Case in Point
Major Court Decisions Impacting New Yorkers in April
Mon, 27 Apr 2009 13:00:00
Searching for Results in Combating Google
Rescuecom Corp. v. Google
Decided by: Second Circuit Federal Appeals Court, April 3
What if you searched Google for Apple Computers but Microsoft’s website appeared instead? Google’s selling of company names for its Ad-Words advertisements makes situations like this occur every day for every type of company. When it happened to the Rescuecom Corporation, a national computer-repair chain, the company decided to take a stand against the Internet search giant. Googling “Rescuecom” turned up not only Rescuecom’s website but a number of advertisements (on the right side of the screen) for the repair shop’s competitors. Because Google had sold the “Rescuecom” name publicly, the competitors could use the Rescuecom name to advertise themselves.
Dissatisfied with what it viewed as illegal uses of its trademarked name, Rescuecom sued Google in federal court for violations of the Lanham Act, the federal trademark law. The act protects brand integrity and tries to prevent consumer confusion—imagine the dilemma if every box of circular oat-based cereal had “Cheerios” on it.
The federal district court in Albany dismissed Rescuecom’s lawsuit, holding that Google’s use of the Rescuecom name was not “in commerce,” one of the requirements for a trademark infringement claim. But the federal appeals court in Manhattan reversed the decision and pushed the case toward trial. Three federal judges reasoned the selling of a business name online had to constitute an activity “in commerce.” Moreover, the court described many circumstances where search engines could violate trademark, depending on how the Internet company structured its algorithms. The court hinted at the reasonableness of Rescuecom’s suit, although it withheld a formal comment on the merits. It likened Google’s acts to deceptive product placement of generic foods in grocery stores, and explained that if a consumer was misled by the way a store organized its products, that store could be liable for trademark infringement.
At trial, a victory for Rescuecom could mean a complete reworking of how Google and other Internet companies advertise online.
Municipalities Dabble in Mortgages
10 East Realty LLC v. Village of Valley Stream
Decided by: Court of Appeals, March 31
In 2002, the Village of Valley Stream, which is located five miles northeast of Kennedy Airport, sold $275,000 of land to Lincoln Realty Company. Rather than take cash at the time of sale, the Village took a 15-year mortgage interest in the property at 5 percent per year. A group of villagers and a civic organization, angered by the transaction, sued the town to void the sale as a violation of the New York Constitution. Specifically, the residents alleged that the Gift or Loan Clause prohibits the execution of purchase-money mortgages by a town. The clause reads, “No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking.”
Although the Appellate Division agreed with the residents, New York’s highest court reversed and dismissed the lawsuit. The Court of Appeals held that the deferred payment plan did not constitute a loan. The judges gave few clues into their thinking, with the decision presenting the opaque logic that just because a transaction involves an interest rate and a term of payment, it is not necessarily “an unconstitutional loan.” Understandably, the court did not want to tie the hands of municipalities in the face of an economic crisis, but the decision is a significant expansion in the power of municipalities to structure “loan-like” transactions. Since the judges drew no boundaries in their decision and submitted no substantive definition of a loan, the Legislature may need to clarify the meaning of “loan” in New York.
Suing Makes Cities Less Able to Protect?
McLean v. City of New York
Decided by: Court of Appeals, March 31
When three-month-old Briana fell from a bed at Patricia Theroulde’s day-care center in New York City and suffered a brain injury, her mother, Charlene McLean, wanted answers. McLean discovered that Briana was not the first child neglected by Theroulde: twice before, the Department of Social Services had received complaints; in the previous two years, Theroulde’s husband had allegedly dipped a child’s hand into a bowl of hot oatmeal and another child was left alone for 90 minutes in a store. Both complaints were confirmed by child services. Although either complaint should have prevented Theroulde from renewing her registration as a day-care provider, the City of New York approved her renewal. Less than a year later, Briana fell.
McLean sued the City for negligence, citing the registration renewal as the cause of Briana’s injury. While two lower courts said the City could be liable, the Court of Appeals unanimously reversed. The high court renewed its longstanding rule that lawsuits against municipalities for negligence are permissible only in the rarest instances, such as when a duty to protect is specifically created by statute. The court reasoned that exposing cities to litigation “would be likely to render them less, not more, effective in protecting their citizens.”
Bench Threats Could Bench Sentence
People v. Flinn
Decided by: Appellate Division, Fourth Department, March 20
Last year, as Gunther Flinn appeared in court to enter his plea for a second-degree murder charge, Jefferson County Judge Kim Martusewicz told Flinn that he would treat him “very differently as far as the sentence is concerned” if Flinn decided to exercise his constitutional right to a trial. The judge promised a post-trial sentence would be “nothing like that Flinn would get if he stood up and accepted his responsibility.” Seeing few choices, Flinn pled guilty and appealed, claiming his plea was coerced.
The Fourth Department agreed, finding that threatening someone with a longer sentence for exercising his Sixth Amendment right to a trial is unconstitutional. Flinn should get another chance later this year.
Rescuecom Corp. v. Google
Decided by: Second Circuit Federal Appeals Court, April 3
What if you searched Google for Apple Computers but Microsoft’s website appeared instead? Google’s selling of company names for its Ad-Words advertisements makes situations like this occur every day for every type of company. When it happened to the Rescuecom Corporation, a national computer-repair chain, the company decided to take a stand against the Internet search giant. Googling “Rescuecom” turned up not only Rescuecom’s website but a number of advertisements (on the right side of the screen) for the repair shop’s competitors. Because Google had sold the “Rescuecom” name publicly, the competitors could use the Rescuecom name to advertise themselves.
Dissatisfied with what it viewed as illegal uses of its trademarked name, Rescuecom sued Google in federal court for violations of the Lanham Act, the federal trademark law. The act protects brand integrity and tries to prevent consumer confusion—imagine the dilemma if every box of circular oat-based cereal had “Cheerios” on it.
The federal district court in Albany dismissed Rescuecom’s lawsuit, holding that Google’s use of the Rescuecom name was not “in commerce,” one of the requirements for a trademark infringement claim. But the federal appeals court in Manhattan reversed the decision and pushed the case toward trial. Three federal judges reasoned the selling of a business name online had to constitute an activity “in commerce.” Moreover, the court described many circumstances where search engines could violate trademark, depending on how the Internet company structured its algorithms. The court hinted at the reasonableness of Rescuecom’s suit, although it withheld a formal comment on the merits. It likened Google’s acts to deceptive product placement of generic foods in grocery stores, and explained that if a consumer was misled by the way a store organized its products, that store could be liable for trademark infringement.
At trial, a victory for Rescuecom could mean a complete reworking of how Google and other Internet companies advertise online.
Municipalities Dabble in Mortgages
10 East Realty LLC v. Village of Valley Stream
Decided by: Court of Appeals, March 31
In 2002, the Village of Valley Stream, which is located five miles northeast of Kennedy Airport, sold $275,000 of land to Lincoln Realty Company. Rather than take cash at the time of sale, the Village took a 15-year mortgage interest in the property at 5 percent per year. A group of villagers and a civic organization, angered by the transaction, sued the town to void the sale as a violation of the New York Constitution. Specifically, the residents alleged that the Gift or Loan Clause prohibits the execution of purchase-money mortgages by a town. The clause reads, “No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking.”
Although the Appellate Division agreed with the residents, New York’s highest court reversed and dismissed the lawsuit. The Court of Appeals held that the deferred payment plan did not constitute a loan. The judges gave few clues into their thinking, with the decision presenting the opaque logic that just because a transaction involves an interest rate and a term of payment, it is not necessarily “an unconstitutional loan.” Understandably, the court did not want to tie the hands of municipalities in the face of an economic crisis, but the decision is a significant expansion in the power of municipalities to structure “loan-like” transactions. Since the judges drew no boundaries in their decision and submitted no substantive definition of a loan, the Legislature may need to clarify the meaning of “loan” in New York.
Suing Makes Cities Less Able to Protect?
McLean v. City of New York
Decided by: Court of Appeals, March 31
When three-month-old Briana fell from a bed at Patricia Theroulde’s day-care center in New York City and suffered a brain injury, her mother, Charlene McLean, wanted answers. McLean discovered that Briana was not the first child neglected by Theroulde: twice before, the Department of Social Services had received complaints; in the previous two years, Theroulde’s husband had allegedly dipped a child’s hand into a bowl of hot oatmeal and another child was left alone for 90 minutes in a store. Both complaints were confirmed by child services. Although either complaint should have prevented Theroulde from renewing her registration as a day-care provider, the City of New York approved her renewal. Less than a year later, Briana fell.
McLean sued the City for negligence, citing the registration renewal as the cause of Briana’s injury. While two lower courts said the City could be liable, the Court of Appeals unanimously reversed. The high court renewed its longstanding rule that lawsuits against municipalities for negligence are permissible only in the rarest instances, such as when a duty to protect is specifically created by statute. The court reasoned that exposing cities to litigation “would be likely to render them less, not more, effective in protecting their citizens.”
Bench Threats Could Bench Sentence
People v. Flinn
Decided by: Appellate Division, Fourth Department, March 20
Last year, as Gunther Flinn appeared in court to enter his plea for a second-degree murder charge, Jefferson County Judge Kim Martusewicz told Flinn that he would treat him “very differently as far as the sentence is concerned” if Flinn decided to exercise his constitutional right to a trial. The judge promised a post-trial sentence would be “nothing like that Flinn would get if he stood up and accepted his responsibility.” Seeing few choices, Flinn pled guilty and appealed, claiming his plea was coerced.
The Fourth Department agreed, finding that threatening someone with a longer sentence for exercising his Sixth Amendment right to a trial is unconstitutional. Flinn should get another chance later this year.
