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In This IssueVIRGINIA SUPREME COURT REVERSES ITSELF IN SPAMMER CASE On September 12 the Supreme Court of Virginia took the highly unusual step of withdrawing its earlier 4-3 vote affirming the 2004 conviction of Jeremy Jaynes for violating the anti-spam provision of the Virginia Computer Crimes Act ("VCCA"). In its new decision, Jaynes v. Commonwealth, 2008 WL 4181177, the Supreme Court unanimously held that the anti-spam provision "is unconstitutionally overbroad on its face because it prohibits the anonymous transmission of all unsolicited bulk e-mails[,] including those containing political, religious or other speech protected by the First Amendment to the United States Constitution." Unless the state’s legislature amends the provision to restrict it to commercial speech, spammers such as Jaynes can operate legally in Virginia, provided they don’t violate the provisions of the federal CAN-SPAM Act, which is less restrictive than the state law. In ruling the anti-spam provision unconstitutional the Supreme Court was apparently influenced by Jaynes' politically focused free-speech argument. The Court observed that "were the Federalist Papers just being published today via e-mail, that transmission . . . would violate the statute." However, Virginia Attorney General Robert F. McDonnell condemned the Supreme Court's turnabout, stating that "the Supreme Court of Virginia has erroneously ruled that one has a right to deceptively enter somebody else’s private property [i.e., his or her computer] for purposes of distributing his unsolicited fraudulent e-mails." He added that Virginia "will take this issue directly to the Supreme Court of the United States." Jaynes' attorney responded that McDonnell’s statement ignores the law’s free-speech restriction and claimed that the anti-spam provision makes a conviction possible without proof of fraud. In this regard the Supreme Court noted that although the attorneys for the Commonwealth of Virginia characterized Jaynes' "false" Internet addresses and domain names as "fraudulent," in fact "those concepts are not synonymous." Pending resolution of his appeal, Jaynes had been under house arrest since his conviction. Earlier this year, however, he was sentenced to 52 months in prison for federal securities fraud after pleading guilty to manipulating the stock prices of at least five publicly traded companies from 2003 to 2006. Thus, the Supreme Court’s decision will not enable Jaynes to avoid jail time. As reported in the Spring 2008 issue of the Tech Law Letter, Jaynes, a North Carolina resident, was considered one of the top 10 spammers in the world before being convicted in the Circuit Court of Loudon County, Virginia, and sentenced to 9 years in prison. The Supreme Court then affirmed Jaynes' conviction, thereby making him the first person convicted in the United States of illegal spamming, or the bulk distribution of unsolicited e-mail. Jaynes had sent to AOL subscribers 55,473 e-mail advertisements with falsified header information and sender domain names. Jaynes intended for the e-mails to pass through AOL’s servers, which are located in Virginia. (Sending such spam had apparently made Jaynes wealthy; prosecutors said he claimed a net worth of $24 million and an annual income of over $1 million.) Jaynes appealed his criminal conviction on four grounds: lack of personal jurisdiction over him, abridgement of his First Amendment right to free speech, unconstitutional vagueness in the VCCA, and violation by the VCCA of the Commerce Clause of the U.S. Constitution. All seven Virginia Supreme Court Justices disagreed with Jaynes' claims that Virginia lacked personal jurisdiction, that the VCCA is unconstitutionally vague, and that the VCCA violates the Commerce Clause. However, the Court originally split when ruling that on Jaynes' claim that because the VCCA could conceivably chill political, religious, or other protected speech in the form of unsolicited bulk e-mail, the statute violated his First Amendment right to free speech. At that time a majority of the Court held that because Jaynes had engaged in "misleading" and therefore unprotected commercial speech, he had not justified acquittal by "merely pleading a hypothetical First Amendment infringement upon a hypothetical person not charged with a crime." The minority, however, took the view that the correct policy is to allow "litigants under very limited circumstances to raise constitutional challenges to statutes alleged to unconstitutionally burden the First Amendment right of free speech of third parties." By reversing itself in the Jaynes case, the entire Court has now adopted that position. In recent years open-source software – a computer program distributed by its maker free of charge pursuant to a public or open-source license – has grown in popularity. Mozilla’s Firefox Internet browser is a well-known example of an open-source program. However, the limitations included in open-source licenses are less well known. For example, the open-source license used for the Linux operating system prohibits downstream users from charging to license any modifications of the software. In Jacobsen v. Katzer, No. 08-10001 (August 13, 2008), the United States Court of Appeals for the Federal Circuit addressed the enforceability of restrictions in open-source software licenses. The Court held that restrictions in an open-source license are enforceable against an end user of the software. The Court also held that violating the license restrictions constitutes copyright infringement as well as a breach of the license agreement. The open-source software at issue was the work of plaintiff Jacobsen, who created a program called DecoderPro that allows model-train enthusiasts to program decoder chips that control such trains. Jacobsen made his DecoderPro program available for free, subject to an open-source license that the Open Source Initiative has named the "Artistic License." Jacobsen sued defendant Katzer, claiming Katzer had copied portions of the DecoderPro program into a competing program, Decoder Commander, without adhering to the requirements of the Artistic License. Those requirements included attributing authorship to Jacobsen and describing how files had been changed from the original source code. In addition to alleging a violation of the Artistic License, Jacobsen claimed that because Katzer’s actions were outside the scope of the license, Katzer had also infringed Jacobsen’s copyright in the DecoderPro program. The Court noted that when a copyright owner grants a nonexclusive license, the owner generally waives his or her right to sue the licensee for copyright infringement and can sue only for breach of contract. However, if the license is limited in scope and the licensee acts outside that scope, the owner may bring an action for copyright infringement. The Artistic License expressly limits the conditions under which the software can be copied; thus, violating those conditions is an action outside the scope of the license and thus constitutes copyright infringement. Because the Court ruled that violating certain conditions in open-source software licenses constitutes copyright infringement, not just breach of contract, the Jacobsen decision is an important victory for developers of such software. A copyright infringer may be forced to pay statutory damages and the plaintiff’s attorney’s fees and may be subject to injunctions against further infringement. In contrast, statutory damages are not available for breach of contract and actual damages may be difficult to prove, especially given that the software is distributed for free. Similarly, attorney’s fees are often not available for breach of contract, and injunctions are more difficult to obtain for such violations. The Jacobsen decision also serves as an important reminder that just because open-source software is available for free on the Internet does not mean the software can be used for any purpose. Before downloading any open-source software from the Internet, one should consider whether the intended use of the software complies with all applicable license restrictions. Moreover, entities planning to download and use open-source software in for-profit or other money-generating operations may wish to consult a software attorney about any relevant license restrictions on such activities. Did You Know ... There Are "Zombie" Brands? Brands are born. Brands die. But some brands come back to life – often a different life – sustained by residual goodwill in consumers' minds. Examples include ATARI, IRIDIUM and NUPRIN, each of which is now used differently from when it first became popular. Dead or dying brands being considered for revitalization are called ghost brands, orphan brands and – perhaps most fitting, given their prospective "reanimation" – zombie brands. The ever-growing number of trademarks has significantly increased the potential value of zombie brands. A company that can successfully revive a zombie brand, with its residual value – sometimes high – of "brand equity," can save hundreds of thousands of dollars in educating the public about a new brand. Why do brands become zombies? Often this scenario happens because a single company has two competing product lines, whether through corporate mergers and acquisitions or for some other reason. For example, Procter & Gamble once owned the WHITE CLOUD mark for bathroom tissue but, because it also owned the mark CHARMIN for the same goods, decided not to keep using WHITE CLOUD mark. Another business began using the mark and worked out a licensing deal with Wal-Mart, so that WHITE CLOUD tissue is now sold exclusively in Wal-Mart stores. At least one U.S. company specializes in acquiring dead brands and bringing them back to life. River West Brands LLC helped revive NUPRIN for pain medicine and EAGLE SNACKS for snack foods. River West is now evaluating how to reintroduce BRIM for coffee. The company's research shows that nine out of ten U.S. consumers over 25 still remember BRIM as a trademark for coffee, largely because of the highly successful advertising slogan "Fill it to the rim — with Brim!" What many consumers may not remember, however, is that BRIM was formerly a mark for decaffeinated coffee. A reintroduced BRIM brand is likely to cover caffeinated coffee and perhaps other types of coffee products. Some zombie brands can have value not only because of brand equity but also because consumers tend to remember the marks better than the particular goods or services they identified. The BrandlandUSA blog lists and gives short arguments for "100 Dead Brands To Bring Back" For companies that want to capitalize on the brand equity in dead or dying marks, coming across a zombie may be an instructive, not scary, experience. Sources (in addition to websites cited in article): "Can a Dead Brand Live Again" by Rob Walker, The New York Times, May 18, 2008; "Attack of the Zombie Brands!" by Daniel Gross, Slate, March 16, 2007; "Dead Brands Walking" by Katherine Stephan, Crain's Chicago Business, December 6, 2004; "Brands Rise from the Dead" by Alycia de Mesa, brandchannel.com, October 4,2004; 'The Decline of Brands" by James Surowiecki, Wired, 12.11.
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