May 16, 2012
Groupon Defeats Trademark Challenge--Groupion v. Groupon
By Eric Goldman
Groupion, LLC v. Groupon, Inc., 2012 WL 1655728 (N.D. Cal. May 8, 2012).
Groupion makes CRM software. Groupon is the leading online daily deals provider. A year ago, Groupion sued Groupon for trademark infringement. Last Fall, the judge denied Groupion's preliminary injunction request, signalling that Groupon could win with a summary judgment motion. Groupon followed through with the motion, which the judge granted, easily rejecting all of Groupion's contentions. The judge also rejected Groupion's cancellation request and independently ruled that Groupion wouldn't be entitled to monetary relief even if it won.
The opinion doesn't break a lot of new ground from the preliminary injunction dismissal. The court reinforces the linguistic differences between Groupion and Groupon, The court also rejects the similarity between the companies' offerings, even though Groupon added some tools (Groupon Rewards and Groupon Scheduler) that have some CRM-esque aspects. The court says "Despite the fact that Groupon now provides its business customers some information about the consumers who purchase its products through Groupon, and provides a calendaring program, the Court finds that this small potential overlap of services does not render Groupon's and Groupion's products to be related to the point that consumers would be confused as to their source."
In a footnote, the court says it's irrelevant that Google auto-corrects Groupion into Groupon:
Groupion, again without any citation to supporting evidence, argues that because searches on the Google search engine for “Groupion” produce results from “Groupon,” the companies share similar marketing channels. This argument does not assist Groupion. In addition to Groupion's fatal failure to cite to supporting evidence, the fact that a third party might suggest an alternative search based on the similarity of the spelling of Groupion and Groupon does not show that the two companies use similar means of marketing their products and services.
I defended this point about the irrelevancy of third party associations in my 2005 Deregulating Relevancy article.
It's hard to draw big lessons from a case like this, especially when there was a whiff of trademark trolling in Groupion's efforts. I have a more insightful lesson from trademark trolling coming in an imminent blog post.
Posted by Eric at 08:48 AM Permalink | Trademark | TrackBack (0) | Printable Version
May 15, 2012
Granick on CISPA's Deficiencies (With Some of My Own Comments)
By guest-blogger Jennifer Granick (with comments from Eric)
[Eric's introduction: Some guest visitors to the blog need no introduction, and that surely describes Jennifer Granick (her Wikipedia page). She's cast huge shadows over cyberlaw in her various stints, including being a leading criminal defense attorney for technology crimes, an EFF attorney and director of Stanford's Cyberlaw Clinic. I'm so glad Jennifer was willing to share her unique perspective on CISPA. I have some remarks after hers. Jennifer has also posted a supplemental line-by-line commentary of CISPA.]
The Cyber Intelligence Sharing and Protection Act ("CISPA") is the latest example of a depressingly common situation in Washington DC -- well-meaning legislators unfamiliar with technology try to rush through a statute about a high-profile Internet issue (here, cybersecurity). Proponents of the bill say they want to faciliate information sharing between the federal government and the private sector. What they don't seem to understand is that existing laws already permit most kinds of cybersecurity information sharing. In their eagerness, the supporters of CISPA would undermine our existing system of accountability for sharing of private data and, by doing so, cause a number of unintended consequences that would harm both state and federal efforts to protect consumer privacy.
CISPA's Unintended Consequences: I firmly believe sharing cybersecurity information is a public good, which is why I have made a career of representing security professionals and hacker hobbyists who want to investigate and report on vulnerabilities. But CISPA (1) fails to comprehend the ways in which existing laws allow sharing, but with accountability; (2) runs roughshod over federal and state laws protecting privacy; (3) could inadvertently immunize retaliatory hack-back security techniques; and (4) creates an "inner circle" of private entities willing to share and share alike with the government, but leaves disfavored service providers in the cybersecurity dark.
(1) Current Law Does Not Interfere With Sharing for Security Purposes: The vast majority of what security professionals consider cybersecurity information is not personally identifing or protected from sharing by any law. Attack signatures, vulnerabilities, exploits and other classic computer security data are freely shareable. For the subset of data that may identify a particular individual, existing laws allow sharing. The most relevant laws, the Wiretap Act and the Electronic Communications Privacy Act, allow a provider to collect and share data for protection of the providers' rights or property. It is true that such sharing is subject to minor but long-standing privacy-enhancing conditions* which CISPA would simply dispose of.
[*FN: My line by line analysis of CISPA (link) highlights where in the text safeguards and dangers would be codified. I strongly oppose this legislation, but can envision a much better, streamlined, privacy respecting, bill that accomplishes the purported cybersecurity purpose.]
As for information protected by HIPAA, VPPA or FERPA, one would not ordinarily think such data is subject to CISPA disclosure and use, except that CISPA specifically calls out sensitive health, educational, firearms, library and bookstore records as the kind of information that private entities can be expected to disclose. Otherwise private information, including video rental records, book rentals, newspaper subscriptions, online reading or data protected by state consumer protection laws (like utility usage records) may freely be shared under CISPA, despite existing privacy rules and sharing safeguards.
(2) State Governments Should Oppose CISPA: States, especially California and New York, protect consumers and consumer privacy with statutes regulating the collection, use and disclosure of sensitive information. Such California laws include electronic surveillance statutes, Shine the Light notifications, Smart Meter utility data protection, the Financial Information Privacy Act, the Reader Privacy Act, Security of Personal Information Law and more. While a comprehensive review of state consumer protection rules that could be preempted by CISPA is beyond the scope of this blog post, it isn't hard to see how California, New York and other states might have serious, perhaps fatal, reservations about CISPA as it currently stands.
(3) CISPA Could Categorically Immunize Even Reckless, Privacy Invasive or Damaging Cybersecurity "Active Defense" Techniques. The definition of cybersecurity system is broad enough to include common "active defense" techniques like remote exploit of an attacking system in order to collect data about the attack, or denial of service attacks to take the offending system offline. For more discussion of those kinds of defenses, see this article in The Atlantic. The statute then categorically immunizes good faith use of such cybersecurity systems. So entities that recklessly use active defense or "hack back" technologies to exploit, disable or destroy attacking machines, even when those machines are innocent zombies controlled and misused by the actual attacker, have no incentive to behave responsibly.
(4) The Cybersecurity One Percent: CISPA sets up a heirarchy of network and service providers. At the bottom are those owned and operated by individuals, who get nothing out of the statute. Next are those entites the government doesn't feel like sharing with, for whatever reason--including the retaliatory motivation that the company hasn't been forthcoming with its own cybersecurity (and customer) data. At the top are the golden firms that get preferrential treatment in the form of state-of-the-art security information. The big businesses that support CISPA probably think they are going to be in the room and get the shiny apple. But CISPA instantiates inequities that the computer security community has been managing for over twenty years, problems which inevitably arise from secretive and selective distribution of important security information. See e.g. Schneier, "Full Disclosure of Security Vulnerabilities a 'Damned Good Idea" (Jan 2007); Microsoft Security Response Center: Announcing Coordinated Vulnerability Disclosure (July 22, 2010); National Infrastructure Advisory Counsel, Vulnerability Disclosure Framework (January 13, 2004); Andy Greenberg, Meet The Hackers Who Sell Spies The Tools To Crack Your PC (And Get Paid Six-Figure Fees), Forbes, March 21, 2012. CISPA proponents neither understand nor address the complexities of acheiving the worthy goal of cybersecurity information sharing.
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Comments from Eric
Many commentators have drawn parallels between CISPA and SOPA, even though they putatively address very different issues (cybersecurity and IP infringement, respectively). I'd like to unpack some of the parallels. The most obvious parallel between the two laws: who thinks up crazy shit like this? As a prize for their creative thinking, the architects of CISPA and SOPA should get a one-way ticket away from Washington DC. Two other parallels between CISPA and SOPA:
1) No use case. I never understood SOPA's use case. Only one target was named: The Pirate Bay. However, the way it was drafted, SOPA wouldn't have applied to The Pirate Bay. So if SOPA was intended to shut down The Pirate Bay but the statutory drafting didn't reach that far, then the statute lacked any clear justification--and especially no payoff that would justify its multitudinous adverse collateral consequences.
Similarly, I'm not clear what problem CISPA is designed to solve. Indeed, some have said CISPA is a solution in search of a problem. If we can't define the problem clearly and succinctly, it's a good sign that either there's no justification for the law, or (more likely) someone is gaming the legislative system for their own benefit.
CISPA and SOPA have another parallel on this front: we don't understand the use case because the proponents never thought they had to justify the statute. In SOPA's case, the copyright owners expected members of Congress to pass the law without serious questions, which almost happened. When the copyright owners have so many financially supported friends in the corridors of power, they don't need to provide specific rationales for their requests; it's simply enough that the copyright owners wanted it, and their patrons are expected to deliver the quid-pro-quo on demand.
CISPA may not been such a blatant case of rent-seeking, but it too was designed to proceed without opposition because it was part of an anti-cyberwar effort. For reasons that remain entirely unclear to me, many DC insiders apparently have convinced themselves that we are waging a surreptitious cyberwar that the bad guys are winning. Perhaps there really is a cyberwar raging behind the scenes, but evidence of a cyberwar sure hasn't leaked outside the DC insider community. This makes me wonder if maybe there's a little too much paranoia running around in DC. Or, maybe there's rent-seeking behind the efforts to hype the cyberwar threat?
Worse, to the extent CISPA is an anti-cyberwar effort, it is poorly designed for that effort. At minimum, its definitions are way too broad to address just cyberwar concerns. One of my biggest objections to CISPA is that it defines cybersecurity issues to include ordinary Internet activities such as competitive scraping and sharing of copyrighted materials. The broad sweep of the bill only reinforces the lack of a clear use case about the problem it's trying to solve.
2) Hack of the Internet's infrastructure. SOPA attacked the Internet's basic infrastructure. Putting aside the poorly conceived domain name cutoff provisions that would have undermined the DNS's stability, SOPA was designed to deputize intermediaries to resolve problems they had little financial incentive to handle carefully. The result would be a massive circumscribing of socially legitimate behavior by intermediaries asked to intervene in problems they didn't care about.
In a different way, CISPA also hacks up the Internet's infrastructure. Over the decades, we have developed a delicate system of checks and balances on the government's ability to monitor its citizens' behavior. CISPA would completely gut that system, giving the government virtually any online information it wanted whenever it wanted it without meaningful restrictions on the government's ability to misuse the information. Thus, CISPA engages in the worst kind of Internet exceptionalism by turning the Internet into an all-you-can-eat smorgasbord buffet of information for ever-curious government officials, while presumably a more robust checks-and-balance system would still be in place offline. Making the Internet worse is not what we as Internet users want!
The resulting public outcry against SOPA and CISPA demonstrates that. The public at large does not want technologically clueless members of Congress messing up the Internet's infrastructure for uncertain/unclear payoffs. We give a lot of deference to Congress to screw things up, but when it comes to wrecking the Internet, THAT'S worth fighting against.
Posted by Eric at 02:07 PM Permalink | Copyright , Derivative Liability , Privacy/Security | TrackBack (0) | Printable Version
A Twitter Exception for Defamation?
[Post by Venkat Balasubramani]
William Charron pubished a short piece for the Berkeley Journal of Entertainment and Sports Law that caught my eye (“Twitter: A “Caveat Emptor” Exception to Libel Law” [pdf]). His central point:
Twitter’s characteristics and limitations should negate any expectation of a “reasonable reader” that Twitter is a repository or stand-alone facts and unassailable “truth.” To the contrary, Twitter is a free-for-all marketplace for stream-of-consciousness thoughts and exclamations, and for unguarded and unedited personal observations, discussion, and entertainment.
Charron highlights the difference between fact and opinion in defamation law generally, and notes that courts have historically looked to context in determining whether something is reasonably understood to be “figurative” or “hyperbolic.” According to Charron, courts have taken this approach when reviewing defamation claims based on statements in chat rooms, message boards, and blogs. As one example, Charron cites to Sandals Resorts International Ltd. v. Google, where the court noted that:
Readers give less credence to allegedly defamatory remarks published on the Internet than to similar remarks made to other similar [and in particular to] posted remarks on message boards in chat rooms [and] blogs.
Charron does account for the possibility that a Twitterer “could find a way in 140 characters . . . to libel someone,” and in these circumstances a “there should be no “automatic immunity from a claim of libel.”
__
It’s a short piece that raises interesting issues.
My read of the situation is that it’s too early to tell whether courts are more apt to view statements online (and on Twitter) as more likely to be opinion than fact. Courtney Love’s lawyers telegraphed that they would rely on a defense along these lines, but the case never went to trial so a court hasn’t squarely addressed the question and addressed some of the surrounding issues. (As reported by Eriq Gardner, the court tentatively dismissed Love's defense: "Judge Rejects Courtney Love's Defamation Theories in Twitter Lawsuit.") For other cases relying on this theory in the context of online posts, in addition to Sandals Resorts, see DiMeo v. Max and Finkel v. Dauber.
One question this raises, is: what perspective does the court use when it evaluates context and makes the determination of whether something is hyperbole or would reasonably be viewed as a statement of fact? A reasonable person who is familiar with and who uses Twitter, or someone who is not familiar with the nuances of Twitter, its shorthand, and culture? I would guess the latter, given that tweets are often publicly disseminated and reported on outside the ecosystem, but if it's the former, litigants may have their work cut out form them in educating judges on the nuances of Twitter.
A big contingent of Twitter uses it to banter and snark, but at the same time, it’s become a go-to source of factual information. While context is undoubtedly important, a tweet should have the capacity to defame in the same way that an email, Facebook post, or an off-hand comment does. I’m not saying that Charron is arguing for the adoption of a default rule of immunity based on opinion, but I can’t see courts going this route anyway. It would be an unwarranted case of "Twitter exceptionalism" to adopt this rule for Twitter but not for other online communications generally.
A few related points.
Defamation by Tweet raises the question of whether linking to something that is defamatory is itself defamation. I’m not aware of a definitive answer to this question, although in the pre-Twitter context, republication of a defamatory statement without sufficient qualification can be defamatory. How about defamation by Retweet? (You know there’s a reason why everyone has that “RTs don’t = endorsements" in their bio!) This is probably getting too far in the weeds, but should it matter whether someone uses the old or the new style Retweet? (It's worth noting that there's a likely Section 230 defense here.)
It’s also worth looking at the online threat cases to see whether courts have treated online threats different from off-line threats. I’ve blogged about a slew of cases involving convictions for online threats, and courts in those cases don’t seem very willing to look at the context of an alleged threat and conclude that a reasonable person familiar with the context would not have viewed the statements as threats. (See, e.g., US v. Jeffries (currently on appeal)); US v. Stock (craigslist threats) and Holcomb v. Virginia; but see US v. Cassidy ("indictment for Twitter harassment is unconstitutional")).
Finally, there's the issue of damages. Jeffrey Hermes has a great post at Citizen Media asking how we "should measure damages for defamation over social media." Pointing to the recent $13.78 million jury verdict based on "an extended campaign of [online] defamation," Jeff notes that the verdict in that case does not allow us to measure what portion was tied to reputational injury and what portion was intended to redress emotional damages. Turning to the reputational injury, he asks some interesting questions about how to evaluate damages when the defendant makes repeated defamatory statements (e.g., is there some loss of credibility to the poster who makes 100 negative posts, as opposed to 10?).
Posted by Venkat at 10:05 AM Permalink | Content Regulation | Printable Version
May 14, 2012
The Dangerous Meme That Won't Go Away: Using Copyright Assignments to Suppress Unwanted Content--Scott v. WorldStarHipHop
By Eric Goldman
Scott v. WorldStarHipHop, Inc., 2012 WL 1592229 (S.D.N.Y. May 3, 2012)
Copyright law wasn't designed as a privacy enhancing doctrine, but sometimes plaintiffs try to repurpose copyright law anyway. This case is an interesting illustration of how copyright law might be used to reverse-engineer a right to forget, using legal tactics not dissimilar to those advocated (and later renounced) by Medical Justice. As such, this case provides an early warning sign of an emerging attack on publicly available truthful information using copyright law chicanery.
In November 2010, Scott's girlfriend and ex-girlfriend got into fisticuffs in a classroom. Scott joined in the melee and hit his ex-girlfriend multiple times. A classmate, Seymour, videotaped the altercation. Seymour then sent the video to the WorldStar website, which posted the video as "Disgraceful: College Fight In NYC Breaks Out Between A Guy, His Girl & Another Girl In Class! (Man Strong Arm's The Student. Hitting Her With Body Shots)." Unfortunately, the opinion is cryptic about whether Seymour posted the video directly or submitted the video to WorldStar for their posting--it would make a difference to the copyright analysis. The video appears to be offline now.
Then, things get really interesting. In December 2010, Seymour assigned the video's copyright to Scott. The opinion doesn't say why. It could be that Scott paid Seymour for this assignment as a cheap way to get legal control over the video; or it could be that Scott coerced Seymour into transferring the copyright to settle a lawsuit threat. Once armed with the copyright, Scott sent 512(c)(3) takedown notices to the websites hosting or linking to the video. See, e.g., this one to Twitter. Scott sent a defective takedown notice to WorldStar, which didn't respond in 12 days, at which point Scott sued. WorldStar brought a 12(b)(6) motion to dismiss. The court rejects the dismissal motion for the copyright claim and grants it for the publicity rights claim.
Copyright. WorldStar argued that Seymour granted it a license to the video before Seymour's copyright transfer to Scott, and thus Scott's acquisition of the video was subject to the then-existing license. The court rejects this argument because WorldStar didn't adequately show it had the required written license (required by 17 USC 205(e) necessary to withstand a subsequent acquisition).
This reinforces the importance of the facts around how WorldStar obtained the video. The opinion doesn't indicate if Seymour clicked through a mandatory non-leaky clickthrough agreement. If WorldStar used a mandatory non-leaky clickthrough agreement, then I'd argue (per UETA/E-Sign) that in fact there was a written license agreement in effect before the Seymour-Scott transaction. However, for WorldStar's argument to work, the license would need to be irrevocable. Otherwise, even if the license survived the acquisition, Scott can simply revoke the license post-acquisition. So while I think most UGC websites will have a "written" license sufficient to withstand the 205(e) attack, I think most UGC websites also don't have strong enough EULA provisions about retaining UGC once posted to avoid this attack. Note that users' rights to remove the videos they uploaded might be located in either the EULA or privacy policy, so both documents would need to be reviewed to reach a conclusion.
WorldStar also argued that Scott sent a defective 512(c)(3) takedown notice, and thus it never got the requisite knowledge of infringement. However, WorldStar didn't argue that it requested Scott resubmit a compliant notice as possibly required by 512(c) (given the nature of the alleged notice defects), and thus WorldStar can't get a 12(b)(6) dismissal on this point.
Publicity Rights. Scott's New York state publicity rights claim fails because Scott didn't allege WorldStar used the video for advertising purposes, and WorldStar's other activities were protected under the state law's newsworthiness exception. While dismissal is the right outcome, relying on the newsworthiness exception is a little disquieting. The newsworthiness exception applies often in content lawsuits (see, e.g., Parisi v. Sinclair and the trademark case BidZirk v. Smith) but not always. See Fraley v. Facebook as an example of how the newsworthiness exception has its limits. A much better grounds for dismissal would be the lack of commerciality in the video; Seymour had no obvious commercial interest in the video, and WorldStar had no more commercial interest in the video's "editorial content" than an ad-supported newspaper has a commercial interest in its editorial content.
Implications. This lawsuit provides a protocol for folks trying to suppress truthful negative information--acquire the copyrights to the content containing the unwanted information, and then use the newly created threat of copyright infringement to force that information off the Internet. While this is a disconcerting protocol, it probably won't work in all circumstances. For example, the protocol probably works better for visual/aural content than purely textual content because (a) people need to see/hear some things with their own eyes/ears, and (b) it's much easier for others to extract and repeat textual information without running afoul of copyrights. Nevertheless, the post-publication acquisition protocol works even better than Medical Justice's now-retired pre-publication acquisition approach because it doesn't rely on legally dubious pre-assignments of not-yet-extant works, plus it can be activated only in response to specific problematic content. Thus, we need to vigilantly monitor the ecosystem for potential abuses of this protocol.
UGC sites (and especially review sites) could undercut the protocol by restricting users' ability to take down content in response to legal duress. Ripoff Report famously provides its authors with no power to delete their reviews, an aggressive and sometimes questionable move that does avoid the problems identified here. If a blanket restriction on users' editing/deleting of their own content is too strong, UGC sites could limit this attack by restricting editing/deleting if the author assigns/transfers the copyright in the work, i.e., a kind of springing conditional irrevocability to the user's license to the UGC site if the user transfers the copyright. I doubt many UGC sites will undertake such an effort now, but if we see widespread misuse of the protocol, UGC sites should undertake more drastic measures to preserve their sites' integrity.
For more on the social values that this protocol threatens, see my essay on the Regulation of Reputational Information.
Posted by Eric at 09:15 AM Permalink | Content Regulation , Copyright , Derivative Liability , Licensing/Contracts , Publicity/Privacy Rights | TrackBack (0) | Printable Version
May 12, 2012
New York Judge *Slams* Bittorrent Copyright Plaintiffs – K-Beech; Malibu Media; and Patrick Collins v. Does
[Post by Venkat Balasubramani]
K-Beech, Inc. v. Does 1-37, CV 11-3995 (E.D.N.Y.)
Malibu Media, LLC v. Does 1-26, CV 11-1147 (E.D.N.Y.)
Malibu Media, LLC v. Does 1-11, CV 11-1150 (E.D.N.Y.)
Patrick Collins, Inc. v. Does 1-9, CV 11-1154 (E.D.N.Y.)
Order & Report & Recommendation (May 1, 2012)
A trio of bit torrent plaintiffs were smacked around (somewhat brutally) by a federal judge in New York last week. The order addressed requests for early discovery filed by plaintiffs in three separate copyright lawsuits involving approximately 50 Doe defendants. It also addressed the requests of Doe defendants to quash subpoenas which were issued in a fourth action after the plaintiff obtained leave to issue early discovery.
The order is scathing and takes more than a few shots at K-Beech’s “rambling motion papers [that] often lapse into the farcicial.”
End result: the court dismisses one case in its entirety, and cuts the remaining three cases down to one Doe defendant, finding that joinder is improper.
Here is a summary of the key points in the court’s order:
1. An IP address does not conclusively identify an infringer: the court says that unlike in a university setting or in earlier times, these days, given the proliferation of wi-fi, the fact that someone’s IP address was connected to allegedly infringing activity does not mean that the person whose IP address was used is the infringer. (“[A] single IP address usually supports multiple computer devices – which unlike traditional phones can be operated simultaneously by different individuals.”) Accord Johnson v. Microsoft Corp., 2009 WL 1794400 (W.D. Wash. June 23, 2009); in contrast, the FTC considers IP addresses to be personally identifiable information. (For what it's worth, more than a few courts have accepted the view--at least at the early stages of litigation--that an IP address identifies the putative infringer.)
2. Improper litigation tactics: at least one of the plaintiffs (K-Beech) engaged in improper litigation tactics. One of the Doe defendants contacted K-Beech to try to resolve the dispute. Apparently, K-Beech employed the usual threat that a defendant’s name could be tied to a porn lawsuit and persuaded the plaintiff to provide (under the auspices of settlement) “unfettered access to [Doe’s] computer . . . employment records [etc.]” K-Beech then failed to respond to the Doe defendant's communications regarding settlement. In response to Doe’s allegations, K-Beech’s counsel failed to present proof that it or its investigators didn't engage in this conduct. The court notes that Doe’s experience mirrors the experience of at least one other Doe defendant in a file-sharing case in New York. The court is not happy:
[t]his course of conduct indicates that the plaintiffs have used the offices of the Court as an inexpensive means to gain the Doe defendants’ personal information and coerce payment from them.
3. No copyright registration: the same plaintiff who engaged in the tactics referred to above did not have an actual copyright registration—it sought to rely on an application for registration (which is not sufficient in the Second Circuit). Although K-Beech was smacked down for this reason in another case in New York, it tried to remedy this by adding “conclusory trademark claims.” [??] When K-Beech's briefing veered into discussing reputational harm from unauthorized downloads, the court in a footnote points out that the owner of K-Beech doesn’t necessary have the most stellar reputation:
it is worth noting that the owner of K-Beech Inc. (and apparent inspiration for the K-Beech mark) is Kevin Beechum . . . . It appears that this is the same Kevin Beechum who testified in federal prosecutions about his experience vandalizing adult retail video stores to help extort protection payments from their owners.
D’oh!
4. Joinder is inappropriate: the court says that plaintiffs should not be able to sue multiple defendants in the same suit. Plaintiffs tried to rely on the “swarm” theory--which has been accepted by some courts and rejected by others--under which file-sharing defendants who were a part of the same interactions can be sued together in the same lawsuit. Here, the court notes that plaintiffs’ own allegations undermine their swarm theory. For example, the downloads were often weeks or months apart:
even assuming that the John Does are the actual infringers, the assertion that defendants were acting in concert rests upon a thin reed.
The court declines to exercise its discretion to join the Doe defendants together.
5. Plaintiffs trying to avoid separate filing fees: the court notes that plaintiffs have avoided more than $25,000 in filing fees by filing mass-defendant lawsuits, as opposed to suing the Doe defendants individually. When you take other cases in the same district into account, this amount is closer to $100,000. (The court notes that this approaches millions when the suits nationwide are considered.)
6. Don’t try to take the moral high-ground, porn plaintiffs:
In its papers, counsel for K-Beech equate its difficulties with alleged piracy of its adult films with those faced by the producers of the Harry Potter books, Beatles songs and Microsoft software, and compare its efforts to collect from alleged infringers of its rights to the efforts of the FBI to combat child pornography. In an ironic turn, the purveyors of such works as “Gang Bang Virgins,” explain how its efforts in this matter will help empower parents to prevent minors from watching “movies that are not age appropriate.” . . . It is difficult to accord plaintiff, which features “Teen” pornography on its website, the moral high-ground in this regard.
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Ouch. As mentioned above, the court dismisses K-Beech’s lawsuit sua sponte in its entirety. The dismissal is without prejudice, but K-Beech should think twice about filing another file-sharing lawsuit in New York. The other defendants can pursue cases against defendants on an individual basis (they must file separately), and the Does (other than unlucky Doe No. 1) are dismissed from the three lawsuits. The court appears open to appointing counsel from its pro bono panel for Doe No. 1 (and I’m guessing future Doe plaintiffs).
There are a slew of these lawsuits pending around the country so it’s tough to say anything definitive, but courts certainly seem to be reaching the boiling point with bittorrent plaintiffs (the abusive litigation tactics don’t help). Check out the TorrentLawyer blog for a few recent examples:
- Malibu Media, LLC cases go down in FLAMES in Virginia
- THIRD DEGREE FILMS, INC. attorney perhaps facing a THIRD DEGREE FELONY
Also, as a follow up to the case in New York, Twitter user "fightcopyrighttrolls" reports on what seems to be an inexplicable strategic decision by lawyers for one of the plaintiffs in this case.
[A note to lawyers: judges compare notes, directly or indirectly.]
Other coverage:
Ars Technica: Furious judge decries "blizzard" of copyright troll lawsuits
Torrent-Freak: Judge: An IP-Address Doesn’t Identify a Person (or BitTorrent Pirate)
Previous posts:
Court Nukes Another Mass Defendant File-Sharing Lawsuit -- Digiprotect v. Does
Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does
Posted by Venkat at 09:48 AM Permalink | Copyright , Privacy/Security | Printable Version
May 10, 2012
An Unmasking Effort Gets Gutted Some More – Art of Living Foundation v. Does
[Post by Venkat Balasubramani]
Art of Living Foundation v. Does, 10-cv-05022-LHK (N.D. Cal.; May 1, 2012)
I posted earlier about the Art of Living Foundation’s (AOLF) efforts to unmask online critics (posting psueudonymously as ‘Skywalker’ and ‘Klim’). In early rulings, the court rebuffed AOLF’s efforts. AOLF originally brought defamation and trade secrets claims. The court held that any allegedly defamatory statements were protected opinion, and that AOLF failed to identify trade secrets with particularity. The court also stayed discovery of defendants’ identities, finding that the balance of equities favored the preservation of anonymity. (Here's my prior blog post on the case: "Spiritual Group's Attempt to Unmask Online Critics Goes South.")
AOLF filed an amended complaint, dropping the defamation claims but adding claims for copyright infringement. The amendment also specified the allegedly misappropriated trade secrets. With respect to the copyright claim, AOLF alleged that republication of certain “lesson plans” by the Doe defendants constituted copyright infringement and misappropriation of trade secrets.
In a further development in this lawsuit, the court granted the Does’ request to dismiss the copyright claims. The trade secrets claims largely survive, although the court notes that they aren’t the strongest.
Copyright claims: AOLF did not present any evidence that one of the two defendants was involved in any way in republishing the lesson plans, or related notes, so this defendant (Klim) is awarded summary judgment. Skywalker, the second Doe defendant, admitted to posting the text of the lesson plans on his blog. Although he wasn’t entitled to summary judgment on the same basis as Klim, he challenged AOLF’s ownership of the copyrights at issue.
The court finds that the registration certificate presented by AOLF was not prima facie evidence of ownership (because the registration was obtained more than five years after publication). The court goes on to find that the AOLF entity that brought the copyright claim was not the owner of the copyrighted material. There’s an Indian AOLF entity, and one of the declarations let slip that the lesson plans at issue were created “for the benefit of the Art of Living Foundation in India with the understanding that the Art of Living Foundation in India would own [all of the rights to the lesson plan].”
AOLF (US) also tried to argue that the Indian entity assigned the US entity the copyright, but AOLF (US) failed to produce any written record or an assignment, or even that such a writing existed. Even a confirming email would have been plenty, but for whatever reason AOLF (US) was unable to muster evidence on this point.
Trade secrets claims: Defendants continue to batter away at AOLF’s trade secrets, but the court finds that AOLF made the minimal necessary showing that its teaching methods: (1) have independent economic value and are not generally available; and (2) are the subject of reasonable confidentiality restrictions. In particular, AOLF came forward with evidence that although the teaching methods were drawn on “conventional concepts and terminology of Hindu mysticism,” AOLF “incorporate[d] many additional and novel elements.” With respect to confidentiality, AOLF alleged that it required its teachers to sign confidentiality agreements. Although the court expresses some skepticism about the overall merits of AOLF’s trade secrets claims, those claims are sufficient to move forward at this time. However, the court does include language in its order inviting defendants to move for summary judgment on the issue of whether AOLF’s information is truly a trade secret, or indistinguishable from general knowledge of the public or those skilled in the relevant field. The court also raps AOLF on the knuckles for trying to take a third bite at the designation of trade secrets apple. AOLF already submitted an amended designation of trade secrets and sought to amend this designation again. The court says that although it will allow the amendment, this is the last time (“the court puts [AOLF] on notice that this is its final opportunity to amend its trade secret designation with particularity”).
Finally, the court grants the motion to strike as to Klim, finding that AOLF put forth no evidence that Klim was involved in any way in the alleged dissemination of AOLF trade secrets.
SLAPP fees: Finally, the court grants defendants' request for fees as to the defamation/trade libel claim. Although AOLF amended its complaint and dropped the defamation and trade libel claims, there was no evidence that AOLF achieved its goals with respect to these claims through other means. AOLF’s amendment of its complaint to exclude the defamation and trade libel claims was “tantamount to a voluntary dismissal.” (Defendants brought a motion to dismiss and a motion to strike and the court earlier granted the motion to dismiss but declined to reach the merits of the motion to strike.) End result: defendants can seek fees for dismissal of the defamation and trade libel claims.
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This is another example of how things can go wrong when someone tries to squelch speech online. Granted, in countless other cases, these types of claims would have resulted in default judgments without anyone batting an eye, but the Does were represented by counsel (and both Public Citizen and EFF appeared as amici). As a result, the balance of power changed significantly. (It also helps to have a thoughtful judge—in this case Judge Koh—who takes a close look at the issues and seems mindful of the speech implications of the judge's rulings.)
It’s interesting that AOLF’s efforts to unmask the Does were premised in part on AOLF’s copyright claims. These turned out to be insufficient at the end of the day. Courts routinely grant requests to unmask Doe defendants when copyright claims are involved, but this ruling is a reminder that judges should take a close look at those requests, even when the other side may not be represented by counsel. For another example, see Maximized Living v. Google.
Finally, the court’s order makes a reference to how many times the webpages containing the alleged trade secrets were viewed: 147 and 351 in July and August 2010, respectively (before the pages were removed in response to a takedown request sent to WordPress). Given the cloud around AOLF’s copyrights and the multiple entities involved (the takedown request was sent from Vyakti Vikas Kendra India), one wonders about the propriety of the takedown requests. But setting this aside, these statistics raise the question of whether AOLF’s significant expenditure of fees to squelch criticism of it was even remotely worth it. (I would be shocked if their answer today was “yes”.) Compare Pitale v. Holstine.
Given the court’s ruling on the fees issue, and its hints around the strength of AOLF’s trade secrets claims, this case should quickly head towards a settlement. The big question is whether everyone will just go their separate ways, or if AOLF will be writing a check to the Does (or their counsel).
Posted by Venkat at 01:37 PM Permalink | Content Regulation , Copyright , Privacy/Security , Trade Secrets | Printable Version
Topix Protected by 47 USC 230--Price v. Gannett
By Eric Goldman
Price v. Gannett Co., 2012 WL 1570972, (S.D. W. Va. May 1, 2012)
This is a pro se case. The plaintiffs alleged that pseudonymous posters made defamatory and otherwise tortious remarks about the plaintiffs on Topix. The court has zero difficulty tossing the case on a 12(b)(6) motion to dismiss. The court's analysis:
Plaintiffs have alleged all three elements [of a 230 defense] in their complaint as Topix is a website where users post comments. Plaintiffs have admitted in the complaint that the unknown individuals provided the statements, not Topix. It is also clear that Plaintiffs are treating Topix as the publisher.
If the plaintiffs weren't pro se, this would be a logical case for the judge to issue sanctions against the plaintiffs for bringing such an obviously unmeritorious claim.
This is at least the second time Topix has qualified for the 47 USC 230 immunity. See my post on the first case, Hopkins v. Doe, which similarly involved a pro se suing over pseudonymous posts and led to an equally emphatic defense win.
Posted by Eric at 06:48 AM Permalink | Derivative Liability | TrackBack (0) | Printable Version
May 05, 2012
Franchisor Really, Really Unhappy With Franchisee's Co-Promotion With a Topless Bar--Capriotti's v Taylor
By Eric Goldman
Capriotti's Sandwich Shop, Inc. v. Taylor Family Holdings, Inc., 2012 WL 1448514 (D. Del. April 25, 2012). The complaint and exhibits A-D, E-H and I-O. Some background.
Capriotti's is a franchised fast-food sandwich chain, with its signature sandwich being "the Bobbie" with roasted turkey, cranberry sauce and stuffing. I've never been to the chain and it doesn't sound like my kind of place, but they do have a comparatively well-developed (for a fast-food sandwich place) vegetarian menu.
In 2003, Taylor became a Capriotti's franchisee in Las Vegas. The franchise agreement contained standard provisions requiring franchisor pre-approval of any franchisee ad copy.
You'd think that Thanksgiving-in-a-roll would sell itself, but Taylor sought a marketing edge in Las Vegas by appealing to local sensibilities. And what sells better in Vegas than sex appeal? So Taylor hooked up with a local topless bar ("Crazy Horse III") to offer a happy hour special of a sandwich and beer for $5. The ad copy displayed the franchisor's trademarked logo; though the parties disputed if Taylor authorized that or not. Several local publications and blogs shared the promotion with their audiences, such as this post:
“Hey, you like boobs, don't you? Of course you do. You like sandwiches too, right? Now why not put them together.... Apparently Crazy Horse III is teaming up with Capriotti's to offer lap dance enthusiasts six-inch-subs with a beer for five bucks during happy hour from 1 to 7 p.m. daily....”
Capriotti's learned that Taylor had allegedly cooperated with the topless bar on the promotion and sent a breach notice with a 5 day cure period. Feeling that Taylor didn't adequately remedy the situation, Capriotti's then sent a notice to terminate the franchise agreement. Taylor continued operating the franchise without change (although at some point the topless bar stopped the promotion), so Capriotti's sued Taylor in Delaware, and Taylor countersued.
The court doesn't understand why the parties sued in Delaware when both litigants are based in Nevada, so it transfers the case back to Nevada. The court also denies the plaintiff's preliminary injunction request because of the parties' factual disagreements and the unavailability of a key witness (the topless bar manager). These parties should settle, but they'll probably spend hundreds of thousands of dollars on attorneys' fees fighting over the implications of associating sub sandwiches with naked breasts instead.
What remains puzzling to me is why Capriotti's thinks it's worth suing to get Taylor out. Perhaps the association with a topless bar is so irreparably distasteful to Capriotti's that it's worth killing the relationship. The opinion also indicates that other franchisees in the local area were unhappy (jealous?) about the promotion. More likely, there's a backstory that makes the franchisor's litigiousness more explainable. Many franchisors would have gladly looked the other way or simply counseled the franchisee about its behavior going forward. After all, even if Taylor authorized the ad copy without permission, it was in the service of moving more Bobbies.
From the franchisee's perspective, this case is a good reminder that franchisors can be unduly sensitive about lascivious associations. Plus, franchisees shouldn't forget that franchisors may be delighted to have a pretextual excuse to shut down a longtime franchisee. The franchise agreement is the foundational document for the franchisee's business; it needs to be respected at all costs.
Posted by Eric at 08:12 AM Permalink | Licensing/Contracts , Marketing , Trademark | TrackBack (0) | Printable Version