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October 30, 2010
Message Board Operator Fights Discovery Order Requiring Disclosure of Identities and Private Messages -- Concerned Citizens for Crystal City v. City of Crystal City
[Post by Venkat]
Concerned Citizens for Crystal City, et al. v. City of Crystal City, et al., No. ED 94135 (Mo. Ct. App.; Oct. 26, 2010)
In 1991, Pittsburgh Plate and Glass Company shut down a factory in Crystal City (Missouri), and Crystal City undertook efforts to redevelop this property. Wings Enterprises expressed an interest in the property and met with the City regarding potential redevelopment efforts. Thomas Kerr, who owned the adjoining property formed Concerned Citizens for Crystal City, a non-profit that opposed the Wings redevelopment proposal (and presumably, had its own ideas for what form the redevelopment should take).
William Ginniver became the president of CCCC and set up a forum for concerned citizens to discuss the Wings proposal. Posters could post anonymously but had to register by providing an email address in order to post to the forum. Ultimately, the City approved the Wings proposal, and CCCC filed suit, alleging among other things that the City violated Missouri's Sunshine Law in connection with the redevelopment discussions. Wings intervened in the lawsuit as a defendant.
In the course of discovery, Wings sent over a request for production to Ginniver seeking:
a complete copy, in native format, of all information in [Ginniver's] possession that had been posted on the domain http://www.clearpillar.com;
a complete copy, in native format, of all databases in [Ginniver's] possession related to any forum that [had] appeared on http://www.clearpillar.com, with all copies to include, among other things, the IP addresses related to each post, member names and email addresses, and the text of private messages on the database.
Ginniver objected, and the trial court largely rejected his objection, ordering him to produce "a full and complete copy, in native format, of all information in his possession or control, that [had] been posted [to http://www.clearpilllar.com]." The court also ordered Ginniver to answer deposition questions regarding the identity of users who posted on the forum.
Ginniver filed an interlocutory appeal of the discovery order but neither the Court of Appeals nor the Missouri Supreme Court decided to hear the appeal. Ginniver then produced a copy of all public messages posted to the forum but withheld "unposted private messages," and "any information that could have uniquely identified the users of the forum." In response, Crystal City and Wings moved for default judgment as a sanction. The trial court granted this request.
The Court of Appeals held that dismissal as a sanction was overly drastic, and the discovery requests were overly broad to begin with. The content of the postings were sufficient for the City or Wings to seek identification of particular posters (or bring this issue before the court at a later time). The court cited to the rules regarding protective orders and hinted that a previously offered stipulation by defendants (to a protective order) may sufficiently address any concerns on the part of the posters (or on Ginniver's part), and that if CCCC failed to comply with a properly narrowed discovery request, the sanction of dismissal may then be appropriate.
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This looks like a narrow escape for plaintiff from what looks like an initial bad ruling from the trial court. The Court of Appeals has an opportunity to clear up confusion regarding the various categories of information, but beyond providing some vague guidance, the Court of Appeals did not give the trial court much to work with.
Status of private messages: It appears that Ginniver sought to withhold private messages, but the court didn't delve into whether the messages were truly private and what that would have meant for purposes of discovery. I recently posted on a decision from Pennsylvania ordering disclosure of a plaintiff's log-in and passwords for his Facebook and MySpace pages, where the court didn't delve into the various categories of information and whether they were truly public or private. ("Court Orders Disclosure of Facebook and MySpace Passwords in Personal Injury Case -- McMillen v. Hummingbird Speedway.") That decision also did not discuss the effect (if any) of the Stored Communications Act on private messages. This court's decision suffers from many of the same problems.
Identification of anonymous posters: Although the court alludes to the standards for when a litigant can identify an online poster, and hints that First Amendment interests are at stake here, it's unlikely that defendants would satisfy any of the standards for identifying all of the posters. This case involves citizen communications criticizing the government's activity, and the First Amendment interests are therefore particularly strong. Even if it did not announce the applicable test, it would have been nice for the court to recognize this, and send a message that a fishing expedition seeking to identify all of the posters was inappropriate.
This case looks like a good candidate for intervention by one of the many public interest groups who have fought (and won) battles around online anonymity.
Posted by Venkat at 01:50 PM | Evidence/Discovery , Privacy/Security
October 26, 2010
Political Campaigns and Copyright Infringement
By Eric Goldman
I might be wrong, but my unscientific impression is that political campaigns are encountering copyright issues more frequently than in the old days. Initially, I had hoped to catalog all of the recent incidents, but I realized that it would take me too long to recap them all. A sampling of political candidates who recently experienced a copyright imbroglio: Sharron Angle (sued by Righthaven over a Las Vegas Review-Journal article), Robin Carnahan (over Fox News footage), Charlie Crist (over the Talking Heads song Road to Nowhere), Chuck DeVore (over Don Henley’s songs), Russ Feingold (over NFL footage), Rand Paul (over Rush songs) and trailblazer John McCain (too many incidents to recount—good thing for him we don’t have a mandatory three strikes rule yet). The CDT recently released a report on takedowns in political campaigns providing more examples.
If my impression about the trend is right, a couple of possible implications:
1) Candidates may be using copyright as another tool to harass and thwart their opponents. It’s like a form of lawfare. Stirring up a copyright infringement claim against your opponent can quickly jumpstart negative publicity against them, plus it’s a good way to drain your opponent’s coffers.
2) In situations where copyright isn’t being used as lawfare, I find it deeply ironic when our actual/wannabe lawmakers run afoul of someone else's copyright. If our lawmakers--the people we entrust to write our laws--can't navigate making secondary uses of other people's copyrights, how can they expect their constituents to figure it out? At minimum, candidates with firsthand experience as alleged infringers should prompt them to be more assertive about standing up for secondary users' rights. After all, they’ve been there!
Posted by Eric at 09:40 AM | Copyright | TrackBack
October 25, 2010
My RapLeaf Profile is Amusingly Mistaken. This is What the Fuss is All About?
By Eric Goldman
The latest in the Wall Street Journal's "scare journalism" series of privacy articles is a hatchet job on RapLeaf. I don't know much about RapLeaf, but at conferences, privacy advocates frequently invoke RapLeaf as an omnipotent, omniscient privacy violator--a stereotype the WSJ article seeks to inflame.
This morning I decided to see what the fuss is about. Rooting around for the opt-out mechanism mentioned in the WSJ article, I discovered that I could see what information they know about me, and I could even customize it. With a little trepidation given its reputation, I logged in to RapLeaf via my primary email account [egoldman@gmail.com] and this is what I learned (I edited the format but not the substance):
_______
Below is information we provide to companies to personalize the content and advertisements they show you. This information comes from public information you have posted online as well as information from some of our partners (from sources like surveys, census data, and public records).
Personalization Info
Companies use this information to personalize content for you. We'll continue to update this view with more information as we obtain rights from our partners, and as we continue to add new information. You can remove segments by clicking on the "Remove" link to the right and soon you'll also be able to add new segments. Some of this information may go into a cookie.
Your interests:
Entertainment
Entertainment > Music
Internet
Internet > Online Streamers > Photo Sharing Consumers
News & Current Events
News & Current Events > Online News
Shopping
Shopping > Auctions
Shopping > Online Shopping
Social Networks & Online Communities
Social Networks & Online Communities > Blogging Resources & Services
Social Networks & Online Communities > Business Networking
Social Networks & Online Communities > Journals & Personal Sites
Social Networks & Online Communities > Social Networks
Your demographics:
Age: 18-20
Gender: Male
Location: San Francisco, California, United States
Influencer Score: 81-90
Children in the Household: No Children Present
Household Income: 0-15k
Marital Status: Single
Home Owner Status: Own
Your Online Profile
The following is public information we gathered online which we have associated with you. We do not use any identifying information (like a social network id, email address, name, or any other ID) in Rapleaf cookies. The data below is only accessible by companies approved by Rapleaf who are personalizing services to you. You can remove attributes by clicking on the "Remove" link to the right. You can also opt out altogether here.
Name: Eric Goldman
Location: San Francisco, California, United States
Occupations:
Assistant Professor at Marquette University Law School
Law professor at Santa Clara University School of Law
Cooley Godward
Epinions
Sites:
Facebook
Flickr
Friendfeed
Friendster
Linkedin
Multiply
Myspace
Plaxo
Twitter
__________
Some comments:
1) The site appears to have partially confused me with another Eric Goldman, as evidenced by the age (wrong by almost a quarter-century), marital status (married nearly 13 years), parenthood status (two super kids), and household income (off by a lot, fortunately).
2) The interest categories are amusingly generic. They aren't provably wrong (though my wife would guffaw at listing me as a "shopper"), but they don't really do anything to uniquely describe my idiosyncratic interests. So an Internet user is interested in news, entertainment, shopping, social networking...? Pretty insightful, guys.
3) The listed websites are also laughable. For example, the most defamatory thing in the profile is that it accuses me of having a MySpace account. Uh, no. In fact, the linked MySpace profile is http://www.myspace.com/jodydog12. Huh? I do have a Friendster account I created in 2003 and never used. I don't know if I created a Multiply account, but it's content-free. I have several Flickr accounts but it links to the one I don't use. It does accurately reflect my Twitter, Friendfeed and LinkedIn pages, all of which have lots of accurate information about me--which makes RapLeaf's other factual errors less excusable.
_______
This RapLeaf profile raises two questions:
1) Why doesn't RapLeaf do a better job knowing me? The WSJ story has examples (intended to be horrifying) of deep insights into users. Despite my spending 14 hours/day on the Internet, RapLeaf sure hasn't gotten many good insights into me. One hypothesis: I don't hang out in the dicier areas of the Internet. For example, a number of the examples in the WSJ article appear to be tied to using Facebook apps, and I categorically don't use apps. I think Facebook has a serious brand/consumer trust issue with bad behavior by its apps providers.
More generally, RapLeaf's shoddy profile reflects how hard it is for any web service to know everything it wants to know about consumers. I discuss this challenge in my Coasean Analysis of Marketing article.
2) Should I be bothered by RapLeaf maintaining a profile about me, accurate or not? I am more sanguine about data profiling than most people. As I wrote earlier, "relevancy trumps creepiness." Nevertheless, it's embarrassing for RapLeaf to do such a poor job figuring out who I am given how much information I've made public. If RapLeaf can't solve its data quality problem pronto, it seems like the marketplace will take care of it faster than any regulator could.
Even so, RapLeaf remains a scary "privacy threat" that creates moral panics among regulators. Whatever RapLeaf's fate in the market, I would hate for us to overreact to its existence in developing privacy regulations. I can think of several websites (Google, Facebook and LinkedIn come to mind) that know way more about me--including my email address and real name--that could be adversely affected by miscalibrated regulatory intervention.
Posted by Eric at 11:45 AM | Marketing , Privacy/Security | TrackBack
October 24, 2010
Court Orders Disclosure of Facebook and MySpace Passwords in Personal Injury Case -- McMillen v. Hummingbird Speedway
[Post by Venkat]
McMillen v. Hummingbird Speedway, Inc., et al., Case No. 113-2010 CD (Pa. Ct. of Common Pleas) (Sept. 9, 2010)
There have been several recent cases dealing with discovery of social networking evidence in a civil dispute. A central issue in the background of all these cases is that an opponent is typically entitled to relevant information from the other side's social networking profiles, but turning over the entire profile wholesale may not adequately protect the privacy interests of the party whose information is turned over. One court in Pennsylvania didn't bother grappling with this dispute, and went to the extreme. The court didn't just order relevant portions of the profiles turned over, it granted defendant's discovery request seeking the plaintiff's passwords (i.e., ordered the plaintiff to turn over his passwords to the defendant).
Background: The basic facts should sound familiar by now. Plaintiff suffers personal injury (in this case he was rear-ended during a "cool down lap" following a stock car race at the defendant's track). Following the injury and the lawsuit, plaintiff posts material about his recreational activities (in this case a fishing trip and attendance at the Daytona 500 race). Defendant seeks full discovery of plaintiff's social networking sites to look for evidence which discredits plaintiff's claim that plaintiff is unable to enjoy life as a result of the injury.
Here, rather than asking the plaintiff to turn over the content of the profiles or relevant information in the profiles, counsel for defendant actually asked plaintiff for the login names and passwords for any of plaintiff's social networking accounts.
The court's ruling: The court looks to whether the information is privileged under Pennsylvania law. The court starts off from a skeptical point, noting that no "social network site privilege" had been adopted by the legislature or appeals courts. The court is reluctant to recognize a new privilege but nevertheless looks at the test for when a privilege applies. After walking through the four factor test that a party seeking to assert a privilege must satisfy, the court focuses on confidentiality, which is one of the four elements. With respect to confidentiality of communications, the court cites to the Facebook and MySpace terms of service which (according to the court) make clear to users that there should be no expectation of confidentiality in anything that is posted to (or sent through) Facebook or MySpace. The court additionally thinks that the social nature of the sites make any expectation of confidentiality on the users' part unrealistic:
Facebook, MySpace, and their ilk are social network computer sites people utilize to connect with friends and meet new people. That is, in fact, their purpose, and they do not bill themselves as anything else. Thus, while it is conceivable that a person could use them as forums to divulge and seek advice on personal and private matters, it would be unrealistic to expect that such disclosures would be considered confidential.
This, along with several provisions of the Facebook and MySpace terms lead the court to reject the privilege. The court also applies Wigmore's test for when it is appropriate to recognize a privilege, and comes to the same conclusion:
no person choosing MySpace or Facebook as a communication forum could reasonably expect that his communications would remain confidential, as both sites clearly express the possibility of disclosure. Confidentiality is not essential to maintain the relationships between and among social network users, either. The relationships to be fostered through those media are basic friendships, not attorney-client, physician-patient, or psychologist-patient types of relationships, and while one may expect that his or her friend will hold certain information in confidence, the maintenance of one's friendships typically does not depend on confidentiality. [emphasis added]
Ouch!
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This seems like a pretty untenable conclusion, for a variety of reasons.
For starters, the court totally glosses over the relevance analysis. There is no way that all of the information in the plaintiff's social networking site can be relevant to the dispute, and the court's decision grants defendant access to both relevant and irrelevant information. There's also information that is likely to be private or sensitive and which may subject the plaintiff to embarrassment. State evidence rules likely protect against disclosure of this type of information, or at least place limitations on the use of this information, and the court's order doesn't take this into account at all.
The court's read on Facebook and MySpace's ability to disclose or access the content of profiles also seems off. As mentioned in Crispin v. Audigier, these sites make available private messaging functionality that is similar to email. Several courts have concluded private messages sent through social networking sites are protected from disclosure by the Stored Communications Act. The court's decision here contains no discussion of this, and disclosure may even violate the Stored Communications Act. Although these companies make private messaging and email services available, this should not cause them to be viewed as a third party "in whose presence" the communication is made. (Accepting the court's view would mean that communications made through Google, Yahoo, and every other ISP or email provider would not be confidential and could never be protected by any privilege.)
There's also the issue that disclosure of the passwords may provide defendant access to plaintiff's other accounts (such as his account with Amazon or his bank account), given that people use the same password among multiple sites. The password also allows the defendant to post as the plaintiff, to edit the plaintiff's profile, use or download apps, change privacy settings (etc.). I would guess there's some implied obligation on the part of the defendant (or its counsel) to not misuse the password, but the court did not even bother spelling out that the defendant had to maintain the password as confidential or not use it for any of these purposes.
Finally, there's the issue that disclosure of the password and access by the defendant probably violates the Facebook and MySpace terms of use!
One hopes that the court takes a second look at this and changes course (or that the decision will be reversed on appeal), because it certainly seems like there are some key issues that the court did not take into account. Interestingly, I don't think Facebook weighed in on this (it may not have had notice). It should weigh in.
Takeaways for litigants: One big takeaway for litigants is that anything posted to social networking sites is fair game, among other reasons, because courts may not appreciate the nuances between truly private messages and public posts. There are gradations of private information, and Facebook itself says that it gives users the tools to control how private or public they want their messages to be. (The private user group posts from the Finkel v. Facebook case is a good example of information that's sort of in-between.) In any event, courts don't always seem sensitive to the nuances here, and as a result, information that a user reasonably thought was private may end up being disclosed in litigation. The prudent course is to not post information on (or even send information through) a social network that you don't want to disclose to the world at large.
Takeaways for lawyers: A possible takeaway for lawyers as well. As new modes of communication emerge, and lawyers start to embrace these methods of communication, there's a question of whether lawyers should worry about things like confidentiality or attorney/client privilege for these types of communications. The obvious concerns are the social networks themselves, third parties, and communication snafus, but this case illustrates that courts may not always get it right when it comes to these communications. Lawyers probably would be wise to adopt a policy of not engaging in confidential or privileged communications with clients via social networking sites (at a minimum, until courts reach clarity on issues such as the one presented in this case).
(h/t K&L Gates's Electronic Discovery Law)
Related posts:
"Judge Offers to Facebook 'Friend' Witnesses in Order to Resolve Discovery Dispute -- Barnes v. CUS Nashville"
"Deleted Facebook and MySpace Posts Are Discoverable--Romano v. Steelcase"
"Facebook Messages/Wall Posts, Civil Discovery, and the Stored Communications Act -- Crispin v. Audigier"
Posted by Venkat at 10:24 AM | Evidence/Discovery , Privacy/Security
October 22, 2010
Former Employee's 'Email Barrage' Does Not Support CAN-SPAM or Computer Fraud and Abuse Act Claims -- Nyack Hosp. v. Moran
[Post by Venkat]
Nyack Hosp. v. Moran, 08 Civ. 11112 (SCR)(PED) (S.D.N.Y.; Oct. 20, 2010)
Moran was employed by Nyack Hospital. When the employment relationship ended he:
sent [an unspecified number of] e-mails, including a 17-page attachment, to over "100 . . . senior managers and employees [at the Hospital]" and others and misrepresented the source of the e-mails as David Freed, the president of the Hospital. The e-mails, as characterized by [the Hospital] "leaked certain aspects of an internal confidential employee survey, defamed the Hospital's reputation and the reputations of several Hospital employees . . . and urged the . . . recipients to report the alleged wrongdoings to the Hospital's Board of Trustees and the Rockland Journal News."
The Hospital sued Moran under CAN-SPAM and the Computer Fraud and Abuse Act. Moran, acting pro se, defeated the claims.
CAN-SPAM claims: The Hospital alleged that Moran violated the subject line and header information prongs of CAN-SPAM. The court concludes that because the emails were not "commercial electronic mail messages," there could be no subject line violation. With respect to the header information prong, there could be no violation unless the messages are found to be "commercial email messages" or "transactional or relationship messages." Having already concluded that the messages were not commercial in nature, the court analyzes whether the messages were "transactional or relationship messages." The Hospital made the flimsy argument that the messages were transactional or relationship messages because the messages "provide[d] information directly related to an employment relationship." The court rejects this argument, noting that the "transactional or relationship messages" were intended by the statute to be a sub-category of commercial email messages (with respect to which CAN-SPAM relaxes certain requirements). Of course, even assuming that the messages were commercial in nature, the Hospital would have had a tough time showing that it suffered any "adverse effects," a point which the court alludes to in a footnote (citing Virtumundo).
Computer Fraud and Abuse Act Claim: The Hospital alleged that Moran violated the CFAA by "transmitting information" to a protected computer and as a result of such transmission intentionally causing damage. While pre-CAN SPAM cases (e.g., AOL v. National Health Care Discount, Inc.) grappled with the issue of whether the CFAA was ever intended to cover spam, the court easily rejects the Hospital's claim on the basis that the Hospital did not allege Moran's emails caused any damage to the Hospital's computer system. In the process, the court cites to Czech v. Wall Street on Demand, a case which rejected CFAA claims based on unsolicited text messages.
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The Hospital here took Moran's acts and tried to shoehorn them into CAN-SPAM and the Computer Fraud and Abuse Act. In the process, it made some arguments that were pretty far out in left field.
Claims around advocacy through email bombardment haven't fared well, absent some showing that the emails caused damage on the receiving end. Intel v. Hamidi was an email bombardment case involving a former employee where the court rejected trespass claims for failure to show damage. Intel brought common law claims, and this case is a good indicator of how CAN-SPAM and CFAA claims would have fared had Intel brought them. I recently blogged about Pulte Homes, Inc. v. LiUNA, where the court held that a union's email campaign on behalf of former employees did not violate the Computer Fraud and Abuse Act. ("Web-based Email Bombardment Campaign Does Not Amount to a Violation of the Computer Fraud and Abuse Act.") Also, as mentioned in the post about Pulte Homes, the Seventh Circuit recently vacated the district court's contempt order based on emails sent by supporters of Kevin Trudeau. ("Seventh Circuit Vacates Contempt for E-Mail Barrage.")
I didn't think the issue of whether the emails were commercial in nature was a close question. The emails were not reproduced by the court in its order, but the emails were cloaked in whistleblower language (I wondered whether an anti-SLAPP motion was a possibility). For a loosely related case on this issue (that looks at whether a [ghostwritten] attorney newsletter is an ad) see Holtzman v. Turza ("Ghostwritten Attorney Newsletter is an "Ad" for TCPA Junk Fax Law Purposes").
At the end of the day, this seemed like a garden variety employment dispute that didn't really implicate laws which cover spam or hacking. Maybe the Hospital brought the CAN-SPAM and CFAA claims in an attempt to preempt any claims which Moran had threatened to raise? It's possible that the Hospital succeeded in achieving its ultimate purpose, although it suffered a smackdown in the process.
Posted by Venkat at 12:05 AM | Spam , Trespass to Chattels
October 21, 2010
Blogger Wins Fair Use Defense...On a Motion to Dismiss!--Righthaven v. Realty One
By Eric Goldman
Righthaven LLC v. Realty One Group, Inc., 2010 WL 4115413 (D. Nev. Oct. 19, 2010)
I've mentioned Righthaven before in my quick links, but this is my first full blog post about them. I trust most of you are familiar with Righthaven by now. Righthaven is a serial copyright plaintiff that searches for republications of newspaper articles, acquires the copyrights from participating newspapers (the Las Vegas Review-Journal is the largest and highest profile participating paper), sues the republisher for copyright infringement without any prior notice--seeking $75k or $150k in damages and transfer of the infringer's domain name--and then sends a settlement offer to the surprised defendant. According to this website, Righthaven has brought 157 lawsuits and settled 56 of them.
Righthaven is controversial for many reasons, including:
* Righthaven does not give defendants any warning before suing them, even though many of the defendants would happily remove the article if asked. Righthaven argues that it's too costly for newspapers to constantly chase down Internet republications. Plus, Righthaven thinks a litigation crusade will generate an in terroram effect to dissuade others from making unauthorized republications in the first place. A similar in terroram campaign has had, at best, mixed results for the record labels, so it's not clear how well that's going to work for newspapers.
* Many of the defendants linked to the original newspaper article as part of their posts. These links don't directly cure any infringement, but they do represent a way of transferring value to the newspapers. First, the links may prompt readers to investigate the original source--even when the post contains the full text of the article. Second, the links count as votes in Google's PageRank algorithm, which increases the overall search engine profile of the newspaper. Some Righthaven critics do not understand why newspapers would want to discourage or eliminate these value transfers.
* Many defendants are small-time non-commercial bloggers or non-profit organizations, most of whom simply can't afford to litigate. Unfortunately, in the blogger and non-profit communities, many people (often mistakenly) assume fair use permits them to freely republish any articles they think would be interesting to their audiences. Thus, Righthaven's lawsuits blindside these republishers, as they (perhaps mistakenly) thought they were following appropriate protocols.
* Righthaven acquires an interest in the article's copyright only after it has identified an infringement and wants to bring a lawsuit. Some defendants (and commentators) have accused Righthaven of champerty and barratry.
* Righthaven has sued defendants who have quoted only a portion of the original newspaper article. For example, in today's case, the defendant quoted the first 8 sentences from a 30 sentence article.
* Righthaven has sued numerous web operators for articles reposted by users. As discussed above, Righthaven never sends 512(c)(3) takedown notices, but Righthaven apparently only sues defendants who haven't made the required 512-related filing with the Copyright Office. Even so, Righthaven's pleadings rarely distinguish between user postings and operator postings, effectively assuming the operator will be automatically culpable for user postings.
* The Copyright Act provides zero support for Righthaven's demand to get the defendant's domain name. Instead, this demand looks like a pressure tactic to increase defendants' incentives to settle the case (i.e., settle up over this one article or we will permanently take your entire site offline).
* Some Righthaven defendants have been helpful to the participating newspapers. For example, Righthaven sued a source that provided helpful material to the Las Vegas Review-Journal; the source then republished the resulting article on its website. Being a source to a story doesn't give the source automatic rights to republish the story, but a lawsuit isn't a great way for the newspaper to say thanks for the help, either.
* Righthaven sued Sharron Angle, a Republican US Senate candidate in Nevada, for republishing a Las Vegas Review-Journal story on her campaign website. Suing major political candidates isn't a great way to curry favor with important media subjects. Even more bizarrely, the Las Vegas Review-Journal endorsed Angle's Senate candidacy [nofollowed link] over incumbent Harry Reid--while its infringement lawsuit against Angle was still pending!
Put aside all of these controversies for a moment. The main question on my mind is whether Righthaven can be a profitable business and, if so, whether Righthaven can generate new incremental revenues for financially beleaguered newspapers.
For Righthaven defendants, it's almost always cheaper to settle than fight. Righthaven has been willing to accept settlements in the few thousand dollar range, and it's effectively impossible to defend a copyright case for less than that. So from a defendant's standpoint, Righthaven's settlement offer is a better financial deal than fighting the suit. This is why so many people have analogized Righthaven to "patent trolls."
Because it's effectively running a settlement mill, Righthaven needs quick and easy settlement. Otherwise, Righthaven will incur investigation, filing, serving and litigation costs that grow with each step in the process; and after the revenue split with the newspapers, the remaining gross margin per suit will be pretty small if Righthaven takes relatively small dollar value settlements. Of course, Righthaven could get its requested $75k-$150k in damages and attorneys fees from a successful court battle, but its costs to get those damages will be significant--especially if it doesn't get the attorneys fees--and small-time blogger or non-profit organization defendants may not have the cash to satisfy the judgment. In reality, I don't expect Righthaven to get big payoffs in the cases it successfully fights to the end. It's more likely judges will award Righthaven only the statutory damages minimums and no fees, which actually would be a big loss for Righthaven (i.e., to spend the time and money to litigate a case through damages only to get less than its typical initial settlement offer).
What clearly won't maximize Righthaven's profits are lengthy court fights that lead to Righthaven losses--especially if the defendants get their attorneys fees under the 17 USC 505 fee-shifting provisions. If lots of defendants fight back against Righthaven and some of them win, and some of those getting their attorneys fees, it will be hard to get enough cheap-and-easy settlements to make a decent profit.
As it turns out, lots of defendants have made the economically irrational decision to reject Righthaven's settlement offer and fight in court. These defenses are producing a trickle of early rulings. For example, in the Klerks ruling, the court overturned a default judgment on the basis that the defendant may have meritorious defenses such as fair use and implied licenses.
Yesterday, we got the most important Righthaven ruling yet, this time in the Realty One Group case. The case involves a real estate broker's republication of 8 sentences from a 30 sentence Las Vegas Review-Journal article on the broker's blog, www.michaeljnelson.featuredblog.com (now devoid of content). The court granted the blogger's fair use defense...on a motion to dismiss! The court notes the blogger quoted a relatively small percentage of the source article and, more to the point, says the blogger's "use of the copyrighted material is likely to have little to no effect on the market for the copyrighted news article."
Successful fair use defenses on a motion to dismiss are exceptionally rare. It is hard (impossible?) to resolve fair use questions without relying upon disputed facts--a no-no on a motion to dismiss. Thus, it appears the court cut some procedural corners, and I could see an appeals court requiring the district court to try again. So as exciting as this result is, it may be vulnerable to an appeal if Righthaven pursued it. However, according to the Las Vegas Sun, "Righthaven CEO Steven Gibson, a Las Vegas attorney, on Wednesday said Righthaven likely won't appeal the Nelson ruling since it reached a confidential settlement with Nelson prior to the ruling being filed."
Despite the procedural limitations of the ruling, the opinion nevertheless provides some useful insights into the viability of Righthaven's tactics. The case shows that judges will pay close attention to fair use defenses, especially when it's simply not credible that the republications had any detrimental effect on the newspapers. The case also shows that judges will tolerate partial quotations of articles. Righthaven has repeatedly claimed that almost all of its cases involve 100% verbatim copying of the entire article, and this case shows that any exceptions to Righthaven's stated approach will fare less well in court. Most obviously, the ruling shows that the courts would rather clear low-merit cases off their dockets quickly, even if they have to cut some procedural corners to do so. Indeed, by kiboshing Righthaven cases early, the court avoids wasting time and money on bogus claims. For these reasons, even if an appeals court reverses the Realty One ruling on procedural grounds, it's clear that Righthaven has zero chance of winning this case.
If the parties hadn't settled, this ruling would be an excellent candidate for a 505 fee shift to the defendant. Any fee shifts could seriously erode Righthaven's margins. That's why I continue to wonder if Righthaven will ever find a profitable niche.
Even if Righthaven has a profitable business, it remains unclear if the participating newspapers get a good economic deal by participating in Righthaven's program. In the copyright world, almost every infringer is a potential customer, so newspapers might get better results by trying to work with republishers rather than blasting them.
Further, it's an empirically unresolved question if the traffic-generation-plus-pagerank-boost payoffs from unauthorized republication more economically valuable than any net proceeds Righthaven might generate from its enforcement actions. For example, in response to the in terroram campaign, people might be scared to talk about the newspaper's articles online.
Indeed, we're seeing this already with respect to links that don't involve any republications. The well-regarded law firm of Sheppard Mullin blogged an advisory that "blogs should be careful not to hyperlink to newspaper articles or other material that may be copyrighted" (they have since amended their post to water down their admonition), and a National Law Journal article (unfortunately behind a paywall) wrote that "Although providing a direct link to an online article is generally considered less risky than copying the original article in its entirety, linking may not fully insulate bloggers and other online users from copyright infringement claims." These fears over linking are unwarranted, but the muddled messages from Righthaven's in terroram campaign could effectively isolate Righthaven-participating newspapers from the rest of the information ecosystem. Obscurity may be a far worse fate for newspapers than unauthorized republication by the kind of defendants that Righthaven is suing. FWIW, unless there is no other way to communicate my message, I will not link to any newspaper that I know is working with Righthaven.
Finally, Righthaven's lawsuits against the newspapers' friends (such as its sources or major political figures) seem counterproductive. In desperate times like now, newspapers need all the friends they can get. Lawsuits against friends are a pretty sure way to convert them to enemies. FWIW, I will not act as a source for any newspaper that I know is participating in the Righthaven program, either.
If you're interested in more information on Righthaven, see:
* September 21 Nevada Public Radio program about Righthaven, which included (among others) Peter Menell and me
* Righthaven Lawsuits website (a comprehensive meta-site)
* Righthaven Victims blog
* Joe Mullin's story on my sparring with Steve Gibson of Righthaven in September. UPDATE: MP3 of the conference call
Steve Green from the Las Vegas Sun has been covering the Righthaven story pretty closely. Follow him at Twitter.
Posted by Eric at 10:00 AM | Copyright , Derivative Liability | TrackBack
October 19, 2010
Probation Limitations on Internet and Facebook Use Violate First Amendment -- In re J.J.
[Post by Venkat]
In re J.J., Case No. D055603 (Cal. Ct. App. Oct. 15, 2010)
J.J. is a 15 year old who was found to have received a stolen motorcycle. He was adjudged a ward of the court and placed on probation. The conditions of his probation included the following:
[J.J.] shall not use a computer that contains any encryption, hacking, cracking, scanning, keystroke monitoring, security testing, steganography [explanatory link added for others who may have also thought that this was a typo], Trojan or virus software.
[J.J.] is prohibited from participating in chat rooms, using instant messaging such as ICQ, MySpace, Facebook, or other similar communication programs.
[J.J.] shall not have a MySpace page, a Facebook page, or any other similar page and shall delete any existing page. [J.J.] shall not use MySpace, Facebook, or any similar program.
[J.J.] is not to use a computer for any purpose other than school related assignments. [J.J.] is to be supervised when using a computer in the common area of [his] residence or in a school setting.
He challenged these conditions as being overly broad and vague.
The court acknowledges that juvenile courts have broader discretion in fashioning conditions of probation than courts do with adults, but nevertheless noted that probation conditions must comport with constitutional restrictions. The court notes also that restrictions on internet activity curtail First Amendment rights:
Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of Web pages, mail exploders, and newsgroups, the same individual can become a pamphleteer. . . . Two hundred years after the framers ratified the Constitution, the Net has taught us what the First Amendment means.
[We know which side the court comes down on in the debate Malcolm Gladwell started over the efficacy of cyber-activism!]
With this in mind, the court concludes that the limitation on J.J.'s computer (and internet) use is overbroad because it "forecloses access to countless benign and protected uses, and is insufficiently narrowly tailored to serve government interests." The ban:
renders modern life -- in which, for example, the government strongly encourages taxpayers to file their returns electronically, where more and more commerce is conducted on-line, and where vast amounts of government information are communicated via website -- exceptionally difficult.
The ban on the use of internet and social networking sites failed because it was unrelated to J.J.'s criminal history. There was no evidence that J.J.'s receipt of the stolen motorcycle was the result of (or related to) any online activity.
The court also modified the condition which restricted use of computers which contained any "encryption, hacking" or similar software because it was vague - J.J. could violate it unknowingly. The court adds a limitation that the violation must be "knowing" in order to constitute a violation.
Related: "Banned from the Internet" (The National Law Journal; Oct. 11, 2010) (discussing other cases)
Posted by Venkat at 08:05 AM | General
October 18, 2010
First Sale and Exhaustion Doctrines in IP Conference, Nov. 5, SCU
By Eric Goldman
I've mentioned our First Sale and Exhaustion in IP conference before, but now it's less than 3 weeks away. If you were thinking about coming, now is a good time to confirm your spot.
As regular readers know, first sale issues are swirling around us. On the copyright front, we are working through a troika of Ninth Circuit cases in Vernor v. Autodesk (now subject to an en banc hearing request), UMG v. Augusto and Blizzard v. MDY. I've also blogged about some transborder importation cases involving cheap textbooks (e.g., Pearson v. Liu). On the importation topic, the US Supreme Court granted cert in another Ninth Circuit case, Costco v. Omega, and oral arguments are imminent. [UPDATE: I've been informed the oral arguments will be on Nov. 8, just a few days after the conference!] And many folks continue to lament the absence of a first sale doctrine for digital files.
On the trademark front, we've discussed how manufacturers are battling back against unwanted eBay sales (see Mary Kay v. Weber and Beltronics v. Midwest). Simultaneously, manufacturers are embracing minimum resale prices following the Supreme Court opinion in Leegin. We haven't blogged too much on patent exhaustion, but the recent Quanta v. LGE Supreme Court ruling casts a large shadow over both patent exhaustion as well as other types of exhaustion. Interwoven into all of these topics are questions about whether statutory first sale/exhaustion rights are waivable or conditionable by contract.
As you can see, we have a lot to talk about.
I'm particularly excited about this conference because that we won't look at IP exhaustion principles in doctrinal "silos." Instead, we've taken an holistic approach to the topic, so that we can see how the exhaustion principles might be similar and different across the various IPs. We hope this will yield some powerful insights that otherwise would be lost in a silo-by-silo analysis.
Our agenda for the day:
8:15 – 8:45 Registration
8:45 – 9:00 Welcome Remarks
9:00 – 10:20 Justifications for the First Sale/Exhaustion Doctrines
Moderator: Lee Ann Lockridge, Louisiana State University Law Center
Vince Chiappetta, Willamette University College of Law
Anne Layne‐Farrar, LECG
Rahul Telang, Heinz College, Carnegie Mellon University
Molly Shaffer Van Houweling, UC Berkeley School of Law
10:20 – 10:40 Break
10:40 – 12:00 Channel Management Issues
Moderator: Mark P. McKenna, Notre Dame Law School
Dale D. Achabal, Santa Clara University
Mary Huser, Bingham McCutchen
Ariel Katz, University of Toronto
Catherine Sandoval, Santa Clara University School of Law
12:00 – 1:10 Lunch
12:40 Mark A. Lemley, Stanford Law School
1:20 – 2:40 Transborder and Comparative Issues
Moderator: Colleen Chien, Santa Clara University School of Law
Frederick M. Abbott, Florida State University College of Law
John A. Rothchild, Wayne State University Law School
Irene Calboli, Marquette University Law School
Cynthia Ho, Loyola University Chicago School of Law
2:40 – 3:00 Break
3:00 – 4:20 Copyright Issues
Moderator: Brian Carver, UC Berkeley School of Information
Neel Chatterjee, Orrick, Herrington & Sutcliffe LLP
Raymond T. Nimmer, University of Houston Law Center
Tyler T. Ochoa, Santa Clara University School of Law
Jason Schultz, UC Berkeley School of Law
4:20 – 4:30 Closing Remarks – Eric Goldman, Santa Clara University School of Law
4:30 – 5:30 Reception
Please register at the conference page. Hope you can join us on Nov. 5.
Posted by Eric at 09:15 AM | Copyright , E-Commerce , Licensing/Contracts , Patents , Trademark | TrackBack
October 13, 2010
Shining the Spotlight on Trademark Bullies (a Long-Delayed Recap of a Trademark Scholars Roundtable)
By Eric Goldman
[Occasionally, a blog post gets “stuck” in draft mode for months. These posts typically do not age well, as intervening developments often render the post moot or less interesting. As a result, most stuck blog posts eventually get killed without seeing the light of day. Today’s post is a stuck blog post that would have been better if I had published it when I first drafted it in April. Nevertheless, I think it's worth sharing even after 6 months of marinating.]
Last April, I attended a roundtable event at DePaul Law School where about 20 trademark scholars got together to discuss some sticky issues in trademark law. In her characteristically indefatigable fashion, Rebecca summarized our discussion (1, 2, 3). See my recap of the 2008 gathering of this group.
At the end of the roundtable, I summarized some of the discussion:
The roundtable's theme was permissible uses of trademarks, and my experience is colored by the fact that I see too many stupid trademark disputes. For example, a number of recent trademark articles have expressed angst about lawsuits over depictions of a fictional character misusing a trademarked product. Cases in this genre include the lawsuits over depictions of Slip-n-Slide (Wham-O v. Paramount Pictures Corp., 286 F. Supp. 2d 1254 (N.D. Cal. 2003)), Caterpillar (Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913 (C.D. Ill. 2003)) and Insinkerator (Emerson v. NBC, which settled). Our group of trademark scholars reached one (and only one!) point of complete consensus during our time together--that trademark lawsuits over these fictional depictions are bogus, and defendants should have a mechanism to shut the case down early and cheaply.
We are also seeing stupid online trademark cases. My exemplar is Lifestyle Lift v. RealSelf, where the trademark owner sued a consumer review website for trademark violations because the website had "used" the trademark to permit consumers to review the brand. The case settled, but as with so many of these cases, the trademark owner's beef was not obviously wrong to guarantee a quick and cheap exit for the defense.
Reflecting on these cases, I think trademark law needs a "fast lane" to squash bogus cases. My analogy is to a "12 items or less" lane at the grocery store; or for a legal analogy, we need the procedural efficiency that 47 USC 230 has conferred in a different context. As trademark doctrine implicates a broader array of social activity, a fast lane becomes increasingly important. However, I don't think our group reached consensus on which allegations might qualify for fast lane terminations.
We also spent a lot of time talking about possible categorical defenses to trademark claims, but any such defense may not provide a fast lane if the defense involves an assessment of possible consumer confusion. For example, the third factor of the Ninth Circuit nominative use test effectively asks judges to consider consumer perceptions about the possible relationship between the trademark owner and the junior user. Unless a judge is willing to make an empirically unsupported conclusion about consumer perceptions, the third factor prevents judges from using nominative use as a fast lane.
More generally, a defense can serve as a fast lane only if we accept that defendant wins *even when* there consumers might be confused. However, most judges and policy-makers (and many academics) aren't prepared to let trademark doctrine step aside when consumers might be confused, even if doing so would yield other benefits, and even if other legal doctrines might "gap fill." See, e.g., the Second Circuit’s tortured analysis in the Rescuecom v. Google case.
Our roundtable did not discuss the rise of non-judicial "adjudicators" of trademark disputes, but we've seen a proliferation of such activity online: search engine trademark policies, eBay's VeRO program, Twitter's trademark policy, the UDRP. These private adjudication programs are relevant to the fast lane discussion for two reasons.
First, if the private adjudicators adopt private rules that are more regressive than trademark law, the statute's doctrinal boundaries matter less. For example, if a search engine's private trademark policy bans keyword advertisements that should qualify as nominative use (as, I have argued, is the case with Google’s trademark policy today), a judicial fast lane protection won't help the advertiser-defendant because a lawsuit never will reach court in the first place. On the other hand, I recognize that many private trademark policies are shaped by substantive trademark law, so a liberalized trademark law might induce the private policies to liberalize as well.
Second, these private policies are important because trademark disputes are routinely adjudicated extrajudicially. A customer support representative at Google or eBay or even Twitter will resolve far more trademark "disputes" in a month than most judges will adjudicate in their careers. As a result, many of these private trademark policies represent the true state of trademark law in the field.
One take-away from the roundtable is that trademark senders face little disincentive to sending cease-and-desist letters, and the misuse/over-use of C&Ds has effectively expanded trademark law’s doctrines. Therefore, we discussed ways to thwart unmeritorious C&Ds.
One option: I learned that the UK and many Commonwealth countries have a "threats action" that allows a C&D recipient to sue the sender and get damages (including attorneys' fees for the suit). As I’ve thought about this since April, I increasingly believe this would be a good idea. I plan to explore ways we could implement this approach.
Another option is public scrutiny of trademark owner behavior. We saw how publicity was used to great effect in the North Face/South Butt dispute. Almost certainly, North Face would have fought harder, and scored itself an easy victory, if the case had not garnered the media scrutiny it did. In effect, publicity provided substantial counterweight to North Face's superior resources. How can we replicate this outcome in the countless other cases where trademark owners go too far? (To be clear, North Face's arguments did not seem frivolous in light of existing trademark law, but they were unquestionably humorless).
I have two possible thoughts, and I would invite your reactions. First, I wonder if there would be a way to create a public database of trademark owner C&D letters? For example, we could require trademark owners to send a copy of every C&D letter to a public repository, which would create a database of letters that could be monitored and scrutinized. Chilling Effects serves an analogous function, but it relies on recipients voluntarily contributing C&D letters rather than forcing senders to submit them. If we go this route, we should also statutorily eliminate the bogus argument that a C&D letter can be protected under copyright law (see prior blog discussion at 1, 2), which lets C&D senders threaten a bonus copyright infringement (or other) claim if the recipient publicly shares the letter.
Second, we need a central monitor who will call attention to stupid trademark enforcement efforts. Again, Chilling Effects is a step in this direction, but it mostly publishes demand letters in a neutral format rather than openly mocking the obviously bogus ones. Ultimately, this may take a little money to buy someone's time to do the necessary work, but the social benefits of this scrutiny could be enormous.
What do you think of these ideas? Do you have other ideas of how we might shine the spotlight on trademark bullies? Would you be willing to participate in any of these efforts? Please email me your reactions (and let me know if I can post to the blog attributed or not).
____
Three other recent developments relevant to this topic:
1) Some progress has been made on a proposed federal anti-SLAPP law. While this is a step in the right direction, it’s incomplete because anti-SLAPP protection only applies once the plaintiff has actually dragged the defendant into court—a subset of the problematic situations involving C&D letters. However, the anti-SLAPP law may apply to trademark lawsuits, so it may offer a useful fast lane in some cases.
2) In March, S. 2968, the Trademark Technical and Conforming Amendment Act of 2010, became law. This includes a provision instructing the Secretary of Commerce and the IP Enforcement Coordinator (Victoria Espinel) to conduct a study of “the extent to which small businesses may be harmed by litigation tactics by corporations attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner.” Oddly, it limits the inquiry to harmed “small businesses” and not other folks ensnared by the wide nets cast by trademark owners. Nevertheless, I look forward to hearing more about the study’s process—assuming it will be run publicly and isn’t being handled behind closed doors. [UPDATE: Today the PTO released a request for comments on this report. Why is the PTO involved in this process???]
3) At IPSC in Berkeley, I heard a presentation by Leah Chan Grinvald of SLU addressing many of these topics. I look forward to seeing the results of her research.
Posted by Eric at 09:16 AM | Copyright , Trademark | TrackBack
October 12, 2010
Blog Host Can't Be Bound by TRO for User Posts (Blockowicz redux)--Bobolas v. Does
By Eric Goldman
Bobolas v. Does 1-100, 2010 WL 3923880 (D. Ariz. Oct. 1, 2010)
This lawsuit involves Bobolasgate.info, a Greek-language blog/website that appears to criticize Greek real estate and media mogul George Bobolas (ranked as one of the top 10 wealthiest Greeks in 2009). I say "appears" because the site is in Greek and Google's translation was indeterminate. Given the blog is in Greek and targets Greece-focused issues, it's not clear which, if any, bloggers are located in the US, but the court assumes that one or more Does are US residents.
Bobolas seeks a TRO against both the blog authors and against non-party GoDaddy, which appears to host the blog and act as its domain name registrar.
The court asks why Bobolas didn't sue GoDaddy. Bobolas' attorney correctly replied that 47 USC 230 immunizes GoDaddy (see, e.g., GoDaddy's easy win in the Kruska case), but the court then observes that "Plaintiff has cited no authority suggesting that GoDaddy cannot be named as a defendant solely for purposes of effectuating injunctive relief." I've consistently taken the position that 230 preempts all form of relief, both monetary and injunctive, so I would cite the statute as the authority the judge seeks. Indeed, I would argue that suing GoDaddy for provisioning services to the blog should be sanctionable, so Bobolas' attorneys got it 100% right proceeding with GoDaddy as a non-party.
But Bobolas' attorneys got it 100% wrong thinking they could bind GoDaddy to injunctive relief as a non-party. I last addressed this issue in connection with the Blockowicz opinion from almost a year ago. FRCP 65 binds non-parties to injunctive orders only when the non-parties are related to the defendants, such as their agents or acting in concert with the defendants. As a garden-variety service provider to the blog, GoDaddy isn't anywhere close to the required level of interaction sufficient to be bound by FRCP 65. The court says:
Plaintiff's counsel argued that GoDaddy is an agent of Defendants given its role as website host and domain name registrar, but Plaintiff has made no such allegation in the complaint and provides no factual or legal proof on this point in its papers. As a result, the Court cannot enter a TRO against GoDaddy.
The court goes on to cite the Blockowicz precedent, saying "some courts have held that injunctions requiring defendants to remove defamatory statements from a website cannot be enforced against non-party website hosts like GoDaddy....Plaintiff does not address this authority."
The court doesn't say it outright, but the net effect of this ruling is that (like in Blockowicz) the plaintiff may end up with no ability to judicially force the content off the Internet. Bobolas may not be able to find the Does, or they may not be in countries that will recognize Bobolas' claims, or US courts may not recognize a foreign injunction (see Global Royalties v. Xcentric). If the content is truthful, this is a great outcome; if the content is wrong, it is less than optimal.
Of course, even without judicial compulsion, GoDaddy could help out Bobolas voluntarily. I've noted before that GoDaddy is not the fiercest champion of its users' interests (1, 2). As a result, a more likely scenario is that GoDaddy will intervene in deference to even minimal judicial provocation. In contrast, the Blockowicz conundrum arose only when Ripoff Report declined to honor a default judgment.
In any case, seeking a TRO against critical content is misdirected. The court rejects the TRO against the US Does, saying that Bobolas hasn't been able to show that the allegedly defamatory posts were made by them and did not provide enough evidence to support that the published statements were actionable defamatory (as opposed to non-actionable opinions or lacking the requisite scienter). The court also rejects a request to shut down the blog entirely, properly noting that doing so would be an impermissible prior restraint.
UPDATE: Paul Levy adds some thoughts about the lack of jurisdiction.
Posted by Eric at 01:45 PM | Content Regulation , Derivative Liability , Domain Names | TrackBack
Sending Politically Charged Emails Does Not Support Disturbing the Peace Conviction -- State v. Drahota
[Post by Venkat]
State v. Drahota, 280 Neb. 627 (Sept. 24, 2010) [pdf]
Background: Drahota was a student at the University of Nebraska who corresponded via email with his political science professor Avery. According to the opinion, they "shared a passion for politics," although they apparently resided on different ends of the political spectrum.
Drahota traded 18 emails with Avery on topics ranging from "terrorism, the Bush presidency, and the Clinton impeachment." Predictably, at some point, their email exchange went south:
In early February 2006, the exchange came to a head. Drahota sent Avery a lengthy e-mail suggesting that indiscriminately massacring those living in the Middle East would save American lives after first suggesting that Democrats, including Avery, were full of hate.
Avery responded:
I am tired of this shit. You have accused me of being anti-American, unpatriotic, and having a mental disorder, among other things. I find this offensive and I will not engage in anymore of this with you. I served my country in uniform honorably for four years. How many have you served? Since you are so pure, so pro-American, so absolutely correct, and wonderfully patriotic, I suggest you sign-up for duty in Iraq right away and put all your claims to the test. But, of course, you will not do that. You, Michael Savage, and the “Chicken Hawks” in the Bush Administration don’t have the guts!!
Of course, Drahota felt compelled to retort:
Fuck you! You don’t know me one bit. You are a liberal American coward. If it were up to you, you would imprison Bush before bin Laden because you have such a fascination with it. I am tired of your brainwashing students who are in the process of molding their minds. I spent 18 months in Pensacola Florida before I was honorably discharged for a neck injury. You can go fuck yourself if you are going to get that way. I’d kick your ass had you said that right in front of me, but YOU don’t have the guts to say that. If you think you do, just try me. You have done nothing for this country, but bad things in recent years. Once again, if you have the courage to say that to my face, I’ll let you do it, but don’t you EVER talk anything about the military with me. We call you people turncoats and I’ll be dammed if I’m going to take that kind of disrespect from someone who is so clueless as to my military background. As long as we’re on the topic, how many years did your hero Clinton serve? You contradict yourself so much that I want to puke. Your website is also a farce. You lie so much and don’t show the true you. I guess, you’re a politician. You’ve really pissed me off.
Drahota later apologized. Apparently, he didn't get back into good graces with Avery, who asked Drahota to not contact him again. In June, Drahota sent Avery two other emails. He sent the emails from averylovesalqueda@yahoo.com. The first email asked whether Avery was sad that Al-Zarqawi was killed in Iraq, and the second email (with the subject line that said "traitor") informed Avery that a friend of Drahota thought Avery was a "Benedict Arnold," in light of Avery's support for Michael Moore, the ACLU, and John Murtha. The closing sentence of this email said that "Libs like [Avery] are the lowest form of life on this planet."
Upon receiving these emails, Avery contacted the police department, who traced the emails to the house of a woman with whom Drahota was living. When confronted with this fact, Drahota admitted to sending the emails. He was charged with disturbing the peace, and fined $250.
The Court's Decision: The Nebraska Supreme Court held that Drahota could not be convicted of breach of the peace for sending the emails, on the basis that regardless of whether the words inflicted emotional injury, the proper test was whether the words would tend to provoke an immediate violent reaction. Here, the court held that the emails would not tend to provoke such a reaction, because the parties were engaged in an "ongoing political debate," in the context of which, both parties had made "provocative statements." The court also noted that at the time of the emails, in addition to being a teacher, Avery was also running for office, which brought Drahota's emails into the realm of political speech. At the end of the day, the circumstances did not support a conclusion that the emails would have provoked an immediate violent reaction in Avery, because among other things, he did not even know who sent the emails or where to find the author.
The State belatedly raised another argument at oral argument (which it left out in its brief). It argued that Avery had the "right to be let alone" after he asked Drahota to stop emailing him, and since Drahota sent emails after Avery's request, regardless of the content, the emails constituted a breach of the peace. The court disagreed, and rejected the State's argument that Rowan v. Post Office Dept. supported its position. Rowan is a case from the 1970s which involved a federal statute that allowed a homeowner to request a vendor to remove his or her name from a mailing list if the homeowner found the material sent by the vendor to be sexually provocative. [Is there anyone out there would not support a statute like this that would let you ban mail order catalogs from your mail box?] The Supreme Court upheld this statute against a challenge brought by bulk mailers. The court in Drahota distinguished Rowan primarily on the basis that there was no Nebraska statute in place like the one at issue in Rowan. Further, the statute in Rowan merely allowed the government to enforce the homeowner's preference "and had no part in deciding what was objectionable." According to the court, in contrast to Rowan, in the present case, the decision of whether the communications were objectionable where left in the prosecutor's hands, who enjoyed the discretion to bring a prosecution for a breach of the peace. [Rowan also mentions the quasi-physical intrusion associated with receiving unwanted mail.]
__
As Professor Volokh - who represented Drahota - notes, the decision is not remarkable as a matter of First Amendment law ("Nebraska Supreme Court Decision on Offensive E-Mails"). One point that was interesting was the court's conclusion that the emails could not rise to the level of fighting words because the recipient in this case was far removed physically from the sender. The court says this is because Avery did not even know who sent the emails, but I'm guessing he figured this out pretty quickly. Some of the commenters at the Volokh Conspiracy raised the question of whether emails can ever constitute fighting words. I don't know the answer to this question, although some decisions hold (right or wrong) that repeated unwanted emails can result in liability for harassment. In answering the question, I think it's worth distinguishing harassment or stalking from a "breach of the peace," which is what Drahota was charged with here.
[Physical proximity seems to be a big factor in our views on whether electronic communications can constitute fighting words. However, we may want to keep in mind the story of the woman who supposedly traveled 200 miles to try to kill an internet commenter: "Woman Travels 200 Miles, With Gun in Hand, to Kill Mean Internet Commenter." No comment as to whether this is reasonable or typical.]
On a related note, I happened to listen to the oral argument in Snyder v. Phelps, the funeral picketing case. Some of the discussion focused on the posting of videos online. As Dahlia Lithwick notes in Slate:
Justice Stephen Breyer—who has had a good deal to say about the Internet and incitement and free speech and balancing tests in recent weeks—also wonders whether the interesting part of this case is the handful of signs at Matthew Snyder's funeral, which Albert Snyder never saw, or the television broadcasts and Internet postings that followed. And so he's off: "Do you think that a person can put anything on the Internet? Do you think they can put anything on television, even if it attacks, say, the most private things of a private individual?"
I haven't followed the case closely (other than in the news), so I can't say whether the Supreme Court will squarely address the issue of how the internet postings will figure into whether the funeral protesters can be held liable for their speech, but I thought it was worth noting that it came up during the argument.
Congrats to Professor Volokh, whose involvement in the case was, coincidentally, the result of an email.
Added: I forgot to mention the "Twitter joke trial" case from the UK, where Paul Chambers was convicted for "sending a menacing message over a public telecommunications system" based on the following tweet:
Crap! Robin Hood Airport is closed. You've got a week... otherwise I'm blowing the airport sky high!
He is appealing is conviction. You can check out details about the case at the "Jack of Kent" blog ("Why the Paul Chambers Case Matters") and at the New Statesman ("A brief guide to the Twitter Joke Trial").
Posted by Venkat at 10:36 AM | Content Regulation , Spam
October 11, 2010
Class Action for Misleading Pop-up Ads Against McAfee Survives Motion to Dismiss -- Ferrington v. McAfee
[Post by Venkat]
Ferrington v. McAfee, Case No. 10-cv-01455-LHK (N.D. Cal. Oct. 5, 2010)
There have been a few rulings involving class actions from customers alleging that an online merchant partnered with a third party who improperly piggybacked on to the merchant's transaction (and in the process the customer ended up buying something he or she did not want to purchase). (See In re: Easysaver Rewards Litigation -- Internet Rewards Program Class Action Survives Initial Motion to Dismiss and Fifth Circuit Blesses Vistaprint's Rewards Program Sign-Up Process.) Congress is taking a look at these types of practices and New York's Attorney General has settled with several companies who allegedly engaged in these types of practices. A lawsuit against McAfee alleging similar claims recently survived a second motion to dismiss.
Background: As alleged by the plaintiffs, McAfee, the computer security software seller partnered with
Arpu . . . a company that places online advertisements that enable consumers to purchase products 'with a single click, using credit card information already on file'. . . . Arpu partnered with McAfee to place ads on McAfee's website that would appear after a customer completed a purchase of a McAfee product. If a customer chose to subscribe to the product or service offered in the Arpu ad, McAfee transmits [the customer's] billing information to Arpu for use in the purchase of the Arpu product. . . . . After [plaintiffs] completed their transactions, but before they downloaded the McAfee product, an Arpu pop-up ad appeared on their computer screens with the button reading 'Try it Now.' Believing that clicking on 'Try it Now' would download the McAfee software they had just purchased, plaintiffs clicked on the button. They later learned that clicking on 'Try It Now' authorized McAfee to transfer their billing info to Arpu, enrolled them in a 30-day free trial of a non-McAfee product called PerfectSpeed, and authorized Arpu to charge them a $4.95 monthly subscription fee after the expiration of the free trial period.
Plaintiffs brought claims under California's unfair competition law and the California Consumer Legal Remedies Act, along with a few other claims.
The Court's Ruling:
Screenshots: As an initial matter, McAfee tried to rely on screenshots of the online sign-up process and have these screenshots judicially noticed. Predictably, the court declines McAfee's offer, because among other things, McAfee itself admitted that it "recreated the image Plaintiffs would have seen . . . [since] the pop-up [ads at issue were] no longer running." [emphasis added] Plaintiffs also disputed McAfee's representation that the ads were identical to what the plaintiffs saw during the purchase process. McAfee also tried to rely on documents from Arpu (e.g., terms of use, purchase confirmation emails, etc.). This request suffered the same fate, because among other things, McAfee failed to provide an explanation of the source of the documents. (Even if McAfee explained where they came from, these documents were not properly subject to judicial notice. They would have been contested anyway, so I'm not sure why McAfee thought it could have the court judicially notice these documents.) As in the Easysaver Rewards case, plaintiffs requested the court to judicially notice a Senate Report titled "Aggressive Sales Tactics on the Internet and their Impact on American Consumers," and two similarly themed FTC reports. The court acknowledged that these reports were prepared, but did not take notice of the findings and opinions contained in those reports.
Unfair Competition Claim: McAfee initially argued that plaintiffs could not obtain damages under 17200 since they had not paid McAfee any money - i.e., plaintiffs paid money to Arpu which plaintiffs were improperly trying to recover from McAfee. The court rejects this argument, concluding that if plaintiffs had paid money to a third party as a result of McAfee's unfair trade practices, plaintiffs could recover this money as restitution, even though they paid it to a third party. It was not lost on the court that McAfee and Arpu likely had some sort of financial arrangement pursuant to which Arpu would pay McAfee amounts for customers that clicked through.
As far as the merits were concerned, the court looked to two tests for evaluating plaintiffs' 17200 claim that McAfee engaged in an "unfair" trade practice: (1) the amorphous balancing test (where the harm to the consumer is balanced against the utility of the defendant's practice) and (2) the test that looked to whether the defendant's conduct was unfair in light of public policy "tethered" to an actual law or statutory provision that was intended to carry out public policy. With respect to the tethering test, the court found that plaintiffs could not point to any statute or rule to which they could tether their unfairness claim. However, the court found that plaintiffs could assert a claim under the balancing test. Here the court balanced the harm to the plaintiffs from the allegedly misleading statements against the utility of the advertising by McAfee. Surprisingly, the court seemed to struggle with the balancing, in light of the purported utility of pop-up ads. Not shockingly, McAfee could not argue that pop-up ads served a useful purpose, beyond pointing out that the pop-up ads were useful in the same way that any garden variety advertisement was "useful." [I'm not sure who will testify on McAfee's behalf that this is actually the case, but I'm sure some internet user exists out there somewhere that can testify to this.]
Plaintiffs also asserted a claim under the "unlawful prong" of 17200, which allows plaintiffs to borrow from other statutes and use violations of these other statutes to support a 17200 claim. The court held that a plaintiff could assert a 17200 claim based on a Lanham Act violation because the Lanham Act cases do not reflect an intent to bar an independent private right of action. Nevertheless, the court held that the plaintiffs did not adequately state a claim here, because the plaintiffs had not alleged "the existence of a valid and protectable mark that is being used [by McAfee] without authorization." Plaintiffs also asserted that McAfee engaged in an unlawful trade practice alleging that McAfee violated the Consumer Legal Remedies Act.
CLRA Claim: The CLRA prohibits unfair practices undertaken in the context of a transaction involving the "sale or lease of goods or services." McAfee argued that the CLRA did not apply because the McAfee transaction involved software which is not a good or service covered by CLRA. As McAfee notes, the CLRA defines goods as "tangible chattels." McAfee analogized software to insurance and credit, which courts have previously held are "intangible chattels," and not covered by the CLRA. McAfee also cited to secured transaction provisions of California's version of the Uniform Commercial Code, which defines "general intangibles" to include software and which exclude computer programs from the definition of "goods."
The court noted the mixed authority on this issue but ultimately concluded that "the software [plaintiffs] purchased is not a good covered by the CLRA." The court additionally concluded that software "generally is not a service for purposes of the CLRA." (CLRA defines service as "work, labor, and services . . . including services furnished in connection with the sale or repair of goods.") In addition, the court rejected plaintiffs' argument that the particular subscription provided by Arpu should be considered a service, on the basis that plaintiffs had not alleged "sufficient facts as to the nature of the services provided by [Arpu] to allow the court to draw that conclusion." The court granted plaintiffs leave to allege this in an amended complaint.
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My first reaction is . . . what the heck were McAfee's marketing folks thinking signing up Arpu's services? McAfee, as a provider of computer security software, offers a third party's product that customers are prompted to purchase through a pop-up ad at the point of sale? Worse yet, McAfee allegedly transferred the plaintiffs' credit card information to a third party based on plaintiffs' assent to terms that were vaguely displayed in a pop-up ad? As detailed in the post about Vistaprint, a robust disclosure may insulate an internet merchant who refers its customers to a rewards program at the point of sale, but the plaintiffs' allegations (and the dispute as to the terms that were presented to the consumers) easily take this case outside this category. Again, setting aside the legal issues, where - other than out to lunch - was McAfee's brand manager in this transaction? McAfee bills itself as a company who makes available products to protect consumers from shady websites and software, but taking plaintiffs' allegations as true, isn't McAfee engaging in the very conduct that its services are designed to protect against? Regardless of how the lawsuit pans out, plaintiffs' allegations put McAfee and its brand in an uncomfortable spot.
The case offers teaching similar to Vistaprint and Easysaver: if you are going to inject a third party transaction in the context of an online sale, your documentation better be bulletproof and should make crystal clear to the consumer that a third party is involved. And if you are going to seek judicial notice, the online terms have to be truly indisputable. The court in this case contrasts Vistaprint by noting that in Vistaprint, (1) customers were required to enter their email addresses, (2) the pop-up offer terms were presented in close proximity to where consumers had to enter their email addresses, and (3) the ads in Vistaprint "clearly identified the third party receiving" the billing information from Vistaprint. Regardless of the disclosure, the whole "transferring a customer's payment information to a third party" sounds like a practice that internet merchants may want to steer clear of.
I'm not sure what to make of the Lanham Act ruling, but the CLRA ruling is interesting. Article 2 of the UCC contains a broad definition of goods, and software (particularly off-the-shelf software) has been classified as a good for Article 2 purposes. A finding that this type of software is not subject to the CLRA certainly narrows the scope of remedies available to consumers, but is defensible in light of the narrow definition for goods employed by the CLRA. (“Goods” are defined as “tangible chattels,” and “services” are defined as “work, labor and services . . . ” under Cal Civ. Code §§ 1761(a) and (b).)
Posted by Venkat at 11:14 AM | E-Commerce , Licensing/Contracts , Marketing
October 08, 2010
Inflatable Giant Gorilla Attacks Google (for Copyright Infringement)--Scherba v. Google
By Eric Goldman
Scherba Industries v. Google, Inc., 1:10-cv-02288 (N.D. Ohio complaint filed Oct. 7, 2010).
Scherba makes giant inflatable gorillas. See an example. A little improbably, it has a copyright registration for a 3D sculptural work called "Gorilla Inflatable"--the work being its inflatable product blown up.
Recently, Google ran an ad campaign promoting its AdWords service in periodicals like Entrepreneur and Crain's Cleveland Business. The ad copy includes a picture of a large inflatable gorilla that looks very, very similar to Scherba's gorilla. Google shows the inflatable gorilla as an apparent advertiser alternative to AdWords--either you can put your ad on top of an inflatable gorilla (a poor choice), or you can place your ads with Google (a good choice). (Perhaps ironically, many critics would disparage Google as the 800 pound gorilla of online advertising). The ad copy doesn't identify the gorilla.
So Scherba sued Google for copyright infringement for showing the picture of an inflated gorilla in its ad copy. All morning, I've been scratching my head trying to puzzle through the issues. Some questions:
* is the depicted gorilla actually a picture of Scherba's inflatable gorilla, or could it be someone else's? Even if it's Scherba's, the gorilla has strong resemblances to King Kong, which in turn has a murky ownership, making me wonder exactly what Scherba owns, what's owned by one of the many claimants to King Kong, and what's in the public domain. If Google fights this, Google might try to bust the copyright.
* The complaint only makes a copyright claim (plus related claims for injunctive relief and a declaratory judgment) but conspicuously does not plead trademark infringement. This makes sense because Google didn't reference the Scherba brand in the ad copy, and Scherba's product almost certainly lacks secondary meaning enough to support trade dress protection.
* can Google take advantage of 17 USC 113(c)? Among other things, 113(c) allows retailers and distributors to take product shots of the goods they are selling and use those shots in advertising. (For more discussion on 113(c), see this post). Specifically, the statute permits photos of sculptural works "in connection with advertisements or commentaries related to the distribution or display of such articles, or in connection with news reports." Google might argue that it's commenting upon the effectiveness of using inflatable gorillas for advertising purposes; otherwise, the 113(c) defense may not apply.
* Can Google successfully claim fair use? Fair use defenses are always dicey for ad copy, and this isn't really a parody (although it might be a commentary). Even so, Google's usage of the copyright is so inconsequential/chickenscratch that some judges will not be sympathetic to Scherba.
* If Google did in fact infringe on Scherba's copyright, how did the error happen? One possibility: it never occurred to Google that any manufacturer of inflatable gorillas would claim a copyright over the product design. That's not exactly intuitive.
For advertisers, this lawsuit is a good reminder to thoroughly vet every graphical element of the ad copy. Be careful out there; it's a gorilla-eat-gorilla world.
Posted by Eric at 01:27 PM | Copyright , Marketing | TrackBack
September 2010 Quick Links, Part 2
By Eric Goldman
Contracts
* Hutchison v. Yahoo, 2010 WL 3706571 (9th Cir. Sept 20, 2010). AT&T's early termination fee wasn't a penalty, even as applied to a termination with only 2 weeks of service left.
* Evan Brown: Software contractor not bound by EULA it clicked on behalf of client.
* Zev J. Eigen, When and Why Do Individuals Obey Form-Adhesive Contracts?: Experimental Evidence of Consent, Compliance, Promise and Performance: “Individuals are more likely to comply with contract terms obligating them to perform an undesirable task when they see and choose to include the terms in the contract during the consent phase. The research also shows that demands for enforcement framed in moral terms–as a promise made that must be lived up to—similarly yield a greater likelihood of compliance than threats of legal action, instrumental appeals or pressure to conform socially.”
* Ewert v. eBay, 2010 WL 3893681 (N.D. Cal. Sept. 30, 2010). Class of sellers certified against eBay over alleged misrepresentations over the duration of auctions.
47 USC 230
* Voicenet Communications, Inc. v. Corbett, 2010 WL 3657840 (E.D. Pa. Sept. 13, 2010). Police raided a Usenet service provider looking for child porn and seized almost everything they could find. The service provider unsuccessfully sued for 1st and 4th amendment violations. In this ruling, the court also refuses to grant injunctive or declaratory relief to the service provider based on the service provider's 47 USC 230 immunity. My prior post on this case.
* Black v. Google Inc., 2010 WL 3746474 (N.D. Cal. Sept. 20, 2010): "Plaintiffs appear to argue that Congress did not intend to grant immunity under § 230 in circumstances involving anonymity....However, there is no provision in the CDA that imposes such a limit." Prior blog post.
Content Regulation
* The jury ruled for the defense in Moreno v Hanford Sentinel, an instant-classic cyberlaw case. My prior blog post.
* Defamation lawsuits against the media are down sharply.
* Nebraska v. Drahota (Neb. Sup. Ct. Sept. 24, 2010). Anonymous harsh emails cannot be prosecuted as a breach of the peace when they did not amount to "fighting words."
* California enacts an "e-personation" law against fake online identities. CA Sen. Joe Simitian’s commentary.
* Congress goes after crush animal videos again.
* Useful Berkman Center report on the legal regulation of sexting, although not surprisingly the report does not offer any good answers.
Technology and our Legal System
* U. S. v. Diehl-Armstrong, 2010 WL 3718941 (W.D. Pa. Sept. 20, 2010). No change in the trial’s venue due to either popular YouTube videos related to defendants (which do not indicate the geography of viewers) or a Wikipedia entry.
* In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 2010 WL 3720406 (S.D.N.Y. Sept. 7, 2010): "Search engines have indeed created significant new dangers for the judicial system. It is all too easy for a juror to find out more than he or she should by typing a few carefully chosen words into a search engine. Nevertheless, in this instance, the jury was not too polluted by the receipt of extra-judicial information such as to prevent it from rendering a fair verdict based on the evidence introduced at trial."
* NY State Bar Association Opinion #843 (Sept. 10, 2010): "A lawyer representing a client in pending litigation may access the public pages of another party's social networking website (such as Facebook or MySpace) for the purpose of obtaining possible impeachment material for use in the litigation."
* ABA Formal Opinion 10-457: Lawyer Websites: "Lawyers must not include misleading information on websites, must be mindful of the expectations created by the website, and must carefully manage inquiries invited through the website. Websites that invite inquiries may create a prospective client-lawyer relationship under Rule 1.18."
Miscellaneous
* Posted to my personal blog: “Scribd Puts My Old Uploads Behind a Paywall and Goes Onto My Shitlist”. As Wired explains, Scribd’s meltdown continues.
* Slashdot on a competition for automated Wikipedia anti-vandalism efforts. Later this year, I’ll address how and why my Wikipedia doomsday predictions haven’t come to pass.
* AOL quietly settled its community leaders lawsuit for $15M. The money was distributed this summer, so I believe the lawsuit is over. Unfortunately, this case leaves unresolved important issues about employment law applied to crowdsourcing.
* Apple has clarified and liberalized its App Store policies. Always smart to keep developers on your side.
* Zamora Radio, LLC v. Last.FM, 2010 WL 3893985 (S.D. Fla. Sept. 30, 2010). Internet radio station may not be sufficiently interactive to support remote jurisdiction.
* Evan Brown on Reed Construction Data v. McGraw Hill Companies, a case where competitor A accessed competitor B's proprietary database using stealth contractors.
* The Supreme Court denied certiorari in the Boring v. Google case.
* Law.com: 25 Most Influential People in IP. I nominated several of the selected folks. However, I did notice one group was categorically not present—the list does not contain any bloggers...
Posted by Eric at 12:04 PM | Content Regulation , Derivative Liability , General , Licensing/Contracts | TrackBack
October 07, 2010
Two More Courts Close the Doors on Data Breach Plaintiffs
[Post by Venkat]
There are a slew of cases that reject data breach claims brought by plaintiffs who have not suffered out of pocket losses. Recently, courts in Maine and Oregon joined the group of courts rejecting such claims.
In re Hannaford Bros Co. Customer Data Security Breach Litigation, (Maine Supreme Court; Sept. 21, 2010): This is one of the cases arising out of the compromise of Hannaford Bros. computer system (which resulted in the theft of "up to 4.2 million debit and credit card numbers, expiration dates, security codes, PINs and other information"). The merchants and service providers (and insurance companies) sparred separately, but this case involved claims asserted by affected customers. A group of 21 plaintiffs filed a lawsuit. Of these, one had a non-reimbursed or unresolved credit card charge, and the other plaintiffs had either not experienced any unauthorized charges or their charges had been resolved. Hannaford moved to dismiss, and the federal district court (where the case was originally filed) dismissed the bulk of the claims. (An earlier post of mine has some details of the district court decision: "Hannaford Data Breach Plaintiffs Rebuffed in Maine.") After the district court's ruling, the only plaintiff who suffered out of pocket loss had the charges reimbursed by the bank. The plaintiffs then moved for reconsideration, asserting that time and effort expended to "avoid or remediate" harm was sufficient damages under Maine law. The plaintiffs also moved to have the district court certify this issue to the Supreme Court of Maine.
The Maine Supreme Court answered the certified question in the negative, holding that "time and effort alone, spent in a reasonable effort to avoid reasonably foreseeable harm, is [not] a cognizable injury under" Maine law. The court notes that plaintiffs are required to mitigate damages, and in certain circumstances, plaintiffs are allowed to recover for their mitigation efforts. However, the court concludes that plaintiffs must "establish[] that the time and effort expended constitute a legal injury rather than an inconvenience or annoyance."
Paul v. Providence Health System-Oregon, (Ore. Ct. App. Oct. 6, 2010): this case involved the theft of patient care information, which was stolen as a result of an employee's decision to take data-laden disks and tapes home and leave them in his car overnight. [I'm guessing he will never leave anything valuable overnight in a vehicle ever again.] "The disks and tapes contained unencrypted patient records for approximately 365,000 individuals; the records included names, addresses, phone numbers, social security numbers, and patient care information." Plaintiffs asserted claims under negligence and an unfair trade practices statute.
The court cited to Oregon precedent rejecting claims brought by smokers who sought to recover for the increased risk of developing lung cancer. In rejecting the smokers' claims, the Oregon Supreme Court held that increased risk of future physical injury is not a cognizable injury in the negligence context, and that the economic cost of ongoing medical monitoring was not a sufficient injury to provide a basis for a negligence claim. Focusing on the second issue, the court framed the issue as whether a special relationship existed between the plaintiffs and Providence that warranted a departure from the general rule that you cannot recover for purely economic damages from a stranger. According to the court, the exception arises where there is a "special relationship" between the parties, for example where one party has "relinquished control over the subject matter of the relationship to the other party." Plaintiffs pointed to laws that required physicians to preserve the confidentiality of patient information, but the court held that this duty gave rise to a claim where there is an "affirmative disclosure" of confidential information, which the court awkwardly distinguished from the present case, which involved a mere failure to safeguard.
Finally, the court also dismissed the unfair trade practices claim brought by plaintiffs on the basis that plaintiffs did not allege "ascertainable losses."
___
Neither decision is particularly groundbreaking. I recently blogged about Ruiz v. Gap, which arrived at the same result ("9th Circuit Affirms Rejection of Data Breach Claims Against Gap"), but this is a relatively well established trend. Both courts engage in judicial contortions (that seemed strained at certain points) to arrive at the same conclusion: no out of pocket loss = no claim. Interestingly, neither the Hannaford case nor the Providence Health case contain much discussion of credit monitoring services, which many data breach defendants offer as a matter of course.
Related: Professor Solove at Concurring Opinions wrote a post in reaction to the Hannaford ruling that warrants some additional discussion: "Are People Really Harmed By a Data Security Breach?" I'll save that for a later post, hopefully this week.
Previous blog posts on data breach cases:
When Does a Privacy Policy Breach Support a Breach of Contract Claim? In re JetBlue (Dec. 2005)
Acxiom Not Liable for Security Breach--Bell v. Acxiom (Oct. 2006)
The [Non]enforceability of Privacy Promises--Pinero v. Jackson Hewitt (Jan. 2009)
Starbucks Data Breach Plaintiffs Try Their Luck in the 9th Circuit -- Krottner v. Starbucks (Nov. 2009)
Claims Brought by Express Scripts Data Breach Plaintiffs Rejected on Standing Grounds (Dec. 2009)
9th Circuit Affirms Rejection of Data Breach Claims Against Gap -- Ruiz v. Gap (Jan. 2010)
Posted by Venkat at 10:05 AM | Privacy/Security
September 2010 Quick Links, Part 1 (IP Edition)
By Eric Goldman
Copyright
* US v. ASCAP (2d Cir. Sept. 28, 2010): "the Internet Companies offer their customers the ability to download musical works over the Internet. It is undisputed that these downloads create copies of the musical works, for which the parties agree the copyright owners must be compensated. However, the parties dispute whether these downloads are also public performances of the musical works, for which the copyright owners must separately and additionally be compensated. The district court held that these downloads are not public performances, and we agree."
* "Combating Online Infringement and Counterfeits Act" (COICA). Who dreams up crazy shit like this? The EFF's take. Fortunately, the bill is on hiatus for now.
* The Fifth Circuit issued an amended opinion in MGE UPS Systems Inc. v. GE Consumer and Industrial Inc., 2010 WL 3769210 (5th Cir. Sept. 29, 2010)—apparently removing some of the most quirky discussions about 1201 anti-circumvention.
* Righthaven sued U.S. Senate candidate Sharron Angle for copyright infringement. If Angle wins, maybe her agenda will include copyright reform. Ars Technica does a good job summing up the Righthaven mess. In Righthaven v. Klerks (D. Nev. Sept. 17, 2010), the judge overturned the defendant’s default & suggested that the defendant’s fair use/implied licenses defenses could succeed.
* Vigorous copyright battle over rival chocolate milk apps. Maybe the parties need a timeout.
* Miller v. Facebook, 2010 U.S. Dist. LEXIS 98924 (N.D. Cal. Sept. 21, 2010). Miller adequately served Yeo, Facebook's co-defendant, so Facebook could not dismiss the case based on Miller's failure to follow the judge's instructions to bring Yeo into the case. Prior blog post.
* The Copyright Principles Project, a 3 year effort led by Pam Samuelson, has released its report and recommendations.
Trademark
* Paris Hilton settles her "That's Hot" trademark lawsuit over greeting cards.
* Partners for Health and Home v. Yang (C.D. Cal. Sept. 13, 2010): "Defendants admit to having purchased the terms 'perma-life' and 'perma life' in internet search engine advertising keywords....These terms are identical and nearly identical to the Plaintiff's trademark. Thus, Plaintiff has provided evidence to support a likelihood of success on the merits of this issue."
* Harry and David v. ICG America, Inc., 2010 WL 3522982 (D. Or. Sept. 7, 2010). Rejecting the consolidation of two separate keyword advertising cases by Harry & David against different defendants because of the unique inquiries into each defendant's situations.
* Putting goats on a restaurant's roof is protectable trade dress? If the roof is grassy, what about the functionality doctrine?
* Is "Pepsi" generic for "cola" in India?
* Rebecca on a ridiculous trademark claim from an exclusive TM licensee that the licensor was allowing other logos to appear *near* the exclusively licensed TM in photos. For more on the folly of adjacency as being actionable under TM law, see my Brand Spillovers article.
* Pensacola Motor Sales v. Eastern Shore Toyota, 3:09-cv-00571-RS-MD (N.D. Fla. Sept. 23, 2010): “Defendants argue they are entitled to summary judgment because the internet ‘key words’ or ‘ad words’ they purchased do not constitute a misrepresentation or cause confusion under the Lanham Act. However, Defendants cite no case law in support of their argument and merely make a factual argument that these ad words do not meet the requirements of the Lanham Act. Plaintiff has presented facts that could lead a jury to conclude that Defendants’ purchase of ad words does indeed meet the requirements of the Lanham Act. Thus, there clearly remains a genuine issue of material fact, and summary judgment is not appropriate for Defendants on count II.”
* uBID v. GoDaddy (7th Cir. Sept. 28, 2010). Illinois has personal jurisdiction over uBID's anti-cybersquatting claim against GoDaddy for domain name parking. Some interesting observations from the court:
GoDaddy has thoroughly, deliberately, and successfully exploited the Illinois market. Its attempt to portray itself either as a local Arizona outfit or as a mindless collection of servers is unconvincing....No more persuasive is GoDaddy’s argument that its sales to Illinois residents are automated transactions unilaterally initiated by those residents….
GoDaddy’s contacts with Illinois are extensive. It has hundreds of thousands of customers in the state and earns millions of dollars in revenue from the state each year. Illinois residents encounter GoDaddy’s ads on television, on the Internet, and on billboards at Wrigley Field and the United Center, among many others. GoDaddy has continuously and deliberately exploited the Illinois market for domain name registration and has profited handsomely from it.
* How 6 Memorable Tech Companies Got Their Names
Advertising
* Lindsay Lohan and E*Trade settled the "milkaholic" publicity rights lawsuit. [I hope this is the first and last time I discuss both Paris Hilton and Lindsay Lohan in the same blog post]
* On remand, the district court rejected Tiffany's false advertising claim vs. eBay. Rebecca discusses the ruling. My prior blog post.
* Yahoo juryrigs its ad display algorithm to artificially get advertisers to bid more. This seems like the kind of thing that spurs plaintiffs’ lawyers into action.
* Lengthy retrospective on ASIS, one of the serial anti-spam plaintiffs whose business crumbled after Gordon v. Virtumundo and a judge ordered her to pay $800,000 to Azoogle. Great line from ASIS's principal: “I thought I was the Jeanne d’Arc of spam…But then she got assassinated, so what was I thinking?”
* Google trying to get pharma companies to try a new ad unit that helps them comply with FDA regulations.
* Webloyalty settles with the NYAG for $5.2M.
* Ads in celebrity Facebook "fan page" newsfeeds are coming.
* Robert Sprague and Mary Ellen Wells, Regulating Online Buzz Marketing: Untangling a Web of Deceit, 47 American Business Law Journal 415 (2010).
Posted by Eric at 10:02 AM | Copyright , Marketing , Trademark | TrackBack
October 06, 2010
Tip for Clean Living: Don't Use a 14 Year Old's Self-Portrait in Advertising for Porn--Lara Jade Coton v. TVX
By Eric Goldman
Coton v. Televised Visual X-ography, Inc., 2010 WL 3768039 (M.D. Fla. Sept. 16, 2010). The initial complaint. Lara Jade's blog post on the court victory. Comprehensive recap from Plagiarism Today, who has been tracking the case all along.
Lara Jade Coton is a precocious photography talent. When she was 14, she took a self-portrait photo dressed up in a top hat and black strapless dress. The photo has no nudity and really isn't all that salacious. Coton posted the photo to a website called deviantArt, which describes itself as "the largest online social network for artists and art enthusiasts." Her account page.
The case involves a pornographic film "Body Magic," redistributed by TVX/Burge. The IMDB page. A contractor, Cohen, copied the photo from deviantArt (or some third party site that had picked up the photo) to use in Body Magic's marketing collateral, including on the DVD package's cover and as the image on the disc itself.
Obviously, this was a poorly considered decision. First, this decision appears to reflect the misapprehension that any photos on the Internet are free to reuse. Second, the decision appears to ignore the overlaps between copyright and publicity rights. We've seen this issue arise from time to time with Flickr photos and Creative Commons licenses; even if a Flickr photo can be freely republished due to a permissive CC license, the photo can't be used for advertising purposes if a person is identifiably depicted in the photo without obtaining that person's publicity consent. As part of our forthcoming casebook on Advertising and Marketing Law, I took a deeper look at publicity rights in advertising, and the case law is horrible for defendants--courts adopt very broad views of what constitutes advertising and identifiability in the advertising even when faces aren't shown. Every principal case we've included in the draft chapter is a defendant loss. Basically, if you're going to show or reference people in advertising, you need their permission.
After Coton discovered that her photo was being used, Coton contacted Burge and entered an email exchange rife with grammar and spelling errors. In one email, Burge replied:
Not only will you not be compensated for your photo we have turned this problem over to our attorney it seems the company my graphic company got the photo from on the internet is a public domain operation. You knew this when you originally sent us your scheming letter. Nice try toots.
Bonus tip for clean living: don't use the word "toots" in any responses to cease-and-desist letters.
After promising to remove Coton's photo, Burge further replied:
I'M SURE BY THE END OF THE MONTH YOUR FACE WILL BE HIS TORY. WE HAVS TOPPED SELLING THE DVD UNTIL COVER IS REPLACED. WE HAVE FURTHER CHECKED OUT YOUR NAME AND ITS NOT LIKE IT'S A HOUSE WHOLE NAME. ACTUALLY, REMOVING YOUR IMAGE WILL HELP IMPROVE THE SELL OF THE DVD ..... SO FAR IT BOMBED.
In retrospect, it is awkward for the film distributor to blame a 14 year old for not selling more copies of a pornographic video.
Coton sued a number of parties; all of them settled except for TVX/Burge, who defaulted on liability but contested damages. At issue were damages for three successful claims: direct copyright infringement, statutory misappropriation of her image, and defamation by implication.
Copyright Infringement. Coton didn't have a timely registration to qualify for statutory damages or attorney's fees. Without those, the damages are pretty low. As a professional photographer, the court accepts her asserted licensing fee of ~$3k. With low sales and a low retail price, the distributor's profits are ~$1k, for a total copyright damages award of a little over $4k.
As we've discussed so many times before (see, e.g., this post), timely copyright registration can mean the difference between a big payday and an uneconomic case. If Coton had made the timely registration, she would have likely gotten a larger damages award than $4k, and this court probably would have awarded attorneys fees of many tens of thousands of dollars.
(Note: at the time she posted the photo to deviantArt, she was an amateur photographer in Britain, so it's not surprising she didn't make a timely copyright registration. I'm sure she registers her photos early and often now).
The court rejects her claims for contributory copyright infringement for the distributor's liability for the retailers' activity, both because the distributor didn't know it was infringing the photo and because a separate damages award for contributory infringement would be double-counting.
Florida Publicity Rights (a/k/a "misappropriation"). The court denied Coton's statutory damages request for the misappropriation, treating it as a double-recovery with the copyright license award. To me, this seems like a clear error. Typically, a photo used in advertising will require separate copyright license and publicity rights license fees. In this case, it just so happened that Coton was both the photographer and the photo subject, but that shouldn't affect the respective license fees. However, Coton requested only $770, so the court's apparent error isn't a big financial deal.
The court accepts Coton's request for $25k compensatory damages for reputational harm but rejects the request for punitive damages because TVX/Burge didn't know of the misappropriation (Cohen made the error) and remediated it quickly following notice. The court also rejects any separate damages under common law misappropriation (not preempted by Florida statutory law; see the Almeida case) as double-dipping with the statute-based damages.
Defamation by Implication. Coton argued that using her self-portrait on a porn DVD false implied her participation in or support of the porn industry. The court accepts Coton's request for $100k compensatory damages "for the humiliation and mental anguish caused by the defendants' defamatory use of her self-portrait" but denies punitive damages for the same reason it denied punitive damages for misappropriation.
Net Effect. Coton won this ruling, but I would characterize it as a small win, not a big one. She had so many factors in her favor: copyright infringement, defaults by defendants, sloppy business practices by the defendants and the overall unsavoriness of the tort (associating a 14 year old with porn). At the case outset, if I knew Coton was going to win on liability, I would have estimated a higher case value than $130k. (I presume she got cash from some of her settlements, so the total payday is likely more). Factoring in attorneys' fees and the fact she will still have to work hard to get the defendants to pay the judgment, this result isn't very lucrative for her or her attorney.
From the defendants' perspective, they probably feel a little relief being on the hook for "only" $130k. Nevertheless, it's an expensive penalty for their sloppiness. The defendants sold less than 200 disks, so they are paying nearly $700 per disk. Worse, all of this was completely avoidable through industry standard rights clearance procedures. It's especially surprising to see a mistake like this by a porn company, who should already be accustomed to processing 18 USC 2257 model releases.
This case reinforces some lessons I think we already knew:
* copyright owners who want sizable damages need a timely copyright registrations
* just because a photo is available on the Internet--even on a site that represents itself as a collection of public domain images--does not mean it's free to use as a copyright matter
* even if the proper copyright license is obtained, a separate publicity rights license/consent may be required for using the photo in advertising. Watch out for being lulled into complacency by favorable Creative Commons licenses, which only address the copyrights and not the publicity rights.
* verify the age of all models used in porn ads if they aren't the actors in the film. Even if not legally required to use overage models, nothing good can come from showing an under-age model in an advertisement for porn.
* don't use the phrase "toots" in business correspondence (or, really, ever).
Lara Jade's blog post adds two tips for photographers: "Remember to be wise about where you upload your images [and] the size you upload them."
Posted by Eric at 01:22 PM | Copyright , Licensing/Contracts , Publicity/Privacy Rights | TrackBack
October 05, 2010
New Internet Law Work-in-Progress Series
By Eric Goldman
Announcing a New Internet Law Works-in-Progress Series and Call for Participation
The High Tech Law Institute at Santa Clara University School of Law and the Institute for Information Law and Policy at New York Law School are pleased to announce a new annual works-in-progress series for Internet Law scholarship. The inaugural event will be held at Santa Clara University on March 5, 2011. Thereafter, the event will rotate between NYLS and SCU each Spring semester.
Why Another Work-in-Progress Series?
As Internet Law scholars, many of us already have numerous venues to present our works-in-progress. However, although many existing works-in-progress events have accommodated our scholarship in the past, none of them expressly cater to Internet Law scholarship. For example, in August the Intellectual Property Scholars Conference (IPSC) at Berkeley cut the Internet Law papers to manage their capacity constraints. It made complete sense for an IP-oriented works-in-progress series to turn down non-IP Internet Law scholarship, but it also highlighted that we as Internet Law scholars need our own dedicated venue to meet, socialize with and learn from each other as a community. We hope this new series will serve that purpose.
Call for Participation
Topically, we take a broad view of what constitutes “Internet Law” scholarship, and we welcome all types of scholarly approaches (doctrinal, theoretical, empirical, etc.). We offer three ways to participate in the event:
Papers-in-Progress Presentation for paper drafts sufficiently advanced to share with event attendees. We anticipate giving extra speaking time to these presentations. To qualify for these slots, you will need to upload a paper draft no later than February 21, 2011. If we have to prioritize presentation requests based on capacity constraints, we plan to give greater priority to papers earlier in the drafting process that will most benefit from peer feedback, i.e., (a) papers that have not been circulated to publication venues will get higher priority than (b) papers that have been circulated to publication venues but do not yet have a publication commitment, which will get higher priority than (c) papers that have been accepted for publication.
Projects-in-Progress Presentation for research projects without a paper draft for attendees to review in advance. This might occur because your paper draft isn’t ready to share (or does not arrive before the Feb. 21 cutoff) or because you would like to explore a paper idea before writing a draft. We intend to allocate less speaking time for these presentations than for papers-in-progress presentations.
Discussant. Space permitting, we welcome other scholars to join the conversation as active audience participants.
How to Participate
If you would like to participate in the event, please email Eric Goldman (egoldman@gmail.com) no later than January 17, 2011. In your email, please (1) specify your desired form of participation (paper-in-progress, project-in-progress or discussant), (2) provide a short talk abstract (please, no more than 500 words), and (3) let us know the paper’s status (uncirculated, circulated or accepted for publication). We intend to confirm participation by February 1, 2011, but we will respond before then to early participation requests, so we encourage you to submit your request at your earliest convenience.
There is no event participation fee, but all participants are responsible for their own travel expenses. We will be announcing additional travel and hotel information soon. There are no publication obligations associated with presenting at the event.
Other Events of Interest
Immediately preceding the March 5 work-in-progress event are two other events of interest to Internet Law scholars. We encourage you to join us for one or both of these events.
On March 4, 2011, Santa Clara University is hosting a symposium entitled “47 U.S.C. § 230: a 15 Year Retrospective” to recognize the 15 year anniversary of the statute’s enactment. Featured speakers include former Representative Christopher Cox (one of the two named co-sponsors of the bill that evolved into the statute), Ninth Circuit Chief Judge Alex Kozinski, Ken Zeran (the plaintiff in the seminal 230 case Zeran v. America Online) and many more. The event is sponsored by the High Tech Law Institute at Santa Clara University School of Law, and co-sponsors include Harvard Law School’s Berkman Center, Stanford Law School’s Law, Science & Technology program, the Berkeley Center for Law & Technology, the New York Law School’s Institute for Information Law and Policy, the Congressional Internet Caucus Advisory Committee and the Electronic Frontier Foundation. For more on this event and to RSVP, see the event page. Work-in-progress participants get free admission to this symposium.
On March 3, 2011, the Stanford Technology Law Review will hold a symposium on current and emerging issues of secondary or intermediary liability on the Internet. Panels will explore these issues in the context of copyright, trademark, and aspects of privacy law. The event will take place at Stanford Law School, with more details to come soon. Please contact Symposium Chair Holley Horrell (hhorrell@stanford.edu) for more information.
For More Information
We will be posting more information about the work-in-progress event to our event web page.
Posted by Eric at 12:51 PM | General | TrackBack
October 01, 2010
Seventh Circuit Tosses Beverly Stayart's False Endorsement Claims--Stayart v. Yahoo
By Eric Goldman
Stayart v. Yahoo! Inc., 2010 WL 3785147 (7th Cir. Sept. 30, 2010).
I have previously blogged about Beverly Stayart's lawsuits against Yahoo and Google for apparently sploggy (and possibly cloaked) objectionable search results delivered when she searched on her name. Whatever sympathy I might otherwise feel for her is overridden by the lawsuits' complete lack of merit.
Yesterday, the Seventh Circuit affirmed the dismissal of her false endorsement claims against Yahoo. My prior posts on the district court opinion and her initial complaint. The court efficiently points out that she has not made a use in commerce of her name sufficient to trigger Lanham Act protection, and therefore she lacks standing for a false endorsement claim.
Stayart argued that her humanitarian/charitable work satisfies the Lanham Act commerciality requirement. This is a nonsense argument that the court easily rejects: "While Stayart’s goals may be passionate and well-intentioned, they are not commercial. And the good name that a person garners in such altruistic feats is not what § 43 of the Lanham Act protects." The Lanham Act's false endorsement provisions are not a general purpose publicity right.
The district court cited two other reasons (beyond standing) to dismiss the case, including an analytically confused 47 USC 230 defense. The Seventh Circuit opinion did not address the 230 issue at all.
While this *should* be the end of Stayart's litigation, it probably won't be. She can refile her state law claims against Yahoo in state court. She also still has a pending lawsuit against Google.
An aside: It's been a busy Cyberlaw week at the Seventh Circuit, including uBID v. GoDaddy, Chicago v. Craigslist and now this opinion.
Posted by Eric at 01:02 PM | Derivative Liability , Publicity/Privacy Rights , Search Engines , Trademark | TrackBack