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Major League Baseball has struck out in its attempt to get the U.S. Supreme Court to intercede in a fantasy baseball dispute.

The justices on Monday said they won't take up MLB's challenge, backed by the National Football League Players Association, of prior court rulings favoring a fantasy league company. The announcement came without comment in a standard list of case statuses published by the high court (PDF).

MLB's Internet media arm, later joined by the pro-baseball players' union, had claimed that C.B.C. Distribution and Marketing--a Missouri company that sells fantasy sports products via the Web, e-mail, regular mail, and phone--was using baseball players' names and statistics without a license, thereby violating the players' rights to publicity under state intellectual property laws. (A right to publicity, of course, is a person's right to control and profit from the commercial use of his name and likeness.)

The original lawsuit actually came from C.B.C. The company sued MLB after the pro baseball association began providing fantasy baseball games on its own Web site. MLB offered C.B.C. a license only to promote MLB's products, not to continue selling its own fantasy baseball games. Fearing a lawsuit from MLB if it continued business as usual, C.B.C. filed its own suit.

C.B.C. won at the district court level and again last year at the appeals court level, which held that the company's "first amendment rights in offering its fantasy baseball products supersede the players' rights of publicity."

A New York State Supreme Court said Tuesday that Dell and its financial services arm misled customers.

Judge Joseph Teresi ruled that the world's second-largest PC maker engaged in fraud, false advertising, deceptive business, and abusive debt collection practices. The company was accused by the state of New York of offering no-interest or no-payment financing options for its products while Dell Financial Services would fail to honor them.

New York Attorney General Andrew Cuomo filed the suit in May 2007, asking for an injunction against the company's business practices and monetary damages for affected customers.

Further court proceedings will need to be held to determine what those damages will be.

Dell told Reuters it "disagrees" with the ruling. "We are confident that when the proceedings are finally completed, the court will determine that only a relatively small number of customers have been affected," according to the company's statement.

About a decade ago, a federal appeals court issued a ruling that prompted thousands of new applications for patents on so-called "business methods," ranging from Amazon.com's "1-click" ordering system to Priceline's auction technique for selling tickets.

But at what point are such processes too "abstract" to be worthy of patent protection? That's one of the key questions that was set to be argued Thursday afternoon before an atypical 12-judge "en banc" panel at the U.S. Court of Appeals for the Federal Circuit in Washington.

Called In re Bilski, the case involves an application for a patent on a process for managing the risks of bad weather in commodities trades. The U.S. Patent and Trademark Office rejected the petition from applicants Bernard Bilski and Rand Warsaw because it decided the process described was not confined to a particular machine and amounted to patenting a "mental step" or an "abstract idea"--something the Supreme Court has ruled is not worthy of a patent, the Patent Office held. The Federal Circuit agreed to have a special panel hear what's widely viewed as a momentous appeal.

Prominent software and Internet companies are closely watching the case--though many aren't claiming to take sides--because they stand to lose big if clear rules don't exist for what's patentable and what's not. Among the long list of names that has filed friend-of-the-court briefs in the weeks leading up to Thursday's oral arguments are IBM, Microsoft, Dell, Symantec, Red Hat, Yahoo, and a number of trade associations representing major Silicon Valley firms. (The blog Patently-O has an exhaustive collection of the documents.)

Although their positions have some fundamental differences, there seems to be at least some measure of agreement among most of the high-tech interests: The scope of inventions eligible for patents shouldn't be overly expansive.

The worry seems to be that such a set-up could block development of new technologies, lead to an explosion of expensive litigation bred by inadvertent infringement, and--since a patent is an exclusive right to an invention that can be licensed at the patent holder's pleasure--stifle competition.

IBM, which boasts one of the largest patent portfolios, was especially pointed in its brief. The company that took heat years ago for patenting a method to determine who uses the bathroom next--an idea it ultimately dropped--argued that processes should be patentable only if they produce "technologically beneficial results."

For instance, there's nothing wrong with companies obtaining patents on "mechanical, electrical, and computer-implemented inventions as card readers, touch screens, cash dispensers, statement printers, and antitheft mechanisms" for automated teller machines (ATMs), IBM wrote in its brief. But if someone is allowed to patent "abstract business methods, (such as) an inventor's claim to a process of performing teller-free transactions," others are arguably choked off from devising new methods within that space, which IBM contends harms "social welfare."

Software patents: Yea or nay?
Beyond that, the recommendations seem to be all over the map, with many of the companies using the case as a platform for voicing their views on the ever-thorny issue of software patents.

One Free Software Foundation-backed group--aptly called the End Software Patents Project--is using the case as a platform to argue that no form of software should ever qualify for a patent. Red Hat also argued that the "exclusionary objectives" of software patents conflict with the nature of the open-source system and open up coders to myriad legal hazards.

Others, like Microsoft, Dell, and SAP, argued that the court should hold that software and business methods deserve to be considered for patents--but only if they're more than just an abstract idea or concept and "operate upon something physical, be it uncured rubber, or electrical circuitry, or signals made up of electrons or photons or electromagnetic impulses." That in-between stance isn't exactly surprising, as all three companies said they own business method patents and are also frequently embroiled in lawsuits alleging they've infringed others' patents.

The Business Software Alliance, of which Microsoft and Dell are members, argued for an even broader reading. Software and "similar legitimate inventions" should remain patentable because overturning "settled" law in that area would "upset expectations in an area of rapid technological growth that is critical to our economy as well as our country's global competitiveness," the BSA wrote. If questionable patents arise, there are other aspects of patent law--that is, the requirement that inventions be novel, non-obvious, and useful--that can be used to weed them out, the group said.

Patenting "abstract ideas"
The attorneys for Bilski and Warsaw, for their part, argue that the patent in question does, in fact, include physical and tangible steps, not just ideas or mental processes. The inventors' supporters, including Accenture and American Express, also contend that an "open and neutral" patent system--including, for example, software patents--has allowed the U.S. economy to flourish and that jettisoning business-related patents will undermine that progress.

In weighing how to rule, the Federal Circuit judges will be returning to a 1998 appeals court case from their own court called State Street Bank & Trust v. Signature Financial Group, which concerned a patent for a mutual fund data processing system. That decision established that an invention is patentable if it produces a "useful, concrete and tangible result" and has some practical application.

Meanwhile, the number of applications for business method patents has grown by about 1,000 each year since 2005, the U.S. Patent and Trademark Office has reported. Last year, the office issued 1,330 business method patents. But about 85 percent of the applications received during the past three years have been rejected because they don't meet the standards of patentability, Patent Commissioner Jon Dudas told CNET News.com in a March interview.

An opinion in the Bilski case is expected during the second half of this year, although many legal experts predict the case won't end at the appeals court level. After all, the U.S. Supreme Court has displayed a fondness in recent years for snapping up patent-related disputes and could very well take on whatever outcome emerges in this case.

Some Supreme Court justices have already approached business method patents with a degree of skepticism. In their concurring opinion to the 2006 decision in a high-profile patent case involving eBay, Justices Anthony Kennedy, Stephen Breyer, David Souter, and John Paul Stevens seemed to be issuing a warning to courts to be on the look out for "the potential vagueness and suspect validity" of some business method patents.

Google is willing to fight Viacom all the way to the Supreme Court in the companies' legal battle over YouTube and pirated videos, but Viacom is taking a hard line of its own, executives from the companies said Wednesday.

David Eun, Google's vice president of content partnerships, told Dow Jones Newswires that Google has no plan to resolve the Viacom case outside court. "We're going all the way to the Supreme Court," Eun said. "We're very clear about it."

Separately, Viacom Chairman Sumner Redstone told Dow Jones he's standing up for broader principles.

"When we filed our lawsuit, we not only served our own interests, we served the interests of everyone who owns copyrights that they want protected," said Redstone. "We cannot tolerate any form of piracy by anyone, including YouTube...they cannot get away with stealing our products."

Viacom sued Google for "massive intentional copyright infringement" in 2007, seeking more than $1 billion in damages.

At stake in the fight is a key part of the Digital Millennium Copyright Act (DMCA), the 1998 law that shields Web site owners from copyright infringement involving material published by users. The "safe harbor" provision in the law can protect against infringement claims as long as copyrighted material is removed upon notification.

After the suit, YouTube launched an antipiracy tool that checks uploaded videos against the original content in an effort to flag piracy.

There's no mistaking who benefited from a federal-court decision to set licensing fees that three top Web services must pay songwriters and publishers for the right to stream their music.

But the question left unanswered is whether the losers also include consumers.

AOL, RealNetworks, and Yahoo may end up paying the American Society of Composers, Authors, and Publishers (ASCAP) $100 million as a result of a decision by a U.S. district judge to set the licensing fee for streaming music at 2.5 percent of adjusted music-use revenue.

"(The court's decision) is a victory for songwriters, composers, and publishers, and something they have been looking forward to for a long period," said John LoFrumento, ASCAP's chief executive. "In the past, we've settled with (Internet companies) at low rates. We wanted to encourage the growth of these businesses, but these businesses have matured...they have been using our members' music to attract people to their Web sites...it's time to compensate (our members)."

While none of the Web companies involved would comment on the judge's decision, a source close to the three sounded like the players on a baseball team after the other side just hit a walk-off home run.

"This wasn't good for us, to say the least," the source said, adding that the judge's order isn't yet final and that the three companies plan to continue fighting.

If the final fee structure looks anything like what is prescribed in the judge's written opinion, RealNetworks, Yahoo, and AOL would likely have to raise prices. It may also mean that the cost of doing business for anyone streaming music over the Web just went up.

"What this means to other licensees is, they now see what a standard benchmark fee should look like," LoFrumento said. "They now know what to expect from the rate court."

The three Web services had negotiated with ASCAP to obtain a license for unlimited play on the Web of any of the millions of songs in ASCAP's repertory. Following a stalemate, the two sides took their case to a rate court. The court's mission in the case was to determine a fair licensing fee.

The judge considered proposals from both sides. AOL, Yahoo, and RealNetworks wanted a multitiered plan with different rates, depending on the nature of the stream. For example, the three Web services wanted to pay 2.5 percent for on-demand audio, 1.7 percent for Internet radio, and .9 percent for music videos.

ASCAP scoffed at those figures. It said any structure should be set up to charge a percentage of a Web service's net revenue.

When it came to actual dollars, the two sides were worlds apart. Under the formula the Web services proposed, AOL and Yahoo would have paid ASCAP respectively $872,000 and $1.1 million for the year 2006.

Under ASCAP's plan, AOL and Yahoo would have paid $7.8 million and $7.3 million for the same year.

Jonathan Potter of Digital Media Association, a trade organization devoted to companies competing in online audio and video sectors, said the Web services involved absolutely want to fairly compensate songwriters and music publishers.

"We are disappointed, however, that the court ruled that online services' royalties should be based in part on service-wide revenue," Potter said, "(and) not simply on revenue directly attributable to music usage."

For more than a decade, Web site operators have enjoyed a broad legal shield against lawsuits filed over material posted by their users, which has let user-driven sites like YouTube and MySpace.com flourish.

But a pair of recent rulings by federal district judges have chipped away at that protective shield. If those decisions are upheld on appeal, and if more judges follow suit, Web site operators and Internet service providers may find themselves compelled to police what their users post--or face the unsettling prospect of being held liable for the contents.

"We fear these cases might inspire a wave of new lawsuits that, even if ultimately dismissed, will create a chilling effect," said Sophia Cope, an attorney for the Center for Democracy and Technology, which has filed briefs supporting broad immunity and gets some financial support from a number of prominent Internet companies. "Many small start-up Web services might find that the costs of defending such suits--in terms of time and legal fees--are too much to bear."

The legal shield comes from a portion of the 1996 Telecommunications Act, which generally says Web sites aren't liable for their users' posts or other content they provide. That has immunized the dot-com industry from a wide range of civil lawsuits spanning everything from defamation to--in a case decided last year involving MySpace--lawsuits alleging that better child safety and age verification measures should have been put into place. (Individual "content providers" who post defamatory comments, upload inflammatory videos of their own creation, and the like, are still vulnerable to lawsuits.)

In early test cases such as Zeran v. AOL, courts have interpreted Section 230 of the Telecommunications Act to supply fairly broad immunity for Web hosts. That trend has largely continued in recent years, with judges finding, for example, that dating site Matchmaker.com was immune from a lawsuit involving an unknown prankster's phony profile impersonating actress Christianne Carafano, and that Craigslist wasn't responsible for allegedly discriminatory housing ads posted by users of the online classifieds site.

Perhaps ironically, the recent decisions that seem to be taking a narrower interpretation of Section 230 also stem from disputes over online dating and roommate matching.

'Bogus' FriendFinder profiles
The first of the two cases pits an anonymous New Hampshire woman against the FriendFinder Network, an operator of dating sites--some sexually explicit--including AdultFriendFinder.com and LesbianPersonals.com. Jane Doe accused FriendFinder of causing her various sorts of harm by allowing "bogus" sexually explicit profiles that could be "reasonably identified" as portraying herself to be published without her knowledge by someone else to its Web properties, as well as in snippets in FriendFinder advertisements on search engines and other third-party Web sites.

FriendFinder Network (screenshot shown here) was accused of allowing an unknown user to post a "bogus," sexually explicit profile of a New Hampshire woman on its online dating Web sites and in its ads.

A recent ruling by U.S. District Judge Joseph LaPlante in New Hampshire federal court on March 27 partially sided with FriendFinder, ruling against some of Jane Doe's claims against the company.

But LaPlante also differed from previous opinions in one important area. He refused to dismiss Jane Doe's argument that FriendFinder's republication of her profile invaded her "intellectual-property rights" under New Hampshire law. She claimed to be concerned about violations to her "right of publicity," which says an individual generally has the right to control how his name, image, and likeness is used commercially--and the court ruled that Doe's argument fell into the category of intellectual-property law.

That point is crucial because, when writing Section 230, Congress explicitly said its shield does not extend to lawsuits "pertaining to intellectual property." Until Judge LaPlante's order, courts had viewed that only as applying to federal claims mostly about copyrights and trademarks--and not state lawsuits over more amorphous publicity rights.

The reasons this could create headaches for Web publishers are twofold, said Eric Goldman, director of the High Tech Law Institute at Santa Clara University. For one thing, laws governing "rights of publicity" are not uniform across the states, which means e-commerce companies would be forced to align their operations with the most restrictive state's law.

And unlike in copyright or trademark cases, where there are fairly well-established rules governing how Web sites are supposed to respond to such infractions posted by third parties, "we don't know what rules are; we have no good case law" on rights of publicity, Goldman added.

Others fear that the ruling could prompt legal mischief. For instance, courts have ruled in the past that Web publishers can be immunized for posts that tarnish someone's reputation--a practice typically covered by defamation laws. CDT's Cope said she's concerned the intellectual-property exception will "swallow the rule," inspiring other courts to allow plaintiffs to slip in defamation claims and others under the guise of "intellectual property" claims.

Judge LaPlante's ruling, however, is not the end of the case. The court can now hear evidence on whether to agree with Jane Doe's remaining allegations. Judges aren't exactly known for changing their minds, once they've made a decision. But Ira Rothken, the lead attorney defending FriendFinder in the case, said he believes any subsequent appeal to the 1st Circuit would result in a finding that state-level intellectual-property laws, too, are subject to the Section 230 exemption.

Roommates.com's matchmaking woes
The other Section 230 saga concerns a Web site called Roommates.com, which allows users to set up profiles and seek roommate matches in thousands of U.S. cities. One of the ways the site attempts to spark matches is through requiring members to complete questionnaires that stock their profiles with a number of personal details, including their gender, sexual orientation, and whether they have children, according to court documents.

Roommates.com found itself on the receiving end of a lawsuit, in part because it asks users to indicate the sexual orientation they're seeking in would-be roommates.

Those personal queries drew a lawsuit from the Fair Housing Councils of the San Fernando Valley and San Diego, which claimed they violated the federal Fair Housing Act and California state housing discrimination laws. A federal district sided with Roommates.com's argument that Section 230 immunized it from such claims, but a divided 9th Circuit Court of Appeals recently disagreed, and that's why implications for other Web publishers could arise. (Here's a PDF of that 54-page opinion.)

The majority, led by Chief Judge Alex Kozinski, ruled that Roommates was not covered by Section 230's shield because it helped "to develop unlawful content" through its requisite questionnaire, which featured preprogrammed drop-down menus containing various possible answers for the allegedly offending questions. The judges also said that because Roommates.com engineered its site in a way that allows site users to search for and sort roommate listings based on those criteria, it's an "information content provider," which, by law, isn't immune to Section 230.

"If such questions are unlawful when posed face-to-face or by telephone, they don't magically become lawful when asked electronically online," Kozinski wrote. "The Communications Decency Act was not meant to create a lawless no man's land on the Internet." (The CDA, the "antiporn" sections of which were struck down by the U.S. Supreme Court on First Amendment grounds, was included in the 1996 Telecommunications Act.)

By contrast, the same judges found that it was no problem for Roommates to ask users to write an open-ended summary of what they're seeking in a roommate, since that request was "neutral."

If that way of thinking is ultimately applied more broadly, the millions of Web sites that routinely use prompts and drop-down menus to solicit, publish, and sort information from their users could be forced to change their practices or face new legal liability, the three dissenting judges argued.

"The majority's unprecedented expansion of liability for Internet service providers threatens to chill the robust development of the Internet that Congress envisioned," Circuit Judge M. Margaret McKeown wrote for the dissent. "Instead of the 'robust' immunity envisioned by Congress, interactive service providers are left scratching their heads and wondering where immunity ends and liability begins."

This case was closely watched, leading Amazon.com, Google, the Electronic Frontier Foundation, the American Civil Liberties Union, and a number of news organizations to file briefs with the court in support of Roommates. They argued that a decision in favor of the fair-housing groups would choke innovative new Web services and stifle free speech in online forums--particularly the "sortable" user ratings and feedback at sites like eBay and Amazon.com, and "tagging" features at sites like YouTube and Flickr.

One attorney who analyzed the case said the majority's stance, which clearly took aim at business practices considered unfriendly to fair-housing laws, said the case may represent a narrowing of the law but could actually be good for Web site operators who value Section 230.

"Imagine, shall we say, a 'progressive' congressman standing up in Washington and saying, hey, with this Section 230 scheme, we give a license to Web site operators to run hate mills, build up bastions of bigotry, and sanctuaries for racism," Evan Brown, a Chicago-based attorney who focuses on Internet law, wrote in a recent blog post. "In short, a Roommates.com victory could have given a battalion's worth of ammunition--in the form of emotional, irrational, rhetoric--to Section 230's critics. Some in Congress would have called for its head."

Craigslist.org can't be held liable for discriminatory ads posted on its site, according to a court ruling released Friday.

A group of Chicago lawyers had sued the online classifieds site over real-estate ads that stated discriminatory preferences such as "no minorities" or "no children." The group, the Chicago Lawyers' Committee for Civil Rights Under Law, argued that such ads are prohibited under the Fair Housing Act and that Craigslist should be held liable for allowing them to be posted on its Web site. Chief Judge Frank Easterbrook of the 7th U.S. Circuit Court of Appeals disagreed, likening Craigslist to courier services such as FedEx or UPS, which do not read or screen the messages they deliver. Easterbrook said it would be expensive and problematic for Craigslist to filter messages before they were posted.

The ruling (PDF) is good news for the many Web sites that host public forums, giving them further legal protections against liability claims based on content posted by their users, but is an obvious setback for proponents of fair housing online and off.

The U.S. Supreme Court on Tuesday declined to intervene in an appeal of a lawsuit accusing the National Security Agency of illicit spying on millions of Americans communicating with foreigners.

The American Civil Liberties Union, which filed suit in 2006 on behalf of journalists, scholars, criminal defense attorneys and Islamic-Americans, had sought review of a 2-1 decision last summer by the U.S. Court of Appeals for the Sixth Circuit to throw out its case.

The ACLU obtained a victory at the trial court level in August 2006. A federal judge in Michigan ruled that the NSA's once-secret terrorist surveillance program, which operated without court orders, "ran roughshod" over Americans' constitutional rights Americans and violated federal wiretapping law.

But the Sixth Circuit overturned that ruling on narrow procedural grounds. It determined that the ACLU and the plaintiffs didn't have legal standing to bring the suit in the first place because they hadn't shown adequate evidence that they have been "personally" subject to the eavesdropping program. The judges did not, however, take a position whether the spying program itself was legal.

The Supreme Court's decision, which arrived without comment, lets that opinion stand.

"Although we are deeply disappointed with the Supreme Court's refusal to review this case, it is worth noting that today's action says nothing about the case's merits and does not suggest in any way an endorsement of the lower court's decision," said Steven Shapiro, the ACLU's legal director.

The Supreme Court's inaction does not, however, directly affect about 40 cases pending before a federal judge in the Ninth Circuit appeals court in San Francisco.

One of them is the high-profile suit filed by the Electronic Frontier Foundation against AT&T, which is accused of opening up its network illegally to the NSA. That case and others like it have prompted a fierce fight in Congress over whether to immunize corporations who assisted government spies from such legal action.

The U.S. Supreme Court has declined to weigh a dispute that could affect how taxes show up on Americans' cell phone bills, dealing a setback to wireless companies.

The case at hand, which pitted Sprint Nextel and T-Mobile USA against state utility regulators, centers on whether states should be allowed to forbid wireless carriers from breaking out various state and local taxes as line-item fees on a customer's bill.

Sounds like a simple enough matter, but it has actually stirred up quite a fuss.

The wireless companies, naturally, maintain they should be able to establish a visible separation between the base prices of their services and the fees required by various regulators. States and localities have increasingly been passing laws prohibiting those line items expressly in order to "hide" arguably unpopular taxes and fees from consumers, Sprint Nextel and T-Mobile said in their brief to the high court.

And because taxes and fees vary by locale, building them into the base price would make it impossible to advertise one price to all customers nationwide, they contended--and therefore make it harder for consumers to compare prices among wireless carriers.

But state utility regulators have countered that the wireless companies are missing the point: The fees and taxes they impose are generally meant to fall on the wireless carriers themselves, not on consumers. Wireless companies should simply raise their rates to reflect that distinction, they argue.

An example of one such law, according to the court filings, is in Indiana, which imposes a tax on the "gross receipts" of corporations in the state. Indiana passed a law insisting that wireless carriers not pass on the tax to their customers as line-item fees. They are, however, allowed to raise their base rates accordingly.

The Federal Communications Commission has already sided with the wireless carriers. It issued an order in 2005 that said states can't impose such restrictions, citing a chunk of federal communications law that says wireless carriers must disclose all "rates charged." But the U.S. Court of Appeals for the 11th Circuit disagreed, saying there's nothing in that law to stop states from regulating how line item fees show up on wireless bills.

Without comment on Tuesday, the nation's highest court said it wouldn't hear an appeal by wireless carriers to overturn the appeals court decision. The U.S. Department of Justice had urged the high court not to take up the case because the appeals court had already sent the decision back to the FCC for further review. That means the fate of Americans' cell phone bills is now effectively back in the federal regulators' hands.