journalists,” a qualified privilege should be available to persons who disseminate information to the public with a real intent to do so at the inception of the newsgathering process. Bloggers should be protected by reporter’s shield laws based on the function of journalism. Courts should examine the evidence of a blogger’s intent to publish in the same fact-specific manner as the court in von Bulow when it found no indicia that Andrea Reynolds was a freelance author.
In the 2009 version of a federal shield law, the Senate rightly defined “covered person” as a person
(i) with the primary intent to investigate events and procure material in order to disseminate to the public news or information…or other matters of public interest, [who] regularly gathers, prepares, …writes, edits, reports or publishes on such matters…
(ii) has such intent at the inception of the process of gathering the news or information sought; and
(iii) obtains the news or information sought in order to disseminate the news or information by [any] means…
The “intent to disseminate” test is grounded in the rationale of the privilege— “to provide protection for the unfettered dissemination of information to the public.” Those who contribute to the public discourse should be able to avail the privilege. However, one weakness of the standard is that it “focuses on the intent of the reporter at the time it was received.”  Most veteran reporters in the nation would “admit that many of their stories come to them when they are not even looking for them…Reporters often have no idea at the time they are collecting information whether they will in fact share that information with the public.” Using the intent test alone, it is unclear whether a “reporter who has a friendly conversation with an acquaintance and then later decides to pursue a story based on what she learned in that conversation” would be protected by the privilege. Although intended to disqualify a savvy person who “conveniently” characterizes herself as a journalist in order to invoke the privilege, the von Bulow intent test could also have the “effect of denying the privilege to even the most established and dedicated full-time journalists.”
This is why the federal statute should include a two-part test for the definition of a journalist: the traditional definition and the function test. The first definition of a journalist should be the traditional definition that includes an association with a media entity, which would avoid the aforementioned problem of professional journalists possibly not being able to invoke the privilege. The second definition of journalist should be the intent-based test based on the function of journalism, which would cover bloggers and other non-traditional journalists. The test would be a fact-based inquiry like the close examination of Reynolds’s intent to publish in von Bulow. This tough standard would ensure limitations on the privilege rather than extending it to anyone with a computer and an Internet connection.
The qualified privilege could be overcome by showing three elements: “(1) the desired information is critical to the maintenance of a party’s claim, defense, or proof of an issue; (2) the information sought cannot be obtained by alternative means; and (3) there is a compelling interest in the information that outweighs the public’s interest in the free flow of information.” The Senate essentially created the same parameters for a qualified privilege in its proposed legislation in 2009. A qualified privilege would “soften the blow of an expansive definition of those persons and entities entitled to invoke it.”
The federal reporter’s shield law should also include narrow exceptions to the privilege for “circumstances in which countervailing societal interests outweigh any societal interest in preserving the privilege.” This includes circumstances when a subpoena is “directed to someone who witnessed or participated in a criminal or tortious activity (exclud[ing] ‘leaks’ of classified or national security information).”  Another exception would include times when a “direct and imminent threat to national security warrants compelling testimony” or when “reasonably certain death or substantial bodily harm” may occur. These three basic exceptions were also outlined in the Senate’s most recent attempt to pass a federal reporter shield law.
Most courts have held that journalists who participate in a crime are barred from invoking the privilege. Accordingly, this exception does not harm the underlying purpose of the privilege since there is “no value in encouraging sources to commit crimes in front of journalists.” Leaking classified information should not fall under the crime exception since “leaks of government information, whether classified or not, have become an essential means by which the public learns about government activities.”  Since current protection is inadequate for whistleblowers, and “as a result, leaking information to the press is often the only realistic means of shedding light on questionable or illegal government practices,” a privilege protecting whistleblowers encourages such persons to come forward serves the public interest. Prosecuting those who leak national security or other classified information is not hindered by a reporter shield law.
Though most fears that a federal shield law would undermine national security are misplaced, there should be an exception to the privilege “if the reporter’s testimony would help prevent a direct and imminent threat to national security.”  The Supreme Court recognized an exception for “imminent threat” to national security in the Pentagon Papers case, which concluded that the “presumption against prior restraints could not be overridden absent an immediate and serious threat to national security.”  This is a reasonable standard that should apply to the reporter’s privilege.
Finally, an exception for preventing “death or bodily harm to another human being applies to other testimonial privileges, including the attorney-client privilege.” It is prudent to extend this exception to the reporter’s privilege “because in such cases the public’s interest in the information far outweighs the public’s interest in encouraging anonymous sources from coming forward.”
V. The Costs and Benefits of a Federal Reporter Shield Law
The most significant cost of any privilege is that it deprives courts of evidence. Critics claim that a privilege closes the courts for individuals harmed as a result of the free press, that a shield creates an exception to courts as a place to redress injury. However, defamatory statements are actionable regardless of the enactment of a shield law. There is no privilege if the media caused the damage.Moreover, some states “explicitly reject the privilege when a media entity is a party to the litigation, a situation that typically occurs in defamation cases,” while others supply the media with some “protection by requiring a plaintiff to demonstrate that the information is important for her case and that she has attempted to obtain the information through other means.”
According to opponents of the privilege, it benefits the media; enacting a federal shield law would lead to accountability problems if reporters are not forced to reveal anonymous sources. The purpose of the privilege is to help the free flow of information to the public rather than aid the press. The privilege benefits the public and whistleblowers and does not hinder law enforcement. In fact, adopting a reporter’s privilege is viewed “as a necessary component of a larger criminal law reform, based on the hope that with this new protection reporters would be more willing to publish stories revealing criminal activity. The states’ enthusiasm for shield laws suggests that such laws enhance rather than detract from the ability of law enforcement to fight crime.”  Not having a federal privilege actually hinders attorneys general. Federal and state privileges should mirror each other since reporters do not know where a subpoena will come from. A federal reporter shield law creates certainty for reporters and attorneys. Thirty-five states with shield laws submitted an amici curiae brief to the Supreme Court of the United States arguing for a grant of certiorari in Judith Miller’s case because the lack of a federal privilege undermines the judicial and legislative determinations of forty-nine states and the District of Columbia.
The irony of not enacting a federal shield law in an age of Wikileaks means that websites such as Wikileaks are more likely to receive information and documents than a reporter, who would verify the information, edit statements, and redact necessary portions. Without a reporter’s shield law, it is likely that sources will go to Wikileaks, which sends information directly to the public and is not subject to professional ethics. Wikileaks is empowered if reporters are not allowed to protect their sources. 
A federal shield law for reporters and citizen journalists would benefit the public by protecting whistleblowers and encouraging anonymous sources to reveal information to responsible disseminators of the news. Because the purpose of the privilege is to help the flow of information to the public, Congress should pass a federal shield reporter’s shield law that protects traditional and citizen journalists. The privilege should not simply cover members of the traditional press, for “[t]he First Amendment does not guarantee the press a constitutional right… not available to the public generally.” Congress should combine the traditional definition of a reporter associated with a media entity with an intent-based inquiry based on the function of journalism to create a federal reporter’s shield law to enhance the First Amendment and encourage the free flow of information in our democracy.
 See In re Grand Jury Subpoena, Judith Miller, 397 F.3d 964, 976-980 (D.C. Cir. 2005); Key Players in the CIA Leak Investigation, http://www.washingtonpost.com/wp-srv/politics/special/plame/Plame_KeyPla…
81 Am. Jur. 2d Witnesses § 526 (2010).
 Mary-Rose Papandrea, Citizen Journalism and the Reporter’s Privilege, 91 Minn. L. Rev. 515, 535-36 (2007) (discussing the purpose of the privilege).
 Branzburg v. Hayes, 408 U.S. 665, 721 (1972) (Douglas, J., dissenting).
 von Bulow v. von Bulow, 811 F.2d 136, 144 (2d Cir. 1987).
 David Kohler & Lee Levine, Media and the Law 529 (Matthew Bender 2009).
 See, e.g.,Free Flow of Information Act of 2009, S.448, 111th Cong. § 1-11 (2009); Free Flow of Information Act of 2007, S.2035, 110th Cong. § 1-8 (2007).
 Branzburg, 408 U.S. at 682.
 See, e.g., Ala. Code § 12-21-142 ; 10 Del.C. § 4320 (4).
 See In re Grand Jury Subpoena, Judith Miller, 397 F.3d at 976-980 (Sentelle, J., concurring) (noting the difficulties of determining who qualifies as a reporter and expressing concern about “whether the stereotypical ‘blogger’ sitting in his pajamas at his personal computer posting on the World Wide Web” would be entitled to invoke the privilege).
 Floyd Abrams Explains Why He Should Lose, http://www.pajamasmedia.com/instapundit-archive/archives/019677.php
 Cal. Const. art. I, § 2(b).
 O’Grady v. Superior Court, 44 Cal.Rptr.3d 72 (Cal. Ct. App. 2006).
 Minn. Stat. § 595.023 (2004).
 von Bulow, 811 F.2d at 143.
 Id. at 145.
 Id. at 145 (quoting Branzburg v. Hayes, 408 U.S. 665, 705 (1972)).
 Id. at 144.
 Cusumano v. Microsoft Corp., 162 F.3d 708, 714 (1st Cir. 1998).
 Shoen v. Shoen, 5 F.3d 1289, 1293 (9th Cir. 1993).
 Id. at 1293.
 Cusumano, 162 F.3d at 714.
 See People v. Von Villas, 13 Cal. Rptr. 2d 62, 78-79 (Cal. Ct. App. 1992) (holding California privilege applied to freelance author ).
 See e.g., Shoen, 5 F. 3d at 1290-91.
 See Silkwood v. Kerr-McGee Corp., 563 F.2d 433, 436-37 (10th Cir. 1977) (holding privilege applied to documentary filmmaker whose “mission…was to carry out investigative reporting for use in the preparation of a documentary film”).
 See Cusumano, 162 F.3d at 714.
 See Summit Tech., Inc. v. Healthcare Capital Group, Inc., 141 F.R.D. 381, 384 (D. Mass. 1992)(holding independent research consultant was “engaged in the dissemination of investigative information to the investing business community” on “matters of public concern,” and was therefore “entitled to raise the claim of privilege”).
 See Privilege Compendium, http://www.rcfp.org/privilege/index.php?op=browse&state=HI
 Papandrea, supra note 3, at 523.
 See id.
 See cnn.com/.
 See id.
 See Papandrea, supra note 3, at 532.
 Id. at 585.
 Floyd Abrams, supra note 13.
 Branzburg, 408 U.S. at 704.
 State v. Buchanan, 436 P.2d 729, 731(Or. 1967).
 Papandrea, supra note 3, at 573-74.
 See id., at 528.
 See id.
 Id.at 530.
 See Papandrea, supra note 3, at 529.
 See id. at 530.
 See id. at 529.
 Id., at 576.
 Id.at 530.
 See Papandrea, supra note 3,at 524.
 Id.at 530.
 O’Grady, 44 Cal.Rptr.3d at 97.
 Papandrea, supra note 3, at 578.
 Gertz v. Robert Welch, 418 U.S. 323, 357 (1974) Douglas, J. dissenting).
 Papandrea, supra note 3, at 520.
 Free Flow of Information Act of 2009, supra note 7.
 Papandrea, supra note 3, at 572.
 Id.at 573.
 Interview with Kurt Wimmer, partner, Covington & Burling, in Washington, D.C. (Dec.17, 2010).
Papandrea, supra note 3, at 584.
 See Free Flow of Information Act of 2009, supra note 7.
 Papandrea, supra note 3, at 585.
 Id.at 520-21.
 Id. at 588.
 See Free Flow of Information Act of 2009, supra note 7.
 Papandrea, supra note 3, at 587.
 Id. at 588.
 See id.
 Id.at 588-89.
 Papandrea, supra note 3, at 589.
 Id.at 589-90.
 Interview with Mark Grannis, managing partner, Wiltshire & Grannis, in Washington, D.C. (Dec. 8, 2010).
 Interview with Kurt Wimmer, supra note 79.
 Papandrea, supra note 3, at 548.
 Interview with Mark Grannis, supra note 96.
 Papandrea, supra note 3, at 535.
 Interview with Kurt Wimmer, supra note 79.
 Brief of the States of Oklahoma, et al. as Amici Curiae in Support of the Petitions for Writs of Certiorari, Cooper v. United States, 545 U.S. 1150 (2005), denying cert. to In re Grand Jury Subpoena, Judith Miller, 397 F.3d 964 (D.C. Cir. 2005).
Interview with Kurt Wimmer, supra note 79.
 Branzburg, 408 U.S. at 684.
© Copyright 2011 Laura Katherine Layton
The "Initial Interest Confusion" Test – Analysis and Proposal for a Sensible Formulation for Use on the Internet
The National Law Review is proud to announce that Jaclyn Coronado Sitjar of Saint Louis University School of Law is one of our Student Legal Writing Contest Winners for March of 2011. Jaclyn’s article focuses on the element of likelihood of consumer confusion which is the crux of many trademark infringement claims.
The Internet facilitates online commerce and provides a wealth of information to consumers by allowing users to search for a product or brand and to receive results, suggestions, and advertisements. Internet consumers using search engines are familiar with search-based advertising, where advertisements appear next to search results. Google provides an advertising service, AdWords.[i]AdWords allows advertisers to bid on search terms, called keywords, and then Google links those keywords to the advertiser’s advertisements or hyperlinks.[ii]When an Internet consumer searches for the keyword the advertiser purchased, the sponsored link or advertisement is triggered and appears either above or to the right of the organic search results.[iii] Other search engines including Netscape and Excite use programs similar to Google AdWords to allow advertisers to either bid for or purchase specific search terms.[iv]
During the first half of 2010, U.S. Internet advertising revenue broke a new half-year record with U.S. Internet advertisers spending $12.1 billion.[v] The average American spends more than sixty hours a month online and 55% of American adults use the Internet daily.[vi] With increasing Internet advertising and use, the possibility of consumer confusion exists on the Internet. Advertisers can buy keywords related to their line of business, which may include buying a competitor’s trademark. For example, if Advertiser A buys Competitor B’s trademark as a keyword, then an Internet search for Competitor B’s product will trigger Advertiser A’s ads in a list of sponsored links along the search results. This example presents a possibility of consumer confusion on the Internet.[vii] One way to alleviate Internet consumer confusion is through the court’s regulation of trademarks in metatags, domain names, and keyword-sponsored advertising and the adoption of the initial interest doctrine.[viii]
I. Background Information
The Lanham Act of 1946 federally regulates trademarks by creating a registration system for marks used in U.S. commerce and providing causes of action for the infringement of both registered and unregistered marks.[ix] Under the Lanham Act, a trademark is “any word, name, symbol, or device, or any combination thereof . . . to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods.”[x]Trademark law serves two primary purposes: (1) to protect the trademark owner’s private interests of the resources and efforts invested into establishing trademarks and (2) to protect the public by reducing the likelihood of consumer confusion by prohibiting misleading trademark practices.[xi]
Section 43 of the Lanham Act defines trademark infringement of unregistered trademarks, which is a cause of action allowing trademark owners the right to bring a civil suit against anyone who “uses” another’s trademark “in commerce” when such use is likely to confuse or deceive consumers in advertising or promotion.[xii] Section 32 of the Lanham Act is the provision for trademark infringement of a registered trademark.[xiii] Although the Lanham Act provides for protection against infringement of both registered and unregistered marks, courts and litigants tend to look to Section 43, which also protects unfair methods of competition, e.g. false designation of origin, sponsorship, or approval.[xiv] Courts interpret both Section 32 and Section 43 to require a plaintiff to establish three elements for a successful trademark infringement action.[xv] First, the plaintiff shows a valid trademark entitled to protection under the Lanham Act.[xvi] Second, the plaintiff shows the defendant used the plaintiff’s mark or a similar mark in commerce.[xvii] Third, the plaintiff must prove the defendant’s use will create a likelihood of confusion.[xviii]
A. Use in Commerce
At issue in many online trademark infringement cases is the second element of the infringement analysis, use in commerce.[xix] The Lanham Act defines “use in commerce” as the bona fide use of a mark either on goods or services.[xx] In the offline context, selling a product with another’s trademark affixed to the carton is an example of sufficient use in commerce.[xxi] In the online context without tangible products to affix trademarks to, courts have had to determine Internet-specific issues such as whether domain names including competitor trademarks or using metatags of a competitor’s trademark constitute sufficient use in commerce.[xxii]With the rise in search-based advertising,[xxiii] the most recent issue with online use in commerce is buying and selling trademarks as keywords. In Rescuecom Corp v. Google Inc., the Second Circuit Court of Appeals recently ruled that buying another’s trademark through Google’s advertising service AdWords constitutes use in commerce.[xxiv] Rescuecom aligned the Second Circuit with the majority of other circuits finding that a defendant’s use of plaintiff’s trademarks to trigger keyword advertising is sufficient use in commerce.[xxv]
B. Likelihood of Confusion
The final element, likelihood of consumer confusion, forms the crux of most trademark infringement claims.[xxvi] Courts employ a multifactor test to determine the likelihood of confusion by applying a version of the eight factors established by the Ninth Circuit in AMF, Inc. v. Sleekcraft Boats:
(1) similarity of the conflicting marks; (2) proximity of the two companies’ products or services; (3) strength of the plaintiff’s mark; (4) marketing channels used by the two companies; (5) degree of care likely to be exercised by purchasers in selecting goods; (6) defendant’s intent when selecting the mark; (7) evidence of actual consumer confusion; and (8) likelihood of expansion of product lines.[xxvii]
The multifactor test is flexible and other circuits may apply fewer or more factors.[xxviii] Whatever factors a court employs, the ultimate test focuses on whether defendant’s use is likely to confuse or deceive customers into thinking there is some sponsorship between the trademark owner and the infringing mark.[xxix]
Usually courts determine likelihood of confusion at the time the consumer makes the purchase. However, sometimes circumstances arise where the consumer is actually confused before making the purchase. For example, an Internet consumer may only be confused into visiting a website, not into actually purchasing a product. A consumer could click on an ad triggered by a keyword containing the competitor’s trademark. Since the traditional likelihood of confusion standard does not translate well to such keyword cases, some courts have turned to initial interest confusion.
II. Initial Interest Confusion
A. Introduction to Initial Interest Confusion
Initial interest confusion is the temporary, pre-sale confusion that occurs when a consumer is drawn to a product believing it to be affiliated with another company because the product somehow evokes that company’s trademark.[xxx] Initial interest confusion is a judicially created doctrine applied where a product generates initial customer interest by using another’s trademark, even if the customer never actually buys the infringing product.[xxxi] Courts applying initial interest confusion can hold defendants liable based on an unfair “bait-and-switch theory” for practices that “affect the buying decisions of consumers in the market for the goods, effectively allowing the competitor to get its foot in the door by confusing consumers.”[xxxii]
The Second Circuit first developed initial interest confusion in 1975 in Grotrian v. Steinway & Sons after finding the traditional likelihood of confusion analysis insufficient to hold the culpable defendants liable.[xxxiii] In Grotrian, a German corporation sold pianos under the trade name “Grotrian-Steinweg” which competed with the well-known piano manufacturer Steinway & Sons.[xxxiv] The district court applied the traditional likelihood of confusion test with special focus on the “degree of likely consumer care” factor.[xxxv] Although expensive piano consumers have a high sophistication level, this sophistication did not eliminate the possibility of consumer confusion between the similar marks.[xxxvi] The court coined the initial interest confusion theory by noting that a potential Steinway buyer might initially be misled to the less expensive Grotrian-Steinweg, which injures Steinway.[xxxvii] The issue was “not the possibility that a purchaser would buy a Grotrian-Steinweg thinking it was actually a Steinway, but rather that, by virtue of “initial confusion,” the “‘Grotrian-Steinweg’ name … would attract potential customers based on the reputation built up by Steinway in this country for many years.”[xxxviii] The consumer’s confusion occurred before the purchase when a consumer would initially afford Grotrian-Steinweg pianos positive credibility because of the consumer’s mental association with the Steinway & Sons mark, regardless of whether the consumer actually purchased a Grotrian-Steinweg piano or not.[xxxix] Therefore, the Second Circuit found the absence of point-of-sale confusion was irrelevant because harm resulted from the initial interest confusion.[xl]
The Second Circuit used the same rationale twelve years later in Mobil Oil Corp. v. Pegasus Petroleum Corp., holding defendant’s “Pegasus Petroleum” name for an oil trading company infringed on plaintiff’s trademarked flying horse logo.[xli] There was a likelihood of confusion “not in the fact that a third party would do business with Pegasus Petroleum believing it was related to Mobil, but rather in the likelihood that Pegasus Petroleum would gain crucial credibility during the initial phases of a deal.”[xlii]
Since Grotrian and Mobil, other circuits have applied initial interest confusion to trademark infringement cases.[xliii] With the rise of the Internet, courts also apply initial interest confusion in the online context.[xliv] The landmark case on online initial interest confusion is Brookfield Communications, Inc. v. West Coast Entertainment Corp.[xlv] Plaintiff Brookfield Communications offered an Internet software database of the entertainment industry using the trademark “MovieBuff.”[xlvi] Brookfield claimed trademark infringement against defendant West Coast’s use of the domain name “moviebuff.com” and the term “MovieBuff’ in metatags for its own entertainment industry database.[xlvii] Metatags are lines of code in a website’s Hyper Text Mark-Up Language (HTML) invisible to the internet user that older search engine technologies used to compile and order search results lists.[xlviii] The Ninth Circuit held for Brookfield, finding initial interest confusion is likely to result from West Coast Entertainment’s metatag use.[xlix]Internet users searching for Brookfield’s MovieBuff product may discover West Coast’s website and, finding a free database similar to Brookfield’s product, the user may “simply decide to utilize West Coast’s offerings instead.”[l] This is actionable initial interest confusion “in the sense that, by using ‘moviebuff.com’ or ‘MovieBuff’ to divert people looking for ‘MovieBuff’ to its website, West Coast improperly benefits from the goodwill that Brookfield developed in its mark.”[li]
B. Criticism and Proposal for Courts Applying Initial Interest Confusion
Brookfieldwas a controversial decision that has been criticized by scholars and judges.[lii] In reaching its conclusion, the Ninth Circuit did not employ the eight-factor Sleekcraft test.[liii] Instead, the court stated “the traditional eight-factor test is not well-suited for analyzing the metatags issue,” then considered only whether the metatags caused initial interest confusion.[liv] This departure from the likelihood of confusion test sparked criticism over whether initial interest confusion is a viable theory to find trademark infringement liability.[lv]
Another criticism is that unlike the earlier offline cases ofGrotrian and Mobilinvolving both the presence of confusion and the misappropriation of goodwill in famous marks[lvi], Brookfield found initial interest confusion merely on the potential that West Coast might receive some benefit from Brookfield’s mark.[lvii]Another common criticism of initial interest confusion is there is no real economic justification for its application, especially online where there is only a de minimiscost to consumers to click back and forth between websites.[lviii] However, because the internet affords a plethora of advertising techniques ranging from metatags to keyword advertising, the online consumer may actually be confused more often than the offline consumer.[lix] Furthermore, Rescuecom shows that with courts in agreement that using trademarks in these contexts is actionable trademark use, infringement claims will survive summary judgment, urging some standard of uniformity among courts applying initial interest confusion.[lx]
In response to this criticism, the Second, Third, Sixth, Seventh, Ninth and Tenth Circuits have recognized online initial interest confusion.[lxi] Just as courts apply different variations of the likelihood of consumer confusion tests,[lxii] courts are also applying different variations of initial interest confusion analysis.[lxiii] Circuit courts and district courts within these circuits are even applying different variations of initial interest confusion.[lxiv] This paper organizes the conundrum of initial interest confusion by three different approaches used by the courts: (1) Engaging in the entire traditional likelihood of confusion analysis and then considering initial interest confusion as a separate factor, (2) Only considering initial interest confusion or giving undue weight to diversion, and (3) Analyzing initial interest confusion within the “evidence of actual confusion” factor or “customer care” factor.
1. Courts analyzing initial interest confusion separately before or after the traditional likelihood of confusion test
Courts in the Second, Third, Sixth and Ninth Circuits analyze initial interest confusion separately from the traditional likelihood of confusion analysis.[lxv] These courts either assess initial interest confusion before or after the traditional likelihood of confusion factors. In the Second Circuit, Savin Corp. v. The Savin Group involved a domain name dispute.[lxvi] The Polaroid factors are the eight factors that the Second Circuit applies to determine whether there is a likelihood of confusion in a trademark infringement case.[lxvii] The Savin court considered initial interest confusion separately after the Polaroid analysis because it “does not fall neatly under any of the Polaroid factors.”[lxviii] The Savin court relied on precedent in Bihari v. Gross, which required a showing of intentional deception before finding initial interest confusion.[lxix] Because the plaintiff had failed to raise a triable issue of fact on either a likelihood of confusion or intentional deception, the Second Circuit affirmed the district court’s summary judgment to the defendant.[lxx]
In Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., the Third Circuit assesses all ten Lapp factors and then analyzes initial interest confusion.[lxxi] The Lapp factors are the Third Circuit’s ten factors used to determine likelihood of confusion in trademark infringement cases.[lxxii] Furthermore, all Lapp factors should be considered whether a plaintiff alleges initial interest confusion, point-of-sale confusion, or both.[lxxiii] Two district courts in the Third Circuit addressed initial interest confusion in keyword advertising cases with the District Court of New Jersey following Checkpoint and the Eastern District of Pennsylvania deviating from Checkpoint.[lxxiv] The District Court of New Jersey in 800-Jr Cigar, Inc. v. Goto.com, Inc. followed Checkpoint by applying all ten Lapp factors and then engaged in a more comprehensive initial interest confusion analysis. [lxxv] The court looked at (1) product relatedness, (2) the level of care exercised by consumers in making purchasing decisions, (3) the sophistication of the purchaser/consumer; and (4) the intent of the alleged infringer in adopting the mark.[lxxvi] The court ultimately found genuine issues of material fact in four of the ten Lapp factors and the impact, if any, of initial interest confusion and denied both parties’ motions for summary judgment.[lxxvii]
Conversely, the court for the Eastern District of Pennsylvania in the Third Circuit declined to extend initial interest confusion in keyword advertising in JG Wentworth v. Settlement Funding LLC.[lxxviii] JG Wentworth alleged Settlement Funding LLC’s purchase of the keyword “JG Wentworth” from Google AdWords for sponsored link advertisements and using JG Wentworth’s trademarks as metatags in Settlement Funding LLC’s websites caused initial interest confusion.[lxxix] Instead of applying the Lapp factors, the court hastily decided there was no likelihood of confusion and no trademark infringement because Settlement Funding LLC’s website link was “separate and distinct” from JG Wentworth’s website link, therefore eliminating potential consumers from the “opportunity to confuse defendant’s services, goods, advertisements, links or websites for those of JG Wentworth’s.”[lxxx]
Since Brookfield, the Ninth Circuit has encountered a variety of cases alleging initial interest confusion on the Internet.[lxxxi] In the Internet context, the Ninth Circuit has applied its Sleekcraft factors before addressing initial interest confusion in trademark infringement cases involving a domain name, keyword advertising, and most recently with Google’s AdWords program.[lxxxii] However, the Ninth Circuit has also held that in the Internet context, the three most importantSleekcraft factors are (1) the similarity of the marks, (2) the relatedness of the goods or services, and (3) the parties’ simultaneous use of the Web as a marketing channel.[lxxxiii] These three factors have been dubbed the “controlling troika” or the “internet trinity.”[lxxxiv] When the Internet trinity factors suggest likely confusion, the other factors must “weigh strongly” against a likelihood of confusion to avoid finding infringement.[lxxxv]
For example, in Interstellar Starship Services, Ltd. v. Epix, Inc., the plaintiff alleged that the defendant’s domain name caused a likelihood of initial interest confusion.[lxxxvi] The Ninth Circuit affirmed the district court’s holding of no likelihood of initial interest confusion, explicitly stating that the district court correctly applied all Sleekcraft factors instead of just the internet trinity factors.[lxxxvii] However, courts have interpreted Interstellar to engage in a type of burden-shifting analysis between the internet trinity factors and the rest of theSleekcraft factors.[lxxxviii] After finding the internet trinity factors favor a plaintiff, the burden shifts to the defendant to prove the remaining factors “weigh strongly against a likelihood of confusion.”[lxxxix] This was seen in Perfumebay.com Inc. v. eBay Inc. with Perfumebay.com seeking declaratory judgment that its various forms of the mark “Perfumebay” did not infringe eBay’s trademark.[xc] The Ninth Circuit affirmed the district court’s holding that a likelihood of consumer confusion and initial interest confusion existed.[xci] There was a likelihood of consumer confusion because the trinity factors (strong similarity between the marks “Perfumebay” and “eBay,” both parties used the internet as a marketing channel, and both parties sold similar products) weighed strongly in eBay’s favor and the plaintiff could not outweigh this showing with any of the other Sleekcraftfactors.[xcii]
The Sixth Circuit, like the Ninth Circuit, applies the Internet trinity factors and the other remaining five factors from its traditional likelihood of confusion test.[xciii] InPaccar Inc. v. TeleScan Technologies, L.L.C., the trucking company Paccar claimed trademark infringement against TeleScan Technologies, the owner of a used truck locator website, based on Paccar’s trademarks in its domain names and meta tags.[xciv] After the district court granted a preliminary injunction against the defendants, Sixth Circuit affirmed the preliminary injunction due to Paccar’s demonstration of “a likelihood of confusion and, thus, a strong likelihood of success on the merits of its trademark infringement claim.”[xcv] Central to its holding, the court relied on the internet factors of mark similarity, relatedness of goods or services, simultaneous use of the Internet as a marketing channel, without relying much on the other likelihood of confusion factors.[xcvi]
2. Courts analyzing only initial interest confusion or giving undue weight to diversion
Some courts found a likelihood of confusion because of initial interest confusion without engaging in the traditional multi-factor analysis or give undue weight to diversion in finding a likelihood of ocnfusion exists.[xcvii] At least one district court is not applying any of the factors tests and instead is relying solely on the initial interest doctrine.[xcviii] In Morningware, Inc. v. Hearthware Home Products, Inc., the court for the Northern District of Illinois found the plaintiff had sufficiently alleged evidence of initial interest confusion to deny the defendant’s Rule 12(b)(6) Motion to Dismiss.[xcix] The defendant had purchased plaintiff’s trademark and variations of plaintiff’s trademark as a keyword from Google’s AdWords program.[c] In finding a likelihood of confusion, the Morningware court relied on a previous Seventh Circuit ruling in Promatek Indus., Ltd. v. Equitrac Corp.[ci]
Promatek involved analogous facts to Morningware, finding a likelihood of confusion when the defendant used the plaintiff’s trademarks in the defendant’s website metatags.[cii] In Promatek, the Seventh Circuit recognized that initial interest confusion can arise even if consumers who are misled to a website are only briefly confused.[ciii] Under Promatek, “What is important is not the duration of the confusion, it is the misappropriation of Promatek’s goodwill.”[civ] InMorningware, “Hearthware’s advertisement does not mention Hearthware and the consumer who views the Hearthware advertisement searched for the term ‘Morningware,’ the advertisement could mislead consumer to believe that the link is associated with Hearthware.”[cv] Following Promatek, Morningware had sufficiently alleged initial interest confusion.[cvi] In reaching this conclusion, the court did not engage in any likelihood of confusion analysis. The court cited seven factors to assess for the likelihood of consumer confusion, but then spent the rest of the likelihood of confusion discussion only on Promatek.[cvii]
The Tenth Circuit in Australian Gold, Inc. v. Hatfield is an example of a court giving undue weight to diversion.[cviii] Defendant Hatfield sold plaintiff Australian Gold’s (“AG”) tanning products over the internet without AG’s authorization.[cix] Hatfield used AG’s trademarks in website metatags and paid a search engine for search result priority.[cx] The Tenth Circuit affirmed the district court’s finding Hatfield liable for trademark infringement for using AG’s trademark within Hatfield’s metatags.[cxi] The court found that the defendant’s intent in using the marks, similarity of products and manner of marketing, the degree of care consumers were likely to exercise, and mark strength all weighed in plaintiff’s favor.[cxii] However, the court went a step further and found that diversion was inherently damaging even though the plaintiffs did not offer any evidence of actual confusion.[cxiii] The court found that “the original diversion of the prospective customer’s interest to a source that he or she erroneously believes is authorized” is a harm caused by initial interest confusion.[cxiv]
Additionally, the court’s treatment of Hatfield’s website disclaimers bolstered the court’s belief that diversion is inherently damaging. Hatfield’s disclaimers disavowed any connection with plaintiffs and clarified the true source of the website.[cxv] Adhering to its belief that damage had already been done once consumers were diverted to defendant’s websites, the court found defendant’s disclaimers to be irrelevant.[cxvi] The purpose of Hatfield’s disclaimers were to clear up any consumer confusion, but the court found the damage from the original diversion was sufficiently actionable. Australian Gold suggests that diversion is inherently damaging and even absent a defendant’s use of disclaimers or plaintiff’s evidence of actual confusion, the Tenth Circuit will still find actionable trademark infringement based on initial interest confusion.[cxvii]
3. Courts analyzing initial interest confusion within the “evidence of confusion” or “customer care” factor of the traditional likelihood of confusion test
The last formulation is courts analyzing initial interest confusion within the “evidence of confusion” factor or the “customer care” factor. Including this analysis as part of the traditional likelihood of confusion factors adheres to the Lanham Act standard for trademark infringement, “likely to cause confusion.”[cxviii] Subsuming initial interest confusion within the complete factors test also reconciles criticism that initial interest confusion is inappropriately expanding trademark infringement to include diversion.[cxix]
The Fifth Circuit applied initial interest confusion in the “evidence of actual confusion” factor based on witness testimony in Elvis Presley Enterprises, Inc. v. Capece.[cxx] Elvis Presley Enterprises (“EPE”) claimed trademark infringement against Capece for using the service mark “The Velvet Elvis” for his nightclub and for using Elvis Presley’s image and likeness in advertising and promoting.[cxxi] Within its seven-factor analysis, the court discussed initial interest confusion within evidence of actual confusion because customers were lured into “The Velvet Elvis” thinking it was associated with the “Elvis Presley” trademark name.[cxxii] The court reasoned there was initial interest confusion even if the customers realized there was no association with “The Velvet Elvis” and “Elvis Presley” upon entering the nightclub.[cxxiii] According to the court, “Despite the confusion being dissipated, this initial-interest confusion is beneficial to the Defendants because it brings patrons in the door; indeed, it brought at least one of EPE’s witnesses into the bar. Once in the door, the confusion has succeeded because some patrons may stay, despite realizing that the bar has no relationship with EPE.”[cxxiv] The court found this initial interest confusion coupled with actual confusion from Capece’s advertising practices weighed “evidence of actual confusion” in EPE’s favor.[cxxv] Although the Fifth Circuit has not ruled specifically on initial interest confusion and keyword advertising cases, one scholar hypothesizes that based on Elvis Presley Enterprises, Inc., the Fifth Circuit may apply initial interest confusion because a sponsored link advertisement luring online customers into a website based on the use of a trademark is analogous to the luring rationale between “The Velvet Elvis” and “Elvis Presley.”[cxxvi]
As Elvis Presley Enterprises, Inc. found a likelihood of confusion based on both actual confusion and initial interest confusion,[cxxvii] courts have also reached similar conclusions even in the absence of actual confusion.[cxxviii] The Sixth Circuit has even gone so far to state that, “evidence of initial-interest confusion comes into the eight factor Frisch test as a substitute for evidence of actual confusion.”[cxxix] The court for the Southern District of Ohio adopted this approach in Tdata Inc. v. Aircraft Technical Publishers.[cxxx] In Tdata Inc., the plaintiff alleged that the defendant’s website metatags containing plaintiff’s trademarks constituted trademark infringement.[cxxxi] Before applying the eight factor Frischtest, the court decided to apply initial interest confusion, reasoning that, “use of the company’s mark in metatags constitutes infringing use of the mark to pull consumers to Tdata’s website and the products it features, even if the consumers later realize the confusion.”[cxxxii] Instead of just stopping there and concluding a likelihood of confusion, the court went through the eight factor Frisch test.[cxxxiii] The previous finding of initial interest confusion was substituted into the “actual confusion” factor, even without evidence of actual confusion.[cxxxiv] Tdata Inc.exemplifies the benefit of applying all of the factors instead of prematurely resting solely on initial interest confusion. This case also shows that absent actual confusion, a court can properly assess the other factors and find a likelihood of confusion.[cxxxv]
The Second Circuit and the Seventh Circuit have also incorporated initial interest into the “consumer care” factor.[cxxxvi] In Mobil, the Second Circuit affirmed the district court’s finding of initial confusion based on “the probability that potential purchasers would be misled into an initial interest in Pegasus Petroleum.”[cxxxvii] In Promatek, the Seventh Circuit placed importance on consumer care, explicitly stating, “The degree of care exercised by consumers could lead to initial interest confusion,” before finding a likelihood of confusion existed.[cxxxviii]
A recent example of courts including initial interest analysis into the factors test isBabyage.com, Inc. v. Leachco, Inc. from the District Court of the Middle District of Pennsylvania.[cxxxix] BabyAge.com’s baby product website includes “featured brand” manufacturers, including Leachco.[cxl] The “featured brand” webpage displayed Leachco’s trademark and included a section entitled “Pregnancy Pillows.”[cxli] The webpage also contained hyperlinks that would take the viewer to webpages containing non-Leachco products.[cxlii] Leachco argued under a “bait and switch theory” that “prospective customers are ‘baited’ by Leachco’s brand into visiting the Leachco “featured brand” webpage on the Baby-Age Website, baited into pursuing a Leachco pregnancy pillow, and then “switched” to non-Leachco pregnancy pillows by the hyperlinks.[cxliii] The court applied theLapp factors and analyzed initial interest confusion within both the customer care and the actual confusion factors.[cxliv] Under customer care, the court found that low price alone was insufficient to make an appropriate conclusion on the level of customer care.[cxlv] Under actual confusion, Leachco sought more information on point of sale and internet traffic that may be probative of initial interest confusion.[cxlvi] The court ultimately denied Leachco’s motion for summary judgment because more development was needed for the customer care and actual confusion factors.[cxlvii]
III. Criticism of Tests 1 and 2 and Proposal for Courts to Adopt Test 3
A. Criticism of Tests 1 and 2
The strongest argument against Test 1, courts analyzing initial interest confusion separately before or after the traditional likelihood of confusion, is that this approach is inefficient and more time-consuming. Instead, courts should include the initial interest analysis within one of the factors as proposed in Part III(B). Separating the initial interest analysis from the likelihood of confusion factors is also problematic because it could run the risk of turning into the formulation in Part II(B)(2), just applying the initial interest analysis.
Analyzing initial interest confusion as a separate doctrine without engaging in the traditional likelihood of confusion test in Test 2 is problematic because it acts as a shortcut to finding trademark infringement.[cxlviii] Completely discarding the multi-factor test makes it easier for a plaintiff to prove trademark infringement if only initial interest confusion is needed.[cxlix] Lowering the bar for plaintiffs to bring trademark infringement would not only strain the judicial system with increased cases, but would also adversely harm consumers and defendant trademark owners. If trademark owners were more susceptible to trademark infringement cases, they would have to reallocate resources to defend themselves in court. Instead of using resources to improve product quality and create new products, trademark owners would have to resources to defend trademark infringement suits, thereby depriving consumers.
Finding a likelihood of confusion solely on initial interest confusion in the Internet is dangerous and threatens to undermine the purposes of trademark law. For example, a plaintiff could allege initial interest confusion based on diversion resulting from a defendant’s use of the plaintiff’s trademark in keyword advertising or metatags. Suppose plaintiff and defendant compete in completely unrelated markets, have dissimilar marks, and both have high levels of consumer sophistication. Under a traditional likelihood of confusion test, it is unlikely a court would find a likelihood of confusion under these circumstances. However, a court choosing to solely apply initial interest confusion could focus on the defendant’s use of the plaintiff’s mark to divert consumers and find a likelihood of initial interest confusion. Although no cases have gone to this extreme of finding initial interest confusion, some courts are inappropriately expanding the scope of initial interest confusion by giving undue weight to the misappropriation of goodwill.[cl]
Another statutory argument against courts just using initial interest confusion is this formulation conflates the trademark infringement test by using misappropriation of goodwill to satisfy both threshold use and likelihood of confusion.[cli] Such a construction is doctrinally inappropriate because likelihood of confusion, not the misappropriation of goodwill, is the “hallmark” of analyzing trademark infringement.[clii] Conflating the trademark infringement test would make it much easier for plaintiffs to bring trademark infringement cases, which would negatively affect the trademark owners who would have to expend time and resources to defend these cases.
The greatest danger of applying solely initial interest confusion is that this approach disregards the Lanham Act. The Lanham Act does not expressly state that trademark infringement is actionable based on initial interest confusion. Instead, the only analysis within the Lanham Act is the likelihood of confusion test, so therefore the likelihood of confusion doctrine should be the only analysis applied to trademark infringement claims.[cliii] One scholar likened initial interest confusion on the Internet to judicial activism.[cliv] The argument was that since the Lanham Act does not include pre-sale confusion as actionable trademark infringement, courts could erroneously extend initial interest confusion to cover consumers searching on the Internet who become initially confused and interested in a competitor’s product.[clv] Without the traditional likelihood of confusion factors test, courts could just apply initial interest confusion to almost any alleged defendant’s use of a sponsored link advertisement, which would frustrate consumers’ intent and interest.[clvi]
As this section demonstrates, courts should not base a finding of consumer confusion solely on initial interest confusion because this formulation contravenes the trademark goals of protecting the trademark owner’s interests and benefiting consumers.
B. Proposal for Test 3
The District Court of the Middle District of Pennsylvania in Babyage.com, Inc.demonstrates a trend in the right direction of courts applying initial interest confusion within the factors test. For the reasons stated above, courts should continue to apply the traditional likelihood of confusion factors and incorporate initial interest confusion within either the “evidence of actual confusion” or “customer care” factors. Analyzing initial interest confusion within the likelihood of confusion test has already garnered support from some courts and scholars and the remaining courts should follow.[clvii]
This approach is preferable for three reasons: (1) Maintaining the Lanham Act standard for finding a likelihood of confusion instead of giving undue weight to diversion, (2) Serving trademark goals of protecting trademark owner’s interests and benefit consumers, and (3) Incorporating the factors into the traditional likelihood of confusion test is efficient and easily applicable.
Firstly, analyzing initial interest confusion within the factors test maintains the Lanham Act standard because the court will still engage in the likelihood of confusion analysis without the risk of using initial interest as a shortcut to find trademark infringement. Courts should still retain the power to decide whether or not some factors should be given more weight than others depending on the particular facts. Secondly, this approach will satisfy the trademark goals because it will keep the focus on consumer confusion instead of consumer diversion. Lastly, incorporating the factors is a timely solution for courts that are already familiar with their respective likelihood of confusion tests. This approach is not drastically different nor does it change the standard, so judges can easily transition into analyzing initial interest confusion within one of their pre-existing factors during the routine likelihood of confusion test.
Post-Rescuecom recognition that use of another’s trademark to trigger keyword advertising is actionable trademark use will allow more Internet trademark infringement claims to pass summary judgment.[clviii] In response, courts need a streamlined test for how to apply initial interest confusion in the Internet. Among the confusing variations of the initial interest confusion doctrine, courts should incorporate the initial interest confusion analysis within the “evidence of actual confusion” factor or the “customer care” factor and continue to apply the traditional likelihood of confusion factors test. This formulation of the initial interest confusion doctrine will promote trademark law’s dual purpose of protecting trademark owners’ interest in the mark and protecting consumers.
[i][i]1.1 Overview of AdWords – AdWords Help,http://adwords.google.com/support/aw/bin/static.py?hl=en&guide=23611&pag…(last visited Oct. 3. 2010).
[iv][iv]See, e.g. Playboy Enters., Inc. v. Netscape Commc’ns Corp., 354 F.3d 1020, 1022-23 (9th Cir. 2004) (involving Netscape and Excite); Gov’t Employees Ins. Co. v. Google, Inc., 330 F.Supp.2d 700, 701-02 (E.D. Va. 2004) (involving Overture Services, Inc.).
[vi]How The World Spends Its Time Online – VisualEconomics.com,http://www.visualeconomics.com/how-the-world-spends-its-time-online_2010…(last visited Oct. 3, 2010).
[vii]See Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999).
[viii]See, e.g., Rescuecom Corp. v. Google Inc., 562 F.3d 123, 127-31 (2d Cir. 2009) (involving keyword-based advertising); PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 247-48 (6th Cir. 2003) (involving both unlawful domain name and metatag use).
[ix]15 U.S.C. §§ 1051, 1051-1072, 1091-1096, 1111-1127 (2009).
[x]Id. at §1125.
[xi]See also Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 782 at n.15 (Scalia, J., concurring) (quoting S. Rep. No. 1333, 79th Cong., 2d Sess., 3, 4 (1946)); See Graeme B. Dinwoodie & Mark D. Janis, Trademarks and Unfair Competition: Law and Policy 15 (2d ed. 2007) (introducing the “two primary justifications … traditionally … offered in support of trademark protection”).
[xii]15 U.S.C. § 1125.
[xiii]15 U.S.C. § 1114(1).
[xiv]15 U.S.C. § 1125.
[xv]DeCosta v. Viacom Int’l, Inc., 981 F.2d 602, 605 (1st Cir. 1992); Checkpoint Sys., Inc. v. Check Point Software Tech., Inc., 269 F.3d 270, 279 (3d Cir. 2001).
[xix]See Brookfield Commc’ns, Inc., 174 F.3d 1036 (using competitor’s mark as a metatag is actionable trademark use); Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006) (using plaintiff’s trademark for keyword advertising on Google’s AdWords is not actionable trademark use).
[xx]15 U.S.C. §1127.
[xxi]Mark Bartholomew, Article, Making a Mark in the Internet Economy: A Trademark Analysis of Search Engine Advertising, 58 Okla. L. Rev. 179, 187 (2005).
[xxii]PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 247-48 (6th Cir. 2003).
[xxiii]See supra note 5 (Search advertising is the largest form of online advertising, accounting for 47% of first-half spending at $5.7 billion in 2010, an increase of 11.6% compared to the first half of 2009 at$5.1 billion).
[xxiv]Rescuecom Corp. v. Google Inc., 562 F.3d 123, 129 (2d Cir. 2009).
[xxv] See, e.g., N. Am. Med. Corp. v. Axiom Worldwide, Inc.,522 F.3d 1211, 1220 (11th Cir. 2008) (“[A]xiom’s use of NAM’s trademarks as meta tags constitutes a ‘use in commerce…”); Google Inc. v. Am. Blind & Wallpaper, No. C 03-5340 JF (RS), 2007 WL 1159950, at *6 (N.D. Cal. Apr. 18, 2007) (“[T]he sale of trademarked terms in the AdWords program is a use in commerce for the purposes of the Lanham Act.”); Boston Duck Tours, LP v. Super Duck Tours, LLC, 527 F. Supp. 2d 205, 207 (D. Mass. 2007) (“Because sponsored linking necessarily entails the ‘use’ of the plaintiff’s mark as part of a mechanism of advertising, it is ‘use’ for Lanham Act purposes.”); Edina Realty Inc. v. TheMLSOnline.com, No. 04-4371JRTFLN, 2006 WL 737064, at *3 (D. Minn. Mar. 20, 2006) (“Based on the plain meaning of the Lanham Act, the purchase of search terms is a use in commerce.”); J.G. Wentworth, S.S.C. LP v. Settlement Funding LLC, No. 06-0597, 2007 WL 30115, at *6 (E.D. Pa. 2007); (“By establishing an opportunity to reach consumers via alleged purchase and/or use of a protected trademark, defendant has crossed the line from internal use to use in commerce under the Lanham Act.”).
[xxvi]See, e.g. Allard Enters. v. Advanced Programming Res., Inc., 146 F.3d 350, 355 (6th Cir. 1998) (internal quotations omitted) (describing the likelihood of confusion as the “touchstone of liability”); Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:1 (4th ed. 2009) (noting that “the test of likelihood of confusion is the touchstone of trademark infringement”).
[xxvii]AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 346 (9th Cir. 1979).
[xxviii]Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983) employing theLapp factors: (1) degree of similarity between owner’s mark and alleged infringing mark; (2) strength of owner’s mark; (3) price of goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion; (5) the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether the goods are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the targets of the parties’ sales efforts are the same; (9) the relationship of the goods in the minds of consumers because of the similarity of functions; and (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant’s market or that he is likely to expand into that market.
[xxix]McCarthy, supra 26, at 23-29.
[xxx]See, e.g., Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 464 (7th Cir. 2000) (“Such confusion, which is actionable under the Lanham Act, occurs when a consumer is lured to a product by its similarity to a known mark, even though the consumer realizes the true identity and origin of the product before consummating a purchase.”); Playboy Enters., Inc. v. Netscape Commc’ns Corp., 354 F.3d 1020, 1025 (9th Cir. 2004) (“Initial interest confusion is customer confusion that creates initial interest in a competitor’s product. Although dispelled before an actual sale occurs, initial interest confusion impermissibly capitalizes on the goodwill associated with a mark and is therefore an actionable trademark infringement.”).
[xxxi]McCarthy, supra 26, at 23-28.
[xxxii]Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir. 1996).
[xxxiii]Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons (Grotrian II), 523 F.2d 1331, 1342 (2d Cir. 1975).
[xxxiv]Id. at 1333-34.
[xxxv]Id. at 716-17.
[xxxvi]Id. at 717.
[xxxviii]Grotrian II, 523 F.2d 1331 at 1342.
[xli]Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir. 1987).
[xlii]Id. at 259.
[xliii]See Elvis Presley Enters, Inc. v. Capece, 141 F.3d 188, 203 (5thCir. 1998) (applying initial interest confusion to the name of a night club); Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382-83 (7th Cir. 1996) (applying initial interest confusion to trade dress infringement).
[xliv]See Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 812-13, (7th Cir. 2002) (applying initial interest confusion to metatags); Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165, 1176 (9th Cir. 2007) (applying initial interest confusion comparing two websites); PACCAR Inc., 319 F.3d at 253-54 (applying initial interest to domain name and meta tags); Gov’t Employees Ins. Co. v. Google, Inc., No. 1:04CV507, 2005 WL 1903128 at *4, (E.D. Va. Aug. 8, 2005). (recognizing initial interest confusion as a viable theory for keyed advertising).
[xlv]Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999).
[xlvi]Id. at 1042.
[xlvii]Id. at 1041-43.
[xlviii]See Ira S. Nathenson, Note, Internet Infoglut and Invisible Ink: Spamdexing Search Engines with Metatags, 12 Harv. J. Law & Tech. 43, 62-63 (1998).
[xlix]Brookfield, 174 F.3d at 1062.
[lii]See J.G. Wentworth, S.S.C. LP v. Settlement Funding LLC, No. 06-0597, 2007 WL 30115 at *7 (E.D. Pa. 2007) (After discussing Brookfield, Judge J. O’Neill of the Eastern District of Pennsylvania states, “I respectfully disagree with the Ninth Circuit’s conclusion in Brookfield,” and refuses to apply initial interest confusion),and Bryce J. Maynard, Note, The Initial Interest Confusion Doctrine and Trademark Infringement on the Internet, 57 Wash. & Lee L. Rev. 1303, 1336-43 (2000) (Brookfield (1) does not protect consumer interests because Ninth Circuit failed to understand search engine mechanics and (2) does not protect trademark owners interests because initial interest confusion does not work when companies are not direct competitors).
[liii]Brookfield, 174 F.3d 1036 at 1062.
[liv]Id. at 1062 n. 24.
[lv]See Niki R. Woods, Note, Initial Interest Confusion in Metatag Cases: The Move from Confusion to Diversion, 22 Berkeley Tech. L.J. 393 (2007) (arguing against broad application of initial interest confusion in the Internet).
[lvi]Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons (Grotrian II), 523 F.2d 1331, 1340 (2d Cir. 1975) and Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 at 259 (2d Cir. 1987).
[lvii]Brookfield, 174 F.3d at 1062.
[lviii]Zachary J. Zweihorn, Note, Searching for Confusion: The Initial Interest Confusion Doctrine and Its Misapplication to Search Engine Sponsored Links, 91 Cornell L. Rev. 1343, 1355-56 (2006) (“Because any time wasted would be de minimis, users interested in Brookfield’s product would be unlikely to feel that they had wasted so much time by clicking a link that seeking out the correct Web site would unacceptably raise their search costs.”).
[lix]See Note, Confusion in Cyberspace: Defending and Recalibrating the Initial Interest Confusion Doctrine, 117 Harv. L. Rev. 2387 (2004) (arguing that initial interest should apply in the Internet because under a cost-benefit analysis, the big cost of decrease in producers’ incentives to conduct business online and to provide consumers with high-quality online services does not outweigh the benefit to producers of cheap advertising from online trademark use).
[lx]Rachel R. Friedman, Note, No Confusion Here: Proposing a New Paradigm for the Litigation of Keyword Advertising Trademark Infringement Cases, 12 Vand. J. Ent. & Tech. L. 355, 379 (2010).
[lxi]PACCAR Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 255-58 (6th Cir. 2003); Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 812-13, (7th Cir. 2002); Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1062 (9th Cir. 1999); Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239-40 (10th Cir. 2006); Savin Corp. v. The Savin Group, 391 F.3d 439, 462 (2d Cir. 2004); 800-Jr Cigar, Inc. v. Goto.Com, Inc., 437 F.Supp.2d 273, 290 (D. New Jersey 2006).
[lxii]See supra note 28.
[lxiii]See discussion infra Parts II.B.1, II.B.2, II.B.3.
[lxiv]CompareHasbro, Inc. v. Clue Computing, Inc., 231 F.3d 1, 2 (1st Cir. 2000) (refusing to apply initial interest confusion) with Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165, 1176 (9th Cir. 2007) (applying initial interest confusion); CompareMorningware, Inc. v. Hearthware Home Products, Inc., 673 F.Supp.2d 630, 636-38 (N.D. Il. 2009) (no likelihood of confusion factor analysis) with Trans Union LLC v. Credit Research, Inc., 142 F.Supp.2d 1029, 1043-44 (N.D. Il. 2001) (analyzing initial interest confusion within “evidence of actual confusion” factor).
[lxv]Savin Corp. v. The Savin Group, 391 F.3d 439, 462 (2d Cir. 2004); Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270, 297-98 (3d Cir. 2001); Interstellar Starship Servs., Ltd. v. Epix, Inc., 304 F.3d 936, 945 (9th Cir. 2002).
[lxvi]Savin Corp., 319 F.3d 439 at 446.
[lxvii]Id. at 456.
[lxviii]Savin Corp. v. The Savin Group, No. 02 Civ.9377 SAS, 2003 WL 22451731 at *12 (S.D.N.Y. Oct. 24, 2003).
[lxix]Id. at *12, *13.
[lxx]Savin Corp. v. The Savin Group, 391 F.3d 439, 462 (2d Cir. 2004).
[lxxi]Checkpoint Systems, Inc. v. Check Point Software Technologies, Inc., 269 F.3d 270, 297-98 (3d Cir. 2001).
[lxxii]Id. at 280.
[lxxiv]800-Jr Cigar, Inc. v. Goto.com, Inc., 437 F.Supp.2d 273, 290 (D. N.J. 2006); JG Wentworth v. Settlement Funding LLC, No. 06-0597, 2007 WL 30115 at *7 (E.D. Pa. Jan. 4, 2007).
[lxxv]800-JR Cigar, Inc., 437 F.Supp.2d at 290.
[lxxvii]Id. at 292.
[lxxviii]JG Wentworth, No. 06-0597, 2007 WL 30115, at *7.
[lxxix]Id. at *2.
[lxxx]Id. at *8.
[lxxxi]Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165, 1176 (9th Cir. 2007); Interstellar Starship Servs., Ltd. v. Epix, Inc., 304 F.3d 936, 942-46 (9th Cir. 2002); Storus Corp. v. Aroa Marketing, Inc., No. C-06-2454 MMC, 2008 WL 449835 at *4-5 (N.D. Cal. 2008); Google Inc. v. Am. Blind & Wallpaper, No. C 03-5340 JF (RS), 2007 WL 1159950 at *9-10 (N.D. Cal. 2007); Soilworks, LLC v. Midwest Industrial Supply, Inc., 575 F.Supp.2d 1118, 1130-33 (D. Ariz. 2008).
[lxxxii]Perfumebay.com Inc., 506 F.3d 1165 (9th Cir. 2007) (keyword advertising);Interstellar Starship Servs., Ltd., 304 F.3d 936 (9th Cir. 2002) (domain name);Storus Corp., No. C-06-2454 MMC, 2008 WL 449835 (N.D. Cal. 2008) (Google AdWords); Google Inc., No. C 03-5340 JF (RS), 2007 WL 1159950 (Google AdWords).
[lxxxiii]GoTo.com v. Walt Disney Co., 202 F.3d 1199, 1204 (9th Cir. 2000).
[lxxxiv]Id. at 1207.
[lxxxv]Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1058 (9th Cir. 1999).
[lxxxvi]Interstellar Starship Servs., Ltd., 304 F.3d at 938.
[lxxxvii]Id. at 942-43.
[lxxxviii]Perfumebay.com Inc v. eBay Inc., 506 F.3d 1165, 1173-74 (9th Cir. 2007); Storus Corp. v. Aroa Marketing, Inc., No. C05-2454 MMC, 2008 WL 449835 at *5 (N.D. Cal. 2008).
[lxxxix]Perfumebay.com Inc., 506 F.3d at 1174-75.
[xc]Id. at 1168.
[xci]Id. at 1176.
[xciii]Paccar Inc. v. TeleScan Technologies, L.L.C., 319 F.3d 243, 255-258 (6th Cir. 2003).
[xciv]Id. at 248-49.
[xcv]Id. at 248-49, 255, 258.
[xcvi]Id. at 255.
[xcvii]Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239-40 (10th Cir. 2006); Morningware, Inc.v. Hearthware Home Products, Inc., 673 F. Supp.2d 630, 636-38 (N.D. Ill. 2009); Gov’t Employees Ins. Co., No. 1:04CV507, 2005 WL 1903128 at *4 (E.D. Va. Aug. 8, 2005).
[xcviii]Morningware, 673 F.Supp.2d 630.
[xcix]Id. at 636-38.
[c]Id. at 633.
[ci]Id. at 636-7.
[cii]Promatek Industries, Ltd. v. Equitrac Corp., 300 F.3d 808, 812-13 (7th Cir. 2002).
[civ]Id. at 813.
[cv]Morningware, Inc. v. Hearthware Home Products, Inc., 673 F.Supp.2d 630, 638 (N.D. Ill. 2009).
[cvii]Id. at 636-38.
[cviii]Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239-40 (10th Cir. 2006) (Although the Tenth Circuit seems to base its decision on the fact that diversion is inherently damaging, it was also affirming the district court’s analysis under a six-prong factor test for likelihood of confusion, so it is not a complete departure from the likelihood of confusion test. In fact, the court briefly analyzed the factors and then discussed the inherently damaging effect of diversion after stating the plaintiffs did not offer any direct evidence of actual confusion. This suggests that the court did not even need initial interest confusion to find a likelihood of confusion and that stating diversion as inherently damaging was just a broad application of initial interest confusion.).
[cix]Id. at 1232.
[cx]Id. at 1233.
[cxii]Id. at 1239-40.
[cxiii]Id. at 1239.
[cxv]Id. at 1240.
[cxvii]Woods, supra note 55, at 406-7.
[cxviii]15 U.S.C. § 1125.
[cxix]Woods, supra note 55, at 411-13 (arguing that courts are broadening the scope of initial interest by (1) giving goodwill too much importance in protecting trademarks’ goodwill rather than looking for confusion and (2) allowing misappropriation of goodwill to constitute use).
[cxx]Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 203-4 (5th Cir. 1998).
[cxxi]Id. at 191, 193.
[cxxii]Id. at 204.
[cxxvi]Patrick Ryan Barry, Comment, The Lanham Act’s Applicability to the Internet and Keyword Advertising: Likelihood of Confusion v. Initial Interest Confusion, 47 Duq. L. Rev. 355, 366 (2009) (“If the court would find that a sponsored link advertisement lured an online customer into a website based on the use of a trademarked name, that court might be inclined to rule that there was initial interest confusion and trademark infringement even if the customer knew the true source of the website and its products before making a purchase.”).
[cxxvii]Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 204 (5th Cir. 1998).
[cxxviii]Trans Union LLC v. Credit Research, Inc., 142 F. Supp.2d 1029, 1043-44 (N.D. Ill. 2001); Tdata Inc. v. Aircraft Technical Publishers, 411 F.Supp.2d 901, 908 (S.D. Oh. 2006).
[cxxix]Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP, 423 F.3d 539, 550 (6th Cir. 2005).
[cxxx]Tdata Inc., 411 F.Supp.2d at 908 (“[T]he initial interest confusion doctrine is applicable as but one part of a relevant eight-factor inquiry.”).
[cxxxi]Id. at 904.
[cxxxii]Id. at 907.
[cxxxiii]Id. at 908-12.
[cxxxiv]Id. at 909.
[cxxxv]Id. at 908-12.
[cxxxvi]Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 812 (7th Cir. 2002); Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 260 (2d Cir. 1987).
[cxxxvii]Mobil Oil Corp., 818 F.2d 254 at 260.
[cxxxviii]Id. at 812-14.
[cxxxix]BabyAge.com, Inc. v. Leachco, Inc., No. 3:08-cv-1600, 2009 WL 82552 at *8-12 (M.D. Pa. Jan. 12, 2009).
[cxlii]Id. at *6.
[cxliv]Id. at *10.
[cxlvii]Id. at *12-13.
[cxlviii]Woods, supra note 55, at 405-6.
[cl]Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1239 (10th Cir. 2006); Promatek Indus., Ltd. v. Equitrac Corp., 300 F.3d 808, 812-13 (7th Cir. 2002); See alsoWoods, supra note lxxiii at 411-12 (arguing against broadening initial interest confusion to protect trademarks’ goodwill rather than looking for confusion).
[cli]Woods, supra note 55, at 412.
[clii]Lamparello v. Falwell, 420 F.3d 309, 314 (4th Cir. 2005).
[cliii]15 U.S.C. § 1125.
[cliv]Barry, supra note 126, at 370.
[clvi]Id. at 371.
[clvii]See infra part II.B.3; see also Gregory R. Shoemaker, Comment, Don’t Blame Google: Allowing Trademark Infringement Actions Against Competitors Who Purchase Sponsored Links on Internet Search Engines Under the Initial Interest Confusion Doctrine, 58 Cath. U. L. Rev. 535, 564 (2009).
[clviii]See Note, supra note 59.
Jaclyn Sitjar © Copyright 2011
Protecting Tenants at Foreclosure Act of 2009, Public Law 111-22
On May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act (the “PTFA” or the “Act”). The PTFA was part of the larger “Helping Families Save Their Homes Act of 2009.” The Act provides new protections to bona fide tenants in any federally-related mortgage loans or any residential real property. Before enactment of PTFA, a new owner of a foreclosed property could take immediate action to evict an existing tenant. The PTFA requires the foreclosing party to allow the tenant to remain in the premises through the end of the lease term, and it requires the foreclosing party to provide a bona fide tenant with at least 90 days notice to vacate. As a result, lenders and other parties who foreclose on residential rental property occupied by a tenant have no choice but to play the role of landlord until the expiration of the tenant’s lease. This article explains who is affected by the Act, the requirements under the Act, and the respective rights, remedies and obligations for both foreclosing parties and tenants who occupy the foreclosed properties.
Who Is Affected by the PTFA?
The PTFA applies to any residential real property or any “federally-related mortgage loan” acquired through foreclosure. The only properties not covered by the Act are non-residential properties that were not foreclosed in connection with a federally-related mortgage loan. Note that one court in New York has held that the PTFA can only be enforced where “federally-related mortgage loans” are involved and that the enforcement of the PTFA in all residential loan situations “would extend federal control to arguably every area of human endeavor and vitiate the constitutional framers’ requirement that ‘federalism’ involves a limited universe of power and that the states retained all but expressly ceded powers.” Collado v. Boklari, 892 N.Y.S.2d 731 (N.Y. Dist. Ct. 2009). It is important to note, however, that this case has been distinguished by at least one other court, and that other courts have held that the PTFA applies in connection with non-federally-related mortgage loans.
The PTFA protects the rights of a “bona fide tenant,” which is defined by the Act as a person in possession of the property with or without a lease, provided that:
i. the tenant is not the mortgagor or the child, spouse, or parent of the mortgagor;
ii. the lease or tenancy was the result of an arms-length transaction; and
iii. the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property, or the rent is reduced or subsidized due to a federal, state, or local subsidy.
All three elements must be satisfied for a tenant to be a bona fide tenant.
The new restrictions in the PTFA are binding on any “immediate successor in interest” in the property. While the Act does not define “immediate successor in interest,” the term generally means the first party to take title to the property following the foreclosure. Note that the PTFA does not specifically address the situation involving a deed in lieu of foreclosure.
What Are the Effective Dates of the Act?
The PTFA became effective immediately upon enactment on May 20, 2009 and applies to all foreclosures that occur after enactment; pending foreclosures included. The provisions of the Act expire on December 31, 2012.
What Requirements Are Imposed on an Immediate Successor in Interest?
First, a successor must allow any existing tenants to remain in the premises until the end of the lease term. If, however, the property is sold to a purchaser who will occupy the property as a primary residence, then the new owner can give 90 days notice of the early termination of the lease. Second, if the lease has expired, is month-to-month or is terminable at will, the successor must give the tenant at least 90 days notice before requiring the tenant to vacate the property. The PTFA, therefore, places drastic new burdens on lenders and other foreclosing parties, especially when there is a significant amount of time remaining under a residential lease, because the lender must serve as a landlord throughout the duration of that lease.
The notice to vacate must be given to the tenant by the successor. Therefore, the successor can’t give notice prior to acquiring title to the property at the foreclosure sale. Accordingly, the notice of foreclosure sale cannot also serve as the 90-day notice to vacate. It is good practice to send the notice to vacate and any other notices to the tenant by Certified Mail, Return Receipt Requested, and to keep the receipts in case they are needed to prove to a court that proper notice was given.
Unfortunately, the PTFA does not give any details or set forth the rights or remedies of the successor during the time that the tenant is allowed to remain in the property. The Act merely states that successor assumes an interest in the property “subject to the rights of any bona fide tenant.” That likely means that the successor steps into the shoes of the former landlord and assumes both the rights and responsibilities of the landlord under the lease. This, of course, raises many questions which the Act does not answer.
Reading Between the Lines: The Details Behind the PTFA
What Responsibilities Do Tenants Owe to their New Landlords?
Presumably, a tenant must abide by all of the provisions in the lease. If the tenant defaults under the lease, the Act does not preempt a landlord from evicting the tenant without giving the 90 day notice under the Act. If a tenant has stopped paying rent, for example, the new landlord should follow applicable provisions under the lease and in the Landlord Tenant Act (Va. Code § 55-217, et seq.) or the Virginia Residential Landlord Tenant Act (Va. Code § 55-248.2, et seq.) to give proper notice of the default to the tenant and then to file an Unlawful Detainer suit to evict the tenant.
The Successor Has the Burden of Proving that an Occupant Is Not a Bona Fide Tenant.
In Bank of America v. Owens, the successor issued a 90 day notice to vacate immediately after foreclosure. 2010 NY Slip Op 20164, 2010 N.Y. Misc. LEXIS 954 (N.Y. City Ct. May 5, 2010). Along with the notice to vacate, the successor also issued a questionnaire to determine if the occupant was a bona fide tenant. The questionnaire stated that, if it was not returned to the successor within five days, the successor would commence eviction proceedings. When the questionnaire was not returned, the successor filed an eviction suit immediately and well before the expiration of the 90 day period. The court held that the new burden imposed by the questionnaire was impermissible and was not authorized by the PTFA. The court also held that the burden is on the successor to show that an occupant is not a bona fide tenant.
Can Tenants File Suit Against Successors For Violating the PTFA?
No. The PTFA does not create a private right of action. In Nativi v. Deutsche Bank National Trust Co., the Bank foreclosed on property and evicted the tenants one month later without giving 90 days notice. 2010 U.S. Dist. LEXIS 51697 (N.D. Cal. May 26, 2010). The tenants’ personal property was placed on the street where it was damaged or stolen. The tenants filed suit against the Bank seeking money damages for, among other causes of action, violations of the PTFA. The court held that the PTFA does not create a private cause of action and dismissed the PTFA count. See also, Fannie Mae v. Lemere, 2010 U.S. Dist. LEXIS 67005 (E.D. Cal. July 6, 2010) (“[F]ederal courts have held that the [PTFA] does not create a federal private right of action, but indeed provides directives to state courts.”) It is important to note, however, that these tenants may have had other valid causes of action against the bank, such as conversion or unlawful ouster. In addition, it is clear from the Bank of America v. Owens case that a tenant may use a violation of the PTFA as a defense in an eviction proceeding, even though it cannot be used as the basis for an affirmative claim for damages against a successor.
Is the New Landlord Responsible for the old Security Deposit?
This question is simply not answered by the Act, and there are no cases from the Virginia state or federal courts that interpret the Act. Generally speaking, however, under Virginia law a foreclosure wipes out the lease, which suggests that the new landlord is not responsible for the security deposit. In addition, the old landlord holds the security deposit in trust for the tenant. If the old landlord fails to transfer the security deposit to the new landlord, pursuant to Va. Code § 55-507, then the tenant would have a direct claim against the old landlord. The new landlord may not have any recourse against the old landlord. Furthermore, under the PTFA the new landlord steps into the shoes of the old landlord only with respect to the real property itself and not with respect to incidentals such as the security deposit. Nevertheless, it is possible that a court making a generous interpretation of the PTFA could find that the new landlord stepped into the same shoes of the old landlord and, therefore, is responsible for the old security deposit.
Can a Successor Terminate a Lease Early Using “Cash for Keys”?
Yes. “Cash for keys” is a program offered by many mortgage lenders where the tenant agrees to turn over the property in good condition and/or before the expiration of the tenant’s lease in exchange for a cash payment from the lender. It is no different than an agreement between a landlord and tenant to modify or terminate a lease early. There is no magic to it, and there is nothing in the PTFA that prevents a successor and a tenant from reaching such an agreement. It is important, however, to ensure that the transaction is arms-length, that it is agreed to voluntarily by both the successor and the tenant, and that the parties put the agreement in writing and sign it.
© 2011 WILLIAMS MULLEN ALL RIGHTS RESERVED
This fourth annual conference comes at a critical time for re/insurance companies. Organizations will need to file for the first time their audited statutory statements under MAR in June 2011.
This event will bring together top-level executives to discuss the challenges and requirements when it comes to NAIC compliance for the re/insurance industry. It will examine SOX and MAR strategies that re/insurance companies can implement to create consistent controls and documentation within their organization. The conference will also include a thorough examination of up-and-coming technological advances that are available to increase efficiency.
By engaging with their peers on these and other critical topics, attendees will leave the conference with a clear understanding of how to approach SOX and MAR to increase performance and effectiveness while decreasing cost and time.
key conference topics include:
Males have by and large run this planet since Neanderthals were drawing on walls in caves. So when we talk about improving gender equality, we are generally talking about things that are immediately beneficial to women. A recent ruling by the European Court of Justice, however, is likely going to cost female drivers some money.
The court has found that tying insurance rates to gender goes against Europe’s Fundamental Charter of Rights. So come December 2012, insurers will no longer be able to do it. The actuarial science regarding male and female drivers, particularly those under 25 years old, couldn’t be clearer. Young men get into more and more expensive accidents than your women. Still, while the numbers don’t lie, I have always wondered why that fact makes it OK to discriminate.
Apparently the court agreed.
In the past, insurers relied on a 2004 directive that recognized the strength of the evidence for gender-based rates. The average claim for an 18-year-old male in the U.K. totals £4,400 ($7,160), vs. £2,700 ($4,390) for an 18-year-old female.
The net effect: Women will be subsidizing men for auto insurance. One British insurer estimated that women under 25 years could pay 25% more per year – perhaps £400 ($650).
The ruling affects other types of insurance, too. Women live longer, so they traditionally paid lower rates for life insurance. (The insurer could earn more investment income off the premium while waiting for the woman’s demise.) So women will see life insurance rates rise, perhaps by 20%.
This issue is obviously a thorny one.
On the one hand, equality is good. On the other, the insurance industry just lost a major, effective way to underwrite risks and properly price rates. Claire brings up the notion of credit ratings being used as a rate-setting metric as well, another thing that always struck me as irrelevant to car-driving ability. Again, the numbers there show some pretty definitive trends but, logically, the connection seems like one inappropriate to the policies that drivers are purchasing.
But what do I know?
I take the subway to work and have never even owned a car.
UPDATE: Canadian Underwriter ran a good piece on this development that includes the following insights about the marketplace uncertainty the decision has created.
The court’s decision will create some uncertainty in the market during the transitional period, says Noleen John, a legal consultant for international legal practice Norton Rose LLP.
“Insurers will from December 2012 need to apply unisex rates,” said John. “This transitional period is less than that recommended by the Advocate General and means that insurers will need to review their policies and practices as soon as possible.
“It also seems likely, in view of the length of the transitional period, that insurers may need to use uncertainty premiums until they have sufficient data in relation to the carrying on of business on this new basis. This could result in higher premiums or lower benefits for certain policyholders (female motorists and male annuitants).”
The decision also may create some uncertainty about the future of other established actuarial factors used to establish insurance premiums.
“There is going to be uncertainty in the insurance market for some time as a result of this decision,” says Ashley Prebble, insurance partner atNorton Rose LLP. “It is likely that the decision will require the European Commission to clarify the position with regards to other potential areas of discrimination, particularly age and disability.”
We shall see.
Risk Management Magazine and Risk Management Monitor. Copyright 2011 Risk and Insurance Management Society, Inc. All rights reserved.
The National Law Review is proud to be a media partner for the upcoming IQPC’s 7th Securities Litigation and Enforcement Summit – April 26-27 in New York, NY. This two day event will feature panel discussions, case studies, contemporary insights and practical advice vital to the successful management of securities litigation.
The second half of 2010 the securities industry witnessed a rise in class action suits mainly due to an increase of undisclosed product and operational defects, breaches of fiduciary duties and accounting improprieties. Securities litigation and associated risk is thus once again front and center in the legal landscape.
ATTEND AND LEARN ABOUT:
- SEC, DOJ and State Attorneys General enforcement initiatives and actions
- New enforcement initiatives under the Frank Dodd Act – what will be the impact for securities litigation cases?
- Developing effective strategies to respond to and resolve government enforcement actions
- Aligning litigation strategy with macro economic considerations
- International trends impacting US based securities litigation
- Recent trends in Insider Trading and Fraud investigations
Register By Friday March 25th and Save:
In Virginia, a lender holding a defaulted loan secured by a deed of trust has two primary means to enforce its remedies under that deed of trust: foreclosure by a trustee’s sale and conveyance by a deed in lieu of foreclosure. We’ve put together a brief primer summarizing the key strengths, weaknesses and procedural guidelines for each alternative to help you determine which option works best for your needs, timeline and budgetary constraints.
I. Trustee’s Sale.
The most common procedure for foreclosure is the sale of the property by a trustee, a non-judicial action. A trustee can act only in a manner authorized by the express or implied terms of the trust instrument or as authorized by statute. If the deed of trust does not provide otherwise, the provisions of the Virginia Code control as to the authority of the trustee. Foreclosure by a trustee’s sale can usually be completed within thirty (30) to forty-five (45) days after the expiration of any cure period provided by the loan documents for the default giving rise to the foreclosure, if the lender acts promptly.
A. The Trustee.
1. Duties and Obligations. A trustee is a fiduciary for both the debtor and the creditor. The trustee must not place himself in a position where the trustee’s personal interests conflict with the interests of the parties to whom he owes a fiduciary duty. A trustee who is counsel to or an employee of the noteholder must be sensitive to the obligation to discharge his fiduciary duties in an impartial manner. The mere fact that a trustee in a deed of trust securing a debt due to a corporation is a stockholder, member, employee, officer or director of, or counsel to, the corporation, however, does not disqualify him from exercising the powers conferred by the trust instrument. Trustees cannot act as purchasers, directly or indirectly, at their own sales; when a trustee buys directly or indirectly at his own sale, that constitutes constructive fraud, and the transaction is voidable. This rule also applies to a trustee who is named in a deed of trust but does not act.
2. Substitution of Trustee. If the person who is to conduct the foreclosure is not named in the deed of trust as trustee, a substitution of trustee is needed. When an instrument appointing a substitute trustee has been executed by the holders of more than fifty percent (50%) of the secured obligations, the substitute trustee can immediately execute all powers granted to the prior trustee.
B. Initial Procedures.
1. Documentation. A trustee should secure the proper documentation from the noteholder, which includes the deed of trust, the original note, title evidence (including title policies and surveys), copies of any correspondence between the noteholder and the debtor, copies of mortgage insurance or guaranty agreements, appraisal, written direction to proceed with the foreclosure and engagement letter. The trustee should verify that the noteholder has complied with all notice requirements set forth in the deed of trust.
2. Diligence. A trustee should contact the local commissioner of accounts regarding fees charged for approving and examining accounts as well as any local requirements, including proper advertisement procedures. Though the trustee is only charged with selling the property encumbered by the deed of trust, the noteholder should consider any relevant diligence issues affecting the property prior to initiating foreclosure proceedings, including environmental matters, permits, insurance, utilities, leases, appraisal, physical condition and rights in fixtures. In addition, though there is no statutory right of redemption in Virginia, the debtor does have the right to pay off the secured indebtedness before the sale; some deeds of trust provide for reinstatement of the debt if the debtor cures all defaults and pays all expenses in the manner and time provided in such deeds of trust.
3. Title. While the doctrine of caveat emptor applies in a foreclosure sale, a trustee must be aware of all liens and encumbrances affecting the property. A trustee cannot sell a greater interest in the property than the deed of trust gives him authority to sell, and any sale by the trustee will be subject to encumbrances having precedence over the deed of trust. A trustee must be aware of all encumbrances on the property, including federal tax liens, in order to properly notify all interested parties, to exercise proper discretion as to whether a fair sale can be had, and to make a lawful distribution of the proceeds of the sale. A trustee should order a title rundown of the property from the date of the original title policy, which can be obtained for approximately $100-$250.
The trustee has no authority to exercise the power of sale or to obtain possession of the property until such time as the debtor defaults under the terms of the note and the trust instrument. The trustee must satisfy himself that the note and the deed of trust are actually in default before initiating foreclosure proceedings, including providing any pre-acceleration notice required by either document.
1. Requirements; Timing. The present owner of the property must be given written notice of sale at his last known address as such address and owner’s name appear in the records of the secured party, which must be personally delivered or sent by registered or certified mail at least fourteen (14) days before the date of the foreclosure sale. It is a good idea to send a separate notice to each owner by regular mail. Each such must provide the date, time, and place of sale and is sufficient if it contains the same information set forth in the public advertisement of the sale. ‘Inadvertent’ failure to give notice imposes no liability on either the trustee or the secured party, and failure to comply with the notice requirements will not affect the validity of the sale. A purchaser for value will have no duty to ascertain whether proper notice was given. Actual receipt by the owner of the foreclosure notice is not required, and a defective statutory notice does not affect the validity of a foreclosure sale.
2. Other Parties. Notice should also be given to any guarantors of the indebtedness, subordinate lienholders, private mortgage insurers, the United States (if a federal tax lien affects the property) and any government agencies that are involved with the secured loan. If a federal tax lien affects the property and has been filed for at least thirty (30) days before the date of the proposed sale, notice should be given to the United States at least twenty-five (25) days prior to such sale.
A trustee must conform the advertising to the terms of the deed of trust, and any material departure will invalidate the sale. Substantial compliance, however, is sufficient as long as the rights of the parties are not materially affected. Section 55-62 of the Virginia Code provides a permissible form of notice that must include the time, place, and terms of sale, including the amount of any deposit required. The advertising provisions are mandatory and override the discretion of the trustee, regardless of the contractual agreement of the parties.
1. Requirements; Timing. The advertisement must briefly describe the property to be sold by street address, if any, and, if there is no street address, the general location of the property with reference to routes, streets, and known landmarks. The tax map identification number of the property may be used but is not required. The advertisement must also include the name, address, and telephone number of the trustee and the secured party, or the secured party’s agent or attorney, to respond to inquiries from the public about the sale. Advertisement of the foreclosure must be made in a newspaper having a general circulation in the city or county where the property being sold or any portion thereof lies. The sale can be held no earlier than eight (8) days after the first advertisement and no later than thirty (30) days after the last advertisement.
2. Number of Publications. If the deed of trust provides for the number of publications by using language such as “advertisement required,” then the direction of the deed of trust must be followed. In any event, if the newspaper advertisement is published on a weekly basis, it must be published not less than once a week for two weeks before the sale; and if published on a daily basis, it must be published not less than once a day for three days, which may be consecutive days. If the deed of trust does not provide for the number of publications, the Virginia Code requires that “the trustee shall advertise once a week for four successive weeks; provided, however, that if the property or some portion thereof is located in a city or in a county immediately contiguous to a city, publication of the advertisement five different days, which may be consecutive days, shall be deemed adequate.”
E. The Sale.
There are virtually no rules regarding bidding at a foreclosure sale, other than that the purchase price of the property must not be so low as to ‘shock the conscience’. The sale may take place “at the premises or at such other place in the city or county in which the property or the greater portion thereof lies, or in the corporate limits of any city surrounded by or contiguous to such county.” Most sales take place on the front steps of the city or county circuit court building. In the absence of specific direction in the trust instrument, the trustee is authorized to sell “upon such terms and conditions as the trustee may deem best.” This language has been interpreted to include the power to sell either for cash or on credit. The trustee must be present and either conduct or supervise the sale. In the absence of specific authority in the deed of trust, a trustee cannot, even with the consent of the lender, delegate the power to sell and be absent from the sale; the trustee may employ an auctioneer to cry out the sale. Prior to bidding, the trustee should announce the terms of sale and answer any general questions from the public. The trustee should disclose fully any known liens or encumbrances. A contract of sale between a trustee and a purchaser is complete when the trustee knocks down the property to the highest bidder and makes and signs a memorandum of the sale and its terms. The trustee may require a deposit, and a closing will be scheduled for approximately ten (10) to thirty (30) days after the sale, all as set forth in the advertisement. In the event that there was a federal tax lien on the property, the government has a right of redemption for a period of one hundred twenty (120) days, meaning that the government may take the property and reimburse the purchaser for the amount paid within this time frame. The trustee may request the waiver of such right upon the delivery of the notice of sale.
F. Settlement and Accounting.
A purchaser can only require a deed with special warranty of title from the trustee. The trustee is not responsible for conveying good title, because a trustee can sell only the interest conveyed to him under the deed of trust. Recordation tax to be paid upon recordation of the deed is the greater of the amount bid at the sale or the assessed value of the property. The trustee must receipt for the proceeds. Any proceeds from the sale must be applied in the following order: to discharge the expenses of executing the trust, including the trustee’s commission; to discharge all taxes, levies, and assessments, with costs and interest, including the due pro rata thereof for the current year; and to discharge in the order of their priority, if any, the remaining debts and obligations secured by the trust instrument, and any liens of record inferior to the trust instrument under which sale is made, with lawful interest. Any residual proceeds shall be paid to the debtor or his assigns. Within six months of the sale, the trustee must file an accounting of sale, including the original note, and all vouchers for his expenses with the local commissioner of accounts. The secured party may sue the debtor or any guarantor for any deficiency between the amount of the proceeds of the sale applied to the note and the amount of indebtedness outstanding thereunder.
G. Advantages and Disadvantages.
In Virginia, a trustee’s sale is a relatively quick and efficient means of foreclosing on real property. Once the sale has been completed, the purchaser will own the property free and clear of other junior encumbrances (provided that the junior lienholders were properly notified). However, the lender must be cognizant of the procedural and timing requirements in order to properly coordinate the trustee’s sale, and the foreclosure process can be more expensive than acquir4ing the property by a deed in lieu.
II. Deed in Lieu of Foreclosure.
With a deed in lieu of foreclosure, the grantor transfers the fee simple title to the property encumbered by the deed of trust to the lender under the deed of trust. The lender contemporaneously releases the lien of the deed of trust and forgives or stipulates the liability of the obligors under the obligations secured by the deed of trust.
A. Advantages. Acquisition by a deed in lieu can be advantageous to a debtor, as the process minimizes damage to the debtor’s reputation and credit rating by avoiding a formal foreclosure and creates substantial savings in costs, expenses, attorneys’ fees and trustee’s fees. The lender may find significant benefits as well, such as efficiency and the ability to obtain quick control of the property to effect its completion, rental or sale to a third party.
B. Disadvantages. A lender should be aware of the potential disadvantages to obtaining property by a deed in lieu of foreclosure. The lender will own the property subject to junior encumbrances (which are normally extinguished by a foreclosure sale) and all obligations of the former owner (including building code violations and environmental responsibilities). The debtor’s creditors may attack the sale as a fraudulent or voluntary conveyance if the value of the property greatly exceeds the value of the loan forgiven; and any guarantor that did not consent to the transaction may assert that the guarantors and debtor are released from any deficiency claim.
© 2011 WILLIAMS MULLEN ALL RIGHTS RESERVED
Political unrest and violence in the Mideast are unsettling to American interests in the region in the short term. Credit: Kevin Frayer/The Associated Press
For decades, politics in most of the Middle East has been frozen like a fossil in amber. Monarchies and pseudo-republics denied their people meaningful participation and representation. Aging presidents-for-life clung to power, grooming sons to replace them. Well-connected elites amassed wealth while burgeoning young populations struggled to find jobs.
The amber has shattered. Mideast dictators have fallen to people power, not U.S.-led regime change. Now the critical question is who will replace these leaders?
The end of this era could be a net-positive for the United States if more democratic governments take hold. In the short term, though, these developments bring with them potential threats to U.S. interests: safeguarding oil supplies, protecting Israel, fighting terrorism and containing the current Iranian regime. The biggest impact may be regional dynamics that curb Israel from attacking foes in Gaza, Lebanon and Iran.
With the proviso that this fateful year in the Middle East is just beginning, what follows are snapshots of six pivotal nations whose post-revolution politics and policies will impact U.S. national security:
The most populous Arab nation, Egypt has vied with Saudi Arabia as the premier Arab ally of the United States. Once the trend-setter in Arab politics, culture and diplomacy, Egypt stagnated during Hosni Mubarak’s 30-year reign. With Mubarak’s resignation Feb. 11, a “supreme defense council” led by Defense Minister Mohamed Hussein Tantawi is leading the transition. The military has promised to submit a new constitution to a referendum and then hold elections for a new parliament and president.
Mubarak’s successor is likely to maintain the 1979 peace treaty with Israel—even if the Muslim Brotherhood, the oldest Islamic political group in the modern Middle East, gains a major share in the next government. As a nation that relies on tourism, Egypt cannot afford to renounce peace with Israel or to impose Islamic law. The Egyptian military will not want to jeopardize its supply of U.S. military hardware. However, a more democratic Egypt will not be silent if Israel attacks Gaza again as it did in 2008-2009, or Lebanon in 2006. Egypt is likely to lift a blockade on Gaza imposed after Hamas seized the enclave in 2007, making it easier for Hamas to smuggle weapons via the Sinai desert. Egypt may also restore diplomatic relations with Iran, which the U.S. will see as a blow to its containment strategy. Already, the interim government permitted an aging Iranian warship and supply vessel to transit the Suez Canal and enter the Mediterranean—the first such crossing since the Iranian revolution.
On counterterrorism, the Egyptian government is less likely to make mass arrests or to accept, via rendition, terror suspects caught elsewhere by the United States. Bruce Riedel, a former senior National Security Council official and CIA officer dealing with the Middle East, said that a less repressive Egyptian government will benefit U.S. interests in the long term by diminishing the pool of recruits for al-Qaida. Still, the transition may be dicey. “While we may lose on the tactical level, we may gain on the strategic level,” he said.
Saudi Arabia is the region’s great economic prize, sitting on top of one fifth of the world’s known oil reserves. King Abdullah, who has ruled officially since 2005 and de facto since 1995, is progressive in Saudi terms and has introduced a few modest reforms. Still, the upheaval nearby was sufficient for the king to rush home from Morocco, where he had been recuperating after back surgery. Reaching into his government’s deep pockets, he promised $37 billion in new government handouts to civil servants and students.
Gregory Gause, a Saudi expert at the University of Vermont, noted that major flooding in Jeddah in January which killed 10 people and caused severe property damage did not provoke mass protests. “If there was ever a time when people would take to the streets, this would have been it,” Gause said. The monarchy benefits, he said, from the fact that its opposition is divided between liberals and religious conservatives and so far remains a largely online phenomena However, last month a group of more than 100 Saudi intellectuals signed a petition for additional reforms, including an elected advisory council. Thousands of Saudis have signed onto Facebook and Twitter accounts calling for mass protests on March 11, the ninth anniversary of a fire in Mecca that killed 15 girls who were prevented from leaving a burning school without their Islamic cloaks.
Saudi security forces appear to have suppressed the main recent threat to the regime from al-Qaida, whose founder was Saudi-born. U.S. concerns focus on Saudi succession and preventing disruptions to Saudi oil production. Abdullah is 87 and in poor health; his half brother and crown prince, Sultan, is also an octogenarian and ailing. Third in line is the slightly younger Prince Nayef, the interior minister, who is not popular. The kingdom’s youth resent the stipends doled out to 7,000 Saudi princes and the foreign workers who take both high-paying and menial jobs. Saudi Arabia’s minority Shiite population, which predominates in the Eastern Province where most Saudi oil is produced, faces discrimination and has protested in the past. The Saudi leadership fears contagion from Bahrain, the scene of unprecedented political tumult in recent weeks. The two countries are connected by a 16-mile causeway.
Bahrain is a major concern for U.S. policymakers because of its sectarian divide and location. Not only is it linked to Saudi Arabia’s Eastern Province, but it is home to the U.S. Fifth Fleet, which guards the Persian Gulf and its precious oil traffic. The fleet also is a buffer between Iran and the region’s fragile sheikhdoms and emirates. From that base, some 3,000 U.S. military officers oversee 30 ships and 30,000 sailors.
Bahrain’s ruling al-Khalifa family badly mishandled protests that broke out Feb. 14, allowing masses of demonstrators to assemble in a roundabout called Pearl Square and then sending in troops to fire on sleeping protesters. The show of force drew worldwide condemnation and the regime has since made a series of concessions, freeing political prisoners, calling for dialogue, dismissing a few cabinet ministers, allowing a once-banned opposition leader to return from exile and permitting demonstrators to refill Pearl Square.
These gestures have not appeased the protesters. Shiite Muslims make up about 70 percent of the island state’s half million citizens and are demanding parliamentary reforms and an end to discrimination in employment, education and housing. Calls to overturn the Sunni Khalifas—or at least restore a more democratic, single-chamber parliament, which briefly existed in the 1970s—are growing. Saudi analyst Gregory Gause said King Hamad is “caught between his population and his family” which holds virtually all key government offices, including that of prime minister; Hamad’s uncle has been in that position since Bahrain’s independence from Britain 40 years ago. Given Bahrain’s sectarian divide and Iran’s proximity, Saudi Arabia and the U.S. worry about Iranian encroachment although so far Bahraini protesters have emphasized their nationalism by wrapping themselves literally in Bahraini flags.
Iranian officials from Supreme Leader Ali Khamenei to President Mahmoud Ahmadinejad and government-appointed leaders of Friday prayers have been crowing that Arab demonstrators are following a script written 32 years ago in Iran. Certainly, Tehran has enjoyed seeing the toppling of secular, U.S.-backed dictators but there is no indication that the protesters were motivated by a desire for Iranian-style theocracy. In fact, the uprisings have been marked by the absence of slogans such as “Islam is the Solution” and that old Iranian favorite, “Death to America.” On Feb. 14 and Feb. 20, protests boomeranged back to Iran as the Green Movement that erupted following disputed June 2009 presidential elections returned to the streets of major Iranian cities. Tehran in recent days has resembled an armed camp as more demonstrations erupt.
Mehdi Khalaji, an Iran analyst at The Washington Institute for Near East Policy, said that if the Arab revolts had taken place before Iran’s post-election crisis, “Iran could have used it in the framework of its propaganda.” Now, Khalaji said, such claims look hypocritical, even laughable. In the short term, Iran may benefit from the distraction of Western policymakers. Since Jan.1, the regime has executed 120 prisoners, according to the International Campaign for Human Rights in Iran, giving Iran the dubious distinction of executing more people per capita than any other nation. While global media attention was focused on Libya, Iranian authorities on Feb. 24 arrested two opposition leaders and their wives.
Disruption of oil production in Libya and general uncertainty in the region have boosted oil prices and Iran’s revenues. Prospects for an attack on Iran’s nuclear program by either Israel or the United States have decreased as those countries focus on the instability among once-trusted Arab allies.
However, in the longer term, the Iranian regime faces major challenges. New heroes are emerging in the Arab world, supplanting Ahmadinejad, Khamenei and Lebanese protégé Hassan Nasrallah, the leader of Hezbollah. A more democratic Egypt may earn it a bigger diplomatic role, diminishing Iranian influence in Iraq, Lebanon and the Persian Gulf. In the interim, Turkey—a prosperous democratic state with diplomatic ties to all its neighbors—is a far more attractive regional model than Iran. The Iranian government must also content with a young, Internet-savvy generation, international economic sanctions, and cyber-warfare attacks on its nuclear program.
Israel can take comfort in the fact that for once, protests in the Arab world have had nothing to do with Israel, the Palestinians or Lebanon. Nevertheless, Israelis worry that successor governments in Egypt and elsewhere may be less accommodating to their actions against Arabs. A future Egyptian president will not “sit on the sidelines” if Israel decides to attack Gaza or Lebanon again, Riedel said. “The Egyptians are not going to be as passive. This is going to be the major source of friction between Cairo and Washington.”
There is also the question of what impact the unrest will have on Palestinian governments in both the West Bank and Gaza. Palestinian President Mahmoud Abbas has promised new elections and efforts to reunify with Hamas, which seized control of Gaza in 2007. Successors to Abbas and to Palestinian Prime Minister Salam Fayyad may be less willing and capable of reaching a bargain with Israel.
The Obama administration said it remains determined to push for an Israeli-Palestinian settlement. Dennis Ross, the top White House official in charge of Middle East policy, recently said that the lesson Israel should draw from the fall of Mubarak is “the danger of getting stuck in an unsustainable status quo.” The Palestinians’ higher birth rate, the need to give new Arab leaders a stake in peace, and the increasingly sophisticated arsenals of Hamas and Hezbollah all argue for reaching a settlement with the Palestinians sooner rather than later, Ross said. However, Israeli Prime Minister Benjamin Netanyahu, already risk averse when it comes to making concessions for peace, is likely to become even more so as he waits to see what kind of government emerges in Egypt and whether any other pro-Western Arab dominos—such as Jordan—will fall. U.S. domestic politics may make it less likely that President Obama will pressure Netanyahu to give up more land for peace. One possibility is that Netanyahu might instead explore a settlement with Syria that could undercut Iranian influence and the possibility of a new Israeli confrontation with Hezbollah.
Libya is important to the United States because it is a major oil supplier to Europe, and like Egypt and Saudi Arabia, has both spawned and confronted numerous members of al-Qaida. A major U.S. concern is that Islamic fundamentalists will fill the vacuum left by Moammar Gadhafi’s brutal regime.
During his 41-year rule, Gadhafi prevented the creation of political parties. He staged phony “people’s congresses” while dictating policy behind the scenes and parceling out plum positions and business opportunities to members of his family and tribe. Whenever he sensed a threat, he reshuffled officials, leading one Libyan a decade ago to compare his countrymen to “mice in a bag” that Gadhafi would shake periodically to pre-empt opposition from organizing. Despite their lack of experience in politics or civil society institutions, Libyans in the eastern part of the country first liberated from Gadhafi’s rule are already putting together provisional governments. A pool of talented Libyans including returning exiles should be able to form a credible new administration. However, the transition is Libya has already been bloodier than in neighboring countries and there is a prospect of civil warfare between tribes and regions. Al-Qaida would likely take advantage of such chaos. Still, it is hard to imagine that Gadhafi’s successors will be worse stewards of Libyan interests or more menacing to the world at large than he has been.
Barbara Slavin has reported on the Middle East for more than three decades, and is the author of the 2007 book Bitter Friends, Bosom Enemies: Iran, the US and the Twisted Path to Confrontation.
Reprinted by Permission © 2011, The Center for Public Integrity®. All Rights Reserved.
Today March 4th – Last Day for Significant Early Registration Discount(s) for 11th eDiscovery Summit April 27-29th in San Francisco, CA
The 11th eDiscovery conference April 27-29th in San Francisco, CA will provide strategies for ediscovery professionals to minimize costs, risks and challenges with ediscovery, and include:
- Organize an effective records program by tapping into existing resources
- Determine judges’ priorities when eDiscovery conflicts arise
- Align the interests of IT, in-house and outside counsel
- Handle eDiscovery via social media sites and other new sources of ESI
- Address the tension between preservation and effective data lifecycle management
- Control the cost of review while maintaining defensibility
- Save money by employing
- Early Case Assessment tools and new technologies
- Compare the Federal rules regarding ESI versus international laws and regulations
- Explore how the states have emulated Federal rules and how they differ