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Ticketmaster Corporation vs. Microsoft Corporation: A Case Comment

Ticketmaster Corporation, an Illinois corporation, Plaintiff, v/s Microsoft Corporation, a Washington corporation, Defendant. No. 97-3055 DDP

Complaint
Plaintiff Ticketmaster Corporation ("Ticketmaster"), by its undersigned attorneys, complains of Defendant Microsoft Corporation ("Microsoft") and alleges as follows:

The Parties

  1. Ticketmaster Corporation (Plaintiff)
    Ticketmaster is an Illinois corporation with its principal place of business in Los Angeles, California.
    Ticketmaster is engaged in the business of providing automated ticketing services to various arenas and other sites located throughout the United States and elsewhere. It maintains approximately 2,700 remote ticketing outlets in 44 states in the United States and 16 domestic phone centres, as well as operations in England, Mexico and Australia. Its annual ticket sales for its clients currently exceed $1.6 billion and, on information and belief, it is the world's largest provider of computerized ticket distribution products and services to producers and promoters of entertainment events.

    Ticketmaster has made extensive use of its name and marks for its ticketing products and services throughout the United States. It owns federal registrations for the following marks:
    Mark Reg. No. And Reg. Date
    Ticketmaster 1,746,016 - January 12, 1993
    Ticketmaster& Design 1,746,017 - January 12, 1993
    Ticketmaster Online & Design 1,960,551 - March 5, 1996
    Ticketmaster Music Showcase & Design 1,991,124 - August 6, 1996
    Ticketmaster 2,009,129 - October 15, 1996
    Ticketmaster 2,012,812 - October 29, 1996
    Ticketmaster 1/2 Tix & Design 1,897,084 - May 30, 1995
    A true and correct copy of the registrations referred to, all of which are valid and subsisting, are attached herewith as Exhibit A.

    Ticketmaster also has made extensive use of its name and marks for its ticketing products and services throughout other parts of the world. Ticketmaster owns registrations for the "TICKETMASTER" mark in numerous other countries throughout the world.

    As an integral part of the services it performs, Ticketmaster sells and markets tickets to various entertainment events through the use of the Internet. To engage in such sales and marketing, it has created and is the owner of a worldwide web site on the Internet using the domain name "http://www.ticketmaster.com." Attached herewith as Exhibit B is a printout of an excerpt from Ticketmaster's web site as it currently appears on personal computer screens.

    Ticketmaster's web site, utilizing Ticketmaster's name and marks, is a valuable commercial asset in that it provides information that consumers desire and in which they have come to have confidence, as well as providing a means of easy access to the purchase of tickets. Ticketmaster's web site provides listings and ticketing access to more than 25,000 events across the United States, including Los Angeles and Seattle. It is by far the Internet's most comprehensive live event site.

    Companies that publish city guides (including Microsoft) also occupy a unique niche on the Internet, in that they directly derive advertising revenue and credibility from their ability to provide the most comprehensive community information available to their users. By accessing Ticketmaster's live event information and services without Ticketmaster's approval, and by prominently offering it as a service to their users, Microsoft is feathering its own nest at Ticketmaster's expense. It is, in effect, committing electronic piracy. In this narrow corridor of cyberspace, Ticketmaster must maintain control of the manner in which others utilize and profit from its proprietary services, or face the prospect of a feeding frenzy diluting its content.

    Ticketmaster spends significant sums of money in advertising its goods and services in the United States each and every year. The Ticketmaster's name and logo are widely known as identifying the goods as well as the services of high and good quality in nature

    As a result of the foregoing, Ticketmaster's trademarks have developed and possesses secondary and distinctive meaning to purchasers of the goods and services bearing the Ticketmaster trademarks.

  2. Microsoft Corporation (Defendant)
    Microsoft is a Washington corporation with its principal place of business in Redmond, Washington. Microsoft is qualified to do business and is doing business in this judicial district.
    Microsoft is engaged in the business of developing, marketing and publishing computer programs. It has an and adjunct to its business the online publication, via the Internet and a worldwide web site, of a city guide to entertainment and restaurants available in the Seattle, Washington area known as the Seattle Sidewalk, with the web site domain name "http://seattle.sidewalk.com."

    The city guide web site is featured offering by Microsoft on Microsoft's publication known as The Microsoft Network. Microsoft plans to publish additional city guides in a number of cities -- including New York, Boston, Denver, Houston, Minneapolis-St. Paul, San Diego, San Francisco, Washington, D.C. and Sydney, Australia -- to be supported by national, regional and local advertising -- including advertisers such as CitiBank, Visa USA and Bank of America.

Jurisdiction And Venue

This is action arising out of Microsoft's wrongful appropriation and misuse of Ticketmaster's name and trademarks and unfair competition, with the threatened result being the diminution and dilution in value of Ticketmaster's name, goodwill and business.

This Court has federal question and diversity jurisdiction over the subject matter of this pursuant to 28 U.S.C. §§1331 and 1332, 28 U.S.C. §2201, 28 U.S.C. §1367, 15 U.S.C. §2201, 28 U.S.C. §1367, 15 U.S.C. §1121 and the doctrine of pendant jurisdiction.
Venue is proper in this court pursuant to 28 U.S.C. §1391(a)(b) and (c).

The Operative Facts

Microsoft has utilized in its seattle sidewalk site the name and marks of Ticketmaster and Ticketmaster's web site notwithstanding Ticketmaster's protestation against such use and Microsoft's implicit recognition that, absent an agreement with the owner for use of a web site, web site are for personal non-commercial use.

Negotiations with Microsoft for an agreement allowing Microsoft to profit from linkage to and association with Ticketmaster's web site have failed and Microsoft is making use of such linkage and association as a freerider and in express contravention of Ticketmaster's request.

Microsoft's commercial use and appropriation of Ticketmaster's name, marks and web site as aforesaid has enhanced the value of Microsoft's web site and business and diluted and diminished the value of Ticketmaster's web site and business. E.g., Microsoft has gained revenue from advertising made a part of Microsoft's web site, depriving Ticketmaster of favorable advertising business opportunities.

Further, Microsoft has published in his seattle sidewalk web site information concerning Ticketmaster and its business that was and is erroneous and misleading concerning the type of payment that is accepted by Ticketmaster for payment of the tickets it sells.

Ticketmaster also has a business relationship with MasterCard by which Ticketmaster has agreed to give MasterCard prominence over any other credit cards in any advertising. Microsoft's use of Ticketmaster's name in connection with MasterCard, which use does not give MasterCard prominence, dilutes the value of that relationship.

Ticketmaster has requested that Microsoft to cease and desist from unauthorized use of Ticketmaster's name, marks and web site and from publishing erroneous and misleading information concerning Ticketmaster's business. Microsoft has failed and in effect refused to cease any of its aforesaid wrongful activities and Ticketmaster will continue to suffer irreparable injuries and harm for which Ticketmaster has no adequate remedy at law unless Microsoft is enjoined temporarily, preliminarily and permanently from engaging in such wrongful conduct.

Claims For Relief

  1. First Claim For Relief (Violation of the Lanham Act 15 U.S.C. §1125(c)-Dilution)
    By reason of the foregoing Ticketmaster asserts a claim against Microsoft for damages, injunctive relief costs and attorneys' fees pursuant to 15 U.S.C. §§1125(c), 1117 and 1116, with respect to the dilution of Ticketmaster's trademarks caused by Microsoft's unlawful use of said trademarks.

  2. Second Claim For Relief (Violation of the Lanham Act, 15 U.S.C. §1125(a))
    By reason of the foregoing, Ticketmaster asserts a claim against Microsoft for damages, injunctive relief, costs and attorney's fees pursuant to 15 U.S.C. §§1125, 1117 and 1116, with respect to Microsoft's falsely, deceptively and misleadingly representing its association, connection or affiliation with Ticketmaster and the operation of Ticketmaster's business in Microsoft's website and its advertising.

  3. Third Claim For Relief (Violation of California Business & Professions Code §17200 et. seq.)
    By reason of the foregoing, Ticketmaster asserts a claim against Microsoft for damages, injunctive relief, costs and attorney's fees for unfair competition under the California Business and Professions Code §17200 et. seq.

  4. Fourth Claim For Relief (Violation of California Business & Professions Code §17500 et. seq.)
    By reason of the foregoing, Ticketmaster asserts a claim against Microsoft for damages, injunctive relief, costs and attorney's fees for false and misleading statements under California Business & Professions Code §17500 et. seq.

  5. Fifth Claim For Relief (Violation of California Common Law-Unfair Competition and Unfair Business Practices)
    By reason of the foregoing, Ticketmaster asserts a claim against Microsoft for damages, injunctive relief, costs and attorney's fees for violations of California common law against unfair competition and unfair business practices.

  6. Sixth Claim For Relief (Declaratory Relief)
    An actual controversy between Ticketmaster and Microsoft now exists as to their respective rights.

    Microsoft has a website for which it obtains advertising and revenue thereon, and, in some ways, competes with Ticketmaster's own website. Microsoft believes it can use Ticketmaster's trademarks, the link to the Ticketmaster website, and the descriptions and in certain instances false "mis-descriptions" of Ticketmaster goods and services, and to use the link to and actual reference to the Ticketmaster website to obtain advertising, users and otherwise advance Microsoft's own website. Ticketmaster disputes Microsoft's ability to use Ticketmaster's trademarks in the aforementioned manner.

    A judicial determination regarding Ticketmaster and Microsoft's respective rights is necessary and appropriate so that Ticketmaster and Microsoft can ascertain their respective rights and properly engage in their businesses now and in the future.

Prayer For Relief

WHEREFORE, Plaintiff Ticketmaster seeks relief against Microsoft and requests entry of judgment against Microsoft as follows:
As To All Claims For Relief:
  1. Entering declaratory judgment in favor of Ticketmaster against Microsoft, declaring that Microsoft's seattle sidewalk website has damaged Ticketmaster rights in its name, marks and website;
     
  2. Enjoining Microsoft and those in active concert or participation with Microsoft, temporarily, preliminarily and permanently, from making any commercial use of Ticketmaster's name, marks or website in connection with its seattle sidewalk website or with any advertising sold or sponsored by Microsoft;
     
  3. For Microsoft to pay Ticketmaster damages in an amount to be determined;
     
  4. For Ticketmaster to be awarded its costs, attorney's fees; and
     
  5. Awarding Ticketmaster such other relief as is just and equitable in the circumstances.

Defence By Microsoft

Ticketmaster's stance breached an unwritten Internet code in which any Web site operator has the right to link to anyone else's site. Microsoft also based its defense on what it said was its First Amendment right to publish public information.

Counter Claim Raised By Microsoft

Microsoft sought a judicial declaration that its deeplink was lawful and suggested that Ticketmaster's complaint raises the issue of whether hypertext linking in any form is legal.

Response To The Counter Claim By Ticketmaster

In responding to the counterclaim Ticketmaster expressly denied attacking the use of hypertext links in general, limiting its claim to the validity of Microsoft's deeplink.

Trial Court Proceedings

The district court granted summary judgment in favor of the defendant on the copyright and trespass to chattels claims and denied summary judgment on the contract claims. The court reviewed three copyright issues asserted by the plaintiff:
  1. whether defendant's use of spiders to extract information from plaintiff's website created a valid issue of copyright infringement;
  2. whether the URLs which were copied and used by the defendant contain copyrighted material; and
  3. whether defendant's “deep-linking” caused the unauthorized public display of defendant's event pages.

Judgement

  1. Contract Claim

    On the first issue, the court concluded that under the “fair use” doctrine, taking a temporary copy of the electronic information for the purpose of extracting “unprotected public facts” (the dates, times and venue locations of events) was “fair use and not actionable.”

    On the second issue, the court concluded that a URL is an address, which is publicly available, and not “sufficiently original” to make the URL a copyrightable item in the manner in which the defendant used it.

    Finally, on the third issue, the court concluded that the “deep-link” did not caused the unauthorized public display of the defendant's event pages since it took the customer directly from the defendant's site to the plaintiffs' site, and clearly identified the plaintiff's site with a notice stating “buy this ticket from another online ticketing company. Click here to buy tickets.” Thus, the court granted defendant's motion for summary judgment on all three copyright claims.

  2. Tresspass To Chattels Claim

    For the trespass to chattels claim, the court reasoned that in accordance with the Restatement (Second) of Torts §219 “showing that the chattel is impaired as to its condition, quality or value” is necessary to establish a tort claim for trespass of chattels. The court held that mere use of a spider to gather information was insufficient to fulfill the harm requirement for trespass to chattels, since the plaintiffs could not establish any actual caused by the spider to their computers.

  3. Contract Claim

    Regarding the contract claim, the court reasoned that the presence of a notice on the bottom of the plaintiff's website which stated that anyone going into the interior web pages accepted the website's terms, which included a condition that “all information obtained from the website is for the personal use of the user and may not be used for commercial purposes” created an issue of fact as to whether or not the defendant actually knew of the terms and conditions before sending its “spider” into the webpage's interior. Thus sufficient evidence existed to defeat summary judgment on the contract claim.

Brief Comment
Links constitute a form of free advertising for the linked site and fulfill a social purpose by increasing the efficiency of information exchange. Restrictions on the ability to link would diminish the Internet's utility, decrease the efficient use of human time and energy, and hamper social and economic productivity.

Deep linking complaints are based on numerous legal theories, ranging from copyright and trademark infringement to trademark dilution, unfair competition, misappropriation, tortious
interference with contract, trespass to chattels, unfair business practices, and unjust enrichment. The few judicial decisions and settlements to date serve as a starting point for further analysis of the deep linking controversy, embracing, for the most part, the primacy of efficient information exchange over the rights of the target websites.

In two preliminary orders, the court expressed doubt that deep linking involved any copyright, trademark, or unfair competition violation, but did recognize that the trespass to chattels, unfair business practices, and tortious interference with prospective business advantage claims might have merit. On the copy right claim, the court stated that “hyper-linking does not itself involve a violation of the Copyright Act ., since no copying is
involved but is analogous to using a library's card index to get reference to particular items, albeit faster and more efficiently.”

The court did not dismiss the claim because of Ticketmaster's allegation that Tickets.com actually copied Ticketmaster event pages onto Tickets.com's computers for the limited purpose of extracting factual information. However, it did reject Ticketmaster's contention that it is copyright infringement to take basic facts from publicly available web pages and publish that information without also copying Ticketmaster's form of expression.

The court also rejected the notion that copying the URL itself was an infringement; the URL is unprotectable because it “contains functional and factual elements only and not original material.” Tickets.com's use of “spidering” was likely analogous to the fair use of reverse engineering to obtain unprotected functional elements approved of by the Ninth Circuit, but could have some merit as a trespass to chattels claim if Ticketmaster could show physical harm to its computers or their basic functioning.

Ticketmaster's claims under the Lanham Act, state unfair competition law, passing off, and reverse passing off lacked sufficient facts to support a preliminary injunction. The court concluded that consumer confusion is unlikely because the Ticketmaster site is filled with its logos, and Tickets.com “in no way pretends that it is [Ticketmaster] or acting for it.” The court stated that deep linking by itself, without confusion of source, does not necessarily involve unfair competition.

Finally, the court found that federal copyright law did not preempt the claims of tortious interference with prospective business advantage or unfair business practices. Ticketmaster claimed that its advertisers pay on the basis of the number of hits to the home page, and will not pay for hits to deep pages. It alleged that Tickets.com implemented its deep links for the purpose of decreasing Ticketmaster's advertising revenue, tortiously interfering with Ticketmaster's prospective business advantage. The unfair business practices claim, that Tickets.com took and published otherwise unprotectable factual data from Ticketmaster, escaped preemption by virtue of an allegation of false advertising.

Although the case is still pending at the time of this writing, these initial determinations reflect the opinion of the court that current intellectual property law does not provide much support for claims against deep linking. This lack of protection supports the need for a review and, if necessary, a modification of intellectual property rules that addresses the balance between the target site's interests and the efficient exchange of information.

Alternatively, tort law (unfair business practices, tortious interference, and trespass to chattels) might be able to strike the right balance of these competing interests.

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