Technology & Marketing Law Blog: February 2011 Archives

Technology & Marketing Law Blog

« January 2011 | Main | March 2011 »

February 28, 2011

"Consumer Reviews of Doctors and Copyright Law" Talk Notes

By Eric Goldman

You may recall that Medical Justice is a vendor trying to help doctors squelch online patient reviews--most recently by getting a prospective copyright assignment of the unwritten reviews and then sending 512(c)(3) takedown notices for any unwanted online reviews that are now newly owned. This is a terrible hack on the entire consumer review ecosystem, and it's been bothering me for some time as I mentioned in my recent Regulation of Reputational Information paper.

Last month, I gave my first public talk about Medical Justice at the University of Houston. I styled the talk "Consumer Reviews of Doctors and Copyright Law," two topics I never thought would go together but apparently they do. My talk slides. I will have more to say about Medical Justice's system and its many deficiencies in the near future.

Posted by Eric at 03:55 PM | Copyright , Derivative Liability | TrackBack

February 27, 2011

Jan.-Feb. 2011 Quick Links, Part 2

By Eric Goldman

Search Engines

Google’s search algorithm has been very much in the news the past 2 months!

* Google’s announcements:
- “Google search and search engine spam”
- Matt Cutts explains Google penalties in a video.
- “Microsoft’s Bing uses Google search results—and denies it.” Comments from Search Engine Land and Greg Linden (on privacy)
- Interview with Amit Singhal on content farming

* Google publicly penalized numerous targets, including
- JC Penney, punished for black hat SEO (the 4th time Google had penalized them).
- Overstock, punished for coopting too many .edu domains
- Forbes, punished for passing PageRank to paid links
- Then, Google dropped the hammer on content farms

The running question with all of these changes: should we praise—or regulate—Google for fighting back against the algorithm gamers? My 2006 article on search engine bias answers that question. I recently wrote a short essay updating the 2006 article—more on that soon.

* Speaking of regulators, they are hardly standing on the sidelines:
- EU regulators hate Google. They really hate Google.
- The Italian antitrust authority dropped its investigation into Google News after Google agreed to make it easier for publishers to opt-out.
- More details emerged on the Texas AG’s investigation into Google. WSJ and AllThingsD (including the actual letter). My prior blog post.
- Interestingly, FWIW, it’s not clear consumers are sold on the need for regulatory intervention. 77% of Americans say "there is no need for government regulation of the way that search engines select the recommendations they provide in response to search inquiries." Then again, survey wording is key. I could see an equal percentage say that we should prevent search engine bias.

* Questions about Google’s algorithms:
- Techdirt: "Will Google's New Hamfisted Censorship On Autocomplete Raise Questions Of Human Meddling?"
- News.com: Google's double standard on user-generated content

Privacy

* H.R. 654, "Do Not Track Me Online Act of 2011." The law would require the FTC to promulgate regulations that “establish standards for the required use of an online opt-out mechanism to allow a consumer to effectively and easily prohibit the collection or use of any covered information and to require a covered entity to respect the choice of such consumer to opt-out of such collection or use.”

* Information Law Group's 2010 privacy law recap.

* Jeff Jarvis: "the emergence of Privacy, Inc., as a industry built on scaring people is beginning to scare me."

Remember, every regulation creates winners and losers, and we should always ask what’s in it for the winners. On that score, see James D. Campbell et al, Privacy Regulation and Market Structure, reaching the conclusion: “privacy regulation can benefit incumbents and reduce innovation.”

* Lyall v. City of Los Angeles, Not Reported in F.Supp.2d, 2011 WL 61626 (C.D. Cal. Jan. 6, 2011). Publicizing an event on MySpace made the event space into a public place for purposes of a police search.

* After Pineda v. Williams-Sonoma treating zip codes as private information, a flood of lawsuits. In response to the Supreme Court's ruling, Sacramento urgently needs to make a statutory fix to Song-Beverly to avoid business-sapping and socially wasteful litigation.

* FTC: Data Resellers Liable for Downstream Security Failures

Social Media/Web 2.0

* Reuters: "Companies warily eye new consumer complaint sites"

* Mountain View Voice: Contractor files big claim for bad Yelp review.

* Teacher is suspended for blogging about her "whiny" students. Compare Yoder v. Univ. of Louisville.

* Reuters recaps e-discovery of social networking site content.

* NYT: Is blogging passé?

* Facebook ads have really low clickthrough rates, but the clickthrough rate improves if another user "likes" the ad.

* Unintended consequences of CA's E-personation law are beginning to manifest themselves. Apple goes after the @ceostevejobs parody Twitter account.

* NYT surveys some esoteric niche online dating websites.

* U.S. v. Forde, 2011 WL 63831 (4th Cir. Jan 10, 2011):

In a post-trial motion, Forde informed the district court that while the trial was proceeding, a friend of the husband of the jury foreperson posted on Twitter an explanation of the difference between “assume” and “presume.” Ford contended that, since the posting occurred during trial, it was possible that the jury foreperson had talked to her husband about the case, her husband then talked to his friend about the case, the friend then posted the statement on Twitter, and the foreperson saw the Twitter posting. Forde thus requested that the district court hold a hearing to investigate the potential misconduct. The district court denied the request.

...Forde's string of possibilities about the origin of the Twitter posting—that the foreperson possibly talked to her husband, who possibly talked to his friend, who possibly took to Twitter in response to what the husband possibly told him—is nothing but speculation and thus falls far short of establishing reasonable grounds for investigation. The district court therefore did not err by denying Forde's request for an evidentiary hearing to investigate his claim.

Posted by Eric at 04:22 PM | Content Regulation , Evidence/Discovery , Marketing , Privacy/Security , Search Engines | TrackBack

February 25, 2011

Business Sues Facebook to Restore Its Fan Page--Complexions v. Complexions Day Spa

By Eric Goldman

Complexions Inc. v. Complexions Day Spa and Wellness Center, Inc., 1:11-cv-00197-GLS -DRH (NDNY complaint filed Feb. 18, 2011)

The primary litigants are two identically named but geographically separated day spas. It appears they are colliding online. This type of trademark clash (the Internet overlaid on geographically separate businesses) is as old as the Internet; my favorite early case of this genre is Bensusan Restaurant Corp., v. King, 937 F. Supp. 295 (S.D.N.Y.1996) (the "Blue Note" case). As those disputes go, this one looks run-of-the-mill.

The clash has spilled over to Facebook, and that's where things get more interesting. The plaintiff (who is seeking a declaratory judgment, so it is the alleged junior trademark user) maintained a Facebook fan page with 1,000 fans. In January, the DJ defendant sent a takedown notice asserting the fan page violated its copyright (the complaint says "copyright", but I wonder if it meant "trademark"), which prompted Facebook to take down the page. The DJ plaintiff (para. 85) wants the page back: "Plaintiff is entitled to injunctive relief restoring its Facebook Page to the Facebook Social Networking Site."

This request raises an issue that seems to be cropping up with increasing frequency: IP owner sends takedown notice, website acts on takedown notice, and alleged infringer seeks injunctive relief ordering the website to restore the status quo. I explored the issue in some detail in my post on Amaretto Ranch Breedables v. Ozimals.

The issue is so interesting because the DJ plaintiff's desired relief should be categorically unavailable. A court can't order a web service to restore an user's account/content for at least two independent reasons. First, such an order clearly violates the First Amendment-- the order would impermissibly circumscribe the service's freedom of speech and the press. Second, even if you don't want to get into the constitutional debate, IMO Congress resolved this issue in 47 USC 230(c)(2), which immunizes websites' "filtering" decisions. If Facebook takes down a fan page because it thinks the page is trademark infringing, 230(c)(2) says Facebook still has the full editorial discretion not to publish the page even if it later learns that the page wasn't trademark infringing at all.

A court *can* order the IP owner to stop sending takedown notices. See, e.g., Biosafe-Hawks, Design Furnishings, and Amaretto. My hope is that a web service would listen carefully to such orders in deciding if/how to remediate its prior responses to the takedown notices. My hope is that web services would also build in enough due process to their private adjudicatory processes so its users can fairly combat false takedown notices without needing judicial intervention at all. However, it remains fair game for the web service to make "bad" choices on both fronts, though we as consumers should draw our own conclusions about those who do.

The Complexions lawsuit has another interesting twist regarding the Facebook fan page. The DJ plaintiff alleges that the DJ defendant sent friend/fan requests to the fans on the DJ plaintiff's fan page, thus engaging in false advertising by trying to poach the fans who didn't realize the litigants were different businesses. To my knowledge, this is the first lawsuit battling over poached Facebook fans. I'm sure it won't be the last.

Posted by Eric at 12:42 PM | Derivative Liability , Trademark | TrackBack

February 24, 2011

Savvy Louisiana Ruling on Metatags--Southern Snow v. Snowizard

By Eric Goldman

Southern Snow Mfg. Inc. v. Sno Wizards Holdings, Inc., 2011 WL 601639 (E.D. La. Feb. 16, 2011)

Have I ever mentioned how much I hate metatags cases? They have led to some godawful rulings. But surprisingly, today's opinion was quite refreshing. It's just the iceberg tip of a litigation battle royale taking place among Louisiana manufacturers of shaved ice equipment and flavorings. Sno Wizards manufactures the trademarked "SnoWizard" shaved ice machine. The defendant in this ruling, Parasol, makes syrup for shaved ice and put the term "snow wizard" in its metatags. (I checked a few pages on Parasol's website and couldn't find the reference any more). Presumably, Parasol wants to tell shaved ice retailers to consider their syrup for shaved ice manufactured using Sno Wizards' machine. Given that Sno Wizard also sells its own flavorings, it's easy to speculate why Sno Wizard might object to Parasol's efforts.

Sno Wizard argued the trademark owner's standard party line that use of its trademarks in someone else's metatags is per se infringement; no further proof required. The court recaps the argument: "SnoWizard retorts that the cases applying Brookfield Communications recognize that the defendant's use of the plaintiff's mark in website metatags creates initial interest confusion and therefore constitutes trademark infringement and unfair competition as a matter of law." From Sno Wizard's standpoint, res ipsa loquitur.

Fortunately, this judge digs deeper. Although the opinion is light on citations, it's rich with wisdom. The court starts out with this winner:

It would be odd indeed for the law to require a plaintiff in an ordinary trademark infringement case to prove likelihood of confusion to the jury, yet to create a lighter burden where metatags are involved, given that with metatags the consumer never actually sees the trademark or knows that it is in use. Thus, the Court is persuaded that SnoWizard cannot passively assume that likelihood of confusion is established as a matter of law in this case.

Why, YES! I enthusiastically agree that the typical pro-trademark owner metatag rulings get the burdens completely backwards.

The court continues by asking the key metatags-related technological question that has eluded most judges: just what do they do? (Google has given its answer). The court says:

SnoWizard cannot prevail on its metatag claim without evidence of what actually takes place as a result of the phrase "snow wizard" being hidden in Parasol's website. Is every consumer diverted to Parasol's website, or is Parasol listed at the top of many search results, or somewhere in the middle of a result list, or twenty names down the list? Does the consumer have to type in just "snow wizard" or is the metatag triggered by other variations of the phrase too?

This inquiry is in stark contrast to most judges' assumption that metatags are the most effective SEO tool ever and therefore guarantee top placement and masses of unwittingly diverted consumers. See, e.g., Art Attacks v. MGA and Venture Tapes v. McGills; but see Standard Process v. Banks, which would have been a helpful cite here.

The court concludes by noting the potential difference between "snowizard" (the trademark) and "snow wizard" (the metatag) to keyword searches:

the jury would be left to guess that "snow wizard" and SNOWIZARD are synonymous to a computer search engine but the Court is not even persuaded that such an assumption is factually correct.

Amazingly, the fact that an extra space might affect keyword searches baffled the Ninth Circuit in the Brookfield case, which similarly involved references that differed by a space ("moviebuff" and "movie buff"). The possible difference also escaped the Seventh Circuit in the Promatek v. Equitrac case, where the trademark ("Copitrak") differed from the metatag ("Copitrack") and actually did produce different search results in Google (see the screen shots yourself, thanks to when Google posted an unmodified copy of its 2001 index).

And in a final display of savviness, the judge doesn't simply roll the issue to trial to examine these factual issues. Instead, saying the trademark owner didn't present enough evidence to earn its way to a trial, the judge dismisses the metatag claim on the spot. This case appears to be a much better context for Judge Kozinski's famous admonishment in Mattel v. MGA (the Barbie Girl case): "The parties are advised to chill."

The author of this gem is Judge Jay Christopher Zainey. Great work, your honor.

Posted by Eric at 01:49 PM | Marketing , Search Engines , Trademark | TrackBack

February 23, 2011

Jan.-Feb. 2011 Quick Links, Part 1 (Copyright Edition)

By Eric Goldman

* I could do a whole separate category just for Righthaven:

- Righthaven LLC v. South Coast Partners, Inc., 2011 WL 534046 (D. Nev. Feb. 8, 2011) held that another Righthaven defendant is subject to personal jurisdiction in Nevada.
- Matthew Drudge settled with Righthaven.
- Recaps on the Denver Post pat-down photo lawsuits from Steve Green and the Denver Daily News
- One Utah blogger has taken a preemptive stand against Righthaven: "For bloggers, message board operators and web-sites that wish to make a statement I have provided a graphic that you are welcome to freely use and disseminate. If we can make this go viral it will send a huge message to newspapers as well as show them we are really in a symbiotic relationship and linking to their stories brings them world wide buzz that benefits them greatly." The image.
- Fortune covered the Righthaven litigation, including a Q&A with always-colorful Steve Gibson.

* As if Righthaven weren’t trolly enough. The latest troubling example of copyright trolling: the mom of the youngest Tucson shooting victim provides media outlets with a family portrait showing her deceased daughter. The portrait photographer hires a lawyer to sue the media outlets showing the portrait. The photographer said all the money would go to charity. Fortunately, the photographer subsequently changed directions. Techdirt covers the story.

* Kelly v. Chicago Park District (7th Circuit Feb. 15, 2011). Super-interesting case that is sure to spawn dozens of law review articles. A wildflower garden created by an artist as "living art" isn't protected under VARA because it "is neither ‘authored’ nor ‘fixed’ in the senses required for copyright....gardens are planted and cultivated, not authored. A garden’s constituent elements are alive and inherently changeable, not fixed....a garden is simply too changeable to satisfy the primary purpose of fixation; its appearance is too inherently variable to supply a baseline for determining questions of copyright creation and infringement."

* WPIX v. ivi (SDNY Feb. 22, 2011). Internet service isn't a "cable system" for purposes of 17 USC 111.

* Serial plaintiff Godzilla sues Honda over a 3 second reference to Godzilla in a Honda Odyssey TV ad.

* Rebecca on an odd ruling over publishing and copying online maps.

* An inside look at Netflix's content licensing negotiations.

* ABA Journal: Musicians Chafe at Politicians’ Misappropriations of Their Work. Prior blog post.

* Who Dat Yat LLC vs. Who Dat? Inc., 2011 U.S. Dist. LEXIS 513 (E.D. La. Jan. 4, 2011):

WDI argues that Fleurty Girl's claim for the removal of its Facebook page fails because Fleurty Girl does not allege facts establishing that Facebook actually relied upon any alleged misrepresentations made by WDI in removing or disabling access to Fleurty Girl's Facebook page. Further, WDI contends that Fleurty Girl fails to identify specific statements WDI made to Facebook regarding infringing material or activity on Fleurty Girl's Facebook page. However, on this motion to dismiss the Court reviews the complaint, assuming all the well-pleaded facts to be true. Fleurty Girl claims that Facebook disabled Fleurty Girl's page as a result of WDI's alleged misrepresentations. Under these facts, it is plausible that Fleury Girl could be entitled to relief if every element of a section 512(f) is later proven.

Posted by Eric at 04:20 PM | Copyright | TrackBack

February 22, 2011

Florida Court Fixes Erroneous 47 USC 230 Ruling--Giordano v. Romeo

By Eric Goldman

Giordano v. Romeo, 09-68539 CA 25 (Fla. Cir. Ct. Feb. 18, 2011)

I previously blogged about this case last month. Romeo posted a report to the Ripoff Report but, after being sued, later asked to have it removed--a request denied by the Ripoff Report per its standard policy. The plaintiffs then added the Ripoff Report back into the lawsuit (the Ripoff Report had initially been dropped per 230), and the court granted an injunction requiring the Ripoff Report to remove the post despite 230.

This was a lawless ruling from a rogue judge, but fortunately the error has been fixed. Judge Adrien, who made the ruling, was not reelected to the bench, so the case was reassigned to Judge Butchko. She makes quick work of Judge Adrien's mess, concluding "the cause of action of the Plaintiffs...against Xcentric for injunction relief is barred by the Communications Decency Act." Thus, Ripoff Report is dismissed (again) from the case with prejudice and "shall go hence without day." (I had to look up this odd idiom--apparently it reiterates that this is a final order. See the extensive discussion of the idiom here).

This doesn't end the wrangling. Of course, the plaintiffs could appeal. Also, the ruling intimates that the Ripoff Report may be eligible to recover some of its expenses, so it's possible the plaintiffs will be writing a check to the defense.

Assuming this ruling remains undisturbed, its net effect is that the plaintiffs have no way of legally forcing the removal of a Ripoff Report posting. For more on the implications of that resolution, see my writeup of the Blockowicz case.

Posted by Eric at 11:37 AM | Derivative Liability | TrackBack

February 18, 2011

Google Suffers Surprising Preliminary Loss in Keyword Advertising Case--Jurin v. Google

By Eric Goldman

Jurin v. Google, 2011 WL 572300 (E.D Cal. Feb. 15, 2011)

A surprising ruling! You may recall Jurin, trademark owner of the term "styrotrim." He sued Google in summer 2009, but quickly dismissed the lawsuit after he had a falling-out with his attorney. I thought the case was over then. Surprisingly, he found a new attorney and sued Google again in Fall 2009. The court fined Jurin $6,000 for wasting Google's time with the first go-around. Again, I thought the fine would end the case, but Jurin shockingly paid up. In round 2, Google has been progressively carving up the lawsuit, getting the court to dismiss some claims last March (including a pretty significant 47 USC 230 win) and more claims in September. Frankly, given the brutal treatment Jurin has been getting in court, I had already mentally counted this case as a win for Google.

Not so fast! In a stunning turnaround, the court refuses Google's motion to dismiss Jurin's "false association" claim. This is wholly unexpected for two reasons: first, the court had already rejected Jurin's "false association" claim TWICE (Jurin is on his Second Amended Complaint), and second, the court does not cite a directly relevant case on point--Heartbrand v. Lobel's--that dismissed a false designation of origin claim against Yahoo.

How did this case do a 180??? The court addresses Google's contention that a "false association" claim only applies when the defendant produces the falsely associated goods--which doesn't apply to Google, who simply presents advertising from other vendors. This argument worked in the March 2010 dismissal. This time, the court says "this Court declines to require Defendant to be the producer of goods in order to continue a claim for false association." In a footnote, the court acknowledges its internal conflict:

To the extent this conclusion runs counter to the Court’s 4 previous orders (ECF Nos. 19, 39) on Defendant’s prior Motions to Dismiss, the Court has now concluded that the analysis set forth herein is the correct one. Any earlier determination to the contrary is hereby revised in accordance with the provisions of Federal Rule of Civil Procedure 54(b).

Whoops. Nice try to bury an embarrassing flip-flop. Actually, IMO, the court got it right the first time(s).

This ruling would be a good choice for a motion for reconsideration to force the court to revisit its change with more precision. Failing that, it ultimately may be appropriate for an appeal.

On the plus side, the court does finally dismiss the breach of contract claim without leave to amend. I didn't really understand the court's discussion here, but at least the court got to the right result.

While this case plods to a more definitive conclusion, I fear this denial of a motion to dismiss will motivate a bunch of unnecessary, low-merit, and cost-unjustified lawsuits against Google and other search engines--just like we saw the Rescuecom case (also a motion to dismiss case) spurred the last flurry of lawsuits against search engines. Listen up, plaintiffs: this case only offers false hope! This is a bad ruling and Jurin will unquestionably lose in the end. Don't buy your lawyer a new boat when you could invest those dollars in a better product or more effective marketing.

PS: I have several other keyword ad cases to blog, including 1-800 Contacts, Consumerinfo.com and Binder. Sorry I'm running so far behind.

The roster of pending AdWords cases (I most recently double-checked the status of pending cases on September 11, 2010):

* ~~Ezzo v. Google~~
* ~~Rescuecom v. Google~~
* FPX v. Google
* John Beck Amazing Profits v. Google ~~and the companion Google v. John Beck Amazing Profits~~
* ~~Stratton Faxon v. Google~~
* ~~Soaring Helmet v. Bill Me~~
* ~~Ascentive v. Google~~
* ~~Jurin v. Google 1.0 (voluntarily dismissed)~~, succeeded by Jurin v. Google 2.0
* ~~Rosetta Stone v. Google~~ [on appeal]
* ~~Flowbee v. Google~~
* ~~Parts Geek v. US Auto Parts~~
* ~~Dazzlesmile v. Epic~~
* Pathak v. ICG

Posted by Eric at 10:39 AM | Derivative Liability , Search Engines , Trademark | TrackBack

February 17, 2011

Quirky 47 USC 230 Case Still Results in Defense Win--Coppage v. U-Haul

By Eric Goldman

Coppage v. U-Haul International, Inc., 2011 WL 519227 (SDNY Feb. 15, 2011)

The facts are garbled, but the plaintiff rented a vehicle from U-Haul and apparently suffered an injury he attributes to the vehicle. He also names Movinghelp.com as a defendant for unexplained reasons. Movinghelp describes itself: "We connect people with a reliable moving labor to do any of the following: packing help, unpacking help, loading help, unloading help, cleaning help and driving help." It's not clear from this opinion how the plaintiff used Movinghelp's services or how those services contributed to the alleged injury.

However, the court doesn't need to explore any of these details because it dismisses Movinghelp per 47 USC 230. The court's entire 230 discussion:

the Court dismisses Plaintiff’s claims against Movinghelp, a website appears to that connect people with movers and posts information provided by local moving companies, under the Communications Decency Act, 47 U.S.C. § 230(c)(1) (“CDA”). See Doctor’s Assocs., Inc. v. QIP Holder LLC, No. 06 Civ. 1710, 2010 WL 669870, at *23 (D. Conn. Feb. 19, 2010) (“Courts engage in a three part inquiry when determining the availability of immunity under the CDA, i.e., (i) whether Defendant is a provider of an interactive computer service; (ii) if the postings at issue are information provided by another information content provider; and (iii) whether Plaintiff’s claims seek to treat Defendant as a publisher or speaker of third party content.”) Because Movinghelp appears to be a provider of an interactive computer service (Compl. ¶ 3), and the postings have included information provided by another information content provider, i.e., U-Haul (Compl. ¶ 10), and the Complaint treats Movinghelp as a publisher of third party content, the Court dismisses all claims against Movinghelp, see Doctor’s Assocs., Inc. v. QIP Holder LLC, 2010 WL 669870, at *23; (Compl. ¶ 14).

The citation to the Subway v. Quiznos case is odd for at least 2 reasons: it's not in the same district (when there are numerous 230 cases in the SDNY), and unlike this case, that case was a 230 defense loss. Whatever. I'll put this case in the category of Doe v. MySpace, which stands for the proposition that no matter what online third party communications were facilitated by the defendant, 230 says the defendant isn't liable for any resulting offline injuries.

Posted by Eric at 03:58 PM | Derivative Liability | TrackBack

eBay's Venue Selection Clause Upheld in Missouri--Earll v. eBay

By Eric Goldman

Earll v. eBay, 2011 WL 497781 (W.D. Mo. Jan. 4, 2011). The initial complaint.

Earll, who is deaf, sued eBay for violations of the Americans with Disabilities Act (ADA) and the CA state law analogue. Her complaint relates to the fact that eBay telephonically confirms sellers, which poses a problem for deaf sellers. As part of the signup process, Earll clicked on eBay's user agreement, which included eBay's standard venue selection clause specifying its home court as the mandatory venue for lawsuits. eBay invoked the clause against Earll to move the suit there.

Earll tries to knock out the user agreement by arguing that it was fatally defective for not disclosing the telephonic verification requirement. The court deems that omission immaterial.

Earll then argues that the venue selection clause covers only a subset of claims a plaintiff might bring, and therefore it does not apply to her civil rights claim. The court rejects the argument because her claims "relate to her inability to sell items on eBay's website."

Earll then argues that some courts have rejected venue transfers in disability-related cases where a transfer would prevent disabled people from litigating, and thus undermining the law's policy objectives. Acknowledging that, the court says that Earll never indicated that she would abandon her claim if it was transferred, and California courts are just as capable of adjudicating ADA claims as the Missouri courts.

Having rejected Earll's arguments, the court orders the venue transfer. This is a nice win for eBay on two fronts. First, it's yet another case upholding its venue selection clause. I just blogged on a similarly favorable case (Evans v. Linden Research) where Second Life, invoking a clause copied from eBay's, also successfully invoked the clause. In light of the confusion we had after Comb v. PayPal, it's nice to see more predictable contract interpretation results.

Second, ADA claims are very dangerous for online sites. See, e.g., the NFB v. Target case. Having the case in eBay's home court surely helps eBay's odds of success in a risky case.

February 16, 2011

Ripoff Report Gets Another 47 USC 230 Dismissal--Herman v. Xcentric

By Eric Goldman

Herman v. Xcentric Ventures, LLC, 1:10-cv-00398-CAP (N.D. Ga. Feb. 14, 2011)

This is a run-of-the-mill lawsuit against the Ripoff Report by an unhappy vendor. Herman is a lawyer (once again, the dreaded lawyer-as-plaintiff) unhappy with a posted report from a client alleging bad service. The court churns it out in a brief and workmanlike opinion.

Quoting from Ripoff Report's summary judgment motion, the opinion says:

Since the CDA was enacted in 1996, every state and federal court that has considered the merits of a claim against the Ripoff Report has, without exception, agreed that Xcentric and Magedson are entitled to immunity under the CDA for statements posted by third-party users.

I know some plaintiff attorneys will look at that language as a thrilling challenge--NOT YET, they think. However, every Ripoff Report plaintiff should anticipate having this language cited against them.

Continuing to borrow liberally from Ripoff Report's motion, the opinion addresses two common contentions in Ripoff Report 230 litigation:

* the fact that the Ripoff Report added some components to its web page does not make Ripoff Report responsible for user-supplied portions. The court says "Because the defendants only created the generic portions of the Ripoff Report website and did not create or alter any part of the report about the plaintiffs, the CDA applies to bar the plaintiffs’ claims regarding the report and title at issue here."

* the "Ripoff Report" branding does not communicate anything about each individually profiled company. The court says "no reasonable reader would believe that the application of the term “Ripoff Report” implies the existence of any facts beyond those contained in the specific reports appearing on the defendants’ website. The plaintiffs cannot defeat the robust immunity of the CDA by trying to creatively plead around it."

This is a super win for the Ripoff Report and another sign that courts just don't want to hear the plaintiffs' arguments (no matter how creative/desperate) trying to put the Ripoff Report on the hook for user postings. I remain amazed how at many plaintiffs take on the Ripoff Report despite this unfavorable dynamic.

Posted by Eric at 09:22 AM | Content Regulation , Derivative Liability | TrackBack

February 15, 2011

Microsoft Adopts Google-Style Trademark Policy for Keyword Advertising

By Eric Goldman

I have gotten several emails relaying this announcement from Microsoft:

We are writing to alert you to some pending changes to the trademark policy within the Microsoft Advertising adCenter Intellectual Property Guidelines. Starting March 3, 2011, adCenter will no longer review trademark keyword complaints. However, adCenter will continue to investigate brand owner complaints related to trademark use in ad text.

We want to make it easier for you to manage your search advertising campaigns. By aligning the adCenter trademark policy with the current industry standard, we hope to help simplify your marketing efforts across the various online advertising programs. Please take a moment to review our updated trademark policy in the Intellectual Property Guidelines so that you may prepare for this change. If you have questions or need further assistance, please contact our support teams.

You can see the policy here.

Microsoft's reference to "the current industry standard" is interesting. For many years, Google's trademark policy has differed from almost every other search engine. But since Google is nearly 80% of the keyword ad market, I guess Microsoft can acknowledge them abstractly as the "industry standard" without actually referencing Google by name. ~~Now that Microsoft has adopted Google's general approach, I assume Yahoo will fall in line next.~~ [UPDATE: as a reader pointed out, now that Yahoo has outsourced keyword ad sales to Microsoft as part of their overall search integration, this policy change automatically applies to Yahoo's search engine as well.]

I'm interested in the timing of Microsoft's announcement. On the one hand, as I mentioned last year in my "Internet Law Trends" slide, the keyword ad battles--especially against search engines--seem to be winding down, and Google appears to have prevailed decisively. Given that Google has done all of the hard legal work for Microsoft, Microsoft can free-ride on its results. On the other hand, we still have a major pending appeal in the Rosetta Stone v. Google case, and the appeals court could issue a ruling that casts doubt on both Google's and (now) Microsoft's trademark policies. I guess Microsoft is willing to take that risk. The good news for Google is that with Microsoft and Google both standardized on the same program, Google doesn't look like an industry outlier, and it has gained a new and well-financed ally to support its policies.

Although Microsoft's new policy makes sense to me both doctrinally and as a matter of policy, Microsoft's decision reiterates how badly it is trailing Google, such that it has to follow the market leader. Microsoft is much more used to dictating terms rather than having to adopt someone else's. Also, I wonder if this is really just a cash grab. In the past, Microsoft's margins were so outrageous that it could ignore low-hanging revenue fruit if it wanted to. This development could be a suggestion that those days are over--especially in search, where Bing isn't profitable, so Microsoft's online endeavors need every cent they can get to keep up with the Google juggernaut.

UPDATE: World Trademark Review has more to say.

Posted by Eric at 02:05 PM | Derivative Liability , Search Engines , Trademark | TrackBack

February 12, 2011

Debt Collection Text May Result in Liability under the Telephone Consumer Protection Act -- Gutierrez v. Barclays Group

[Post by Venkat Balasubramani]

Gutierrez v. Barclays Group, Case No. 10cv1012 DMS (BGS) (S.D. Cal.; Feb. 9, 2011)

The Telephone Consumer Protection Act is a big stick. And it's being wielded against debt collectors.

Plaintiffs (a husband and wife) applied for a credit card. On the application, the husband listed his work number and his wife's cell phone number. Credit cards were issued to both the husband and the wife. At some point, when the couple were delinquent on their payments, Barclays began making collection calls to both numbers. It also sent text messages to the numbers. In response to one of the text messages, the husband asked (via text message) to cease further text messages. Although the court doesn't explicitly say this, presumably, the messages from Barclays continued. Plaintiffs filed claims under the TCPA.

Defendants argued that plaintiffs consented to the text message by listing their number on the credit application, and sought to dismiss the claims against the wife on the grounds that she was not the "called party." The court denies defendants' request for summary judgment.

Consent: The first question was whether the wife consented to listing her telephone number and provided the "prior express consent" that would allow defendants to argue that the communications fell under this exception to the TCPA. Defendants pointed to an FCC Report and Order which stated that calls made by a creditor to a debtor to the number which the debtor provided in the credit application fall under the "prior express consent" exception. However, the wife argued that since she did not fill out the application in question, she could not have consented. The court found that there was little case law on the issue of how this type of consent must be expressed. The court looked to the criminal context and found that courts find consent to a search by the defendant, but also by a third party who possessed "common authority over or other sufficient relationship to the premises or effects" in question. Defendants put forth evidence that the husband possessed "common authority" over the phone because he freely used it. On this basis, the court finds that the wife effectively gave prior express consent to receiving the calls.

Revocation of consent: Unfortunately for defendants, that was not the end of the story. Plaintiffs argued that they revoked the consent via text message. Defendants argued that the revocation had to be in writing, but the court disagrees, noting that if consent could be provided by telephone or other means, it would be odd to require a revocation to be in writing. Ouch!

Whether the wife was the proper plaintiff: Defendants finally tried to get the wife's claims dismissed on the basis that since she did not receive the texts in question, she was not the "called party" for purposes of the TCPA. The court looked to mixed rulings on the issue of who could sue for a TCPA violation. One case held that unintended and incidental recipients could not sue. At least one case held to the contrary that any recipient could sue. The court takes a different approach and rules that only the subscriber has a cause of action to sue under the TCPA.

The TCPA is a tough statute for people who send unsolicited text messages. Third party consent is unreliable in the marketing context (see "Ninth Circuit Revives TCPA Claim--Satterfield v. Simon & Schuster"), but it looks unreliable in general. When you add the fact that consent can be revoked by text message or orally, people who send unsolicited text messages are not left with much comfort. I think that's worth remembering is that unlike spam, it does not matter whether an unsolicited text message as sent for advertising purposes. It is also no defense that the recipient was not "separately charged" for the call. Debt collection text messages can violate the statute, absent consent (which can be easily revoked).

Unsolicited text message litigation has followed almost the opposite trajectory to spam litigation. Defendants just can't seem to get a break. Some of this is a result of the overzealous plaintiffs involved in spam litigation. Some of it is also the structure of the respective statutes. The TCPA is just much more of a plaintiff friendly animal.

Posted by Venkat at 11:16 AM | Publicity/Privacy Rights , Spam

February 11, 2011

Defamation, False Information & 47 USC 230 Talk Slides

By Eric Goldman

Earlier this week, I spoke at a PLI event, "Social Media 2011: Addressing Corporate Risks," on the topic of "Defamation, False Information and 47 USC 230" (this link takes you to the talk slides). I tried to skew the presentation towards topics that are relatively specific to social media defamation as opposed to generally applicable defamation issues. This also gave me yet another chance to remind folks about our 47 USC 230 conference on March 4, and the last slide (which I didn't reach during the presentation) previews some points I will make in more detail in my forthcoming paper on 47 USC 230.

Posted by Eric at 12:02 PM | Content Regulation , Derivative Liability | TrackBack

California Supreme Court Rules That a ZIP Code is Personal Identification Information -- Pineda v. Williams-Sonoma

[Post by Venkat Balasubramani]

Pineda v. Williams-Sonoma, S178241 (Cal. Supreme Court; Feb. 10, 2011)

Plaintiff made a purchase at Williams-Sonoma and when she went to pay, the cashier asked for plaintiff's ZIP code. Thinking she was required to provide it in order to complete the transaction, plaintiff provided it.

Plaintiff sued under the Song-Beverly Credit Card Act (the Credit Card Act) which prohibits a store that accepts credit cards from:

request[ing], or requir[ing] as a condition to accepting the credit card as payment...the cardholder to provide personal identification information, which the [store] records upon the credit card transaction form or otherwise.

The statutes defines personal identification information as:

information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number.

The trial court dismissed the claims, finding that a ZIP code does not fall under the definition of personal identification information, and the court of appeals affirmed. (Interestingly, plaintiff brought an invasion of privacy claim. The court did not accept review over the invasion of privacy claim, which the court of appeals dismissed on the basis that the plaintiff did not have a privacy interest in her address, which was contained in a database.) In reversing the decision of the court of appeals, the court points out that Williams-Sonoma had a particular motivation when it asked for plaintiff's ZIP code:

[Williams-Sonoma] subsequently used customized computer software to perform reverse searches from databases that contain millions of names, e-mail addresses, telephone numbers, and street addresses, and that are indexed in a manner resembling a reverse telephone book. The software matched plaintiff's name and ZIP code with plaintiff's previously undisclosed address, giving defendant the information, which [Williams-Sonoma] now maintains in its database. Defendant uses its database to market products to customers and also sell the information it has compiled to other businesses.

The court looked to the statutory language which includes the cardholder's address and telephone number as illustrative examples. Although the court of appeals took these examples to mean that more general information which can't by itself be used to locate a person was not included in the statute, this court disagreed. The court rejects the argument that the ZIP code shouldn't be included because it is only a component of an address, reasoning that under this approach a retailer could ask for portions of an address but not the entire thing (thus achieving its purpose of being able to market to the individual without asking for the entire address). The appeals court also reasoned that an address and telephone number is specific to an individual while a ZIP code refers to a group of people. (As the court notes, ZIP stands for "Zone Improvement Plan.") The court rejects this as well, noting that both residential and work telephone numbers could refer to more than one person but these are nevertheless encompassed by the statute.

Ultimately, the court looks to the intent behind the statute and finds that the legislature intended the statute to encompass:

information unnecessary to the sales transaction that, alone or together with other data such as a cardholder's name or credit card number, can be used for the retailer's business purposes.

In the court's view, any other interpretation of the statute would allow retailers to "end-run" the statute's purpose. The court also cites extensively to the statute's legislative history, which was concerned with retailers' extraction (at the point of credit card transaction) of information that would be used for marketing purposes. In addition to the statutory construction arguments, Williams-Sonoma made due process and vagueness arguments, but the court doesn't give these much credit.
__

This is an interesting one that brings to mind the debate over whether an IP address is personal information (an issue Microsoft hashed out, but which I'm guessing we'll see again). (See "Court: IP Addresses Are Not 'Personally Identifiable' Information.") There's been a dispute over whether the collection of email addresses violates the California statute, but apart from a ruling on a CAN-SPAM preemption defense, I don't recall seeing a conclusive ruling on whether an email address fits the statute's definition of personal identification information. ("California Privacy Law Not Preempted by CAN-SPAM Act.") In light of this ruling, I would say that an email address will be treated as personal identification information for purposes of the statute. On the other hand, a federal trial court held that the statute does not apply to online transactions, so email addresses collected in this context may not necessarily pose a problem. (See Saulic v. Symantec Corp., 596 F. Supp. 2d 1323 (C.D. Cal. 2009). In light of Pineda, I'm guessing plaintiffs and advocacy groups are going to try to revisit this issue.)

It's hard to muster much sympathy for Williams-Sonoma here, since they obviously used the information to market to plaintiff (this may be my bias at work - like most people, I think that catalog marketing is a truly odious practice, although Professor Goldman mentioned by email that he disagrees). On the other hand, Williams-Sonoma made a pretty reasonable argument that the statute looks like it applies to pieces of information which can be used to identify the purchaser. A cardholder's ZIP code "without more" doesn't seem like it should constitute personal identification information. You can use a person's address or telephone number to market to someone, but you can't use a ZIP code. Also, I wondered about the fact that gas stations (for example) sometimes require credit card users to input their ZIP codes as an anti-fraud measure (I'm guessing they argue that they don't violate the statute because they don't archive the information - at a quick glance I don't see a fraud exception in the statute, although there is a "positive identification" provision).

However, what sways me (and the court alludes to this in referencing a change in the statute to address retailer "requests" for information) is that stores ask customers for their ZIP codes in the context of these transactions and customers often provide it because they think it's some sort of fraud protection measure. If the retailer is going to turn around and just run this information through the database for marketing purposes, this feels duplicitous.

It looks like the statute was last amended in 1991, but since then (given the proliferation of databases), tracking someone down with bits of information has gotten much easier, and will become even easier over time. Given this, I wonder if the legislature considered prohibiting retailers from using information obtained via a credit card transaction to identify and market to customers unless the customer opts in. It's increasingly tricky to think of data as personally identifiable information versus non-personally identifiable information. Eric has posted about Professor Ohm's reidentification work, which shows how the distinction between PII and non-PII is becoming less useful: "Data Anonymization and Re-identification Lecture Featuring Paul Ohm, SCU, April 7." This looks like a good example of this.

A final note: this case highlights how online and off-line retailers live in different worlds. Off-line retailers go to great lengths to identify and stay in touch with their customers. Online retailers can just use cookies, ask consumers to check a box on their website, or get consumers to like their Facebook page.

Other coverage:
"My zip code is none of your business!" (Chris Hoofnagle)
"A Ridiculous California Court Ruling: Zip Codes are Private" (Kashmir Hill)

Posted by Venkat at 06:45 AM | Marketing , Privacy/Security

February 10, 2011

Comparative Domain Name and Keyword Regulation Talk Slides

By Eric Goldman

I have a busy semester of talks, so I will be rolling out some talk slides over the next few days. Today, I'm posting my talk slides from a talk I gave last month at the University of Houston as part of this event. I titled the talk "Domain Name and Keyword Regulation."

This is a newly updated version of a talk I gave in 2007 at McGeorge Law School. At the time, I was interested in how we codified various forms of domain name exceptionalism compared to other keyword navigation tools. (The impetus for that talk, in turn, comes from my Deregulating Relevancy article, where I make this point more fully). This time, I think I did a better job offering some reasons why domain names may truly differ from keywords, so perhaps the "exceptionalism" isn't as remarkable as I indicated in 2007 (or is justifiable in part).

Revisiting the talk after 4 years, what really caught my attention were the relative quantum of regulations targeted specifically at domain names and keywords, respectively. I did a search in Westlaw's federal and state statutory databases for "domain name," and I was overwhelmed with hundreds of search results. I'm amazed how many statutes call out domain names and, in some cases, subject domain names to exceptionalist regulation. I taxonomize these various types of domain name regulations in my slides.

In contrast, we still have virtually no keyword advertising-specific regulation. The only such law still on the books is the Alaska anti-adware law, a law that I believe everyone simply ignores (although perhaps it's been mooted by the demise of adware circa 2005). When I initially gave the talk in 2007, the Utah Spyware Control Act was still on the books, but Utah ultimately (and wisely IMO) repealed that law, and Utah's other flirtations with keyword regulations have fortunately petered out. Given how keyword advertising has eclipsed domain names in so many ways, I remain perplexed by this disparity in regulatory attention despite the distinguishing characteristics between the two.

Posted by Eric at 11:30 AM | Adware/Spyware , Domain Names , Internet History , Trademark | TrackBack

February 09, 2011

Second Life Forum Selection Clause Upheld--Evans v. Linden

By Eric Goldman

Evans v. Linden Research, Inc. (E.D. Pa. Feb. 3, 2011)

This lawsuit is similar to the Bragg lawsuit from a few years ago, which argued that land purchases in Second Life were equivalent to real property purchases (due to marketing representations made by Second Life), so Second Life couldn't unilaterally reclaim land from its users. In 2007, Bragg won a favorable jurisdictional ruling, defeating Second Life's invocation of the forum selection clause in its user agreement. See Bragg v. Linden Research, Inc., 487 F. Supp. 2d 593 (E.D. Pa. 2007). The parties subsequently settled. Now, another group of plaintiffs are taking a run at Second Life on the same basic theories.

I don't normally blog on forum selection clause cases any more, but this case is interesting because Second Life changed its fate. In contrast to the Bragg ruling, this opinion upheld Second Life's forum selection clause, shipping the case from ED Pa. to ND Cal. The new case involves the same basic arguments as the Bragg case, filed in the same court against the same defendant, and the decisions were written by the same judge. How did Second Life work this turnaround?

After the Bragg ruling, Second Life changed its user agreement's forum selection clause to basically mimic the approach eBay uses in its user agreement: mandatory jurisdiction/venue in Second Life's home court except for permissive virtual arbitration for low-dollar-value disputes. eBay adopted this structure in the early 2000s after it got a scary ruling in Comb v. PayPal, and since then eBay has had some litigation success with its new clause. Here, Second Life changed its contract from a mandatory arbitration clause--which failed--to eBay's mandatory jurisdiction/venue + permissive arbitration approach--which works. Nicely done.

(Personnel note: Second Life's mimicry of eBay's user agreement probably isn't an accident. Second Life's General Counsel at the relevant times, Marty Roberts, previously did a tour of duty as an in-house lawyer at eBay. See Marty's LinkedIn profile).

The court does not clearly explain how Second Life successfully amended its user agreement for any users who initially signed up under the old contract. (As I've previously blogged, retroactive contract amendments are tricky). The court says tersely "The information provided shows that each Plaintiff agreed to the March, 2010 TOS at some point before this action was brought." I would have loved to see the court explain in more detail how Second Life successfully moved everyone onto the new contract.

There are two very practical implications from this ruling:

1) If your mass-market online user agreement still contains a mandatory arbitration clause, you are playing with fire.

2) I have been recommending an eBay-style forum selection clause to my clients for many years now. Given that it is battled-tested in court, you might consider if the clause would be a useful starting point for you.

Posted by Eric at 09:27 AM | Licensing/Contracts , Virtual Worlds | TrackBack

February 07, 2011

Court Dismisses Class Action Against Spokeo for Lack of Standing -- Robins v. Spokeo

[Post by Venkat Balasubramani]

Robins v. Spokeo, 10-cv-05306 (C.D. Cal. Jan. 27, 2011)

Spokeo is a website that bills itself as an aggregator of hard-to-find information about people. Robins filed a complaint against Spokeo for violation of the Fair Credit Reporting Act, arguing that the "reports generated by Spokeo.com contain inaccurate consumer information that is marketed to entities performing background checks."

Spokeo argued that it only aggregated information provided by third parties and it was entitled to immunity under Section 230. The court doesn't reach that question, finding that Robins lacked standing - i.e., he "failed to allege that [Spokeo] has caused him any actual or imminent harm." Plaintiff alleged that he had trouble seeking employment and he was "concerned that the inaccuracies in his report will affect his ability to obtain credit, employment, insurance, and the like." The court found that plaintiff's allegations of "possible future injury" failed to satisfy Article III standing requirements and dismissed the complaint without prejudice. Although this case and the Starbucks data breach case deal with the standing issue in different contexts, the court's conclusion on standing can be contrasted with the Ninth Circuit's recent conclusion in the Starbucks data breach case that employees affected by a data breach have standing based on "'generalized anxiety and stress' as a result of [the data breach]." ("Starbucks Data Breach Plaintiffs Rebuffed by Ninth Circuit.")

I'm guessing this complaint will be refiled and the court will have to eventually reach the issue of whether Spokeo is entitled to Section 230 protection. Will we see Roommates.com in action? (See "Roommates.com Infects the Tenth Circuit--FTC v. Accusearch.") Or will Spokeo be treated as a syndicator that is entitled to Section 230 protection? ("Database Publisher Gets 230 Defense--Prickett v. infoUSA.")

On a related note: Spokeo is already dealing with complaints from privacy advocates, but as noted by Kash Hill, the blogger at PogoWasRight recently filed a complaint against Spokeo after profiles of hers that were removed from the site "came back to life." ("Spokeo Draws Ire (and FTC Complaints) from Privacy Advocates for its Zombie Profiles.")

Posted by Venkat at 12:05 PM | Content Regulation , Privacy/Security

Regulating Reputational Information Chapter Now Available

By Eric Goldman

I have posted my book chapter, The Regulation of Reputational Information, which I published as part of The Next Digital Decade compilation I've previously mentioned. I have another version of this chapter coming out later this year in a book oriented more towards social scientists, The Reputation Society: How Online Opinions are Reshaping the Offline World (MIT Press 2011).

This chapter is the final evolution of an essay I wrote for this conference at George Mason University nearly 2 years ago. The chapter is designed to preview a larger/long-term book project on reputation regulation that I hope to write over the next X years (where X remains to be seen!). So, if you would like a brief introduction into one of my long-term research projects, this chapter is the place to start.

The next iteration in this project is my forthcoming article, "In Defense of 47 USC 230," where I will explain in more detail 47 USC 230's salutary role in online reputation systems. I am presenting that talk several times this semester, including at our March 4 47 USC 230 blowout.

I have posted many times about reputation issues on the blog, including several variations of slide decks I've used over the years. Start with this post.

The chapter's abstract:

"This essay considers the role of reputational information in our marketplace. It explains how well-functioning marketplaces depend on the vibrant flow of accurate reputational information, and how misdirected regulation of reputational information could harm marketplace mechanisms. It then explores some challenges created by the existing regulation of reputational information and identifies some regulatory options for the future."

Posted by Eric at 09:22 AM | General | TrackBack

February 05, 2011

Grimmelmann on "Search Neutrality"

By Eric Goldman

James Grimmelmann, Some Skepticism About Search Neutrality, in THE NEXT DIGITAL DECADE: ESSAYS ON THE FUTURE OF THE INTERNET (Berin Szoka & Adam Marcus, eds. 2010).

James Grimmelmann wrote a terrific must-read book chapter on search neutrality. His blog post on the chapter. The book chapter taxonomizes the various arguments that have been advanced in favor of search neutrality, and then with his characteristic pointedness, he proceeds to eviscerate each and every one as only a law professor can do. There are so many good parts to the chapter, I'm only going to cherry-pick some of my favorite quotes and present them without comment. If you like these excerpts, then as the saying goes, read the whole thing.
___

* "the case for search neutrality is a muddle. There is a fundamental misfit between its avowed policy goal of protecting users and most of the tests it proposes to protect them"

* "Of course Google differentiates among sites—that’s why we use it. Systematically favoring certain types of content over others isn’t a defect for a search engine—it’s the point."

* "what difference should it make that Yahoo! and others liked Foundem? So? That’s their opinion. Google had a different one. Who is to say that Yahoo! was right and Google was wrong? One could equally well argue that Google’s low ranking was correct and Yahoo!’s high ranking was the mistake."

* "If you want Google to steer users to websites with views that differ from their own, your goal is not properly described as search neutrality. In effect, you have gone back to asserting the objective correctness of search results"

* "Just as the subjectivity of search means that search engines will frequently disagree with each other, it also means that a search engine will disagree with itself over time."

* "Search neutrality will be born with one foot already in the grave of regulatory capture."
___

For a complementary perspective, check out Geoff Manne's contribution to the book entitled "The Problem of Search Engines as Essential Facilities". Plus, I have written a brief "update" to my 2006 Search Engine Bias article where I talk about how the issues have evolved in the past half-decade. I plan to post that in the near future.

Posted by Eric at 09:45 AM | Search Engines | TrackBack

February 04, 2011

Court: Husband's Access of Wife's Email to Obtain Information for Divorce Proceeding is not Outrageous

[Post by Venkat Balasubramani]

Miller v. Meyers, 09-cv-6103 (W.D. Ark.; Jan 21, 2011)

This case presents another fact pattern involving an increasingly common twist to the modern divorce proceeding - someone surreptitiously accesses his or her spouse's email and on-line accounts to gather information to be used in a family law proceeding. The now ex-spouse brings a claim for violation of statutes protecting the privacy of communications. Here, the ex-spouse gets summary judgment on her Stored Communications Act claim, and the parties shortly settle after the court's ruling.

The facts were straightforward. Anna Miller alleged that Darin Meyers used a keylogger program to access information and communications from Miller's on-line accounts, including email accounts. The parties resolved their differences in family court and entered into a settlement agreement. After finding out that Meyers accessed her emails, Miller brought claims against Meyers under the Computer Fraud and Abuse Act, the Stored Communications Act, the ECPA, and under state law.

The divorce settlement: Meyers argued that the parties resolved all of their claims in the divorce settlement, but the court rejects this argument. The court points to language in the agreement to the effect that the settlement was only intended to compromise the parties' claims "arising out of [the divorce] litigation." The court also notes that the family law court would not have had jurisdiction over plaintiff's claims anyway, so it's not reasonable to think that they would have resolved those claims by virtue of the divorce settlement.

Computer Fraud and Abuse Act: The court denies summary judgment to both parties on the CFAA claim, noting that there is a factual dispute as to whether plaintiff suffered $5,000 in damages due to the unauthorized access. Plaintiff did not argue that the use of improperly obtained evidence harmed her in the divorce proceeding, and the court may not have accepted this argument anyway. (Courts are across the board on what type of damage can be used to satisfy the $5000 jurisdictional threshold, but it looks like there were factual disputes either way.)

Stored Communications Act: The Stored Communications Act claim was open and shut. Defendant admitted he accessed the emails, and he clearly did not have permission to access plaintiff's email account. Plaintiff gets summary judgment on this claim, and the court saves the damages ruling for the factfinder.

ECPA: The court rejects plaintiff's ECPA claim, finding that plaintiff put forth no evidence that defendant "recorded any information during the course of monitoring," and in any event, through use of the keylogger software defendant only obtained the passwords and would have only opened the emails after they reached plaintiff's account. Interestingly, the court notes that there was "some indication that plaintiff was aware, or should have been aware, that defendant was monitoring her." The court does not specify what evidence defendant presented in support of this proposition (apart from the general theory that someone can monitor activity on computers in their home), and imputing consent based on a supposed expectation of monitoring seems to push the consent exception pretty far. The court also does not discuss the issue of whether the capture of the passwords themselves could have constituted an interception. (See "Scope of Electronic Communications Privacy Act may not be so narrow" (discussing Brahmana v. Lembo, No. 09-106, 2009 WL 1424438 (N.D. Cal. May 20, 2009).)

State law claims: The court grants plaintiff summary judgment on her computer trespass claim, but finds that there was no evidence at the summary judgment stage of what injury she suffered. The court defers the damages ruling for trial. The court grants defendant summary judgment on plaintiff's unlawful access to a computer claim under state law, declining to find a private cause of action where the legislature did not clearly provide for one. Plaintiff asserted a breach of contract claim based on a breach of non-disclosures of the settlement agreement. The court finds that factual disputes preclude an award of summary judgment in either party's favor.

Finally, the court rejects plaintiff's claims for intentional infliction of emotional distress, finding that defendant's conduct was not shocking or outrageous. Here the court throws out a zinger:

Defendant's conduct of monitoring the internet traffic on his home network and using a keylogger to access his then wife's emails, and then using copies of those documents in divorce and custody proceedings is not extreme and outrageous conduct. A husband prying into his wife's email, after learning that she was engaging in conversations and photo sharing, and then using damaging emails in a divorce and custody proceedings can hardly be considered "extreme and outrageous," "beyond all possible bounds of decency," or "utterly intolerable in a civilized society."

Say what? I guess all is fair in love and war (including violating federal statutes), in this court's view.
___

Apart from the court's interesting views on the outrage claim, there's not much to say about this case. The court notes that the underlying evidence which was improperly obtained was used in the family law proceeding (apparently without objection or scrutiny from the court), and I wonder how often this occurs.

In any event, the case is a good opportunity to repeat the PSA: accessing someone else's emails or accounts is not necessarily a good idea, as tempting as it may seem. It doesn't matter if the person whose email you access is your employee, spouse, or best friend! Also, using keylogger software is risky. Keylogger software should come with a disclaimer that tells you to consult with counsel before deploying it.

Posted by Venkat at 09:25 AM | Privacy/Security

February 03, 2011

CA Anti-SLAPP Cases Involving Consumer Reviews as Matters of Public Concern

By Eric Goldman (with research assistance from the HTLI Graduate Fellow Michael Scapin)

As I've indicated previously, I support efforts to enact a federal anti-SLAPP law. While I think it's a good idea for a number of reasons, I especially would like to see federal anti-SLAPP protection for consumer reviews of vendors.

Consumer reviews are a tricky area for anti-SLAPP coverage, however. Historically, anti-SLAPP laws were designed to protect public participation in official government matters. Consumer reviews normally don't fit within that model of anti-SLAPP laws. California has taken a broader approach by providing anti-SLAPP coverage for matters of public concern, but even then, it's not 100% clear that consumer reviews of vendors satisfy this standard.

As part of supporting the ongoing drafting process for the proposed federal anti-SLAPP legislation, Mike and I took a deeper look at the California cases addressing whether or not consumer reviews qualified as matters of public concern for purposes of CA's broad anti-SLAPP law. This research, by definition, had several limits. First, finding the right search keywords is tricky. Second, we deliberately left out some borderline cases, such as the cases involving stock trading message boards (although we included GTX v. Left). Third, so many CA appellate cases are unpublished--we can still find them in our search, but they don't contribute to the jurisprudence. Finally, there's no easy way to search California superior court rulings, so the inclusion of a couple such cases is purely fortuitous.

Looking through the complete group of cases, I reached an overall assessment that wasn't exactly comforting. California's consumer review anti-SLAPP cases appear to make a distinction between a "pure" consumer review solely addressing the vendor's performance, which isn't a matter of public concern, and a review that provides additional commentary on other issues, such as how to choose a vendor in that class, which does qualify as a matter of public concern. This distinction helps explain both the unfavorable cases enumerated below plus a few of the favorable cases (such as the Wong, Gilbert and Wolk cases).

If I'm correct that courts are making this doctrinal distinction, then many consumer reviews on Yelp, TripAdvisor, etc. might not qualify for California anti-SLAPP protection because they only assess the consumer's experience with the reviewed vendor and don't engage any broader themes. From my perspective, this is a clear hole that I think the federal anti-SLAPP law should fill by expressly including consumer reviews within the statutory scope. Even if this distinction does not actually exist, the fact that we found two (admittedly unpublished) unfavorable cases indicates the dangers of an undefined statutory reference to "matters of public concern."

If you are aware of any other relevant cases not listed below, please let me know. The cases we found:

Favorable Cases

* Wong v. Jing, 2010 WL 4457330 (Cal. App. Ct. 2010). "Moreover, the posting went beyond parochial issues concerning a private dispute about particular dental appointments. It implicitly dealt with the more general issues of the use of nitrous oxide and silver amalgam, implied that those substances should not be used in treating children, and informed readers that other dentists do not use them. Thus, the review was not just a highly critical opinion of Wong‟s performance on particular occasions; it was also part of a public discussion and dissemination of information on issues of public interest."

* Navarro v. Cruz, 2010 WL 2183227 (Cal. App. Ct. 2010) (unpublished). Blog covered matters of public interest when "the blog addressed issues ranging beyond the specific wrongs and breaches claimed to have been suffered by its writer, on issues such as immigrant exploitation, fraud, and substandard housing. These issues would affect and would be of interest to many present and future immigrant teachers-including not just those who had allegedly been victimized, and not even just those who had actually contracted with UPI, but also those who might be considering becoming immigrant teachers through UPI or other such agencies. And the blog expressly sought to rally others to support changes in the claimed practices and in the contractual and other requirements that foreign teachers believed they were forced to accept, and encouraging others “to ‘stand up’ to pursue a common goal” involving an ongoing controversy."

* Calibra Pictures, Inc. v. Variety, BC 433 320 (Cal. Superior Ct. 2010). Negative newspaper review of a movie qualified as a matter of public concern.

* MagicJack LP v. Happy Mutants LLC, CV091108 (Cal. Superior Ct. 2009). "THE POSTING ON DEFENDANT'S WEBSITE PROVIDES INFORMATION ABOUT PLAINTIFF'S PRODUCT NOT ONLY TO THE "SUBSTANTIAL" NUMBER OF PEOPLE WHO HAVE ALREADY PURCHASED THE DEVICE, BUT ALSO TO OTHER CONSUMERS WHO MIGHT BE CONSIDERING PURCHASING SUCH A DEVICE."

* Penney v. Isbell, 2008 WL 607594 (Cal. Ct. App. 2008) (unpublished). "While we hesitate to oversimplify, these cases teach that statements encouraging and promoting the public discussion of current issues of broad concern that potentially affect significant numbers of people, as well as statements disseminated as part of what could be described as consumer protection information and advice, are generally considered statements involving issues of public interest within the meaning of the anti-SLAPP statute. In contrast, statements involving purely personal controversies unconnected to any larger discussion of general societal or consumer issues are not statements involving issues of public interest."

* GTX Global Corp. v. Left, 2007 WL 1300065 (Cal. App. Ct. 2007) (unpublished). "Left's statements on Stocklemon.com amounted to the same type consumer interest information found to be protected in Wilbanks. Left suggested reasons why consumers should be wary of investing in GTX. As such, the statements were directly connected to an issue of public concern."

* Gilbert v. Sykes, 147 Cal. App. 4th 13 (Cal. App. Ct. 2007). "Gilbert's Web site contributed toward the public debate about plastic surgery in at least two ways: First, assertions that a prominent and well-respected plastic surgeon produced “nightmare” results that necessitated extensive revision surgery contributes toward public discussion about the benefits and risks of plastic surgery in general, and particularly among persons contemplating plastic surgery as a means of looking younger or improving their appearance....Second, a review of the entire Web site shows that it is not limited to Gilbert's interactions with Sykes. The Web site contains advice, information and a contact page where readers can share their own experiences. At the Selecting a Doctor link, a page on “Useful Information” has tips on choosing a plastic surgeon, including references to other Web sites and resources. A Red Flags link lists “Things to look out for” or warning signs to look for when selecting a doctor to perform the surgery. A Final Thoughts/Contact Me link features Gilbert's ruminations about plastic surgery in general, not all of it negative. Clearly, the Web site was not limited to attacking Sykes, but contributed to the general debate over the pros and cons of undergoing cosmetic surgery."

* Carver v. Bonds, 135 Cal. App. 4th 328 (Cal. App. Ct. 2005). "The [newspaper] article warned readers not to rely on doctors' ostensible experience treating professional athletes, and told what it described as “a cautionary tale” of plaintiff exaggerating that experience to market his practice. Since the statements at issue served as a warning against plaintiff's method of self-promotion, and were provided along with other information to assist patients in choosing doctors, the statements involved a matter of public concern."

* Wilbanks v. Wolk, 17 Cal. Rptr. 3d 497 (Cal. App. Ct. 2004). "Consumer information, however, at least when it affects a large number of persons, also generally is viewed as information concerning a matter of public interest....Here, it appears that the viatical industry touches a large number of persons, both those who sell their insurance policies and those who invest in viatical settlements. According to plaintiffs, their own business generated an average monthly income of $58,333 before Wolk's statements about them appeared on her Web site— and plaintiffs are but one of many brokers. It is undisputed that Wolk has studied the industry, has written books on it, and that her Web site provides consumer information about it, including educating consumers about the potential for fraud. As relevant here, Wolk identifies the brokers she believes have engaged in unethical or questionable practices, and provides information for the purpose of aiding viators and investors to choose between brokers. The information provided by Wolk on this topic, including the statements at issue here, was more than a report of some earlier conduct or proceeding; it was consumer protection information....The statements made by Wolk were not simply a report of one broker's business practices, of interest only to that broker and to those who had been affected by those practices. Wolk's statements were a warning not to use plaintiffs' services. In the context of information ostensibly provided to aid consumers choosing among brokers, the statements, therefore, were directly connected to an issue of public concern."

Unfavorable Cases

* Dunne v. Lara, 2009 WL 3808345 (Cal. App. Ct. 2009) (unpublished). "Lara's comments were no more than a report about Dunne's business practices, of interest only to Dunne's customers and potential customers. Lara has not demonstrated the existence of any widespread public debate and his statements are not protected by section 416.26, subdivision (e)(3) or (4)."

* Sandra Caron European Spa, Inc. v. Kerber, 2008 WL 3976463 (Cal. App. Ct. 2008) (unpublished). "The Internet postings which the Kerbers contend are protected speech under the anti-SLAPP statute critiqued a local, family-owned spa, disparaging the dÈcor and attractiveness of the facility, the attitude and service of the person who purportedly helped the reviewers, and the conditions of the steam room and sauna. Caron Spa is not an entity that is in the public eye; nor are its owners....Wolk does not help the Kerbers because, as the trial court pointed out, the reviews were essentially phony customer reviews, drafted not by customers but by former employees of Caron Spa, a status shared by Mrs. Kerber....Moreover, the reports were simply about one spa's purported business practices; there was no wider context to the statements that would aid consumers in choosing among spas. In other words, the reviews did not connect with or encourage any larger discussion or public debate of general societal or consumer issues related to the spa industry."

Other States

We didn't find much in other states. One case worth noting:

Gardner v. Martino, 2005 WL 3465349 (D. Or. 2005) (affirmed on other grounds by the Ninth Circuit). "given the cases holding that issues of consumerism, including complaints about products and services, are issues of public interest, I conclude that the statements made here about plaintiffs and their alleged treatment of Feroglia and the quality of the product, are properly considered statements about a public issue or an issue of public concern within the meaning of Oregon's anti-SLAPP statute."

SEPT. 2011 UPDATE:

A few other cases I've found of possible relevance:

* Kim v. IAC/InterActive Corp., 2008 WL 3906427 (Cal. App. Ct. 2008): dentist's defamation lawsuit against a patient and CitySearch over a CitySearch review tossed per California's anti-SLAPP; defendants awarded attorney's fees.

* Rahbar v. Batoon, case # CGC-09-492145 (San Francisco Superior Ct. filed Sept. 2, 2009): dentist's defamation lawsuit over a Yelp review tossed per California's anti-SLAPP; patient awarded $43k in attorney's fees.

NOV. 2011 UPDATE:

* Hamilton v. Prewett, 860 NE 2d 1234 (Ind. Ct. App. 2007): "While we acknowledge that there may be instances where entertainment is a public issue or an issue of public interest that warrants anti-SLAPP protection, we do not find this to be one of those occasions. Hamilton's suit against Prewett, while unsuccessful on the merits, is not the type of lawsuit that the anti-SLAPP statute was enacted to prevent. Unlike the plaintiffs in the previous Indiana anti-SLAPP cases, Hamilton did not file his suit to stifle Prewett's speech on a public issue or an issue of public interest."

* Berryhill v. Georgia Community Support & Solutions Inc., 281 Ga. 439 (2006). Critical web posting didn't constitute petitioning activity for purposes of Georgia's anti-SLAPP statute.

* Higher Balance, LLC v. Quantum Future Group, Inc., 2008 WL 5281487 (D. Or. Dec. 18, 2008): "There is no doubt that the statements here were made in connection with an issue of public interest, specifically, the quality of HBI's products and services developed by Pepin [HBI's co-founder]."

Posted by Eric at 02:23 PM | Content Regulation | TrackBack

Yellow Pages Companies Challenge Seattle Opt-out Ordinance on First Amendment Grounds

[Post by Venkat Balasubramani]

Dex Media West, Inc., et al. v. City of Seattle, et al., Case No. 10-cv-01857 (W.D. Wash. complaint filed Nov. 15, 2010)

In what many will probably characterize as a dinosaur's last gasp litigation strike, two yellow pages companies sued to invalidate the City of Seattle's scheme to allow its residents to opt-out from yellow pages distribution. They are likely to be successful this time around. In fact, after reviewing plaintiffs' summary judgment motion, I'm surprised the City of Seattle just doesn't go back to the drawing board and rewrite the statute.

Seattle Ordinance 123427 sets up an opt-out scheme for yellow pages which are distributed in the City of Seattle. The ordinance contains a licensing provision, requiring distributors to obtain licenses and pay an annual fee of $100. Yellow pages distributors are required to submit annual reports "describing the quantity of yellow pages phone books . . . distributed within the City during the previous calendar year." The ordinance further empowers the Director of Seattle Public Utilities to set up an Opt-Out Registry which will "serve as a clearinghouse for residents and businesses to register" and opt-out. The opt-out registry will be made available to distributors, who have to provide their contact information and will also forward any opt-out requests received from residents. The scheme also imposes a "recovery fee" designed to recoup recycling costs ($0.14 per book and $148.00 per ton of yellow pages). Finally, the scheme allows the Director to suspend or revoke a license and fine those who do not comply.

Conceptually, yellow pages fall within the category of materials that citizens should be able to opt-out from. Yellow pages are not political speech. They are heavy and cost money to dispose of, and they are delivered somewhat intrusively to your doorstep. Should the government be allowed to restrict delivery of this material to citizens who opt-out?

The answer is likely yes, and the classic case cited in support of the constitutionality of an opt-out is Rowan v. United States Post Office, 39 U.S. 728 (1970). Rowan involved a statute which allowed people to opt-out from mailings which the recipients deemed obscene and which were sent through the postal service. Although not perfectly analogous, it certainly lends some support to the general idea that an opt-out from unwanted intrusive communications should be constitutionally acceptable.

Generally speaking, challenges to government schemes allowing people to opt-out of other unsolicited communications have not been successful. For example, courts have rejected challenges to the junk-fax statute, on the basis that the government has an adequate interest in preventing the intrusion in privacy and increased costs resulting from an unwanted fax. (See, e.g., State of Mo. v. American Blast Fax, Inc., 323 F.3d 649 (8th Cir. 2003).) The do-not-call list has similarly been upheld against a court challenge. (See FTC v. Mainstream Marketing Services, 345 F. 3d 850 (10th Cir. 2003).) Of course, challenges to anti-spam statutes have not fared particularly well either (a few exceptions notwithstanding).

However, the cases resolving challenges to opt-out schemes make clear that the restrictions have to satisfy two First Amendment principles: the restrictions must be narrowly tailored and not be content based (unless the entire category of content is not entitled to First Amendment protection). And this is where the Seattle ordinance runs into trouble. As pointed out in plaintiffs' summary judgment motion, the statute suffers from a number of classic flaws - among other things:

- the statute singles out yellow pages from all other types of unsolicited pamphlets, without reference to the harms sought to be remedied;
- the City made exceptions to satisfy local business interests, such as business associations;
- the ordinance also contains a licensing scheme which is at best highly suspect;
- the statute compels the yellow pages publishers to publish an unwanted message (in the form of opt-out notices and messaging on the cover)
- the statute charges the yellow pages companies to dispose of the books even though the unwanted or discarded books are recycled or disposed of by the recipients;
- yellow pages companies already employ opt-out mechanisms and have no interest in delivering yellow pages to recipients who do not want them (there's no indication that the opt-out system set up by the City will be more effective).

I can see the City being able to penalize distributors who do not comply with constitutionally permissible restrictions, but to think you have to be licensed to distribute yellow pages in the City of Seattle? That just doesn't sound like it will ever fly.

The City of Seattle argued in its filings that yellow pages are categorically harmful and unwanted, and thus the City should be allowed to ban them altogether, but that's a tough argument to make. The City also argues that yellow pages are commercial speech which is entitled to a lesser degree of protection. You can access the City's opposition to plaintiffs' motion here, but I was not persuaded after reading it.

A possible solution is to set some sort of weight limit or page limit, and say that unsolicited pamphlets (of any type) are fine so long as they do not exceed a certain number of pages or a certain weight. This is one way to tackle the problem without reference to the content in question. Another option is to require the distributors to include an opt-out card which recipients can mail in to opt-out, or to referenced a website where recipients can opt-out, and to penalize any distributors or publishers who fail to honor opt-outs.

Plaintiffs' motion for summary judgment contains a few interesting facts around advertising. For example, in one yellow pages book, advertising comprises approximately 35% of the directory, and in another it comprises 15-35%. In comparison, as noted in the motion, advertising makes up 58% of Vogue magazine, 52% of Forbes magazine, and 74% of Bride's magazine.

Underlying this lawsuit is the fact that paper-based yellow pages operations are seeing their end days. Look up services have migrated online, and local advertising is not the greatest source of revenue. (Even Google is struggling to ramp up its local advertising operation, hiring sales people to engage in direct sales.)

In the meantime, we'll see what the court does with the statute, but I'm highly skeptical of its viability.

Related:
"At Last, You Can Send the Yellow Pages to Hell" (Gizmodo, noting the launch of the "National Yellow Pages Consumer Choice & Opt-Out Site") (Feb. 1, 2011)
"Verizon seeking permission to stop delivering white pages in Maryland, Virginia" (Washington Post) (Nov. 16, 2010)
"Banned Books in Seattle: Yellow Pages Cries Foul Over ‘Opt-Out’ Law" (WSJ Law Blog) (Nov. 16, 2010)

Posted by Venkat at 10:50 AM | Content Regulation , Marketing

February 02, 2011

Web Host May Be Liable for Removing Only 1 of 3 Websites Operated by Its Customer--Hermeris v. Brandenburg

By Eric Goldman

Hermeris v. Brandenburg, 2:10-cv-02531-JAR -KMH (D. Kan. Jan. 23, 2011)

This is yet another web hosting copyright infringement case where the 17 USC 512 safe harbors aren't discussed. (For other recent examples, see Rosen v. Hosting Services and Perfect 10 v. RapidShare). It's not 100% clear why 512(c) didn't come up. The defendant seeking dismissal, theplanet.com, appears to have designated a 512 agent. However, the case implies (but never expressly says) that theplanet didn't properly honor the copyright owner's takedown notice.

The plaintiff runs SimpleFilings.com, an online document preparation business. The alleged copyright infringer is IncomeInc.com, which runs at least three websites (all virtually identical to each other) that provide rival services to the plaintiff's. Theplanet.com provides hosting services for all three websites. The opinion's facts are garbled, and the court doesn't say exactly what the alleged infringers copied from the plaintiff. More importantly, the plaintiff sent a copyright takedown notice to theplanet targeting only one of the three websites, and the opinion never makes clear what the notice said or what happened to the targeted website (the opinion implies that theplanet didn't take it down). The plaintiff also complains that in response to the takedown notice, theplanet should have removed the other two similar websites as well, so its failure to do so constitutes direct and secondary copyright infringement. This ruling addresses theplanet's motion to dismiss that latter allegation.

Fortunately, the court quickly rejects the direct infringement claim. The court says:

ThePlanet argues that merely hosting the websites does not rise to the level of copying, which is required to plead a cognizable claim for copyright infringement. The Court agrees.... liability is entirely premised on defendant’s participation as the host of the Brandenburg defendants’ websites.

A 512 discussion would have been helpful here. Whatever else 512 does, it should eliminate the claim that a web host is directly liable for a customer's copyright infringement without a proper 512(c)(3) notice. Because the court doesn't reference 512 at all, it appears the court is making a common law interpretation of direct infringement.

Things go less smoothly with the secondary copyright claims. Regarding contributory infringement, theplanet argues that it lacked the requisite knowledge of infringement. Because we don't know if the plaintiff sent a 512(c)(3)-compliant notice, it's hard to tell exactly what notice the plaintiff actually gave theplanet. The court says:

The Complaint alleges that plaintiff provided notice to ThePlanet of alleged direct infringement by the Brandenburg defendants with respect to plaintiff’s First Website. The Complaint further alleges that the Second and Third Websites are substantially similar to the First Website....[A]ssuming the facts alleged in the Complaint are true, ThePlanet had constructive knowledge of the direct infringement by the Brandenburg defendants based on plaintiff’s allegations that ThePlanet had actual knowledge of the direct infringement involving the First Website and that the Second and Third Websites are substantially similar to the First Website.

Holy non-sequitur, Batman! We'd need to see the exact notice, but knowing that there's one instance of infringement on the site doesn't automatically confer knowledge of all identical (let alone similar) infringements. Again, in the 512 context, we've seen this argument rejected many, many times where courts have required the plaintiffs to send takedown notices specifying each and every location of alleged infringement. See, e.g., Viacom v. YouTube and the many Perfect 10 cases. So if this plaintiff's notice didn't identify the second and third websites, under 512, the web host shouldn't have any responsibility to root out those sites. As you can see, without the 512 backdrop, this court's common law interpretation goes awry in a troubling way.

The court says theplanet may have materially contributed because it failed to act when it had the requisite knowledge. Again, the court imputes the knowledge of website #1 to spur the duty to take down websites #2 and #3.

On the vicarious infringement claim, the court appears to say (incorrectly IMO) that all web hosts have sufficient right and ability to supervise their customers' activities, at least for purposes of the motion to dismiss.

This opinion raises way more questions than it answers. Perhaps subsequent rulings (if it gets that far) will clear up some of the mysteries.

Posted by Eric at 08:53 AM | Copyright , Derivative Liability | TrackBack

February 01, 2011

Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial

By Eric Goldman

Cammarata v. Bright Imperial Ltd., 2011 WL 227943 (Cal. App. Ct. Jan. 26, 2011). The complaint. The trial court ruling.

If you can't compete with free, can you litigate it away?

Kevin Cammarata ran subscription-based porn sites until he sold his business at an allegedly depressed sales price. The defendant runs an ad-supported porn site, RedTube.com, one of many porn websites with the suffix -tube.com as an homage to YouTube. Nothing about any of the websites implicated by this lawsuit is office-safe. The court, apparently with a straight face, sets the context by saying "the formerly profitable subscription-based websites 'have been brought to their knees' by the tube-based sites." (Once again reinforcing that the Internet is really just a series of tubes...?)

Unhappy with competing with free, Cammarata sued RedTube and some of its advertisers for unfair business practices. Cammarata's attorney, Jay Spillane, was quoted as saying "Tube sites have done injury to the business. We feel RedTube and other sites like them are crowding out competition when it comes to the online adult business.”

Crowding out competition? Is that another way of saying that new entrepreneurs are winning market share from incumbents?

The court summarizes the allegations against RedTube:

Cammarata contends that Bright's unlawful activities consist of (1) allowing customers to view adult entertainment videos on its website below cost for the purpose of injuring Cammarata's business and destroying his competition in violation of Business and Professions Code section 17043; (2) unlawfully using its videos as "loss leaders" in violation of Business and Professions Code section 17044; and (3) engaging in "unlawful, unfair, or fraudulent business practices or acts" in violation of Business and Professions Code section 17200. The advertising defendants are allegedly aiding and abetting Bright in accomplishing the conduct described above.

The trial court granted the defendants' anti-SLAPP motion. The appellate court upholds that ruling. Unless something changes, Cammarata should be writing a check to the defendants for their troubles.

Frankly, I'm not sure about the application of anti-SLAPP laws here. The court's treatment of the "public interest" is pretty lax--basically, the statutory "public interest" here is that lots of people are generally interested in porn ("Cammarata and Bright agree that there is a substantial public interest in the kind of sexually explicit videos shown on tube-sites such as Redtube"--news flash of the day!). Nevertheless, I'm glad it results in a fee shift given the sheer craziness and anti-consumer sentiments of the lawsuit.

Cammarata argued that he was suing over RedTube's pricing decisions, not its publication of videos. The court rejects this argument:

We reject Cammarata's argument that his causes of action arise from Bright's predatory pricing, not its speech, because here the product being priced is speech, not dog food. All of Cammarata's causes of action arise from Bright's conduct of placing speech on the Internet where it can be viewed for free by the public. This is the "predatory pricing" that Cammarata complains of.

The court then turns to the merits of Cammarata's complaint about pricing. At its core, his argument is that giving away content for free, supported by advertisers, is illegal under California law. Obviously, no court was going to agree. Could you imagine? Sirius could sue all of the broadcast radio stations. HBO could sue broadcast TV stations. Subscription newspapers could sue free newspapers. That would be quite a result. The court politely mocks Cammarata's arguments:

If Bright's business model sounds familiar it's because it's the business model typical of broadcast radio and television stations in the United States not to mention thousands of local newspapers and, more recently, tens of thousands of Internet websites including Youtube, CNN and Video.Yahoo.

The court rejects the arguments, saying that it's not below-cost pricing to run an ad-supported business, and Cammarata can't show that RedTube was trying to destroy his business. The court concludes with a snarky "don't let the door hit you on the way out":

If Cammarata's subscription-based website lost revenue after Redtube and other tube-based websites came on the scene it was because the tube-based business model is more efficient, not because of alleged predatory pricing by Bright.

It's true that subscription services often can't compete with free services. But as this case shows, if your competition is giving content away for free when you hope to charge users to enjoy comparable content, you better come up with a new business model pronto because the courts won't bail you out.

A historical perspective: If you never saw it, I wrote on Internet content price setting back in 1997 under my old name: Eric Schlachter, The Intellectual Property Renaissance in Cyberspace: Why Copyright Law Could Be Unimportant on the Internet, Berkeley Technology Law Journal, 1997. In the paper, I talk about price setting when marginal costs of content reproduction and distribution are zero; I then explore some 1990s-era ways of cross-subsidizing content production and publication. As any economist will tell you, the market price will be MR = MC, which if MC = 0 means P = 0. It's interesting to see folks still trying to fight that basic law of economics.

Posted by Eric at 09:54 AM | Copyright , Internet History , Marketing | TrackBack

Search

Categories

Archives

Recent Entries

February 28, 2011

"Consumer Reviews of Doctors and Copyright Law" Talk Notes

February 27, 2011

Jan.-Feb. 2011 Quick Links, Part 2

February 25, 2011

Business Sues Facebook to Restore Its Fan Page--Complexions v. Complexions Day Spa

February 24, 2011

Savvy Louisiana Ruling on Metatags--Southern Snow v. Snowizard

February 23, 2011

Jan.-Feb. 2011 Quick Links, Part 1 (Copyright Edition)

February 22, 2011

Florida Court Fixes Erroneous 47 USC 230 Ruling--Giordano v. Romeo

February 18, 2011

Google Suffers Surprising Preliminary Loss in Keyword Advertising Case--Jurin v. Google

February 17, 2011

Quirky 47 USC 230 Case Still Results in Defense Win--Coppage v. U-Haul

eBay's Venue Selection Clause Upheld in Missouri--Earll v. eBay

February 16, 2011

Ripoff Report Gets Another 47 USC 230 Dismissal--Herman v. Xcentric

February 15, 2011

Microsoft Adopts Google-Style Trademark Policy for Keyword Advertising

February 12, 2011

Debt Collection Text May Result in Liability under the Telephone Consumer Protection Act -- Gutierrez v. Barclays Group

February 11, 2011

Defamation, False Information & 47 USC 230 Talk Slides

California Supreme Court Rules That a ZIP Code is Personal Identification Information -- Pineda v. Williams-Sonoma

February 10, 2011

Comparative Domain Name and Keyword Regulation Talk Slides

February 09, 2011

Second Life Forum Selection Clause Upheld--Evans v. Linden

February 07, 2011

Court Dismisses Class Action Against Spokeo for Lack of Standing -- Robins v. Spokeo

Regulating Reputational Information Chapter Now Available

February 05, 2011

Grimmelmann on "Search Neutrality"

February 04, 2011

Court: Husband's Access of Wife's Email to Obtain Information for Divorce Proceeding is not Outrageous

February 03, 2011

CA Anti-SLAPP Cases Involving Consumer Reviews as Matters of Public Concern

Yellow Pages Companies Challenge Seattle Opt-out Ordinance on First Amendment Grounds

February 02, 2011

Web Host May Be Liable for Removing Only 1 of 3 Websites Operated by Its Customer--Hermeris v. Brandenburg

February 01, 2011

Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial