January 31, 2012
Court Denies Kravitz’s Motion to Dismiss PhoneDog’s Amended Claims -- PhoneDog v. Kravitz
[Post by Venkat Balasubramani]
PhoneDog v. Kravitz, 2012 U.S. Dist. LEXIS 10561 (N.D. Cal.; Jan. 30, 2012)
PhoneDog and Kravitz are fighting over ownership of the Twitter account Kravitz used while he was working for PhoneDog. In an earlier order, the court allowed several of PhoneDog’s claims to continue, although it dismissed PhoneDog’s claims for economic interference due to Kravitz’s allegedly improper taking of the Twitter account.
The court's initial order allowed PhoneDog's claims for conversion and misappropriation of trade secrets to proceed, but dismissed PhoneDog's claims for negligent and intentional interference with economic relationships. I thought PhoneDog’s claims were weak at best, and the court could have whittled down the litigation and guided the parties to their ultimate destination—settlement—by culling some of the claims, but no such luck.
With respect to intentional interference with prospective economic advantage, the court accepts PhoneDog’s theory that:
[d]ue to Kravitz’s alleged conduct, there is decreased traffic to [the] website through the [Twitter] Account, which in turn decreases the number of website pageviews and discourage advertisers from paying for ad inventory on PhoneDog’s website.
This looks like a broad theory of economic interference that would sweep up a lot of otherwise innocent conduct, but the court says that at the pleading stage, this is sufficient. The judge’s decision on economic interference seems to view traffic as an asset that can be misappropriated (even if there is no trademark claim, the economic interference claim is like a claim for diversion of traffic). The court also says that PhoneDog’s negligent interference theories also have merit at the pleading stage because “Kravitz owed a duty of care to PhoneDog as an agent of PhoneDog.”
The net result is that all of PhoneDog’s claims move forward, and Kravitz (and PhoneDog) will have to slog through some additional discovery in order to resolve PhoneDog’s claims at the summary judgment stage.
I can't think of any new lessons to draw from this ruling, except that some sympathetic judges will let claims move forward. It would have been cheaper and quicker for everyone involved to have entered into a written agreement addressing the issue, or at least to have addressed this question up front (even if informally).
Another Set of Parties Duel Over Social Media Contacts -- Eagle v. Sawabeh
Employee's Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward--Maremont v. SF Design Group
Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer--Ardis Health v. Nankivell
Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account -- Deck v. Spartz, Inc.
January 30, 2012
Judge Can't Decide if Facebook's User Agreement is a Browsewrap, But He Enforces It Anyways--Fteja v. Facebook
By Eric Goldman
Fteja v. Facebook, Inc.,2012 WL 183896 (S.D.N.Y. Jan. 24, 2012). Fteja's initial "complaint" (filed as an order to show cause).
If I could waive a magic wand, I'd retire the phrases "clickwrap" and "browsewrap." Those terms trace their lineage to a radically different technology--plastic shrinkwrap on physical products--and, as a result, they never developed clean or precise definitions in the online world. This opinion is much more prolix than necessary because the court couldn't figure out what either term meant and therefore couldn't decide how to apply the precedent. Fortunately, the court gets to the right place eventually.
Fteja claims that Facebook terminated his Facebook account improperly because it discriminated against him as a Muslim. Facebook will win this lawsuit eventually; see, e.g., my paper about online user account terminations and 47 USC 230(c)(2) and Young v. Facebook.
Yet, the judge launches into an extended discourse about the philosophy of online contracts. Overly troubled by the hyperlinked presentation of the actual terms, the court reaches this awkward classification:
The judge then snarks about social media exceptionalism:
it is tempting to infer from the power with which the social network has revolutionized how we interact that Facebook has done the same to the law of contract that has been so critical to managing that interaction in a free society. But not even Facebook is so powerful.
(Don't underestimate Facebook, your honor. It is changing our brains).
Despite all the navel-gazing, the judge realizes:
Having convinced himself that Facebook's venue selection clause is enforceable, the judge then concludes that transfer is proper. All of the relevant evidence is at Facebook's headquarters, Fteja's witnesses don't appear to be near NYC, the alleged contract breach means the "locus of operative facts" took place in California, and Fteja's medical condition ("Ménière's disease") won't keep him off airplanes.
Some related posts:
* Court Disregards Check-the-Box Agreement and Doesn't Enforce Venue Clause -- Dunstan v. comScore
* Forum Selection Clause in "Submerged" Terms of Service Presumptively Unenforceable -- Hoffman v. Supplements Togo
* Anti-Scraping Lawsuit Largely Gutted--Cvent v. Eventbrite
* Interesting Database Scraping Case Survives Summary Judgment--Snap-On Business Solutions v. O'Neil
* Clickthrough Agreement With Acknowledgement Checkbox Enforced--Scherillo v. Dun & Bradstreet
* Contract Formed Even If Customer Never Received It--Schwartz v. Comcast
* Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?--Ticketmaster v. RMG
January 29, 2012
Newspaper Isn't Liable for User Website Comment Per 47 USC 230--Delle v. Worcester T&G
By Eric Goldman
Delle v. Worcester Telegram & Gazette Corp., 2011 WL 7090709 (Mass. Super. Ct. Sept. 14, 2011)
I previously mentioned this ruling in a recent Quick Link, but I can write up a full post now that I've seen the actual opinion.
Robert Delle is a lawyer (of course). A reporter surreptitiously called Delle and asked for his views on Obama's citizenship. The reporter then published a story in the T&G calling Delle a "birther" and opining about the relationship between the birther movement and racism. Seven months later, the T&G published a story covering a lawsuit that Delle was litigating. A user commented to that article that "there was no bigger dope than Delle." Delle claims the comment came from a T&G employee/agent, but his only support for this belief is that he'd heard a rumor that sometimes newspapers comment on their own stories.
Bringing a defamation lawsuit over being called a "dope" doesn't seem very savvy to me, and the court easily dismisses the claim due to 47 USC 230. The court correctly concludes "the T & G cannot be held liable for the statements of a third party on the comments section of its website." It doesn't matter if the T&G prescreened the comments, allowed other users to flag the comment as abusive (which Delle did) and decided not to act after users had flagged the comment as abusive. Delle's unsupported allegation that perhaps the T&G wrote the comment wasn't enough to survive the dismissal motion.
The court also tosses the defamation claim against the T&G for its earlier story. Interestingly, the court doesn't directly address the defamatory implications of calling someone a "birther," even though in my world a that's much worse insult than calling someone a dope. Instead, the court says that any implication that birthers are racist, and therefore Delle may be a racist, was clearly based on the reporter's personal beliefs, plus it constituted an interpretation of facts rather than a fact itself.
Prior blog coverage of newspapers' 47 USC 230 wins for user-posted comments.
January 27, 2012
Top Internet Law Developments of 2011
By Eric Goldman
As usual, I'm running late with my year-end recap. This post begins with my countdown of the top 5 Internet Law developments of 2011, then it lists other interesting developments and cases. It concludes with some of the most linked posts and then my editor's choice of some posts in 2011 that might have been a little overlooked. As usual, thanks for reading the blog in 2011!
Countdown: My Top 5 List of Developments in 2011
#5: Righthaven Implodes. Since the beginning, I've been skeptical of Righthaven's business model. Seriously, who else thinks it's a good idea to sue small-time mom-and-pop bloggers and non-profits on a one-by-one basis? However, even I had no idea that Righthaven would accelerate their own demise by routinely making basic litigation errors. A sketchy business model + a litigation shop that isn't very good at litigation = one dead start-up. It's always fun (in a bloodsporty way) to watch hubristic bullies get their just desserts, but watching the Randazza firm school the Righthaven litigators in Litigation 101 has been amazing. THAT'S how you litigate.
Righthaven lost often in 2011 (see my August reset). They lost fair use rulings (e.g., CIO, Choudry). They lost on standing grounds (e.g., Democratic Underground, Wolf). They were hit with sanctions. They were hit with hundreds of thousands of dollars of attorney fee shifts (e.g., Leon, Wolf, DiBiase). They even lost their domain name in an auction--a delicious irony given that Righthaven's complaints improperly demanded its defendants' domain names on the theory that it might need the domain name to satisfy a judgment against the defendant, when in fact it was Righthaven's domain name that was used to help satisfy a judgment against it!
Righthaven ended 2011 on death's door, but the trend of newspapers trolling for copyright litigation isn't going away. I'll be watching NewsRight closely in 2012.
#4: Medical Justice Gives Up. Speaking of hubristic bullies... You recall Medical Justice, the organization that helped doctors and other medical service providers take copyright assignments from patients in their as-yet-unwritten reviews so that the doctors could expeditiously remove unwanted reviews by sending 512(c)(3) takedown notices to review sites. It's an interesting legal hack, but it has some bad side-effects, including the fact that patients hated it, the copyright assignments almost certainly were void (for public policy reasons and others), doctors were hurting themselves by discouraging patient reviews (patients prefer to choose doctors when there's a critical mass of patient reviews), and (as our research uncovered) most consumer review sites ignored the doctors' 512(c)(3) takedown notices. Obviously, with those defects, Medical Justice wasn't exactly adding a ton of value to its clients. Medical Justice finally gave up, but too late to prevent a lawsuit against one of its clients and a complaint to the FTC. Chances are Medical Justice will be living with a long-term hangover from this entrepreneurial foray.
Seeing Medical Justice stop peddling anti-patient review tools was slightly satisfying, but that result was always a fait accompli. The reason Medical Justice's change of heart matters is that shady or clueless vendors keep developing new ways to suppress unwanted consumer reviews, and I hope Medical Justice's experiences will discourage other vendors from trying the copyright hack. I talk about these dynamics more in my paper on regulating reputational information.
#3: gTLD Expansion. It remains unclear exactly what ICANN's rollout of unlimited top level domains will do. Due to the expansion of new namespaces, brand owners face a long list of complicated--and potentially expensive--choices to make. Unfortunately, these choices don't really benefit society; instead, the gTLDs tax businesses while the benefits accrue to a small number of service providers (and, of course, ICANN itself). I think many businesses will reserve their name in multiple new gTLDs to prevent squatting--with the net effect that businesses will spend more money just to preserve the status quo. Meanwhile, most consumers are likely to be bewildered by the unlimited number of TLDs, which is just going to increase their tendency to rely on search engines and link directories rather than domain names to navigate to their desired destinations.
#2: Internet Consumer Privacy Lawsuits Tank. 2011 initially looked like the year of the Privacy Plaintiff. A torrent of privacy lawsuits had been filed, plaintiffs had wrested a few important and lucrative settlements, and Internet companies continue to make questionable privacy decisions that create a steady supply of potential new lawsuits.
But the path to riches didn't materialize. Instead, 2011 emerged as the year when privacy class action lawsuits mostly failed miserably. Courts principally rejected the lawsuits on standing grounds for lack of cognizable harm, but plaintiffs failed on other related grounds, such as a lack of damages negating the prima facie case. There were some exceptions where plaintiffs made a little progress (see, e.g., Claridge v. RockYou, Anderson v. Hannaford, Fraley v. Facebook). I'm sure the privacy plaintiffs' bar will be studying those rare successes to formulate a better battle plan--and to better prepare their cases and find strong named plaintiffs, a recurring omission that hasn't gotten a lot better over the year. However, for now, it's clear that the privacy plaintiffs' bar can't just show up in court and hold out their hands for a payday.
#1: Regulators Broke the Internet. We've always known that regulators could combat bad online activity by working "up the chain," i.e., by making upstream service providers liable for the bad acts or obligated to cut off the activity. However, for the most part, we've shared a tacit understanding that systematically going up the chain was a "nuclear" option--it would fix the specific problem but only at significant collateral cost that, on balance, makes the option unattractive.
I think we'll look back at 2011 as the year that tacit understanding broke down. In 2011, regulators around the world showed a seemingly insatiable demand for working up the chain. Although we in the USA like to think we're different from other repressive regimes, the evidence suggests otherwise. Some examples of "up the chain" activity in 2011:
* Arab Spring. Repressive regimes got local Internet access providers to turn off Internet access in the country.
* Operation in Our Sites. The Immigrations and Customs Enforcement (ICE) agency keeps seizing domain names of suspected foreign rogue websites on an ex parte basis, making errors and breaking the law in the process. Mike Masnick blew open the story on Dajaz1.com, which ICE seized on an ex parte basis, conducted secret proceedings for a year, and then gave back the domain name with no explanation.
* Graduated Response. Copyright owners got Internet access providers to voluntarily (?) agree to restrict, and eventually terminate, their users' accounts.
* Secondary liability against intermediaries. Rightowners keep expanding their intermediary targets, including lawsuits against ad networks and SEOs/web designers. To be fair, some of these lawsuits aren't going very far, and expansive secondary liability theories aren't new in 2011.
* Ex Parte Seizures. Rightsowners are asking for the moon against third party service providers in ex parte proceedings, and courts are giving it to them because the third parties aren't there to represent their own interests. We recap this epidemic in this post.
* SOPA and PIPA. These proposed bills were the finest examples of rightsowners pursuing the nuclear option regardless of the collateral damage. The bills' basic architecture was to attack a wide range of intermediaries for third party actions--domain name registrars, search engines, payment service providers, ad networks. By seeking to deputize the intermediaries, the bills sought to instantiate "up the chain" duties across virtually the entire Internet. Putting aside their other policy deficiencies, I think we should resist all laws predicated on that fundamental assumption of intermediary deputization. See my post on the OPEN bill for why I reject the compromise "follow the money" solution. Sadly, I stand virtually alone in my stance.
Other Interesting Developments.
Some other interesting developments this year:
* Patent Reform. The America Invents Act is the most dramatic patent reform bill in years, and it has many provisions that may affect Internet companies, including the joinder standards, the prior user defense, and the novelty/priority standards. The law doesn't fix the overall problems with bad Internet patents or unmeritorious assertions of those patents, but it nevertheless could make some dramatic changes in what Internet companies do.
* Google and Antitrust. Google has become the incumbent in search, and all of its rivals--especially the companies Google is disintermediating--are desperately seeking to knock it off its perch. I believe Google and antitrust was the #1 topic prompting reporter phone calls to me in 2011. We are waiting to see what comes from the FTC investigation into Google's practices, and the list of Google-haters keeps growing daily. At the same time, the anti-Google forces made surprisingly little actual progress in 2011, including suffering a conspicuous (and not even close) loss in the myTriggers case. See my paper on why I am so over the Google antitrust battles.
* DC's Obsession with Busting Silicon Valley Companies. Sometimes, it feels like DC insiders wake up in the morning and wonder, "What Silicon Valley company do I feel like busting today?" Drive down the 101 from San Francisco to San Jose and play the "Spot the FTC/DOJ Bust" bingo game. Some of DC's targets in 2011: Google Buzz, Twitter (finalized in 2011), Facebook, Google pharma ads, Apple and others for no-poaching restrictions, and others. Good times!
* Judges Order Litigants to Hand Over Passwords to Social Networking Sites. This year, several judges ordered litigants to turn over their Facebook passwords to their litigation opponents for discovery purposes. See, e.g., Zimmerman v. Weis (which I added to my Internet Law reader this year). In 10 years, we'll look back at this mini-trend and shake our heads at the judicial cluelessness. Social networking sites contain a mix of public and private information, and letting a litigation opponent root around the account is just as objectionable as making a litigant hand over the keys to his/her house so the opponent can rummage around.
Other Key Court Rulings in 2011
Some other interesting court decisions this year:
* Author's Guild v. Google. The court rejected the Google Book Search settlement agreement for good reasons, but it sent the parties back to square 1. Why the parties haven't been able to broker a legislative compromise is beyond me.
* Barclays v. theflyonthewall. The Second Circuit took a big bite out of the hot news doctrine. Unfortunately, the Second Circuit didn't kill the hot news doctrine outright, but the opinion leaves open very little room for hot news plaintiffs.
* Network Automation v. Advanced System Concepts. The most important keyword advertising ruling to come out in several years. While the ruling itself was a mixed bag for the litigants, the opinion tore down a number of crusty plaintiff-favorable legal doctrines that had cluttered up trademark jurisprudence for years--including virtually mooting the initial interest confusion doctrine and killing the "Internet trinity" bypass to the standard multi-factor likelihood of consumer confusion test. I've noticed that the opinion has already noticeably tilted courts towards more defense-favorable rulings.
* Betty Boop case (Fleischer Studio v. AVELA). For a few months, it looked like the Ninth Circuit had eliminated trademark merchandising rights in characters that were out-of-copyright. Then it changed its mind; but still it liberated Betty Boop to the world.
* PhoneDog v Kravitz. An interesting battle over ownership of a Twitter account.
* Levitt v Yelp/Ascentive v. PissedConsumer. 47 USC 230 still works really, really well as an immunity. In Levitt, Yelp got a 230 dismissal that Yelp had tried to get advertisers to pay to manage consumer reviews. In Ascentive, the court rebuffed a plaintiff's effort to use a trademark infringement claim against a consumer review website to work around 230.
* Habush v Cannon. Buying a person's name as the trigger for keyword advertising doesn't violate their publicity rights.
* UMG v. Shelter Capital. While everyone waits for the Second Circuit's decision in Viacom v. YouTube, the Ninth Circuit stole some of that thunder with a powerful endorsement of the 17 USC 512 safe harbor. Too bad Veoh didn't live long enough to enjoy the win.
* In re Rolando S. Rolando was convicted of felony identity theft for taking a classmate's Facebook page for a joyride. My vote for the most interesting Internet Law case of 2011, and an instant cyberlaw classic. I've already added it to my Internet Law reader, and the students seemed to enjoy discussing the case.
Some of the Most Linked Blog Posts in 2011 (Per Topsy)
* New Advertising & Marketing Law Casebook Available for Review
* Court Orders Plaintiff to Turn Over Facebook and MySpace Passwords in Discovery Dispute -- Zimmerman v. Weis Markets, Inc.
* "App Store" Isn't Generic, But Apple Can't Enforce Its Purported Trademark in the Term--Apple v. Amazon (Apple legal issues are always good link bait)
* Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract -- CX Digital v. Smoking Everywhere (the most popular post of the year by far--a modern Contract Law classic)
* Second Life Ordered to Stop Honoring a Copyright Owner's Takedown Notices--Amaretto Ranch Breedables v. Ozimals
Favorite "Overlooked" Posts
A few posts that maybe got overlooked a little:
* Cyberbullying and Restorative Justice [a Long-Delayed Post on DC v. RR]
* Racy Teen Photos Posted to Facebook Are Constitutionally Protected Speech--TV v. Smith-Green
* Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion
* Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial
* What Would a Government-Operated Search Engine Look Like in the US?
Lists of Yore
January 26, 2012
Federal Prosecution Over "Threats" on Craigslist – US v. Stock
[Post by Venkat Balasubramani]
US v. Stock, Cr. No. 11-182 (W.D. Pa.; Jan. 23, 2012)
I blogged about a case before where a defendant was charged under a federal threat statute of posting a threatening video to YouTube. (“Court Finds That Threatening Video Posted to YouTube and Facebook Can Constitute a "True Threat.”) A couple of recent cases have raised similar issues.
Stock was charged with posting a notice on Craigslist. Here is what the notice said:
I went home loaded in my truck and spend the past 3 hours looking for this douche with the expressed intent of crushing him in that little piece of shit under cover gray impala hooking up my tow chains and draggging his stupid ass down to creek hills and just drowning him in the falls. But alas I can’t fine [sic] that bastard anywhere . . . I really wish he would die, just like the rest of these stupid fucking asshole cops. So J.K.P. if you read this I hope you burn in hell. I only wish I could have been the one to send you there.
Stock said that the statement was not a "threat" under the statute, so regardless of whether a reasonable person would perceive it as a threat, the indictment should be dismissed as a matter of law.
The court says that, although the statute does not define the term "threat," cases construing similar statutes say that a threat is "a serious statement or communication which expresses an intention to inflict injury at once or in the future" (as distinguished from "idle or careless talk . . ."). Under this definition, the court says that it can’t dismiss the indictment because defendant’s statement would not be considered a threat only if different parts of the post were viewed discretely. While some parts of the post express a mere desire that something bad occur, or reference harm in the past tense, when viewed as a whole, whether the post is a threat is a question for the jury.
The court cites to US v. Elonis, another recently decided district court case where the court declined to dismiss a similar indictment. Elonis was charged with making threats via interstate commerce based on statements he made on his Facebook page. He was formerly employed at an amusement park, and he posted a series of threats directed at the amusement park, local authorities, and his wife. Here’s a flavor of some of the posts:
And if worse comes to worse
I’ve got enough explosives
To take care of the State Police and the Sheriff’s Department.
That’s it, Ive had about enough
I’m checking out and making a name for myself
Enough elementary schools in a ten mile radius
To initiate the most heinous school shooting ever imagines
And hell hath no fury like a crazy man in a Kindergarden class
The only question is . . . which one
The defendant in Elonis made a few arguments similar to the ones made by Stock: the statements were hyperbole, venting, and that the statements were "crude, spontaneous and emotional language expressing frustration." The court rejected these arguments, noting that as long as the defendant "knowingly” made the statements, whether they were threats depends on whether an objective recipient would perceive the statements as threats. The court also noted that although the threats were posted to Facebook, the subjects of the alleged threats (the amusement park co-workers and his wife) were Facebook friends with the defendant and saw the threats.
There were a couple of key differences between Elonis and Stock. For starters, the statements in Elonis were scarier (they talked about blowing up a school). The court also notes that defendant continued to post threatening statements after Elonis’s wife obtained a protective order. Additionally, the statements Elonis made were likely to be viewed by the subjects of the threats, which included Elonis’s former co-workers and his wife (or his wife's friends). The statements in Stock on the other hand were contained in a post to Craigslist. The post did not identify the target of the threat by name, and we don’t have any idea of how that person would even come across it. For all we know, no one even viewed the threat at all. The statements were similar to the YouTube video the defendant posted in Jeffries. (For what it’s worth, Jeffries was appealed and the appeal is currently pending.)
Some of this gets to the issue of defendant’s intent. There’s a mix of authority as to whether the defendant must subjectively intend the threat to be a threat, with many jurisdictions saying that subjective intent is not required. (The Ninth Circuit says yes, the defendant has to subjectively intend to make a threat, not just intend to transmit the communication in question.) However, all of the cases acknowledge that the defendant must knowingly transmit the statement in question. And that’s where Jeffries (the YouTube case) and this case feel like they are on shaky ground. In both cases, the defendants made statements in cyberspace that were not directed at the subjects of the ostensible threats. In Jeffries, I’m skeptical that the defendant knew that the subject was likely to come across the threat, but in this case I’m even more skeptical. The statement was posted to Craigslist!
It's also worth pointing out that last month a district judge in Virginia dismissed an indictment based on thousands of allegedly harrasing tweets and various blog posts. (Here's a post from Ars Technica on that case: "Judge: indictment for Twitter harassment is unconstitutional.") Although the charges in that case were different in that the government proceeded under a different statute and argued that the defendant intended to cause "emotional distress" to the victim, the court relied on the fact that the communications were not made directly to the victim. (Here's a pdf of the court's order in US v. Cassidy. The analysis between this case and Stock and Elonis differs because "true threats" are considered unprotected speech, but it's interesting that the court relied on the fact that the communications were not made directly to the victim.)
I understand why the government may want to track and investigate threatening statements made online, but I'm surprised these statements ended up being the subjects of federal criminal prosecutions.
[I made a few changes to the post to clarify the timing between the protective order and the threats in Elonis. There were multiple statements that were allegedly threatening and the defendant continued to post after his wife obtained a protective order. At some point she presumably unfriended him on Facebook. While she may not have been directly exposed to threats the defendant made after she obtained the protective order, people in their mutual social circle would have seen them.]
January 25, 2012
Facebook Boasts/Taunts Undermine the Legal Defense for a Fight at a House Party--In re DLW
By Eric Goldman
In the Matter of the Welfare of: D.L.W., Child, 2012 WL 171412 (Minn. App. Ct. Jan. 23, 2012)
The opinion indicates the following facts: BP supplied DLW with $200 of dope for resale. Before DLW could move the merchandise, the police seized the stash. The supplier-dealer contract apparently did not allocate this risk of loss, so BP took the position that DLW still owed $200. DLW either was unwilling or unable to pay. The parties then threatened each other via Facebook.
Subsequently, at a house party, BP and DLW got into a fight. Exactly what happened in the fight is the key issue. BP admitted he was "hovering over" DLW and that he administered "a pretty good beating" to DLW. DLW told the police he didn't fight back. However, after the fight, BP went to the hospital with 7 stab wounds. DLW was later found with a pocket knife that had BP's DNA on it.
In court, DLW claimed he didn't fight back and floated a self-defense claim. In response, prosecutors sought to introduce DLW's Facebook post made one hour after the fight:
D—n, I love drunk fight. Owee. I feel like a country boy in a bar fight. Got to love my bois. Ha! round 2. Let's do it, p-ssy. I got two days and that's enough to cause a little raucous.
Dude, Alicabeth, sorry for fighting at ur crib. Liquor before beer. You're in the clear. Well, that's a understatement. Ha! F—k you. The streets can see what you can't see. [B.P.], you're a p-ssy b—ch who can't fight worth sh-t. You f—king cracker a—b—ch. 4 on 8. D—n, that's sad. All your bois ended up on the ground. Ha! Get at me. You know where to find me. Ya'll make me laugh.
[B.P.], you are the definition of a white b—ch. Come see me. 85th Place North. Let's get it, p-ssy.
And just like last time, you won't get out of ur d—n car when my bois surround the car. Not a threat. Just a promise. You're guna get f—ked up. No lie. LOL.
Although I don't speak this language, the prosecutors asserted that these:
were not the words of a young man who just took a beating, didn't fight back and lost a fight....since we know that [B.P.] was over [appellant] and [appellant] was on the ground while [B.P.] was punching him, the only way that [appellant] could have felt that he won that fight was because he fought dirty, and he stabbed [B.P.].
The court allows the evidence, holding it is both potentially relevant and not unfairly prejudicial, and thus upholding the jury ruling of criminal assault. This suggests a new protip: if you're involved in a fight, check with your lawyer before discussing said fight on Facebook.
Compare People v. Bignone, another case involving house brawls and Facebook posts.
Related blog posts on social media evidence undermining legal arguments:
* Social Media Photos Foil Yet Another Litigant--Clement v. Johnson's Warehouse
* YouTube Video Impeaches Witness' Credibility--Ensign Yacht v. Arrigoni
* Facebook Entries Negate Car Crash Victims' Physical Injury Claims
* Contrary MySpace Evidence Strikes a Litigant Again--HAC, Inc. v. Box
* MySpace Postings Foil Another Litigant--Sedie v. U.S.
* Disturbingly Humorous MySpace Posts Used as Impeaching Evidence in Spousal Abuse Case--Embry v. State
* Latest Example of Social Networking Site Evidence Contradicting In-Court Testimony--People v. Franco
January 24, 2012
Comments on United States vs. Jones: What's Old is New Again (Guest Blog Post)
By Ethan Ackerman with comments from Eric
U.S. v. Jones No. 10–1259 (U.S. Supreme Court; Jan 23, 2012)
In 2005 federal agents convinced a judge to issue a warrant so they could affix a cellular-based GPS tracker to the underside of Antoine Jones' wife's car, which the agents then tracked constantly for almost a month. Unfortunately for the federal agents' subsequent criminal prosecution of Jones on cocaine distribution and conspiracy charges, the agents did so after the warrant had expired, and in a different state than the warrant permitted. After an unsuccessful trial, Jones appealed his conviction to the D.C Circuit, which suppressed the warrantless surveillance, finding it was obtained through a Fourth Amendment violation.
In so holding, the D.C. Circuit split with the Seventh, Eighth and Ninth Circuits on the matter. Importantly for the Supreme Court, each of these Circuits found no search occurred (or in the case of the D.C. Circuit, a search had occurred) when analyzing the 'search' under the 'reasonableness' test of Fourth Amendment law developed from Katz v. United States.
Yesterday, the Supreme Court held that the government's search was a Fourth Amendment violation. Importantly, the five-member majority opinion by Justice Scalia reaches that result by effectively resurrecting the 'trespass' element of Fourth Amendment law that has been dormant for almost 50 years--and wasn't a part of any of the underlying Circuits' opinions. I don't want to denigrate the significance of that holding, and I suspect it will dominate much of the scholarly commentary about the ruling. Already, the universally-cited Orin Kerr, blogging at the Volokh Conspiracy, has several posts up already about the trespass and mosaic theories aspects of Jones.]
However, my biggest surprises from the opinions were the unanimity of support for the idea that this was a constitutionally-suspect search, and the numerical majority that also found this search unreasonable for non-tresspassory "reasonableness" reasons. It's kind of a big deal that all nine Justices found this case to be a Constitutionally-infirm search, disagreeing with a significant portion (probably a majority) of the Circuit Courts' benches. Even more so, it's truly a big deal that five (a numerical majority) found this search "unreasonable" under a reasonableness test that looked to the intent of the searching officers and so casually dismissed the atomistic arguments of the government that at each moment the searching was being done in a public place. Both of these arguments have been mainstays in earlier Fourth Amendment decisions.
Additionally, much of the earlier commentary on the D.C. Circuit's unreasonableness rationale, somewhat pejoratively nicknamed a "mosaic theory," had focused on its novelty and un-testedness. However, five justices appear ready to apply it in this case. In particular, Justice Sotomayor 's concurrence makes clear that she agrees with Justice Alito's four-member opinion adopting the D.C. Circuit's reasonableness rationale. In that concurrence, she amplifies the majority opinion's holding relying on trespass principles, but indicates this is an "irreducible constitutional minimum," above which Katz's reasonableness rationale (which Justice Scalia's majority opinion doesn't denigrate, even if it declines to evaluate the applicability of) still controls. Tom Goldstein shares my conclusion that there are effectively two majority opinions in this case. His excellent observations are here and also illuminate just how much was not resolved in the decision.
I really only learned two things in my Criminal Procedure class from law school: (1) every fact matters, and (2) the Supreme Court makes up the rules from case-to-case. At the time, I didn't feel I got very much from my class, but in retrospect, perhaps I actually learned everything that really mattered in Fourth Amendment jurisprudence. As Ethan recaps and as Paul Ohm indicated (United States v. Jones is a Near-Optimal Result), this opinion is a mix of good news (get a warrant before GPSing my car) and unresolved issues (basically everything else--ranging from practical questions like the legitimacy of warrantless tracking of cellphone movements to theory battles over whether the Fourth Amendment protects against trespass, violations of reasonable expectations of privacy or both).
Putting aside those important questions, the opinions articulated some deep distrust of government motives. I am always perplexed when the privacy community loses sight that the government is the real privacy threat, not the private sector. It also seemed that the judges did, in fact, internalize the personal threat that police could monitor their own cars without a warrant. It reminded me a little of the RIM case where the judges tried to envision their personal situation without their Crackberries.
January 23, 2012
Comments on the Golan v. Holder Supreme Court Ruling (Guest Blog Post)
By Tyler Ochoa
In a decision that favored the 1% (copyright owners) over the 99% (consumers and the public domain), the U.S. Supreme Court recently held that neither the Patent and Copyright Clause of the U.S. Constitution nor the First Amendment prohibits the removal of works from the public domain. Golan v. Holder, No. 10-545. Prior blog coverage of the case: certiorari granted and the 10th Circuit opinion.
The majority opinion was written by Justice Ginsburg for herself and five other justices. Justice Breyer, joined by Justice Alito, dissented. (Justice Kagan recused herself, as she had participated in the case as Solicitor General before being named to the Court.) The line-up of justices was therefore essentially the same as the 7-2 opinion in Eldred v. Ashcroft, 537 U.S. 186 (2003), which upheld the Constitutionality of copyright term extension, with Justice Alito replacing Justice Stevens in dissent, and Chief Justice Roberts and Justice Sotomayor replacing Chief Justice Rehnquist and Justice O’Connor, respectively, in the majority.
The case concerned Section 514 of the Uruguay Round Agreements Act of 1994 (URAA), which is codified in 17 U.S.C. § 104A. That section “restored” copyright protection to works of foreign origin that were still under copyright protection in their source countries, but were in the public domain in the U.S. for one of three reasons: (1) lack of national eligibility, for countries with whom we did not have copyright relations prior to joining the Berne Convention; (2) lack of subject-matter eligibility, for sound recordings fixed before February 15, 1972 (the date sound recordings first became eligible for federal protection); and (3) failure to comply with the formalities previously required under U.S. (such as proper copyright notice and registration of the renewal term). Effective January 1, 1996, all such works were taken out of the public domain and placed under copyright protection in the U.S., for the same duration that is granted to domestic works. (For the background of the case, see Tyler T. Ochoa, Is the Public Domain Irrevocable? An Introduction to Golan v. Holder, 64 Vanderbilt L. Rev. En Banc 123 (2011)).
The Petitioners (orchestra conductors and film distributors who had performed and sold foreign works in the public domain before restoration) made three principal arguments, all of which the majority rejected. First, Petitioners argued that the phrase “for limited Times” in the Patent and Clause prohibits Congress from removing works from the public domain once those “limited Times” have expired. Justice Ginsburg, however, relying on her majority opinion in Eldred, held that “limited” does not mean “fixed” or “unalterable,” and noted that terms granted to foreign works are the same as those granted to domestic works, which the court had previously held in Eldred to be “limited.” Slip. op. at 13-14. She also relied on the fact that many of the works whose copyright was “restored” had never enjoyed copyright protection in the U.S. at all, saying “surely a ‘limited time’ of exclusivity must begin before it may end.” Slip. op. at 15. (Here, Justice Ginsburg is not quite correct: all works enjoyed common-law copyright protection before they were published, even those foreign works originating in countries with whom the U.S. had no copyright treaty relations. It was only upon first publication that foreign works entered the public domain in the U.S. if they failed to comply with formalities or were not from an eligible country. But it is true that many of the works involved had not previously received federal statutory copyright protection.) Nonetheless, the majority’s rationale does not apply to those foreign works that did receive 28 years of copyright protection and were not renewed. Not only did the Berne Convention NOT require that such works be removed from the public domain, Article 18(2) of Berne commands that such works “shall NOT be protected anew” (emphasis added). See Daniel Gervais, Golan v. Holder: A Look at the Constraints Imposed by the Berne Convention, 64 Vanderbilt L. Rev. En Banc 147, 149-54 (2011).
Justice Ginsburg relied primarily on the fact that “the Copyright Act of 1790 granted protection to many works previously in the public domain. . . . The First Congress, it thus appears, did not view the public domain as inviolate.” Slip. op. at 16. However, as Tomas Gomez-Arostegui and I pointed out in our amicus brief, the historical evidence on this point is highly equivocal and far from compelling. We cannot say with certainty whether the members of the First Congress thought they were removing works from the public domain or not; but there is a strong argument that they did NOT think so. It is true that in 1834 the Supreme Court held that there was no post-publication common-law copyright, meaning that, to the extent that the First Congress had protected previously published works, that law was later held to have had the effect of removing works from the public domain; but it is far from clear that the members of the First Congress would have foreseen or agreed with that conclusion.
Justice Ginsburg also relied on a handful of private patent and copyright laws that removed specific works from the public domain, and on two acts that gave owners of foreign works who were unable to comply with U.S. formalities during World Wars I and II the opportunity to comply with those formalities after the war, thereby removing works from the public domain. In so doing, however, Justice Ginsburg indulged in the blithe assumption that anything Congress has done a handful of times must be Constitutional. Marshaled against her conclusion is that is the fact that Congress has steadfastly avoided protecting works already in the public domain each time it has passed a general revision of the Copyright Act, and even expressed the opinion in the legislative history of the 1976 Act that doing so would be unconstitutional. (See Breyer’s dissenting opinion, slip. op. at 19.)
The Petitioner’s second major argument was that granting copyrights to existing works does not “promote the Progress of Science,” as the Copyright Clause requires. In the 18th Century, “Science” meant knowledge broadly, and this portion of the Clause is traditionally read to incorporate a “utilitarian” view of copyright; namely, that the purpose of copyright is promote the creation and distribution of new works of authorship. (This is the principal basis of Justice Breyer’s dissenting opinion.) The majority, however, held that the Clause is also intended to promote the dissemination of existing works of authorship. While there is plenty of evidence to support this assertion (see, e.g., Malla Pollack, What Is Congress Supposed to Promote? Defining ‘Progress’ in Article I, Section 8, Clause 8 of the U.S. Constitution, or Introducing the Progress Clause, 80 Neb. L. Rev. 754 (2002)), it is the majority’s application of this principle that is problematic. Basic economic theory holds that an existing work will be more widely disseminated when it is in the public domain than it will be under copyright protection. Copyright exists to solve the “public goods” problem of financing the work’s creation and initial publication (who would invest in the creation and distribution when the work could be copied more cheaply without paying the author?); but after a “limited Time,” dissemination is better served by placing the work in the public domain. The majority, however, refuses to question Congress’ assertion to the contrary, applying only rational basis review, instead of any kind of heightened scrutiny. (Slip. op. at 21-22).
Petitioner’s third argument was the First Amendment requires heightened scrutiny, because leaving works in the public domain was one of the “traditional contours of copyright protection” that the majority alluded to in Eldred that would justify First Amendment scrutiny. The majority rejects this argument, and squarely holds that the “traditional contours of copyright protection” are limited to the idea-expression dichotomy and the fair use doctrine. (Slip. op. at 23-26 & n.29.) So long as those two (vague and inconsistently applied) limits on copyright are preserved, apparently Congress had the power to impose any other type of speech restriction in the name of copyright protection.
The majority’s decision would seem to foreclose almost any future Constitutional challenge to Congress’ patent and copyright power. The majority rejected (or reinterpreted) the dictum in Graham v. John Deere Co., 363 U.S. 1, 6 (1966), in which the Supreme Court stated that “Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available,” saying that this is NOT a Constitutional limit on Congress’ power. (Slip. op. at 19) The majority also states that that the public has no vested rights in the public domain at all. Instead, it characterizes the public domain as the absence of ownership, rather than affirmative ownership by the public. (This characterization is at odds with 19th Century opinions on the subject. In my article Origins and Meanings of the Public Domain, 28 U. Dayton L. Rev. 215, 232-36, 256-66 (2003), I collect the evidence that the public domain was consistently said to have two characteristics in the 19th Century: it was property that was owned by the public, and it was irrevocable.) The absence of any ownership interest in the public domain would seem to foreclose any challenge based on the Fifth Amendment’s Due Process Clause as well.
The Golan opinion is a severe blow for those who believe that the public domain is a vital resource for public education and creativity. I anticipate that owners of copyright in domestic works will now lobby Congress for the same advantage that foreign copyright owners received in 1996: restoration of copyright for those works that are in the public domain for failure to comply with formalities such as copyright notice and renewal. This move, if successful, would have an enormous impact on the public domain. It has been estimated that only about 85 percent of works published in 1923-1963 were renewed; the remaining 85 percent are in the public domain. Congress could apparently restore the copyrights in this 85 percent at any time, leaving the U.S. public domain with only those works that were created before 1922.
Would Congress go back and attempt to restore copyrights in even older works, those that did enjoy the maximum period of copyright protection? I agree that it is far-fetched to suppose that Congress will take advantage of its newly-ratified power to do so, although a broad reading of the opinion would certainly support its power to remove any works from the public domain, including Shakespeare and Beethoven. (Indeed, under the majority’s rationale, none of their works ever enjoyed copyright protection in the United States.) However, at least one passage in the opinion suggests that even this Supreme Court might balk at such a move:
Carried to its logical conclusion, petitioners persist, the Government’s position would allow Congress to institute a second “limited” term after the first expires, a third after that, and so on. Thus, as long as Congress legislated in installments, perpetual copyright terms would be achievable. As in Eldred, the hypothetical legislative misbehavior petitioners posit is far afield from the case before us. In aligning the United States with other nations bound by the Berne Convention, and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights.
(Slip. op. at 15) This paragraph suggests that, should Congress attempt to “restore” copyright protection to a work after its maximum statutory period of duration had expired (rather than a work which failed to achieve the maximum period for failure to comply with formalities), the Court might be willing to hold that such “misbehavior” does violate the “limited Times” provision.
January 22, 2012
Photobucket Qualifies for the 512(c) Safe Harbor (Again)--Wolk v. Kodak
By Eric Goldman
As I've indicated before, blogging 17 USC 512 cases has gotten tedious because they are just TOO LONG. I can crank through most 47 USC 230 cases in an hour or two because they are usually quite short and efficient. In contrast, because 17 USC 512 gives copyright plaintiffs so many words to contest, 512 opinions tend to be lengthy and quite time-consuming to blog--with this 69 page opinion as a prime example. This has some implications for drafters of laws like SOPA/PIPA, which have similarly long and detailed provisions that just beg plaintiffs to contest every word and will force courts to write quite lengthy opinions that bloggers like me will struggle to crank through. I cheer for immunities and safe harbors, but I have three cheers for SHORT immunities and safe harbors.
This case is even more unfortunate because the pro se plaintiff had an obviously unmeritorious case, yet the two defendants used three law firms to beat this case. And it's not exactly like Kodak is wallowing in cash any more.
Wolk is an artist. Users uploaded images of Wolk's work to Photobucket (a UGC photo-sharing site). Photobucket, in turn, had a revenue-sharing agreement with Kodak Imaging that allowed users to print the images via Kodak (i.e., Kodak did "photofinishing").
The court says that Kodak Imaging wasn't directly liable for printing the images (Wolk didn't allege secondary infringement). The court observes that "reproduction, display or transmission of the Plaintiff's images by or through the KODAK Gallery website is an automated process with no human intervention by any employee of the Kodak Defendants." Thus, because its entire system was automated, Kodak didn't act volitionally and thus avoids the strict liability standards of direct copyright infringement.
This ruling is unexpected because it's been conventional wisdom for many years that photofinishers were in fact directly liable for their print jobs. Perhaps that's because humans were always involved in the photofinishing process during that time, as opposed to now where the process from photo upload to mailing of items can be completely automated. Whatever the case, this ruling has to be encouraging for other automated photofinishers (whether they print photos or other items), such as CafePress or Zazzle. Then again, perhaps the copyright plaintiffs will pursue them under secondary infringement doctrines, which Wolk didn't do.
Although I like the result, I remain confused about the scope of the "volitional doctrine." As was the case in Cablevision, Kodak's system was completely automated only because Kodak's engineers designed it that way. We would benefit greatly from a richer theoretical grounding for the volitional doctrine and how it interplays with strict liability. Without that grounding, the results seem a little random.
512(c) Safe Harbor
Photobucket qualified for the 512(c) safe harbor. This isn't surprising; the court indicated as much when it denied Wolk's request for a preliminary injunction. Still, the court works through a 512(c) in fine detail:
* Photobucket is a "service provider"
* Photobucket properly adopted and implemented a repeat infringer termination policy.
* Photobucket accommodates standard technical measures. Wolk argued that Photobucket gives users tools that can remove or hide watermarks. The court doesn't opine whether watermarks are a standard technical measure, but instead the court says Photobucket doesn't encourage users to use the tools, so users--not Photobucket--would be the ones interfering with standard technical measures if watermarks qualified as such.
* Photobucket didn't have actual or constructive knowledge of the infringement. Before the lawsuit, Wolk sent 15 infringement notices covering 9 works. When Wolk sent 512(c)(3) notices, Photobucket expeditiously responded. However, 11 of the notices weren't 512(c)(3)-compliant (because they didn't specify URLs) and thus are irrelevant. (Compare the troubling dicta in the uncited UMG v. Shelter Capital). Wolk argued--as so many copyright owners do--that one notice about a work should cover all existing and future uploads without providing URLs of the other items. The court rejects that argument.
* Photobucket doesn't have the right/ability to control infringement because it does not prescreen content, render extensive advice to users regarding content and edit user content. Photobucket also lacked direct financial benefit from the infringement: "The Defendants' profits are derived from the service they provide, not a particular infringement."
* Photobucket properly identified its agent for notice and designated it with the copyright office.
All of this 512(c) analysis was fairly by-the-book. The most interesting part is where the court discussed how "Photobucket Has No Duty To Police Its Website For Infringements." The court says:
Photobucket is a website that consists of over 9 billion images and videos. Under the plaintiff's theory, Photobucket would be required to police its website for infringing copies of her work wherever they may appear once she has provided a DMCA-compliant notice....[due to 512(m),] the DMCA does not require the policing the Plaintiff suggests.
The court says, without any real discussion, that 512(c) moots Photobucket's secondary liability. Accord UMG v. Shelter Capital. The court continues with other reasons those claims fail. In particular, Photobucket lacked the requisite scienter about the infringing items it transmitted to Kodak at users' requests, nor did Photobucket act "in concert" with Kodak. The court rejects the applicability of Grokster, Napster and Aimster because those cases involved peer-to-peer file sharing (more evidence of the exceptionalism towards P2P) and her incomplete takedown notices didn't confer scienter.
The court granted summary judgment against Wolk, ending her case. The precedential value of this case's discussion about 512(c) probably will be overwritten by the Second Circuit's Viacom v. YouTube ruling, and a win against a pro se litigant isn't much in the grand scheme of things. Nevertheless, the ruling reinforces that courts continue to take the 512 safe harbor seriously. In particular, they continue to rebuff copyright owners who don't send 512(c)(3) takedown notices but still want judicial relief.
Meanwhile, the "volitional conduct" defense appears to be live and well, especially in the Second Circuit, although I'm not sure anyone understands the doctrine's parameters.
January 20, 2012
Connecticut Supreme Court Says no Error in Admission of Facebook Photos at Probation Hearing -- State v. Altajir
[Post by Venkat Balasubramani]
State v. Altajir, SC 18706 (Conn. Supreme Ct.; Jan. 3, 2012)
Altajir was involved in an automobile accident while she was under the influence. One of her passengers died. She was sentenced to five years in jail and five years of probation. The accident occurred in 2004 and she was sentenced in 2006. There were numerous conditions attached to the probation. After she got out (early), in 2009, she was involved in another accident. While she was not under the influence, she did not have an ignition lock device on her car and she had not restored her driver’s license. She admitted she violated these conditions of her probation.
At a later hearing, the state argued that Altajir was a “marginal probationer.” In addition to the fact that she hadn’t obtained a job, hadn't furthered her education, and didn’t do much community service, the state sought to highlight her nonchalance by putting a slew of Facebook photos in front of the judge. It argued that:
[the defendant was] worshipping at the altar of alcohol and debauchery and lewd behavior. And why is that significant. It’s significant because the message didn’t get sent, and this individual refused to accept it.
The trial court noted that her Facebook photos had played a role in her initial sentencing and the defendant “has the audacity to go back on Facebook and show herself in the condition of being intoxicated.” The defendant addressed the court but did not deny the photos' veracity. Defense counsel made an objection to admitting the photos, but although some of the photos were eliminated, the judge considered 36 photos. The court terminated probation and sentenced the defendant to three years in jail. Altajir appealed, and the appeals court said review of the issue was not preserved and the claimed violation was not of constitutional magnitude, so it did not merit reversal.
The Connecticut Supreme Court said that while strict evidentiary standards apply to the determination of whether someone violated their probation, in deciding to revoke probation or sentence a defendant, a court can take a broader category of evidence into account. The test is whether there is a high probability that “misinformation infected the [trial judge’s] decision.” While there was some discussion about the possibility that the date the photos were uploaded may not necessarily be the date the photos were taken, there was no evidence that the events depicted in the photos occurred after Altajir served her initial sentence. Instead, the court focuses on the fact that the defendant did not unequivocally deny the veracity of the photos (as to the dates, locations, etc.). The court says that while the evidence of reliability would have been insufficient at trial, the photographs had the minimum indicia of reliability to be admitted at a probation hearing.
This case deserves a prime spot on Professor Goldman’s list of cases where people get zapped by social media evidence. As the court notes, the Facebook evidence was taken into account by the court in the initial sentencing. Altajir nevertheless did not keep her Facebook profile clean. She also does not demonstrate much awareness of Facebook's privacy settings or how photos of her would be viewed by others.
On the other hand, the court does not give enough credence to the fact that social media evidence has reliability issues, particularly when it is being used to show things like dates and places. The photos in question were uploaded after the initial sentencing, but the events depicted in the photos may not have occurred on the date they were uploaded. Some of the photos were labeled "old photos." The other problem is that the photos could have been uploaded by someone else or the defendant may have simply been "tagged" in the photos. The state did not present any evidence as to "how [the] photographs had been acquired, who could view the defendant's Facebook profile or how Facebook's features governing publicity and privacy functioned during the relevant time period." The court even says that the images were "purportedly viewable on the defendant's Facebook page."
[As a sidenote, Altajir is the granddaughter of Mahid al-Tajir, a United Arab Emirates man with a net worth of $4.3 billion.]
"Maryland Supreme Court Rejects "Circumstantial Authentication" Standard for MySpace Evidence -- Griffin v. Maryland"
"Connecticut Court of Appeals Tackles Authentication of Facebook Messages -- State v. Eleck"
Google Gets Significant Win in AdWords/Parked Domains Case
By Eric Goldman
In re Google AdWords Litigation, 2012 WL 28068 (N.D. Cal. Jan. 5, 2012)
Google defeated class certification in an AdWords-related case over Google's placement of ads on parked domains. This almost certainly ends this case in practice, as few if any advertisers will find it worth continuing the case on their own. This ruling also takes us closer to the end of litigation wars over parked domains.
The advertisers sued Google for placing AdWords ads on parked domains and error pages and not adequately disclosing these facts.
The court finds standing under both California UCL/FAL and Article III based the named plaintiffs' allegations that they bought advertising they wouldn't have bought if they knew where Google was going to put it. This was also good enough to confer standing for the unnamed plaintiffs; the court says that "where one class representative in a UCL or FAL class action has already established Article III standing, the court need not analyze the standing of unnamed class members."
The court also finds numerosity, typicality, adequacy, and commonality (on the question of “whether Google’s alleged omissions were misleading to a reasonable AdWords customer”). However, the court rejects class certification on predominance grounds. Even though there are common legal questions among the advertisers, their idiosyncratic factual questions are more important than the common legal questions. Specifically, because only some advertisers were financially harmed by Google's placement of ads on parked domains and error pages, the court would have to investigate each advertiser's results to determine if restitution were appropriate. Further, because each click was auctioned off and sold for a constantly changing price, it would be hard to calculate the "but for" pricing that advertisers would have paid. Plus, not every advertiser is seeking click conversion; presumably (although not articulated in the court's opinion) some advertisers compute their bids on the branding value of ads. The court thus concludes this discussion by saying "any effort to determine what advertisers “would have paid” under a different set of circumstances requires a complex and highly individualized analysis of advertiser behavior for each particular ad that was placed."
To fix this problem, advertisers' counsel suggested a variety of restitution formulae that relied on blanket assumptions applicable to all advertisers. The court rejects these categorical approaches, saying "[s]ince the purpose of restitution is to return class members to status quo, the amount of restitution due must account for the benefits received from ads placed on parked domains and error pages." This too requires a per-advertiser assessment.
Google continues to make substantial progress cleaning up its AdWords litigation docket. Recently, it got rid of Woods v. Google over click fraud and improper pricing discounts; it defeated class certification in FPX v. Google over trademark triggering; and the Ninth Circuit upheld its settlement of the CLRB Hanson case. Even so, it's also clear that litigation forays by advertisers will be a perennial aspect of Google's life going forward; partially due to Google's occasional corner-cutting, but mostly due to advertisers' wish that they could get unlimited traffic at no cost. Then again, the plaintiffs' bar will be sharing some of that joy with Facebook too.
This lawsuit was just one of several lawsuits over the legitimacy of parked domains. I've criticized Google before for its AdSense for Domains program, which fosters an ecosystem that motivates questionable domain name registrant behavior while providing little if any real value to consumers. From my perspective, it's pathetically anachronistic that Google still offers its parked domain program--what is this, 2004? Time for Google to grow up a little more.
While I think it's sad Google can't wean itself from the questionable revenues it derives from its parked domains program, I think it's even sadder to see plaintiffs trying to attack the parked domains ecosystems using proxy defendants like intermediate service providers rather than just going after the domain name owners directly. See, e.g., Vulcan Golf v. Google; In re Yahoo; uBid v. GoDaddy; etc. Let's hope this ruling discourages plaintiffs from bringing future proxy battles over parked domains.
January 19, 2012
Just How Egregiously Must a Trademark Plaintiff Act Before a Court Awards Attorneys' Fees to the Defendant?--1-800 Contacts v. Lens.com
By Eric Goldman
The federal trademark statute says judges may award attorneys' fees to the winning party in "exceptional" cases. What does it take for a case to be "exceptional"? Apparently, it has to be pretty egregious conduct, as this long-running money pit of a case illustrates.
1-800 Contacts sued Lens.com for competitive keyword advertising. Through the course of the litigation, we learn the following facts:
* 1-800 Contacts accrued $650k in legal fees pursuing the case and capped its legal fees at $1.1M before it stiffed its law firm.
* the defendant Lens.com made less than $21 in profits from its competitive keyword ad buys. 1-800 Contacts also tried to attribute to Lens.com keyword ad buys made by Lens.com's affiliates, a legal argument the court ultimately rejected.
* 1-800 Contacts had done the same thing it was suing Lens.com for doing. 1-800 bought Lens.com's keywords and made about $220k in profit from those keyword ad buys, yet it had duplicitously tried to shut down Lens.com for making less than $21.
To me, this looks like an egregious misuse of the litigation process--exactly the kind of sanctionable behavior that should be considered "extraordinary" enough to make the plaintiff reimburse the defendant for its sizable legal fees. Indeed, the court has harsh words for 1-800 Contacts, including calling 1-800 Contacts' behavior "troubling" and specifically referencing its hypocrisy for suing over behavior it had itself engaged in. The court also says "1-800 Contacts’ actions raise questions about vexatious suits to defeat competition."
Nevertheless, the court decides not to award attorneys' fees. The court cites the following factors in denying the attorneys' fee request:
* the legitimacy of keyword advertising remains legally unsettled. Even when it was clear the direct infringement case was weak, 1-800 Contacts still had a non-frivolous claim for secondary infringement.
* Lens.com did engage in competitive keyword advertising, even if its purchases were "minuscule."
* Lens.com itself was sanctioned for discovery violations.
* even though 1-800 Contacts' expert reports were largely tossed, some of the reports were admitted.
It's clear the judge had distaste for both parties. Lens.com also has a parallel antitrust claim going against 1-800 Contacts in a different forum, and the judge seemed to be deferring to that case to remediate any abuses by 1-800 Contacts. Still, given 1-800 Contacts' condemnable conduct, it's curious the judge didn't stick them with a fee shift.
I think this ruling gives us some more insight into the trademark bullying phenomenon. The mockably ridiculous USPTO report on trademark bullying noted that trademark law's fee shift provision acts as a deterrent against abusive trademark litigation. (For example, it says "the potential for an award of attorneys’ fees is an existing deterrent to misuse of the litigation process in trademark disputes.") Given how hard it is to get a fee shift in light of a ruling like this, this was just another way in which the USPTO completely understated a very real problem in the field.
January 18, 2012
Third Circuit Says Data Breach Plaintiffs Lack Standing Absent Misuse of Data -- Reilly v. Ceridian
[Post by Venkat Balasubramani]
Reilly v. Ceridian Corp, 11-1738 (3rd Cir. Dec. 12, 2011)
Ceridian is a payroll processing firm. Reilly and Pluemacher were employees of a law firm that was a Ceridian customer. In December 2009, Ceridian suffered a “security breach.” A hacker infiltrated Ceridian’s system and gained access to information belonging to 27,000 employees at 1,900 companies. After investigating, Ceridian sent a letter to the affected individuals, letting them know that their personal information, including “first name, last name, social security number and, in several cases, birth date and/or bank account” information was accessed. Ceridian provided the affected inviduals one year of free credit monitoring and identity theft protection. (It’s unclear as to whether plaintiffs took advantage of this, but they alleged that they spent money for monitoring efforts.)
The Third Circuit focuses on the issue of whether plaintiffs have standing. The court canvasses the precedent and says most courts addressing standing for data breach plaintiffs have concluded that plaintiffs lack standing because the harm is too speculative. The court agrees:
Here, no evidence suggests that the data has been--or will ever be--misused. The present test is actuality, not hypothetical speculations concerning the possiblity of future injury.
Plaintiffs relied on Pisciotta v. Old National Bancorp and Krottner v. Starbucks for the proposition that the increased risk of identity theft is sufficient to confer Article III standing. The court distinguishes these cases on the basis that, in those cases, the threatened harms were “more imminent”. In Pisciotta there was evidence that the hacker’s intrusion was sophisticated, and in Krottner, there was evidence that someone attempted to misuse the purloined information.
Plaintiffs also cited, by analogy, where courts have broadened standing requirements in other contexts (toxic tort, defective medical devices, and environmental injury). The court is not persuaded. The court says that, in those cases, an injury has occurred, even if it has not manifested itself and it cannot be presently quantified. In contrast, in the data breach context, “any damages that may occur here are entirely speculative and dependent on the skill and intent of the hacker.” Second, the court says that the medical device and toxic tort cases raise “human health concerns.” Courts relax the test for standing where human “suffering” is involved. The injury in those cases cannot be remedied by money. This is similar to the environmental injury cases where courts say that plaintiffs challenging actions on the basis of environmental regulation should be allowed to proceed because monetary compensation may not fix the harm that will occur:
unlike priceless “mountains majesty,” the thing feared lost here is simple cash, which is easily and precisely compensable with a monetary award.
The court finally says that the amounts expended by plaintiffs is not sufficient to confer standing because the money was not spent to avert or deal with any “actual injuries.”
Courts have pretty uniformly rejected data breach lawsuits, but the recent trend is to do so on the basis of Article III standing, rather than on the merits. This case looks like it's on the more restrictive end of the spectrum as far as standing goes.
The court’s attempt to distinguish other data breach cases on the basis that the harms in other cases were imminent or more obviously likely to occur isn’t the most convincing. Hackers have been known to compromise data in order to demonstrate security vulnerabilities, but if this is not the case, isn’t it fair to assume that data will be misused in some way? Aren't all hackers by definition sophisticated? Aren't all data breaches presumptively malicious? On the other hand, the data breach plaintiffs never seem to have adequate data to present to the court that the information in question is being misused. Even data pointing to the frequency of misuse in other breach cases would be useful to sway a court, but it's either not available or not being highlighted by plaintiffs. It's also surprising to see plaintiffs' counsel not include someone in the lawsuit who has had their information misused. (Maybe data breach cases are not well suited to resolution on a class basis?)
Some courts (In re Hannaford; Ruiz v. Gap) have said that basic monitoring services are reasonable mitigation efforts and as a result, companies that suffer breaches are offering to affected individuals this as a matter of course. Here it’s unclear as to whether plaintiffs took advantage of this but also took efforts of their own. Although it's not clear, it looks like in this court's view, even basic monitoring is not necessary and a failure to provide it would not form the basis for standing.
While the cases are across the board in how they get there, one thing is for sure. Data breach plaintiffs have gotten little or no relief in the courts.
"9th Circuit Affirms Rejection of Data Breach Claims Against Gap -- Ruiz v. Gap"
"The [Non]enforceability of Privacy Promises--Pinero v. Jackson Hewitt"
"Acxiom Not Liable for Security Breach"
"Starbucks Data Breach Plaintiffs Rebuffed by Ninth Circuit -- Krottner v. Starbucks"
"In Hannaford Data Breach Case, First Circuit Says Card Replacement and ID Theft Insurance are Reasonable Mitigation Damages and Compensable--Anderson v. Hannaford Bros"
January 17, 2012
Egregious/Overreaching Ex Parte Orders for Rightsowners Keep Coming -- Deckers and Richemont
[Post by Venkat Balasubramani, with comments from Eric]
Deckers v. Liyanghua, 11-cv-07970 (N.D. Ill.; Dec. 15, 2011) (report and recommendation)
Deckers proceeds against a slew of domain names in Illinois. The case was originally sealed, but in granting a preliminary injunction, the court unseals it. The court's November 15, 2011 (now-unsealed) order provides for the following relief:
- an injunction against defendants
- An order requiring the registries and/or registrars to “prevent the . . . domain names from connecting to corresponding” websites and prevent the registration or transfer of new domain names
- an order directed at search engines, web hosts, registrars and registries to cease facilitating access to any websites through which defendants conduct business
- expedited discovery (Deckers emails a subpoena to banks and service providers who now have to turn over documents)
- authorizing notice via email . . . but “[a] ruling on permissible service of process methods is held in abeyance until Deckers has obtained discovery responses from third parties” [this is significant -- there has not yet been service of process]
- an asset transfer restriction
The preliminary injunction similarly includes a broad injunction against defendants. It also orders the registries to change the registrar of record for the domain names to a registrar of Decker’s choosing. There’s a broad injunction against those "in privity" with defendants, including search engines, web hosts, registrars and registries. The court orders broad discovery, and an asset freeze.
The one interesting thing is that the court makes Deckers post a $150,000 bond. Deckers contested this but the court didn't budge on this issue.
Richemont Int’l v. Montesol OU, 11-cv-09322 (S.D.N.Y.; Jan. 3, 2012)
In this case, the court enters a TRO on Dec. 21, 2011. The TRO broadly enjoins defendants from infringing on the marks and contains an asset freeze. It also purports to enjoin websites, online search engines, online shopping price comparison services and other businesses and publications from advertising, promoting, or marketing the websites or products in question. A similar prohibition is directed to website hosts, ISPs “or any other business supporting, hosting, or providing e-commerce services to defendants’ websites.” The order also directs registries or registrars to “delete all existing DNS entries” for the domain names and to enter the registrar’s default DNS address for the domain names, and orders a slew of service providers to "temporarily disable service to" the domain names.
On January 3, 2011, the court enters a preliminary injunction. The order notes that defendants were served with the papers on December 23 and, as of January 3, 2012, they did not submit any papers in objection. The injunction is similar in scope to the TRO. It contains a broad account freeze directed at third parties. It enjoins service providers from providing support to the websites. It tells the registries/registrars to delete all existing DNS entries and enter the registrar's default DNS address.
This activity in the courts is crucially relevant to the SOPA/PIPA discussions taking place right now. Congress should take a look at what is going on in courts--if for no other reason than to figure out what relief judges think is authorized under current law (or what relief plaintiffs seem to obtain) and what potential abuses (if any) may occur, and also to explain how exactly SOPA/PIPA changes existing law. Obviously, just because a court authorizes a certain type of relief does not mean that there is always a proper basis for it. There are a lot of cites to "the court's inherent equitable power" in these orders. That's judicial code for: "there is no express basis for it, but I think certain relief is appropriate and I'm going to grant it."
It may not be easy to engender much sympathy for these defendants, but that's not the point. The system has certain procedural safeguards in place, and those should not go out the window just because you're dealing with a foreign online infringer. The relief that is being granted in these cases is extraordinary and is frequently being done with no notice or minimal notice. There is no way much of this will fly against a domestic litigant. In some cases, the initial papers are filed under seal, so defendants cannot determine what the allegations are against them until the preliminary relief--in the form of a shutdown--is awarded. Plaintiffs seem to be required to do nothing more than to present a declaration from their investigative team alleging that (1) defendants infringe, (2) defendants are located abroad, and (3) perhaps the defendants will evade or frustrate the court's relief.
Based on this, the court typically shuts off the defendant's website and also orders relief directed at third parties who may or may not be subject to the court's jurisdiction. These third parties are not before the court and have no chance to contest the scope of the relief being sought. I'm curious as to how they react when they are presented with the order. Do registrars routinely transfer domain names to a friendly registrar of the plaintiff's choosing? Is DNS deletion or revision routinely implemented in response to these orders?
It's interesting to compare the approach Deckers took in this case to the approach it took against alleged infringers who was selling counterfeit UGG boots out of a house (located in Illinois). See Deckers v. Migliore, 11-cv-06836 (N.D. Ill.; Nov. 15, 2011). Deckers didn't obtain any ex parte relief; they moved for a default after effecting service. Is this because a court was less likely to order the total shutdown of the point of sale of the infringing goods (in this case, a house), or because Deckers views infringement occurring on the internet as somehow different?
All of these ex parte shutdown cases (and there are probably many more out there) warrant a *close* look. It's disappointing to see so many of these orders sail through without any significant objection from the judges who sign them. Of course, they offer a preview of how rightsowners will proceed under SOPA. Many have highlighted the potential for abuse under SOPA. There's little doubt that rightsowners will push the envelope. They are already doing so under current law.
Ex parte orders regarding foreign alleged infringers are out-of-control. Without sufficient regulation and without any adversarial pushback, rightsowners have learned that they can ask for ridiculous relief on an ex parte basis and get a judge to sign off on most or all of it. It's clear that rightsowners are asking for way more than the law allows, but judges seem to acquiesce. The results are two-fold:
1) the rightsowners are taking control over third party domain names on an ex parte basis and with questionable notice given to the domain name registrants
2) worse (IMO), judges are issuing orders that purport to bind third party non-litigants, such as domain name registrars, search engines and shopbots. The Federal Rules of Civil Procedure purport to limit such orders against non-litigants, but litigants and judges apparently interpret phrases like "acting in concert" incredibly broadly. The result is that these third party service providers--who aren't in court protecting their interests when the orders are being signed--are presented with a court order that imposes costs on them no matter what they do. They can take the action required in the court order...at some cost. Or they can contest the order...at some cost. Or they can ignore the order and risk being found in contempt. Naturally, these third parties will take whatever path is cheapest--which is usually to honor the order regardless of its legal legitimacy. (This is especially true in the case of domain name registrars, who typically make only a buck or two of profit a year off any particular domain name). So when the judge doesn't tightly control the ex parte requests being imposed on third parties, the judges are usually ensuring that the third party won't contest even an illegitimate order.
Rightsowners don't look so good in this process, but who can blame them for overreaching? If judges are freely handing out lollipops, why not ask for a lollipop! Plus, lawyers view themselves as zealous advocates, so anything that they can get a judge to sign must, by definition, be OK.
This means the real breakdown is occurring with judges. They are supposed to be the safeguards to prevent abuses, but judges are so dependent on adversarial proceedings that they are surprisingly flexible when only one side bends their ears. It looks we need some urgent judicial education about the issues raised by rogue website enforcements.
As Venkat points out, some members of Congress and their rightsowner patrons are also looking pretty silly right now. They keep insisting, with the straightest face imaginable, that rightsowners lack the current ability to bring effective enforcement actions against foreign rogue websites, and this is just FLAT-OUT WRONG. So either these folks are ignorant about what's happening in the courts or lying about it (or possibly both). Now, the entire legislative process is routinely detached from actual facts, so this is nothing unusual, but it's hardly a credit to those who are looking increasingly foolish as rightsowners in court keep getting what lobbying rightsowners and members of Congress keep insisting isn't possible to get. Get your story straight, please.
For the critics of SOPA and PIPA who have decided this legislation is the place to draw the line in the sand: I'm with you, brothers and sisters, but defeating the legislation doesn't end the problem. Until we fix what's taking place in the courts with rightsowners running hog-wild in ex parte proceedings, any legislative successes will be hollow. After we wipe out SOPA and PIPA completely, we need to proactively seek out at least two additional policy solutions:
1) We need to develop educational programs for judges about dealing with ex parte orders, especially when it comes to third party non-litigants.
2) We may need to fix or clarify the portions of the Federal Rules of Civil Procedures so that ordinary service providers aren't bound by ex parte orders against them. The rules should be clear enough that service providers don't have to spend their money to correct judicial errors. Maybe an automatic fee-shift if a plaintiff gets a judge to sign off on an overbroad order that a third party non-litigant successfully contests?
If you have any other suggestions about proactive steps we should take to fix the abuses we're seeing in court, please send them along.
Prior blog coverage of these topics:
* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
UPDATE FROM ERIC: A reader reminded us of the UDRP Sec. 3, which says: "We [registrars] will cancel, transfer or otherwise make changes to domain name registrations under the following circumstances...b. our receipt of an order from a court or arbitral tribunal, in each case of competent jurisdiction, requiring such action." So when a judge issues an ex parte order against a registrar, the registrar's hands may be tied. All the more reason for the judge to get it right and not rely on ex post pushback from the non-litigant third party. This also creates the possibility of abuse of ex parte orders, just like I discussed in this blog post. If we were to redraft the UDRP, we probably would not make it mandatory for registrars to honor ex parte orders.
January 16, 2012
Copyright Doe Defendant Can’t Quash Disclosure Subpoena Anonymously—Hard Drive Productions v. Does (Guest Blog Post)
By Guest Blogger Elliott Alderman with brief comments from Eric
[Eric’s introductory note: Elliott Alderman is an IP attorney in Washington DC. I asked if he could guest-blog this opinion after calling it to my attention.]
Hard Drive Productions, Inc. v. Does 1-1,495, Civil Action No. 11-1741 (D.C. D.C. Dec. 21, 2011)
Overview: A DC Magistrate Judge recently ruled that a defendant cannot file anonymous motions to quash disclosure subpoenas in copyright file-sharing case. This ruling invites discovery abuses--and kicks due process.
The fragile balance between copyright owners enforcing their rights and the privacy interests of IP address owners was upended recently in Hard Drive Productions, Inc. v. Does 1-1,495, Civil Action No. 11-1741 (2011). There, the magistrate held that individuals who subscribe to the Internet through ISPs have no expectation of privacy in their subscriber information, since they have already disclosed this information to their service providers. So when copyright owners file disclosure subpoenas seeking subscriber information, local district court rules require that responding IP address owners must publicly identify themselves as part of filing a motion to quash.
There are two separate levels of privacy involved here: (1) public knowledge (including opposing counsel) of the IP address owner’s identity, and (2) the court’s knowledge of the parties involved in an action before it. A simple solution to the considerable detriment posed to subpoenaed parties is to allow motions to be filed under seal. At this stage, it is only discovery, not adjudication on the merits of the underlying claims, and there is no public benefit to disclosure before consideration of the motions.
Some background: As content owners move from suing download sites for inducement liability to a model of filing reverse class actions against unnamed individual users of P2P networks, discovery of infringers becomes crucial. However, content monitoring software, at best, may associate a digitally marked file with an IP address, but does not identify the owner of the account. And, significantly, the owner of the account is not, by definition, an infringer. So with IP addresses in hand, copyright owners must file disclosure subpoenas with ISPs to get the subscriber information associated with the identified IP addresses.
Typically, consistent with due process (and common sense), IP address owners responding to a disclosure subpoena have the right to preserve their anonymity while a judge reviews the propriety of the class action and the corresponding subpoena. Without the protection of anonymity, a motion to quash a disclosure subpoena is rendered moot, since disclosure of personal information on a public docket reveals the name and address information sought by the subpoena. See Achte/Neunte Boll Kino Beteiligungs GMBH & Co. v. Does 1-4,577, 736 F. Supp. 2d 212, 215 (D.D.C. 2010). Ironically, Achte/Neunte is one of the cases cited by the magistrate in support of public disclosure.
For a number of reasons, Hard Drive makes no sense. A subpoenaed owner essentially no longer has a right to contest disclosure, since challenging the merits of the discovery process reveals the very thing sought in discovery – his identity. And even if the judge later holds that the owner was misjoined, that an IP address is not an infringer, or any of the other bases that courts throughout the country are using to dismiss file-sharing defendants and kill these suits, plaintiffs have the personal information that they need to harass presumptively innocent parties. Worse still, plaintiffs will be encouraged to withdraw subpoenas before judges evaluate their merits, since the subpoenaed information will already be in hand.
As noted above, the Hard Drive magistrate also based his holding on Local Rule 5.1, which requires that all parties who file pleadings and papers with the district court must provide their name and full residence address, even if they are seeking to proceed anonymously. Judge Bates, who had assigned the case to the magistrate, originally ordered that motions to quash would remain under seal even if the moving party lost. How about a Solomonic compromise? Allow motions to be filed under seal, then only if the motion is denied would subscriber information be released, since the ISP is going to disclose the information anyway. Certainly there are policy reasons supporting the requirement that parties identify themselves to the court -- not the least of which is that it has no way of communicating with unrepresented Does – but permitting sealed motions balances the interests of copyright owners seeking to vindicate their rights against the privacy rights of IP address owners.
Moreover, the central premise of the decision, that there is no expectation of privacy in business transactions where information is disclosed to a third party, defies logic. One also shares information with telephone and insurance companies, and medical doctors – third parties all – but an expectation of privacy remains. Moreover, courts have implicitly recognized a privacy interest in ISP subscriber information, holding that copyright owners may not use the DMCA’s takedown notice-subpoena provisions to discover subscriber identities. See Recording Industry Association of America v. Verizon Internet Services, Inc., 351 F.3d 1299 (D.C. Cir 2003); In re Charter Communications, Inc., 393 F.3d 771 (8th Cir. 2005). And although it may be argued that when copyright infringement is at issue there is no free speech right to anonymity, see e.g. Sony Music Entertainment, Inc. v. Does, 326 F. Supp. 2d 556 (S.D.N.Y. 2004), the extortionate nature of the file-sharing cases is such that fairness would dictate that IP address owners should be able to anonymously defend against inclusion in classes of unrelated others.
Further, even assuming that an individual has no reasonable expectation of privacy in his subscriber information, he certainly does in his choice of movies. Part of the copyright troll business model, particularly for pornographic films, is the threat of publicly associating an individual with his private tastes. I have represented a number of owners who have had their routers hacked or had tenants or other unauthorized parties who used their Wi-Fi connections. With or without legal liability, too many of these parties have settled because privacy is a more expensive currency than cash.
In fact, in other contexts where there is the potential for stigma or embarrassment, courts typically evaluate the merits of the underlying case before requiring disclosure of confidential information, like a person’s identity. See, e.g. Doe v. Smith, 429 F3d 706 (7th Cir. 2005). The potential for harm to defendants in file-sharing cases is worse, however, because in addition to whatever shame or stigma attaches to being labeled an infringer or, worse, a porn hound (I think that’s the legal term), there are immediate legal consequences to stripping anonymity. Not permitting sealed motions is like having discovery first, then later evaluating its legitimacy.
Finally, the importance of the anonymous motion is intertwined with the architectural problems with the reverse class action model generally. This is not a white hat/black hat debate between content creators and piracy. Rather, the file-sharing cases are about the economics of joining unrelated parties in a class as a cost-effective way to pursue often non-meritorious actions, where secondary parties who are not infringers become the collateral damage. A number of court have dismissed these actions on a variety of grounds, including that:
* IP address owners are not intrinsically infringers. See VPR Internationale v. Does 1-1017, 2:2011cv02068 (C.D. Ill. 2011) (an IP address is not a person)
* different owners have different defenses; and
* unrelated owners do not act in concert by using a P2P program. K-Beech, Inc. v. John Does 1-85, Civil Action No. 3:11cv469 (E.D. Va. 2011); Raw Films, Ltd. V. John Does 1-32, Civil Action No. 3:11cv532 (E.D. Va. 2011); Hard Drive Productions, Inc. v. Does, No. C-11-01566 (N.D. Cal. 2011).
Moreover, the reliability of monitoring programs is suspect, Challenges and directions for monitoring P2P File Sharing Networks, University of Washington Technical Report, UW-CSE-08-06-01, and because a number of ISPs use dynamic IP addresses (where an IP address is rotated between several users) and “infringements” are generally date- and time-stamped, the odds of mistakenly associating a particular IP address with the “infringement” is greatly increased.
All this for want of a sealing motion!
This is a bad ruling. The court has guaranteed that the copyright plaintiff can unmask defendants simply by asking for a subpoena—either the subpoena is granted or the defendant reveals him/herself to fight the subpoena. That’s not the way the system is supposed to work. By creating a no-recourse situation for anonymous/pseudonymous defendants, the court has stripped them of essential due process rights. And, as we know, plaintiffs able to unmask defendants often can take advantage of substantial extra-judicial remedies, such as the public embarrassment factor in porn copyright cases. Thus, this ruling unfairly screws over anonymous defendants in these cases. It needs to be fixed.
For more on the topic, see Lior Strahilevitz’s paper Pseudonymous Litigation.
January 15, 2012
Attempted Trademark Workaround to 47 USC 230 Immunity Fails Badly—Ascentive v. PissedConsumer [Catch-Up Post]
By Eric Goldman
[This is one of the top dozen or so most important Internet law opinions of 2011, but unfortunately it came out just as I was going into my exam-grading exile and I had to put blogging it on hold. Even over a month later, it's still worth your careful review.]
In my Regulation of Reputational Information paper, I explain how vendors are misusing intellectual property to control consumer perceptions of their businesses. One example is Medical Justice, which tried to use copyright law to work around 47 USC 230 and suppress unwanted reviews. Fortunately, Medical Justice has abandoned that effort.
Other vendors try to use trademark law to work around 47 USC 230. By definition, consumers must reference a vendor's brand in order to review it, and trademark's doctrinal plasticity means that such references arguably support a prima facie trademark claim. (I explain that issue more in my Online Word of Mouth paper). As a result, we've seen a number of vendors dabble with trademark claims against consumer reviews. For two examples, see Lifestyle Lift v. RealSelf and Eppley v. Iacovelli. (For more on the noteworthy litigiousness of doctors against consumer reviews, see this post).
In this case, the plaintiffs used trademark law to make a no-holds-barred assault on the 47 USC 230 immunity's applicability to consumer reviews. Their arguments go nowhere. I hope this emphatic ruling will discourage other plaintiffs from trying to use trademark law to work around 230.
Likelihood of Consumer Confusion
The court tried to do a straight-laced multi-factor LOCC analysis, but as I've noted before, the LOCC factors don't make sense when comparing apples and oranges like a vendor and a review site of the vendor. On the bad faith factor, the court says:
While it may be true that PissedConsumer has engaged in sharp-elbowed and perhaps unethical SEO tactics meant to make its webpages appear more relevant to search engines such as Google or Yahoo! than they actually are, that fact has no bearing on the inquiry here—whether PissedConsumer has attempted to sow confusion as to the source, origin, or affiliation of its products and services with those of plaintiffs.
The court instead observes: "Indeed, it is clear that PissedConsumer is not using plaintiffs’ marks as source identifiers at all." Well, that's only partially true--PissedConsumer is using the plaintiffs' marks as referents for the plaintiffs. (See Deregulating Relevancy for more on the implications of that). In a footnote, the court said there wasn't a dispute that PissedConsumer was using the marks in commerce, but the court failed to reconcile these seemingly inconsistent statements.
To bolster their unmeritorious trademark claim, the plaintiffs argued that several specific technological features used by PissedConsumer supported trademark infringement. The court rejects the plaintiffs' arguments on each feature:
* using the plaintiff's trademark as a third level domain name, i.e., ascentive.pissedconsumer.com. The court said that the pissedconsumer.com domain name makes it clear to consumers that the site is critical of, and therefore not affiliated with, the mark owner.
* using the plaintiff's trademark in the consumer reviews. The court says there's no consumer confusion here either:
after a brief inspection of the content of PissedConsumer’s website, the user would realize that they were visiting a third-party gripe site for “pissed” consumers.
* metatags. The court rejects initial interest confusion. First, there can't be competitive diversion because PissedConsumer isn't selling anything to consumers. Second, no one searching for the plaintiffs would be "diverted" to the defendants' website. (A point I make in gory detail in my Deregulating Relevancy article). Third, initial interest confusion imposes minimal (if any) harm on consumers because they can hit the back button. Finally, the court recognizes that technology has evolved since the 1999 Brookfield ruling such that metatags don't matter (citing, among other things, Google's 2009 blog post to that effect—thanks, Matt Cutts, for doing that!)
* black hat SEO. The opinion talks in some detail about linking archive posts from Twitter with the hope that Google will treat the posts as fresh content. The court says:
While it may be—and likely is—the case that PissedConsumer’s SEO practices are intended to make its webpages seem more relevant to search engines than they actually are and these methods may indeed violate the search engines’ terms of services, the remedy for this conduct is not trademark law but instead with the search engines themselves.
Amen to getting trademark law out of the way and letting search engines fix the gaming! This is another point I made ad naseum in my Deregulating Relevancy article.
* serving ads (through Chitika) showing the plaintiffs' trademarks, presumably automatically triggered by keywords on PissedConsumer's pages. The court says that, at most, PissedConsumer as the publisher is contributorily liable to any infringement committed by the ad network (Chitika), but the plaintiffs didn't allege contributory infringement. The court seemed to treat Chitika as the direct infringer instead of the advertisers, but in fact I think Chitika should be evaluated under contributory infringement as well, with the advertiser being the direct infringer (if there is one).
Although the court gets to the right place, its doctrinal jujitsu shows what happens when trademark law is stretched to places it doesn't belong. We've lost too many of the limiting principles in trademark law that should help make a case like this an easy one for judges. Among other things, a more robust use in commerce doctrine would have ended much of this case early, and the very lengthy opinion oddly doesn’t mention the seemingly applicable doctrine of nominative use at all.
47 USC 230
Having dispatched the plaintiffs’ trademark assault, the court mops up all of the remaining state law claims using 47 USC 230. The court says "a website such as PissedConsumer constitutes an ‘interactive computer service,’" which makes PissedConsumer's officers "providers" of an ICS. This is an unusual reading of the statute, but it's all good.
The court rejects the plaintiffs’ Roommates.com attack on 230, saying "determining what makes a party responsible for the ‘development’ of content under § 230(f)(3) is unclear, and the CDA does not define the term." Thus, the court says it's appropriate to examine the totality of the circumstances; plus, "one is responsible for the ‘development’ of information when he engages in an act beyond the normal functions of a publisher (such as deciding to publish, withdraw or modify third-party content) that changes the meaning and purpose of the content." The Roommates.com attack fails here because the plaintiffs provided no evidence that PissedConsumer actively created the content; their unsupported general assertions weren't enough. The court rejected the application of the old (and quite outmoded, IMO) Badbusinessbureau opinion, saying PissedConsumer's "actions are not unlike the targeted solicitation of editorial material engaged in by a narrow genre of publishers." (Huh?) Inviting consumers to post reviews and SEOing the pages didn't change the analysis. Accord Asia Economic Institute v. Ripoff Report.
Separately (and not relying on 230), the court tosses the RICO claim because the plaintiffs didn't show that PissedConsumer engaged in commercial bribery or extortion.
On these bases, the court rejects the plaintiffs' request for a preliminary injunction. However, the case is ongoing, and the plaintiffs still get discovery.
Although not a party to the suit, the real party-at-interest in this case is Google, because both Ascentive and PissedConsumer depend on Google traffic as virtually their entire marketing plan. In Ascentive's case, it said that 99% of its sales are made online, and a majority of that came from Google searches. Indeed, Ascentive had previously sued Google for trademark infringement before abandoning that claim. Meanwhile, PissedConsumer's business is to get favorably indexed in Google for businesses' names and then sell them services that take the edge off any negative user content that gets indexed. As a result, both litigants are competing against each other for favorable placement in Google search results. In my Online Word of Mouth paper, I discuss how brand owners face unusual and effectively unprecedented competition on their own brands for scarce consumer attention—in this case, the scarce resource of top search engine placement—and how that dynamic leads to weird trademark lawsuits like this one.
The legal ruling may be good for PissedConsumer, but this opinion isn't exactly a clean bill of health for its business model. Indeed, "the Court finds some aspects of PissedConsumer’s business practices troubling and perhaps unethical." I continue to believe that all consumer review businesses that seek to get paid by the vendors they review have a major structural conflict-of-interest—especially when the review site’s sales pitch to the vendor is reputation management. I ultimately think Google will need to restructure its algorithm to reflect the inherent untrustworthiness produced by these conflicts of interest.
Paul Levy's comments on the ruling.
January 13, 2012
Some Thoughts About Google Search Plus Your World (SPYW)
By Eric Goldman
[Normally I don't like to blog about these types of newsy product releases, especially when the facts are still being developed. However, I have spoken with some reporters about Search Plus Your World (see, e.g., this article by Robert Hof at Forbes), and I put together the following comments for a different reporter that seemed worth sharing.]
I have been consistently skeptical about the antitrust gripes about Google. Despite the dogged efforts of a long list of adversaries, no one has yet surfaced any "smoking gun" evidence that Google has acted impermissibly under antitrust law. Instead, most antitrust gripes about Google sound like sour grapes or, worse, efforts to misuse antitrust law to increase the complainer's profits at the expense of the public interest. For example, when other online intermediaries raise antitrust complaints that Google should be giving them more free traffic, I start to question the motives of the complainers. For a little more on this, see my recent article on search engine bias.
Having said that, Google's strongest defense all along has been that its search redesign choices have been in consumers' best interests. I think the widespread negative response to Search Plus Your World reflects, in part, a skepticism that Google's favoritism towards Google+ is solely in the consumers' best interests. Indeed, Google's own use case (the example involving Chikoo) seemed quite weak as a situation where the search results were actually improved--and I presume Google tried to showcase one of the strongest examples it could find. In my limited experience with Search Plus Your World so far, I haven't yet seen a single search results page where the prominent display of Google+ results actually improved the relevancy of my results. If anything, I have had some search results page where it was clearly harder for me to find the most relevant results.
If we lose faith that Google's integration of Google+ was in the searchers' best interest, our imaginations can run wild with speculation about other reasons why Google made the choices it made. I believe this is what's happening in the court of popular opinion. From a legal standpoint, I don't think Search Plus Your World adds very much to the antitrust complaints against Google (and some of the complaints, especially Twitter's, seem more like sour grapes than bona fide concerns). It's just another example where Google is cross-promoting its services, which is not inherently wrong and often can improve the consumer experience. However, if Google can't prove to us that each of its specific choices to integrate Google+ are in our best interests given the widespread speculation that they weren't, Google creates a major wedge in the trust relationship with users--and invites judges and regulators to impute bad motives to Google if they want.
One more point. Just last summer, many folks were cheering Google+ as the first bona fide competitor to Facebook to emerge in some time, which is important because Facebook has some serious issues with a dominant market share itself. Google's efforts to bolster Google+ have the ancillary benefit of keeping Facebook on its toes and improving competition in the social networking space. On balance, having choices among social networking sites is a good thing, especially as Facebook continues to degrade the user experience by putting surreptitious ads in the newsfeed and with the MySpace-ification of its profile page UI via Timeline. This alone doesn't excuse all of Google's choices about integrating Google+, but we shouldn't lose sight of this big picture either.
UPDATE: Some of my favorite articles on SPYW so far:
* Danny Sullivan: Search Engines Should Be Like Santa From “Miracle On 34th Street”
* Steven Levy
* Tim Carmody
UPDATE 2: Techcrunch: Not At Any Price: Twitter Denied Data To Google And Bet On Itself
January 11, 2012
An Update on PhoneDog v. Kravitz, the Employee Twitter Account Case
[Post by Venkat Balasubramani]
In November, the court allowed PhoneDog’s claims against Kravitz for conversion and trade secrets to proceed. ("Courts Says Employer's Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed.") In its initial order, the court rejected PhoneDog's interference with economic advantage claim because it was muddled and didn't clearly specify what economic relationship PhoneDog alleged Kravitz allegedly interfered with.
PhoneDog filed an amended complaint, clarifying its economic interference arguments (or trying to at least). Kravitz moved to dismiss the amended claims. I've linked to the pleadings above. PhoneDog claims that it had an economic relationship with the followers of Kravitz’s Twitter account, so Kravitz taking the account disrupted this relationship. PhoneDog also claims this affected its relationship with “existing and prospective advertisers” on PhoneDog’s website. Finally, PhoneDog argues that Kravitz interfered with its economic relationship with CNBC and Fox News by continuing to contribute to programs on these channels after he left PhoneDog. Regardless of how the court rules on the economic interference claims, the conversion and trade secrets claims will continue (for now).
For what it’s worth, although I don't know the precise contours of economic interference claims under California law, PhoneDog’s claims look tenuous--especially the one about the disruption of economic relationship between PhoneDog and the followers of Kravitz’s Twitter account. In the usual scenario, there's no real economic relationship between an account and followers. People follow because they are interested in information. It's not like anyone is charging their followers--i.e., typically there's no money changing hands between an account and followers. (I assume some sort of direct economic relationship (or expectation) is required to bring a claim, but the court's order isn't overly specific on this point.) Another thing to consider is that the account/follower relationship is dynamic. If people don't like what they hear from an account or they don't like a change in voice, they can unfollow, instantly and at no cost. The core of the economic value, if any, is in the ongoing content and the voice. PhoneDog also argued Kravitz continuing to use the Twitter account was a disruption of its relationship with advertisers, but I'm skeptical that PhoneDog will be able to show that advertisers on its website cared about the Twitter follower numbers. It may be true that traffic to the website diminished and and as a result PhoneDog generated less revenues from advertising, but that shouldn't amount to Kravitz's interference with PhoneDog's relationship with its advertisers.
After the court initially ruled on Kravitz’s motion to dismiss, another court (in Pennsylvania) issued its order in the LinkedIn case (Eagle v. Morgan). That order didn't cleanly resolve the claims over ownership of the LinkedIn account, but it does take a pretty dim view of the economic interference claim based on Dr. Eagle’s continued use of her LinkedIn account. (“Edcomm failed to point to “one potential contract that would . . . have materialized” absent Eagle’s alleged interference.”) As WSJ’s Law Blog notes, Kravitz filed a copy of this ruling as supplemental authority and requested the court to take judicial notice of it. Interestingly, in Eagle, the court notes that a password can’t be a trade secret because it’s not something that a competitor can derive economic value from. This should be equally applicable to PhoneDog’s argument that Kravitz misappropriated trade secrets by continuing to use the Twitter account. A Twitter account shouldn’t be a trade secret. But the court already allowed the claim to go forward, and Kravitz is going to have to raise this in a summary judgment motion.
I previously expressed some skepticism about PhoneDog’s case, but I’m even more skeptical now. I also question whether it was really in PhoneDog's interest to sue Kravitz over this. Was it really worth PhoneDog's expenditure of energy and fees to try to get back the Twitter account? Also, public sympathies have mostly tilted towards Kravitz. Kravitz has experienced a media bonanza as a result of this lawsuit and has gotten (mostly favorable) press coverage in a variety of different outlets, including the New York Times. Kravitz continues to Tweet, and he has taken a few opportunities to poke PhoneDog over its claim that each follower was worth $2.50 per month. His Twitter bio even says “People are not property. Love over gold.” People overall seem sympathetic to Kravitz’s side of the story. Someone even set up a “Save Noah” website and Twitter account. The net result of PhoneDog's lawsuit so far is a personal branding bump for Kravitz.
I’m not seeing a clear parth to victory for PhoneDog here (and more likely I’m guessing the case settles), but in the unlikely event PhoneDog wins control over the Twitter account, it will be interesting to see if the followers unfollow the account en masse.
Another Set of Parties Duel Over Social Media Contacts -- Eagle v. Sawabeh
Employee's Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward--Maremont v. SF Design Group
Courts Says Employer's Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed--PhoneDog v. Kravitz
Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer--Ardis Health v. Nankivell
Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account -- Deck v. Spartz, Inc.
January 10, 2012
TheDirty Denied 47 USC 230 Immunity--Jones v. Dirty World
By Eric Goldman
Jones v. Dirty World Entertainment Recordings, LLC, 2012 WL 70426 (E.D. Ky. Jan. 10, 2012). Prior blog post on this case.
A Kentucky federal judge rejected 47 USC 230 immunity for thedirty.com for third-party content. It's entirely clear that if the jury finds the user posts defamatory or a privacy invasion, this judge will let thedirty be liable for third-party content. That's exactly what 47 USC 230 was designed to prevent, making this a troubling and probably lawless ruling. Critics of 47 USC 230 will likely rejoice about this opinion because it represents the biggest incursion to 47 USC 230's immunity we've seen to date. Yet, for that reason, I wonder if this ruling will survive an appeal, which thedirty has already promised.
You may recall thedirty encourages users to submit third party gossip, typically about women, along with a photo of the gossip subject. Nik, thedirty's operator, evaluates the submissions, picks some of them for publication, and then typically adds his own short snarky comment about the user post. In this case, Nik published two user submissions about Sarah Jones, a Cincinnati Bengals cheerleader and a school teacher. The user posts intimated, among other derogatory remarks, that Jones had sex with the entire Bengals football team, had sexually transmitted diseases because her boyfriend cheated on her, and had sex with her boyfriend in public places, including her school classroom. In response to the second post, Nik's snarky comment was "Why are all high school teachers freaks in the sack? – nik."
[Just to state the obvious, this isn't my kind of website. I think the site is targeted at a different demographic than middle-aged suburban dads of two. And if the statements are untrue, then they don't belong online. But unlike this judge, my views about 47 USC 230 don't turn on whether or not I think the website is laudatory or has good editorial practices.]
The court's discussion is short, yet it's surprisingly scattered. Pages 8-10 run through a gamut of gripes about thedirty's practices and statements, but the judge doesn't articulate the relevance of these facts (other than providing evidence of the judge's animus towards thedirty). Because the judge does a poor job connecting the facts to his adopted legal standard, we aren't sure exactly what thedirty did to foreclose the 230 immunity. However, and slightly helpfully, the court summarizes its conclusion at the end:
This Court holds by reason of the very name of the site, the manner in which it is managed, and the personal comments of defendant Richie, the defendants have specifically encouraged development of what is offensive about the content of the site. One could hardly be more encouraging of the posting of such content than by saying to one’s fans (known not coincidentally as “the Dirty Army”): “I love how the Dirty Army has war mentality.”
This goofy legal standard ("specifically encouraged development of what is offensive about the content of the site") comes from the 10th Circuit FTC v. Accusearch opinion. Although a few other courts have cited Accusearch favorably, I believe this is the first time a court has favorably cited this specific standard for evaluating 230's immunity. (The language was also quoted in the Backpage case, although the defendant won that case). By adopting a legal standard that no other court has found useful, this judge was clearly reaching.
I personally wouldn't shed a tear if thedirty was wiped off the face of the Internet. As I said, it's not my kind of site. But Congress told judges that they aren't allowed to wipe UGC sites off the Internet just because they don't like them. For that reason, this is a terrible ruling that needs to be fixed on appeal. In the interim, I'm sure the plaintiff's bar will swarm all over this opinion, just like they have with other 230 exceptions. Yay, something we can look forward to.
Other blog coverage of thedirty cases:
* TheDirty Defeats Publicity Rights Claims--Gauck v. Karamian
* TheDirty Defeats Privacy Invasion Lawsuit--Dyer v. Dirty World
* thedirty.com's 47 USC 230 Defense Rejected on Motion to Dismiss--Jones v. Dirty World Entertainment
Mass Ct: ZIP Code is Personal Identification Info Under Credit Card Statute But Plaintiff Must Still Allege Harm -- Tyler v. Michaels Stores
[Post by Venkat Balasubramani]
Tyler v. Michaels Stores, Inc., 2012 WL 32208 (D. Mass.; Jan. 6, 2012)
Last year, the California Supreme Court held that a ZIP Code is personal identification information for purposes of a statute which restricted the type of information a retailer could collect: "California Supreme Court Rules That a ZIP Code is Personal Identification Information -- Pineda v. Williams-Sonoma." A federal court in Massachusetts recently construed a similar Massachusetts statute to reach the same conclusion, albeit for different reasons. But having found that the retailer in this case technically violated the statute, the court dismisses the case on the basis that the plaintiff failed to allege a cognizable injury.
Is a ZIP Code Personal Identification Information?: Section 105(a) of Massachusetts General Laws provides:
No person, firm, partnership, corporation or other business entity that accepts a credit card for a business transaction shall write, cause to be written or require that a credit card holder write personal identification information, not required by the credit card issuer, on the credit card transaction form. Personal identification information shall include, but shall not be limited to, a credit card holder’s address or telephone number.
The court looks to the legislative history behind the statute and says that the Massachusetts legislature’s intent was different from California’s. While the California legislature was concerned with retailers obtaining personal identification information and using it for marketing purposes, the Massachusetts legislature was more concerned about security and fraud prevention. Thus, while Pineda looked to whether a ZIP Code could be used (together with the customer’s name) to locate the individual, the court in this case focused on whether recordation of this information by a retailer poses the risk of identity theft or fraud. The court looks to Massachusetts’ identity theft statute, which defines personal identifying information as “any name or number that may be used . . . to assume the identity of an individual.” The court says that inputting a ZIP code in the context of a credit card transaction is similar to inputting a PIN number in the context of a debit card transaction. Because the ZIP code is information that can be used along with other card holder information to commit identity theft and criminal fraud, the court says that the ZIP code is personal identification information for purposes of the statute.
Did the Retailer Write the Information on a Transaction Form?: Michaels argued that the statute does not cover electronically stored information and that the transaction form has to be a paper document. The court rejects this argument for several reasons. First, the statute applies to all credit card transactions, whether they are processed manually, electronically, or through other means. The act does not distinguish between paper and electronic forms, and the court says that the risk of identity theft is present regardless of the type of transaction. The statute also permits the retailer to include information in the transaction form that is required by the credit card issuer. The retailer collects information during the transaction process (as required by the credit card issuer) and then issues the receipt, which may contain information different from the transaction form. (For example, the card number has to be truncated on the receipt under FACTA.) “The receipt is a printout of the permissible information on the transaction form, but it is not the transaction form itself.” (For what it’s worth, FACTA is also a statute aimed at curbing identity theft, but does not cover emailed receipts: “FACTA Does Not Cover Emailed Receipts.”)
Has Plaintiff Alleged Cognizable Injury?: The statute in question does not provide for statutory damages. It only says that a violation of the statute is “deemed to be an unfair and deceptive trade practice.” A claim for unfair and deceptive trade practice requires a showing of “injury and loss” and a causal connection between defendant's practices and plaintiff's injury. Plaintiff had not been subject to identity theft, so she had to prove injury or loss in other ways. She does not argue that she has an increased risk of identity theft. Instead, she argues that Michaels used her name and ZIP code in conjunction with a commercially available database to determine her address and phone number. The court says that her allegations are insufficient because she does not allege that Michaels acted illegally in accessing the database. She also alleged that she was injured because she received “a deluge of unwanted mail.” The court says that this is not an injury cognizable under the statute since the statute was enacted to prevent fraud. [Although not cited in the order, see Cherny v. Emigrant Bank, for the proposition that the receipt of spam is not in itself a compensable harm.]
Unjust Enrichment: Plaintiff also brought a claim for unjust enrichment. This claim is similar to the "PII-as-valuable-property" claim brought by the RockYou plaintiffs. ("Judge Recognizes Loss of Value to PII as Basis of Standing for Data Breach Plaintiff -- Claridge v. RockYou.") Under this theory, her personal information is a valuable piece of property so plaintiff should receive some compensation when she 'exchanges' this information with the retailer. The court says there are two problems with this argument. First, the ZIP code is not itself valuable to Michaels. It derives value only due to “the independent work and cross-referencing necessary to obtain the full address.” Second, the court says that reasonable people would not expect compensation for turning over their ZIP code, and plaintiff did not allege that, had she known all the facts, she would have “charged” Michaels for the ZIP code.
The conclusion that plaintiff did not state a cognizable injury was the most interesting. The court drops a giant footnote saying that it’s not deciding this case the basis of Article III standing, but even if it were, the result would be the same (citing In re iPhone App Litigation; Specific Media; In re Facebook Privacy Litigation). There is a big grey area here, which is whether a violation of a state law alone is enough to support standing, or whether even when plaintiff makes out a prima facie violation of a state statute, a plaintiff has to separately prove damages as a threshold matter. Can state legislatures circumvent Article III standing requirements? Can Congress? The court says that these issues are not implicated since the unfair trade practice statute only confers standing upon those who show that they have been injured. (My gut feeling is that Congress and state legislatures should have the power to define when a plaintiff can sue; at least they do so routinely. The court says that clarity on the standing question is forthcoming, since the Supreme Court granted cert. in Edwards v. First Am. Corp.)
The court’s conclusion on the unjust enrichment claim is also interesting. While one or two decisions accepted (at the motion to dismiss stage) the theory that personal information must be valuable because the defendant monetized it, later decisions, like this one, require plaintiff to more clearly articulate their misappropriation theories. Just because information is valuable in someone else’s hands, does not mean that their use of that information is a misappropriation of your property.
It’s unclear whether the court’s rejection of plaintiff’s injuries is a result of the court’s construction of the credit card statute as aimed to combat identity theft and fraud, or whether it’s because Massachusetts unfair trade practices statute (like California’s) requires some out of pocket loss.
Overall, this decision, like many of the privacy lawsuits we’ve blogged about reflects a reluctance by courts to recognize informational privacy claims where they don't easily see out-of-pocket losses. The risk of future identity theft is not getting much traction in courts. (See also, Reilly v. Ceridian, a recent 3rd Circuit case which is in the blogging queue.) The “personal information as currency” is also not getting much traction in courts either. When those two theories are taken out of the mix, the plaintiff is left only to allege that the defendant violated the statute and therefore plaintiff is entitled to damages. Courts are requiring privacy plaintiffs to allege more than this.
January 09, 2012
Updates on Transborder Copyright Enforcement Over "Grandma Got Run Over by a Reindeer"--Shropshire v. Canning
By Eric Goldman
Shropshire v. Canning, 2012 WL 13658 (N.D.Cal. Jan. 4, 2012). Prior blog post.
This dispute involves complicated facts, so here's my understanding of what's happening:
The lawsuit involves the musical composition "Grandma Got Run Over by a Reindeer." I won't give the song a dignity of a link. The song is co-owned by a group that includes Shropshire and his ex-wife Patsy. A Canadian group, the Irish Rovers, covered the song. I can't tell if that cover was properly licensed. Canning, a Canadian, uploaded the Irish Rover's cover to YouTube and synchronized it with Christmas-themed pictures, such as reindeers. I infer that Canning uploaded the cover without express consent from the Irish Rovers. Shropshire eventually sent a takedown notice to YouTube, and Canning submitted a counter-notice. Shropshire then sued Canning for copyright infringement and a 512(f) claim for an impermissible putback notice. Canning subsequently got authorization from co-owner/ex-wife Patsy for his video.
In the first ruling last January, the court rejected (with leave to amend) Shropshire's synchronization claim, saying that Canning's synchronization took place in Canada, not the US, and therefore wasn't covered by US copyright law. The court also rejected (with leave to amend) the 512(f) claim for lack of a claimed misrepresentation. Finally, the court required Shropshire to bring in Patsy as a party, which Shropshire did.
In August, the court partially granted and denied a motion to dismiss the second amended complaint. The court held that "extraterritoriality [is] an element of a claim for copyright infringement rather than an issue of subject matter jurisdiction," and then that "the alleged act of direct copyright infringement – uploading a video from Canada to YouTube’s servers in California for display within the United States – constitutes an act of infringement that is not “wholly extraterritorial” to the United States." Copyright's strict liability made it irrelevant if Canning tried to upload to youtube.ca and had no idea that this would result in files being stored on US servers. [In my opinion, this is a harsh result as none of us have any idea about the geographic situs of servers in the cloud, nor do we care]. The court also partially upheld Shropshire's 512(f) claims from a 12(b)(6) dismissal motion.
That brings us to the most recent ruling, which is largely procedural. Shropshire had named ex-wife Patsy as a party, but they worked things out and settled, which led to Patsy being dismissed. Canning reiterated that Patsy was still an indispensable party to the litigation, but the court held that Shropshire satisfied the prior order by bringing Patsy in and then working out a deal with her. To me, the more interesting development is that the case started with no lawyers on either side, but now both sides have lawyered up in a big way--Shropshire's team lists 4 lawyers from DLA Piper (possibly the world's largest law firm), while Canning has 3 lawyers from Mark Lanier's law firm (not Lanier himself). Seriously, guys? We're talking about a comparatively obscure YouTube video, not Obamacare!
Putting aside the many quirks of this case (including the fact that Canning posted a cover recording and the implicit proxy war between ex-spouses), I think the case is interesting because it demonstrates that US copyright owners can bring--and are bringing--copyright enforcement actions in US courts against foreign alleged infringers. This is the kind of fact that seems highly relevant to SOPA/PROTECT-IP...not that the advocates would actually acknowledge what's taking place in court if it would undercut the case for the legislation--even if the court system today will provide them with their desired solutions without any damaging legislative fixes.
January 07, 2012
Trademark Owner Can't Hold GoDaddy Liable for Domain Name Forwarding -- Berhad v. GoDaddy
[Post by Venkat Balasubramani]
Berhad v. GoDaddy, C 09-5939 PJH (N.D. Cal.; Jan. 3, 2012)
Plaintiff, Petroliam Nasional Berhad (Petronas), a government owned entity, owns the Petronas Towers in Malaysia. It’s trying to enforce its trademark rights against two domain names (petronastowers.net and petronastower.net). In mid-2010, it quickly obtained relief against both domain names, via in rem actions. These aren’t the disputes before the court. Prior to obtaining in rem relief against the domain names, Petronas urged GoDaddy to disable the website and domain names (the domain names were registered to GoDaddy and GoDaddy provided forwarding services, which pointed the domain names to porn sites). GoDaddy demurred, stating that as the registrar, it could not adjudicate Petronas’s cybersquatting claim and since it did not host the underlying sites, it couldn’t process Petronas’s trademark infringement claim. Petronas is trying to hold GoDaddy liable for not ‘disabling’ the domain name and website at Petronas’s urging. It asserted claims for cybersquatting and contributory cybersquatting against GoDaddy. Its hook for trying to hold GoDaddy liable? GoDaddy “used” the domain names by providing forwarding services for its customers.
Cybersquatting claim: GoDaddy argued that it was covered by the ACPA’s safe harbor. It also argued that two of the three ACPA elements ((1) use; (2) confusingly similar domain name; (3) bad faith intent to profit) were not satisfied. The court does not rule on the safe harbor issue but agrees with GoDaddy that Petronas's claims cannot withstand summary judgment.
The court finds that GoDaddy’s forwarding service does not amount to “use” of the domain names: “GoDaddy simply provided the infrastructure to the registrant to route the [domain names] to the website of his choosing.” It was a free service that GoDaddy provided to its domain name registration customers. Additionally, under the cybersquatting statute, only the registrant or its representative can “use” the domain name and potentially incur liability. Second, there was no evidence that GoDaddy harbored a bad faith intent to profit by providing forwarding services. It also did not charge for the service so it did not profit from the forwarding in any way.
Contributory Cybersquatting: As the court acknowledges, it’s unclear whether courts even recognize claims for contributory cybersquatting. (I blogged about a Western District of Washington case whre Judge Martinez allowed the claim to go forward at the early stages: “Court Allows Microsoft's Claims for Contributory Cybersquatting and Dilution to Move Forward”; see also Eric’s post about SolidHost v. NameCheap: “Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?”). The court analyzes the contributory cybersquatting claim under Perfect 10 and Lockheed and says that Petronas has to show that GoDaddy had knowledge and directly contributed to or induced the infringement. When the defendant provides a service the defendant can be held liable where it exercises “direct control and monitoring of the instrumentality” used to infringe. The court says that there is no evidence that GoDaddy exercised any type of control over the registrant’s use of the forwarding services. The court also says that Petronas has not shown that there is any bad faith by the registrant (the person who utilized GoDaddy’s forwarding services). According to the court, the registrant could have used the forwarding to “create mischief” or “annoy the owner of the Petronas mark” – he didn’t necessarily use the forwarding to “profit.” [This was a strange conclusion. I would have thought that the disposition of the in rem actions would conclusively establish bad faith intent to profit by the underlying registrant.]
Cancellation of Petronas’s Mark: GoDaddy asserted counterclaims and sought to cancel Petronas’s mark. Petronas argued that GoDaddy lacked standing to assert the claim for cancellation but the court rejects this: “GoDaddy has standing to seek cancellation because Petronas is using the registration as a sword against GoDaddy.” With respect to the merits of GoDaddy’s claim, the court says that factual issues preclude the grant of summary judgment. [Ouch. Petronas tries to hold GoDaddy liable, but all that's left of the lawsuit at this point is GoDaddy's claim for cancellation of Petronas's mark.]
The recently much-maligned GoDaddy may deserve a star for not caving to Petronas’s takedown notice, even at the risk of liability to GoDaddy. The court’s discussion alludes to the fact that registrars play a central role in the functioning of the internet as we know it. This just highlights the effect of GoDaddy’s conduct in other cases (e.g., the ex parte takedown cases Eric and I have blogged about). Of course, there’s also GoDaddy’s SOPA-support debacle, which resulted in a drain of domain names (including this one) away from GoDaddy. It’s unclear exactly what GoDaddy did in response to Petronas’s claims. While it did not cancel the forwarding, it did “assist Petronas in seeking a transfer order, and [locked] each domain.” In any event, GoDaddy deserves kudos for not summarily killing the forwarding that the registrant had in place.
The court’s treatment of Petronas’s direct infringement claim for cybersquatting spans many pages. The court ultimately concludes that GoDaddy provided services to the registrant in the nature of “infrastructure,” but still declines to consider GoDaddy’s claim that it was protected under the safe harbor. This is unfortunate because GoDaddy was forced to expend resources dealing with discovery and summary judgment; this may well influence GoDaddy's future dealings with others who are similarly situated to Petronas. ACPA's relevant registrar immunity provision (for damages) provides:
A domain name registrar, a domain name registry, or other domain name registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.
GoDaddy’s forwarding services arguably fall under “maintenance” of a domain name, but there’s not much discussion of GoDaddy’s immunity argument at all in the court’s order. The text of the immunity provision also leaves room for a damages claim where the plaintiff shows a “bad faith intent to profit.” This looks like unfortunate drafting that makes it tough for courts to grant immunity without consideration of fact-specific issues that are germane to the overall cybersquatting analysis. It would be nice for the immunity to distinguish between when the registrar is acting as a registrar and when it’s arguably trying to monetize domain names (e.g., through parking). (See: "Film Academy Targets GoDaddy Founder As Legal Fight Heats Up.") Registrar immunity rulings are rare, but if there was ever a candidate for when it is appropriate, this was it. A scenario where registrars routinely comply with rightsholder requests and disable forwarding or DNS resolution would break the internet. The court recognizes as much in its background discussion of the case (“If registrars stopped performing the function of taking name server information and providing it to registries, the Internet would not function.”) Unfortunately, the court does not take the route of providing immunity. [The routing point is relevant to the overall SOPA discussion.]
The court analyzes the contributory claim under Lockheed’s test for contributory trademark infringement. Courts continue to assume the viability of a claim for contributory cybersquatting, but they rarely dig in. Courts also don’t seem to discuss the contours of a cause of action against the backdrop of registrar immunity. A broad cause of action for contributory cybersquatting against registrars is a work-around of the registrar immunity provisions. (As GoDaddy pointed out, it was precluded by the ICANN/UDRP rules from disabling the site pending resolution of Petronas's claims, which were properly directed to a UDRP forum or a court.) I’m surprised the court did not take a much more critical look at Petronas’s claims here. Trying to hold GoDaddy liable for routing and pointing to DNS servers is a short step away from arguing that GoDaddy should be liable for forwarding. What’s next? Will Petronas sue Al Gore for its injuries because he invented the internet?
Petronas obtained the relief it sought: control or cancellation of the infringing domain names. It tried to hold GoDaddy liable because GoDaddy did not in effect disable access to the domain names. The court correctly rejects GoDaddy’s claims, but does not take the shortest possible route in doing so. The court should be cognizant of how its resolution of claims against GoDaddy will affect how GoDaddy reacts in the future to notices from rightsowners. The current trademark liability rules have resulted in a system where trademark owners can send takedown notices, typically to sites themselves. Rightsowners have pushed the envelope and through rulings such as Akanoc, are likely extending this to hosts as well. Petronas's claims tried to take it one step further, and broaden this to the registrar level. The court rejects its attempt, albeit in a long-winded way.
Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?
Domain Name Privacy Protection Services Not Liable for Failure to Disclose Identity of Alleged Spammer
Court Allows Microsoft's Claims for Contributory Cybersquatting and Dilution to Move Forward
Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?
If You Dislike SOPA, You'll Dislike This Case Too
Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods
January 06, 2012
Did a Court Eliminate 512(h) Subpoenas?--Maximized Living v. Google
By Eric Goldman with additional comments from David Gingras
17 USC 512(h) is a relic of a different era. The basic architecture of 17 USC 512 seeks to put copyright liability on users instead of their service providers. However, for that scheme to work, anonymous/pseudonymous infringers must be identifiable so the copyright owners can sue them instead of the intermediaries. 512(h) seeks to expedite the identification of alleged infringers by allowing copyright owners to get an unmasking subpoena super-easily. All copyright owners need to do is file a subpoena request with a court clerk, and in response the court clerk *must* issue the subpoena--the copyright owners don't need to file a lawsuit, and no judge reviews or approves the subpoena's issuance.
Indeed, neither the clerk nor a judge have any statutorily provided discretion to refuse the subpoena. As a result, 512(h) is now badly out-of-step with the law governing anonymous/pseudonymous online defendants that has developed over the past decade in response to unmasking abuses. In other areas than copyright, plaintiffs usually must make some showing that their substantive claims are meritorious before a judge will issue an unmasking subpoena. (The level of the plaintiff's showing depends on a variety of factors). In contrast, a 512(h) subpoena issues irrespective of the substantive merits of the plaintiff's claims--thus opening up a backdoor channel to unmasking abuses. For example, last year I got anecdotal reports that doctors used 512(h) to unmask patients that anonymously/pseudonymously reviewed doctors in contravention of the Medical Justice-supplied contract. If we were redrafting 17 USC 512 today, we would pay a lot more attention to 512(h) and its privacy implications than we did in 1998. [On that front, I have a latent empirical research project to investigate what happened after 512(h) subpoenas issued, but this case may have mooted it.]
With that background, let me turn to this case. Maximized Living sells copyrighted material to chiropractors. Anonymous blogger Doe allegedly infringed Maximized Living's copyrights via a Blogspot blog post. Maximized Living submitted an apparently overbroad 512(h) subpoena request to Google to identify Doe, and Doe successfully quashed the subpoena for its irregularities. Nevertheless, Doe apparently removed the infringing material from the blog. After that removal, Maximized Living sent Google a putatively corrected 512(h) subpoena request to unmask Doe. In this ruling, the court quashes Maximized Living's 512(h) subpoena for a second time.
The court does something goofy to reach this result. The court holds "that the subpoena power of s 512(h) is limited to currently infringing activity and does not reach former infringing activity that has ceased and thus can no longer be removed or disabled." Thus, because Doe had removed the infringing material after the first 512(h) subpoena was quashed, there was no infringing activity taking place when the second 512(h) subpoena request was made.
The problem with this result is that copyright owners must submit a 512(c)(3) takedown notice to service providers before seeking a 512(h) subpoena. Most service providers will take down the allegedly infringing material in response to the 512(c)(3) notice, so unless the copyright owner moves really fast to make its 512(h) request, the infringing material invariably will be down before the 512(h) subpoena request gets filed with the court--leaving those copyright owner in the same place as this one (i.e., submitting a 512(h) request when there's no current infringement). Below, David Gingras explains why the court may have misread the statute.
As a practical matter, this case's result may not be earth-shattering even if it survives appeal. I believe most service providers honor 512(h) subpoenas without much scrutiny and perhaps without notifying the targeted individual. This case will only help if the targeted individual challenges the subpoena, which will only happen if the service provider notifies the individual before releasing the unmasking information and the individual gets to court quickly enough. Because the service providers are a critical player in this process, how they handle 512(h) subpoenas warrants careful attention. I'd be game to work with you to try to get service providers to tell us more about their 512(h) handling procedure and if they give notice to the users--and wait for any quashing effort to materialize--before forking over unmasking info. [FWIW, Google appears to have done both, so they get a gold star for the day.]
Copyright owners also can avoid this result by filing the 512(h) subpoena request basically at the same time as they send the 512(c)(3) notice. That way, when the 512(h) subpoena is filed, there is still infringing activity occurring, even if it's quickly eliminated by the service provider responding to the 512(c)(3) notice. My guess is that many copyright owners will be reluctant to do this because it will increase the cost and time required to target infringing material when quick-filing of a 512(h) request will help in only a small number of situations. Thus, changing the takedown protocol to add a 512(h) filing probably isn't cost-effective.
Finally, even if 512(h) isn't available, the copyright owner can still seek unmasking through a John Doe lawsuit. This isn't as low-cost as 512(h) and will trigger judicial screening of the subpoena request before issuance, so 512(h) is better for copyright owners if they qualify. Nevertheless, copyright owners can still achieve unmasking, and perhaps this case simply indicates that 512(h) is a much more highly specialized solution than we thought.
Finally, a personnel note: one of the plaintiff's lawyers is Kenton Hutcherson. You may recall that last year I blasted an article by Kenton for advocating that plaintiffs scrub search results by taking advantage of Google's apparently lax policy towards court orders. Here, it looks like the judge didn't respond well to at least two of the plaintiff counsels' choices:
1) the overreach in the initial 512(h) subpoena request
2) the submission of a second 512(h) without the court's permission, as specified when the court quashed the first subpoena
One possibility is that the court reached its odd substantive conclusion in response to the plaintiff lawyers' errors.
Comments by David Gingras
[Eric's introduction: Many of you already know David Gingras due to his positions as General Counsel for Ripoff Report and litigation counsel for thedirty.com. While drafting this post, I sent this opinion to David for his thoughts, and his statutory analysis in response was so useful that I asked his permission to share it]
I think it’s extremely clear the court make the wrong decision here. I think the court should have found that the subpoena was entirely appropriate under § 512(h) even if the allegedly infringing material had been removed and the infringing activity stopped.
The court’s premise seemed to be that you could only use a pre-suit subpoena under § 512(h) to identify current infringers, not a former infringer who had stopped infringing. By itself, this seems like a very dubious distinction. What’s the difference?
As far as I can see, the conclusion was based on the fact that you obviously can only use what is commonly referred to as a “DMCA notice” (i.e., a takedown demand under § 512(c)(3)(A)) to address active infringements. In turn, that sounded correct because § 512(c)(3)(A) requires the party submitting the notice to identify, inter alia: “the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled." By using the present and future tenses here, it’s beyond obvious that this section doesn’t apply to past acts of infringement. In other words, you can only use a § 512(c)(3)(A) notice to address current/ongoing infringements (DUH – if the material was already removed, you wouldn’t need to a send a takedown notice anyway, right?)
Up to this point, the court interprets the DMCA in a common sense way, but then it erred when it assumed (incorrectly), that because § 512(h) subpoenas are necessarily premised on a § 512(c)(3)(A) takedown notice, that requires the court to find that where the infringement has stopped, the right to pursue a § 512(h) subpoena also stops. That’s just totally inconsistent with the plain language of § 512(h)(5) which talks about the duties of a party on the receiving end of a DMCA notice (like Google) once they receive the follow-up subpoena:
(5) Actions of service provider receiving subpoena.--Upon receipt of the issued subpoena, either accompanying or subsequent to the receipt of a notification described in subsection (c)(3)(A), the service provider shall expeditiously disclose to the copyright owner or person authorized by the copyright owner the information required by the subpoena, notwithstanding any other provision of law and regardless of whether the service provider responds to the notification. [italics added]
The way I read that section, it seems pretty simple – you can get and serve a § 512(h) subpoena either contemporaneously with the § 512(c)(3)(A) takedown notice, or the subpoena may be issued subsequent to that notice; i.e., at a later time when the infringement has already stopped. Either way is perfectly fine, which makes sense.
In this instance, the way the court interpreted § 512(h) makes the words “or subsequent to” totally superfluous, so we know the court’s conclusion is incorrect. Furthermore, the last few words of § 512(h)(5) seem to suggest that § 512(h) subpoenas may or may not come after a service provider has already “responded” to the takedown demand; i.e., after the material has already been removed – that’s another strong indicator that the right to pursue a § 512(h) subpoena may start with a § 512(c)(3)(A) takedown notice, but it does not stop simply because the infringing material was removed.
January 05, 2012
SOPA/PROTECT-IP/OPEN Linkwrap #2
By Eric Goldman
It's been a busy time for news related to SOPA (the Stop Online Piracy Act, not the Stop Online Privacy Act, although that could be an unintended result!), PROTECT-IP/PIPA, and the OPEN Act. In a bit, I'll recap some links. First, though, some general thoughts about the last month.
As I predicted, SOPA has been incredibly divisive. It has largely boiled down to Hollywood in support vs. the rest of the world against, with an emerging "with me or against me" attitude. What a shame. We get much better results when the tech and entertainment community collaborate rather than play zero-sum games.
Naturally, I think Hollywood has made several strategic miscalculations here. First, the outrageousness of its proposals has mobilized the tech community. It's been fascinating watching companies and politicians scramble to disavow themselves from SOPA when targeted by the anti-SOPA advocates. That NEVER happens when it comes to a Congressional proposal to regulate technology. Perhaps this mobilization will be a flash in the pan, or perhaps Hollywood has poked a sleeping tiger once too often.
Second, Hollywood's credibility with its financially-sponsored politicians may be wearing thin. Politicians will happily take its money, but they don't enjoy looking like fools--and many SOPA supporters have, in fact, looked pretty silly while being left twisting in the wind by their Hollywood patrons. Money will buy a lot of politician patience, but the goodwill reservoir is not bottomless.
Third, even if Hollywood can succeed in passing something like SOPA or even PIPA, I believe it would be counterproductive to its long-term interests. As I've mentioned before, we all benefit from having larger common markets (see, e.g., NAFTA or the EEC), and the Internet has emerged as the largest common market of all. A Balkanized Internet will devolve into disparate smaller markets that represent less value for everyone.
A final counterproductive point, although Hollywood may not care. SOPA/PIPA absolutely will drive US dollars--and jobs--overseas. For example, I ditched GoDaddy as my domain name registrar and took my business to a foreign registrar who won't be subject to SOPA/PIPA. If other folks make the same calculations I did, collectively it will be a boon for foreign service providers and a net loss for US service providers. At best, SOPA/PIPA preserve some jobs at the expense of others; my guess is that our economy will suffer a net reduction in jobs. Just what we need during this protracted economic downturn.
The amazing thing is: despite the complete lack of credible empirical evidence supporting SOPA/PIPA, and despite a groundswell of grassroots opposition to it, and despite companies and politicians dropping their support of SOPA/PIPA when the spotlight is cast on them, Hollywood might still be able to succeed in this rent-seeking endeavor. It's evidence of just how well Hollywood has embedded itself into Congress' psyche (and wallets).
Some news items since my last linkwrap:
* OPEN has been introduced in the Senate as S.2029.
* CDT's list of opponents. As you know, I am on it.
* Mike Masnick broke a huge story about Dajaz1.com, showing how our government repeatedly broke the law in falsely pursuing a so-called rogue website. The conduct of the government is chilling--things like this aren't supposed to happen in our democracy!--and if heads don't roll for the coverup, it will be another nail in the coffin of our republic.
* The government also lost the Rojadirecta case. Also, an in-depth look at the Operation in Our Sites bust of Ninja Video, where the government continues to make questionable interpretations of criminal copyright law.
* Constitional Law scholar extraordinare Laurence Tribe and advocate Marvin Ammori both explained how SOPA violates the First Amendment. Marvin followed up with a First Amendment assessment of the manager’s amendment. Corynne McSherry’s thoughts.
* Why aren't members of Congress listening to the opposition? Maybe it has something to do with the revolving door between government and industry. See this article: SOPA revolvers: Sixteen former Judiciary staffers lobby on online copyright issues.
* Wikimedia’s General Counsel Geoff Brigham explains “How SOPA will hurt the free web and Wikipedia”
* One of the many unanswered questions: who is a rogue website and how many are there? CNET News.com suggests that SOPA is all about taking out just one website--The Pirate Bay. Seriously, we're going to break the Internet because of The Pirate Bay? Talk about collateral consequences for something that could be handled with incredibly narrow legislative fixes—or better yet, with precise transborder enforcement cooperation.
* EFF on the good and bad in the OPEN Act.
* Mike Masnick completely destroys Lamar Smith’s so-called statement of facts in support of SOPA. Reading articles like this remind us that support for SOPA/PROTECT-IP is hardly about "the facts."
* More "fact" debunking, this time by Julian Sanchez.
* Speaking of "the facts" or the lack thereof, it appears that the House Judiciary Committee is massively overclaiming who supports SOPA. Misleading the American public apparently is just business as usual in DC.
* Meanwhile, companies are realizing that being listed as a SOPA supporter isn't necessarily good for business. SOPA opponents targeted GoDaddy, who instantly declared their lack of support for SOPA but remains completely untrustworthy and hypocritical.
* Meanwhile, SOPA is turning into an election-year issue, and politicians are beginning to learn the power of Reddit.
* If you want to speak up, check out SOPA Track and find out where your legislators stand. My Congresswoman, Anna Eshoo, has been firm in her opposition to SOPA, but the California senators are both PIPA co-sponsors because they too deeply in bed with Hollywood to listen to other constituents. So fair warning to Sen. Boxer and Feinstein--I plan to vote for your opponents, whoever they are, in the next election cycle.
* Great article about how SOPA will become a Trojan horse for all types of online content censorship, not just the suppression of rogue websites.
* Opposition to SOPA is bipartisan: “I suggest the left and right unite and pledge to defeat in primaries every person named as a sponsor on H.R. 3261, the Stop Online Piracy Act.”
Just a reminder because everyone knows SOPA is so ridiculously extreme: PROTECT-IP is NOT an acceptable "compromise" to SOPA. PROTECT-IP is also extreme. As I indicated previously, if we're going to have any legislative discussions about rogue websites, we should start with the OPEN Act and iterate from there. In light of the action in the courts (see the links below), any legislative solution should be coupled with increased immunities for Internet intermediaries so that they don't just coddle the rightsowners irrespective of the legislation.
FWIW, I have called Rep. Eshoo to thank her for her opposition to SOPA, and I've contacted Sens. Feinstein and Boxer to let them know that I disagree with their positions on PROTECT-IP. Have you contacted your legislators to tell them how you feel? If you don't speak up, they won't know where you stand.
Prior blog coverage of SOPA/PROTECT-IP/OPEN:
* More on Ex Parte Cutoffs of Foreign "Rogue" Domain Names
* Does the House Judiciary Committee Debating SOPA Know What's Going On In the Courts?--Philip Morris v. Jiang
* If You Dislike SOPA, You'll Dislike This Case Too--True Religion v. Xiaokang Lei
* The OPEN Act: Significantly Flawed But More Salvageable Than SOPA/PROTECT-IP
* I Don't Heart SOPA or PROTECT-IP: A Linkwrap
* Ad Network Avoids Contributory Copyright Infringement for Serving Ads to a Rogue Website--Elsevier v. Chitika
* Court OKs Private Seizure of Domain Names Which Allegedly Sold Counterfeit Goods--Chanel, Inc. v. Does
* Why I Oppose the Stop Online Piracy Act (SOPA)/E-PARASITES Act
January 04, 2012
Nov.-Dec. 2011 Quick Links, Part 3
By Eric Goldman
Marketing and Advertising
* Facebook is putting Sponsored Stories in user newsfeeds. Naturally, they will make the ad label almost invisible. Yet another reason to hate Facebook, and what a desperate act of financial overreaching to goose their IPO. FWIW, I absolutely hate that Twitter does the same thing. It's terribly marked as an ad, and it takes me more time than it should to figure out why it's appearing in my stream. Boo for Twitter, and boo for Facebook.
* Then again, not all Twitter ads are objectionable. The most popular tweet of 2011? An ad from Wendy’s.
* Rebecca reports on a lawsuit over marketing that chickens were “raised humanely.” Note to meat eaters: there's no such thing as mass-raising of animals "humanely" for our food consumption. Invariably, meat-eaters who actually take the effort to understand the process of manufacturing meat decide to reduce their meat consumption.
* AdAge: FDA's Social-Media 'Guidelines' Befuddle Big Pharma.
* Yahoo Inc. v. XYZ Companies, 2011 WL 6072263 (S.D.N.Y. Dec 5, 2011). Yahoo gets a huge and uncollectable default judgment of $610M under CAN-SPAM against Nigerian spammers.
* Pom loses a jury trial against Ocean Spray over false advertising.
* Washington Post: An inside look at the world of TV news payola/“plugola.”
* Ad Naseum on reverse product placement, i.e., manufacturing virtual brands created for TVs and movies.
* NYT: In China, car brands have very different meanings to consumers than they do in the US (except for BMW, where the brand attributes are surprisingly the same).
* Cracked: 5 Black Friday Myths The Media Wants You to Believe.
* In re Facebook Privacy Litigation, 2011 WL 6176208 (N.D. Cal. Nov. 22, 2011). Prior blog post. Judge Ware dismisses the Facebook/Zynga referrer ID case with prejudice. Wendy Davis' coverage. It appears the plaintiffs have appealed (sub nom Graf v. Zynga) to the Ninth Circuit.
* Facebook will make 45 privacy-related changes—almost none of them “important”—to appease the Irish Data Protection bureaucrats.
* Mark Zuckerberg has extensive experience apologizing to Facebook users for Facebook's privacy transgressions.
* USA Today on how Facebook tracks user activity at websites other than its own.
* Interesting visualization of Facebook’s creeping degradation of privacy for user-provided info.
* In the Matter of ScanScout, Inc., FTC File No. 1023185:
* FTC bust of Skid-e-Kids for COPPA violations.
* Weber v. Google, over Google toolbar snooping, was quietly dropped.
* Incorp Services, Inc. v. Does 1-10, 2011 WL 5444789 (N.D. Cal. Nov. 9, 2011). The court orders unmasking of alleged click fraudders:
By tracking the clicks over the course of several weeks and narrowing a substantial portion of the activity to only two IP addresses—both owned by the same ISP—Incorp has provided sufficient information to indicate that the responsible parties are “real person(s)” who may be sued in federal court. Incorp also has demonstrated that it took reasonable steps to identify Defendants. Because information pertaining to the assignee of an IP address is maintained by the third-party ISP, the only way in which Incorp is able to identify definitively the parties associated with the suspect IP addresses is by subpoena to the ISP.
* In re Application of the USA for an Order Pursuant to 2703(d), 1:11-dm-00003-TCB –LO (E.D. Va. Nov. 10, 2011). No Fourth Amendment privacy protection for IP addresses.
* NYT provides yet another update on some European regulators' efforts to kill Silicon Valley.
* Peter Fleischer: Harsher data protection sanctions are coming.
* Stebbins v. Texas, 2011 WL 6130403 (N.D. Tex. October 24, 2011). Another court calls David Stebbins’ attempt to manufacture an arbitration award “frivolous,” saying “his factual assertions that the alleged contract was formed when Plaintiff sent an e-mail to Defendant with a blog link and a dollar bill describe fantastic or delusional scenarios that are clearly irrational and incredible.” Prior blog coverage (1, 2).
* Garon v. eBay, Inc., 2011 WL 6329089 (N.D.Cal. Nov. 30, 2011). No antitrust claims for vendors who eBay terminated for low ratings. I think eBay should have been able to use 47 USC 230(c)(2) (not discussed by the judge).
* Fadal Machining Centers, LLC v. Compumachine, Inc., 2011 WL 6254979 (9th Cir. Dec.15, 2011). In a B2B context, enforcing an arbitration clause posted to the web that was incorporated by reference in the vendor’s invoices.
* Spam Arrest v. Marketingesquire complaint: Spam Arrest sues an email marketer for violating its TOS by sending "spam."
* Wofford v. Apple Inc. (S.D. Cal. Nov. 9, 2011). Free software update to iPhone software did not constitute a "tangible good or service" for California CLRA purposes.
* How plaintiff firms are adapting to Concepcion.
* WSJ: Are We All Online Criminals?
Keyword Advertiser Mostly Defeats Trademark Lawsuit--Scooter Store v. SpinLife
By Eric Goldman
This is a spirited litigation between two retailers of wheelchairs, motorized scooters and related items. Maybe that retailing sector is so profitable that it warrants a litigation cat-fight, but my guess is these litigants are spending their retirement money beating up each other in court.
Today's ruling deals with SpinLife's AdWords advertising triggered on keywords such as “the scooter store,” “scooter store,” “my scooter store” and “your scooter store” as well as the inclusion of such terms in the spinlife.com's metatags. The plaintiff (let's call them TSS) has registered trademarks in "The Scooter Store" in certain classes but not for retail stores, because the PTO rejected that usage as generic. TSS asserted that SpinLife's keyword ads and metatags infringed its trademark rights.
The court ultimately concludes that "The Scooter Store" is generic for retail stores. This isn't surprising; the PTO had said the same thing to TSS. In fact, I've argued that all "[noun] store" marks (where the store sells the noun) are generic. Surprisingly, a different court ruled otherwise with respect to Apple's claims over "app store." I still think that court got it wrong.
Weirdly, having held the term generic, the court then spends several pages considering the question: "Can SpinLife's use of generic phrases cause consumer confusion?" What??? TSS tried to argue that it's enforcing its trademarks from other classes, not the generic term. The court wisely rejects that. If a term is generic in a class, then it's free for competitors to use in that class--FULL STOP, end of story.
The weirdness continues when the court doesn't dismiss the state anti-dilution claim based on TSS's purported rights in a generic term. WHAT??? Apparently the court is willing to consider TSS's trademark registrations in the other classes for dilution purposes, even though the court just said the registrations were irrelevant for infringement purposes. I understand that dilution claims cut across classes, so that part makes sense, but it's crazy to consider that a registered mark could control the term's use in a class where it's generic. The federal anti-dilution statute has a number of defenses that would clearly free the defendant, so the court's ambivalence may just be a quirk of Texas' anti-dilution statute. In any case, I imagine the judge will get to the right place eventually, but the fact it didn't get there instantly is puzzling.
Before the court declared TSS's marks generic, SpinLife argued that buying trademarked keywords is categorically permissible under trademark law per 1-800 Contacts v. Lens.com. The court rejects this strong proposition, saying "this Court will not rely on a single out-of-circuit case to conclude that the Adword purchases are not actionable under any circumstances." The court's decision isn't surprising given the diversity of rulings we've seen over trademarked keywords, although I think the world would be a better place if the court did adopt the strong proposition.
In the end, the court says SpinLife is free to use "scooter" and "store" in AdWords and its metatags without restriction. Furthermore, TSS ends up with weaker assets than it thought it had pre-litigation (see, e.g., American Blinds which exited its keyword advertising enforcement case similarly bereft) and a clear signal that it should stop spending money on its lawyers and start investing those dollars towards competing on the merits.
Other cases in the category of irrational enforcement actions against keyword advertisers:
- King v. ZymoGenetics. The defendant advertiser got 84 clicks.
- Storus v. Aroa. The defendant advertiser got 1,374 clicks over 11 months.
- 800-JR Cigar v. GoTo.com. The search engine defendant generated $345 in revenue from the litigated terms.
- Sellify v. Amazon. The defendant got 1,000 impressions and 61 clicks.
- 1-800 Contacts v. Lens.com. 1-800 Contacts spent no less than $650k (and was willing to spend $1.1M) to pursue Lens.com, which made $20 of profit from competitive keyword ads. It also tried to hold Lens.com responsible for affiliate ad buys which generated about 1,800 clicks, which under the most favorable computations were worth about $40k.
- InternetShopsInc.com v. Six C. The defendant got 1,319 impressions, 35 clicks and zero sales.
January 03, 2012
Nov.-Dec. 2011 Quick Links, Part 2 (Extended IP Edition)
By Eric Goldman
* Costco v. Omega (E.D. Cal. Nov. 9, 2011). On remand after the disappointing non-result from the Supreme Court in this case, the district court gives Costco a decisive win, holding that Omega engaged in copyright misuse:
Omega concedes that a purpose of the copyrighted Omega Globe Design was to control the importation and sale of its watches containing the design, as the watches could not be copyrighted. Accordingly, Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.
The net effect is that Costco violated copyright law's importation clause but Omega's copyright misuse makes the importation not actionable. This is one of the most significant copyright misuse decisions we've seen. Assuming it goes to the Ninth Circuit again, it will be interesting to see what they do with it. If this latest ruling stands, Omega's legal hack will be decisively shut down; and other manufacturers trying to use copyright to control their channels for non-copyrightable articles will want to reevaluate their approach.
* The Righthaven debacle continues to wind towards its messy but inevitable conclusion. Some of the items from the last couple months that caught my attention:
- Every time Righthaven's lawyers whine about opponents' unfair litigation tactics, I'm dumbstruck by the duplicity.
- Stephens Media dropped its efforts to contest that Democratic Underground made a fair use by republishing a newspaper article excerpt.
- Righthaven v. Wolf: "The Court admonishes Mr. Mangano regarding his lack of civility. The motion for reasonable attorney's fees in the amount of $32,147.50 and costs of $1,000.85 is GRANTED."
- Righthaven LLC v. Newsblaze LLC, 2011 WL 5373785 (D. Nev. Nov. 4, 2011). Yet another dismissal for lack of standing.
- the auction for Righthaven.com is going on right now. Current high bid is $1,900.
* C-70/10, Scarlet Extended SA v. Societe Belge des auteurs, compositeurs et editeurs (SABAM) (ECJ Nov. 24, 2011). Some interesting quotes from an ECJ opinion:
- "EU law precludes the imposition of an injunction by a national court which requires an internet service provider to install a filtering system with a view to preventing the illegal downloading of files"
- "The filtering system would also be liable to infringe the fundamental rights of its (Scarlet's) customers, namely their right to protection of their personal data and their right to receive or impart information"
- “E.U. law precludes an injunction made against an Internet service provider requiring it to install a system for filtering all electronic communications passing via its services, which applies indiscriminately to all its customers, as a preventive measure, exclusively at its expense, and for an unlimited period”
* Brownmark Films LLC v. Comedy Partners, 2011 WL 6002961 (E.D. Wis. Nov. 30, 2011): In awarding a fee shift to defendants, "the Court finds that Brownmark's legal positions were also objectively unreasonable, and thus their position was frivolous. To this Court, there is little that could justify the plaintiff's stated view that the South Park version was not parody....given the transformative nature of the use and the lampooning Brownmark's original received, there is ample reason to believe that South Park's use would have greater spurred the market for the original. In the internet era, with information freely and quickly accessible, viewers interested in South Park's version could turn to the internet to find a copy of the original. And any confusion over which version was the original could be supplied to online viewers through a statement at the video's web page. For all of these reasons, the Court finds that Brownmark was objectively unreasonable in its position that South Park's use was not fair." Wendy Davis' writeup.
* Carolyn Wright, a/k/a PhotoAttorney, who helps photographers enforce their copyrights, got side-swiped in a misguided enforcement action and had her photo site mistakenly taken offline by a DMCA takedown notice (not surprisingly, GoDaddy was in the middle of this).
* UC Berkeley revamps its policies about student note-taking and recordings of classes. It seems a little odd to encourage faculty members to be sending 512(c)(3) takedown notices freely. James Grimmelmann has more criticisms.
* RIAA is in pre-litigation enforcement mode against ReDigi for reselling digital files.
* The Zynga-Vostu litigation settled.
* Ars Technica: Warner Bros: we issued takedowns for files we never saw, didn't own copyright to
* The economics of the record label-online music site deals look very, very bad for the music sites.
* Techdirt: Congressional Research Service Shows Hollywood Is Thriving
* David v. CBS complaint. Tertiary infringement re-redux: Download.com sued again for secondary copyright infringement for distributing LimeWire and BitTorrent clients.
* A Singapore newspaper sued Yahoo News for copyright infringement.
* An analysis of the Trans Pacific Partnership (TPP).
* 1-800 Contacts, Inc. v. Lens.com, Inc., 2011 WL 5403368 (D. Utah Nov. 4, 2011). The court denies 1-800 Contacts' motion for post-judgment relief based on newly discovered evidence. This case could be a textbook case of trademark bullying--remember, 1-800 Contacts has spent well over $650k on this case and Lens.com made $20 (not a typo) of profit directly from its keyword ads based on 1-800 Contacts' trademarks. Prior blog post.
* Speaking of trademark bullying, does an "Eat More Kale" t-shirt infringe any IP rights that Chik-fil-A has in "Eat Mor Chikin"? See the 2011 C&D letter, the 2006 C&D letter and the 2006 C&D response. I assume most kale eaters don't overlap with Chik-fil-A consumers. But, Paul Levy explains why there should be a pox on both parties' houses.
* Lovely Skin, Inc. v. Ishtar Skin Care Products, LLC., 2011 WL 6055489 (D. Neb. Dec. 6, 2011). In a trademark lawsuit, the defendant asked for:
REQUEST NO. 32: All documents referring or relating to purchasing of keywords, “Ad Words,” “sponsored links,” or other advertisements for search engines and any efforts to achieve search prominence on search engines, including but not limited to Your purchase, or consideration to purchase, the name “Lively Skin” or the URL www.livelyskin.com.
REQUEST NO. 37: Documents referring or relating to communications with Google to purchase “lively skin” and “livelyskin.com” as keywords or “Adwords.”
The court says (cites omitted):
In support of its motion to compel, Ishtar states that Lovely Skin's production of documents in response to these requests are “deficient for two reasons.” First, the Google information lacks the dates that the keywords were used, which are necessary to establish “(1) whether Lovely Skin's marks had achieved secondary meaning when Ishtar entered the market; and (2) the extent of Lovely Skin's inequitable use of the term “livelyskin” in its keyword advertising campaigns.” Second, Ishtar claims that as a result of its recent Internet searches, Ishtar has learned that “Lovely Skin possesses additional information regarding keyword purchases made by Lovely Skin through other search engines.” The Court finds that the information sought by Ishtar is relevant to its affirmative defenses of the claims made against it by Lovely Skin.
* Partners for Health and Home, L.P. v. Seung Wee Yang, 2011 WL 5387075 (C.D. Cal. Oct. 28, 2011):
Defendants have infringed Plaintiff's Perma–Life trademark by each of the following acts, taken either individually or as a whole:
a. Registering the domain www.perma-life.co.kr and using it to promote their competing Pearl Life cookware;
b. Applying the metatags “perma life” and “permalife” to the website at www.perma-life.co.kr through which they sold their competing Pearl Life cookware;
c. Applying the term “permalife” as visible video tags (indexes) on videos promoting Pearl Life cookware which they posted on the Internet at video sharing websites YouTube (www.youtube.com) and Tag Story (www.tagstory.com), and on the “blog” site Daum (www .daum.net).
d. Purchasing the term “permalife” as an Internet search engine advertising keyword to direct Internet users to their website at www.pearllife.com at which they advertised their Pearl Life cookware.
* Foreword Magazine Inc. v. Overdrive Inc., No. 10-1144 (W.D. Mich. Oct. 31, 2011). Offering to sell a domain name after getting a C&D can't be introduced as evidence of bad faith in the resulting ACPA suit.
* Weather Underground v. Navigation Catalyst (E.D. Mich. Nov. 9, 2011). Typosquatters' liability for ACPA violations must be evaluated on a domain name-by-domain name basis, not based on the defendant's entire portfolio; and ACPA bad faith cannot be established on a "willful blindness" standard.
* iYogi Holding Pvt. Ltd. v. Secure Remote Support, Inc., 2011 WL 6291793 (N.D.Cal. Oct. 25, 2011). A default judgment against a competitor who created fake reviews bashing the plaintiff.
* Fordham sent a trademark demand letter to Texas Wesleyan for using the acronym "CLIP" to describe its IP center, which garnered derision from many other IP professors. The demand letter (currently set to private; I'm trying to fix that).
* Multi-Time Machine v. Amazon complaint. A watch manufacturer sues Amazon for trademark infringement based on Amazon's internal search engine's results.
* Night Owl Games v. Zynga complaint. Another game developer seeks a declaratory judgment against Zynga over the -ville trademark, this time "Dungeonville."
* Harvard spikes a Yale t-shirt making fun of it.
* Rebecca provides three updates on Southern Snow Manufacturing Co. v. Sno Wizard Holdings, Inc. (see my prior blog post on the case): insurer had duty to defend, a baffling battle over false trademark marking, and a further rejection that metatags matter.
* The Trade Secret Litigator: The America Invents Act: What Will the Impact of the New Patent Law's "Prior Commercial Use" Defense Have on Trade Secret Protection?
* Coca-Cola turns the vault for its secret formula into a tourist attraction.
* Are strict limits on e-discovery coming for patent cases?
* All Things D reports on Abhyanker v. Benchmark Capital, an idea theft lawsuit against a VC fund involving the entrepreneur who also is behind Trademarkia.
I'm Not a Fan of this Craptastic Trademark Lawsuit--Fancaster v. Comcast
By Eric Goldman
Fancaster, Inc. v. Comcast Corp., 2011 WL 6426292 (D.N.J. Dec. 22, 2011).
We've seen some pathetic trademark lawsuits this year (SUE MOAR KALE, anyone?), but I'll nominate this long-running litigation money-sink (going over 3.5 years) as the saddest trademark case of 2011.
Fancaster registered its mark in 1989 for broadcasting services, and over the years it's been used in connection with a range of services, "including selling Fancaster branded radios, charging customers to watch closedcircuit boxing matches, producing karaoke shows, transmitting sponsored news messages to wireless pagers and cell phones, and conducting live demonstrations of FANCASTER broadcast services" (cites omitted).
In 2006, it launched Fancaster.com to broadcast short sport-related video clips. It hopes to cover such must-see events "as La Tomatina in Spain, Ostrich racing in Arizona, the Westminster Kennel Club Dog Show and the annual Nathan's Hot Dog Eating Contest." Rather than advertise the website on the Internet (you know, where people who enjoy content online might already be), instead they are seeking out untapped Internet enthusiasts by "marketing the website at sporting events, bars, on local television channels in Sioux Falls, South Dakota and Sioux City, Iowa, on radio stations in Charleston, South Carolina, and via flyers and handbills."
Meanwhile, in 2008 Comcast rolled out a service called fancast.com "that allowed users to watch full-length premium mainstream media over the Internet." The service was a debacle, losing $80M in less that 2 years due to “the unexpectedly high cost of distributing video content on the internet.” (Even though Comcast acquired bandwidth at wholesale rather than retail costs...how much it would have cost non-carriers to launch competitive services?). In March 2011, Comcast shut down the Fancast service and rolled the domain name over to XfinityTV.
With the overlap between the Fancaster and Fancast names, one possibility is that Comcast blatantly ripped off the name of a small startup who wouldn't want to tangle with a giant, thereby creating "reverse confusion" where everyone thinks first-mover Fancaster infringes second-comer Comcast. But another story equally fits this facts: Fancaster is doing a little trademark trolling, seeking to increase Comcast's $80M of losses by grabbing some gravy for itself. (Some gravy indeed: Fancaster's damages expert thought it would take $73M of corrective advertising to fix Comcast's damage to a brand that has no market awareness outside of Sioux City.)
It's a sad commentary on our milieu when we can't tell which litigant is bullying the other. Maybe *both* parties are equally imbibing the bullying elixir. Fancast initially unleashed the litigation hounds, but Comcast responded with a hailstorm of countermoves, including an ACPA counterclaim for a slew of "fancast" domain names Fancaster registered after learning about Comcast's upcoming launch. A lot of lawyers appear to have satisfied their billable hour goals using this case. Yay for free-spending deep-pocketed clients!
The court resoundingly thumps Fancaster's core argument about consumer confusion, miraculously finding a way to twist all of the factors to Comcast's favor. The judge may have cut some analytical corners, but that says the judge simply didn't accept Fancaster's narrative.
The court specifically rejected the possibility of initial interest confusion, citing 3rd Circuit precedent that basically limited IIC to competitors, and the parties didn't directly compete. The court also dismisses Fancaster's efforts to show overlaps in search engine results, saying "the confusion one encounters on an Internet search engine is a twenty-first century version of that experienced when searching the phone book." I am going to be doing some work this quarter to show that the initial interest confusion doctrine almost never succeeds in court any more, and therefore it imposes costs on both litigants for no gain. This case is just one example of that.
The court also scoffed at Fancaster's request for $73M for corrective advertising:
There is not a shred of evidence of any damage to the fancaster mark caused by Comcast. The only loss to Fancaster that Mr. Krueger could testify to was that resulting from pursuing the instant litigation against Comcast.
Comcast had survey expert Hal Poret do two surveys. The court tosses the first one because it didn't adequately replicate market conditions by not presenting consumers with a navigable website:
use of a printout and static screenshots, instead of live websites, provide ample grounds on which to exclude the March 2009 survey. For one, it is difficult to fathom how presenting a respondent with a paper printout of the FANCAST homepage in anyway replicates how an Internet user would encounter and perceive the FANCAST website in the marketplace. Websites, particularly those that offer video content, are meant to be viewed on a computer and allow consumers to browse and interact with them via hyperlinks. The FANCAST printout offered none of these aspects. Similarly, although viewed on a computer, the static screenshots of the fancaster and control website homepages did not allow respondents to interact with them as they ordinarily would in the marketplace.
I haven't researched this issue, but this ruling may tell us something important about the requirements for consumer surveys when websites are involved.
JUST FOR LAW PROFESSOR READERS: Our colleague Greg Lastowka (a longtime friend) gets toasted by the judge for his expert report, which the judge repeatedly called "totally inappropriate" and says "wanders far from the proper scope of an expert's opinion." For example, Greg's report says the judge can award between $1k-$100k for an ACPA violation (a true statement of the law), to which the judge sarcastically responds "Lastowka's generosity gives the Court at least a modest role." Later, the judge blasts Greg for narrating the requirements of an ACPA claim, saying "A jury should not be receiving instructions on the law from two sources, and however erudite and accurate they may be, Mr. Lastowka's instructions will not be allowed to compete with the Court's instructions." The judge also tosses Greg's report on why Fancaster engaged in ACPA bad faith, saying "the expert assumes the role of the fact finder and is therefore not performing the role of an expert." This is a good reminder that when we're called for potential expert gigs, we have to clarify exactly what we're being asked to opine upon and whether it's appropriate for expert testimony. This judge clearly didn't respond well to any line-blurring about expert testimony.
For what it's worth, the court similarly shreds Gary Krugman's expert report for Comcast about PTO practices (part of Comcast's counterclaim for fraud on the PTO), part of which the judge says "inappropriately usurps the role of the fact finder."
This ruling eviscerated Fancaster's case, making it a strong win for Comcast, but it left a few residual legal issues open. Yet, the legal battle has been mooted by the passage of time. Comcast already stopped using Fancast as a brand, and Fancaster still hasn't shown a lot of movement towards developing a real business or even a revenue model. Are the parties really going to spend more money on a pointless lawsuit? We all know what the answer should be; let's see what they actually answer.
For more on the case, see Rebecca's post.
January 02, 2012
Nov.-Dec. 2011 Quick Links, Part 1
By Eric Goldman
47 USC 230
* Wang v. OCZ Technology Group, Inc., 2011 WL 4903190 (N.D. Cal. Oct. 14, 2011). In a false advertising suit, the plaintiff argued that the defendant quoted/linked to third party testimonials on the defendant's website and those contributed to the misrepresentations. The defendant counterargued that the third party content was immunized by 47 USC 230 and therefore shouldn't be attributed to it. The court rejects the defendant's use of 47 USC 230 on a motion to strike material from the complaint, saying that it was too premature. Rebecca's coverage.
* News report that, per 47 USC 230, Worcester Telegram & Gazette wasn't liable for user-posted comments to one of its stories. Naturally, the plaintiff was an attorney. Prior blog coverage of lawsuits against newspapers for user-posted comments.
* An insurance company sued Google for the high search placement of Scam.com and PissedConsumer reports about it. Hello 47 USC 230!
* Yoder v. University of Louisville, 2011 WL 5434279 (W.D. Ky. Nov. 8, 2011). Yoder graduated from University of Louisville with her nursing degree, but her lawsuit isn't moot due to her damages claim. Prior blog post.
* Roberts v. McAfee, Inc. (9th Cir. Nov. 7, 2011). Due to the single publication rule, failing to remove a press release on the website does not reset a defamation statute of limitations.
* Mattingly v. Milligan, 2011 WL 5184283 (E.D. Ark. Nov. 1, 2011):
Milligan won a hotly contested race for the position of Saline County Circuit Clerk. Following his election, Milligan sent a letter to four employees informing them that he would not retain them. That evening, Mattingly made two posts on Facebook in quick succession stating that bad things were all around and that her heart went out to those ladies who were told they were no longer needed. The posts could be viewed directly by at least 1,300 people, most of whom were residents of Saline County. As Milligan said in his letter of termination, Mattingly's statements were "in a public domain."...As evinced by their comments in response, some who read the posts understood Mattingly to be speaking about Milligan's decision to terminate some employees in the Circuit Clerk's office. These comments included criticisms of Milligan's termination decisions. According to Milligan, six constituents were motivated by Mattingly's posts to call him at home to complain about the terminations. Television news stations, newspapers, and an internet blogger reported on the Milligan's decision to terminate the employees. Viewing the evidence in Mattingly's favor, her Facebook posts touched on a matter of public concern.
* Obsidian Financial v. Cox, 2011 WL 5999334 (D. Or. Nov. 30, 2011). The court held that an Oregon blogger isn’t a journalist for shield law purposes. I think the case got so much attention in part because the judge said unnecessarily derogatory things about bloggers. However, Kash Hill reports that the defendant doesn't appear to adhere to journalistic standards, either. Eric Robinson explains why the judge got to the right legal result. The EFF also contextualizes the ruling.
* Louisiana Crisis Assistance Center v. Marzano-Lesnevich (E.D. La. Nov. 23, 2011). Interesting anti-SLAPP decision.
* India asks Google and Facebook to prescreen UGC to prevent the publication of disparaging content.
* The Smoking Gun reports on a prosecution for posting revenge porn.
* Not surprisingly, myTriggers appealed its loss in its antitrust claims against Google. (Because the case has nothing to do with its legal merits, I'm sure myTriggers will keep appealing losses until they exhaust all appeals). Prior blog post.
* In an expected move, ShopCity filed an antitrust complaint against Google with the FTC.
* buySafe v. Google complaint: As part of a patent battle, buySafe asserts that Google promises better search placement for participants in its Trusted Stores program.
* On a related note, Bing is going back to hand-picking some search results. Could you imagine how the Google Haters would respond if Google did the same thing?
* Also related? New Scientist: “Google and Microsoft have won a major victory in the fight against such content farms”
* Google Knol is another casualty of Google's project cleanup. Remember some Google Haters thought Google Knol would crush other encyclopedic-style projects due to Google favoritism of its own properties? (See, e.g., this article). What say you now?
* Search Engine Land: Google Instant Costs Google $65,000 In France. Given all of its prior losses, I had thought Google already was completely illegal in France.
* Clive Thompson: Why Kids Can’t Search.
Social Networking Sites
* Zoya Co. v. Julep Nail Parlor Co., 2011 WL 5975054 (N.D. Ohio Nov. 29, 2011). Website wasn't passive for Zippo purposes because, among other things, "It includes links that allow customers to “Connect on Facebook” and “Connect on Twitter” and to subscribe to a monthly newsletter." Compare DFSB Kollective Co. v. Tran.
* U.S. v. Cassidy, 2011 WL 6260872 (D. Md. Dec. 15, 2011). Reversing a harassment conviction based on talking a lot about a person on Twitter and in a blog.
* Dimas-Martinez v. State, 2011 Ark. 515 (Ark. Dec. 8, 2011). “Because of the very nature of Twitter as an on online social media site, Juror 2's tweets about the trial were very much public discussions. Even if such discussions were one-sided, it is in no way appropriate for a juror to state musings, thoughts, or other information about a case in such a public fashion….Thus, this court has recognized the importance that jurors not be allowed to post musings, thoughts, or any other information about trials on any online forums. The possibility for prejudice is simply too high. Such a fact is underscored in this case, as Appellant points out, because one of the juror's Twitter followers was a reporter. Thus, the media had advance notice that the jury had completed its sentencing deliberations before an official announcement was made to the court. This is simply unacceptable, and the circuit court's failure to acknowledge this juror's inability to follow the court's directions was an abuse of discretion.”
* U.S. v. Juror Number One, 2011 WL 6412039 (E.D. Pa. Dec. 21, 2011). A juror was fined $1,000 for criminal contempt for using email to discuss the case with other jurors during the trial after being dismissed from the jury.
* State v. Gordon, 2011 WL 5354265 (Ohio App. Ct. Nov. 7, 2011):
if Gordon's use of the computer for personal purposes during work time constitutes theft in office, it would mean that every public official or government employee who sends a personal email, reads a text message, or checks Facebook during working hours would be guilty of committing a felony. We do not believe that is the intended purpose of R.C. 2921.41. Therefore, we find that there was insufficient evidence that Gordon's use of the Village's computers for personal purposes constituted Theft in Office pursuant to R.C. 2921.41
* Woodward v. State, 2011 WL 6278294 (Ala. Crim. App. Ct. Dec. 16, 2011). Inflammatory online comments about a defendant (who allegedly killed a police officer) don’t necessitate a change in venue: “the unsolicited, unreviewed, largely anonymous online comments did not rise to the level of saturated, prejudicial media coverage. Moreover, we believe that any readers of the comments would value those comments at their true worth and not as “news coverage” at all.”
* Kash Hill: How Not To Use Facebook To Get Custody Of Your Kids. Horrifying story!
* Gizmodo: Facebook Is Making Us Miserable [and not for the reason you think!]
* The truth about students using Facebook and their grades.
* A quarter of the blogs listed on the inaugural ABA Journal Blawg 100 from 5 years ago are now gone. This blog didn't make the first list, but next month we'll be celebrating our SEVENTH anniversary!!!
* K-12 schools are adopting social media policies restricting teacher-student interaction on social networking sites.
UGC Website Hit With Spoliation Sanctions--Io v. GLBT
By Eric Goldman
[This is one of those blog posts that got stuck in queue. It's still pretty interesting, so I'm sharing at this relatively late date. Happy new year!]
Io Group Inc. v. GLBT Ltd., 2011 WL 4974337 (N.D. Cal. Oct. 19, 2011)
This case involves Io, the pornography company that lost Io v. Veoh, the main 17 USC 512 case I teach in my Internet law course. The defendants in this case are British. They run a series of UGC porn websites where users can get some porn for free and then must pay for additional access either with cash or by uploading their own content. The plaintiffs seek to hold the defendants liable for copyright and trademark infringement because users are allegedly committing copyright infringement by uploading the plaintiffs' porn. The defendants are defending on 17 USC 512 and other grounds.
Being in Britain, the defendants are governed by the Data Protection Act. They interpreted that act to require them to flush lots of data very quickly. Perhaps they have been overly zealous about implementing the DPA such that their interpretation isn't so credible. For example, they automatically deleted all incoming and outgoing email after 3-4 days, and they didn't change this for more than a year into the lawsuit. They also completely deleted all files that were subject to a takedown notice, so it wasn't possible for plaintiffs to see which files had been removed. Their answers to the judge's pointed questions apparently weren't very satisfying, and eventually the defendants went AWOL. So it's a little hard to tease out any legitimate DPA-based objections the defendants might have had from their other questionable choices.
FWIW, I'm not a DPA expert, but the DPA requires that the service provider keep data only so long as reasonably necessary. I would think legal obligations/discovery rules satisfy that standard.
The court's opinion gives some insights into the evidence that would be useful for the 512 safe harbor. The defendants completely wiped away any UGC files they disabled. The court says:
With respect to the deleted audiovisual files, Plaintiffs are prejudiced by not being able to examine the files and related metadata for any "red flags" indicating that infringement was likely. Such red flags could render Defendants ineligible for safe harbor protections of the Copyright Act.
This is consistent with language in the Ninth Circuit's subsequent ruling in UMG v. Shelter Capital. The court continues:
The loss of takedown notices and corresponding removal notification emails also prejudices Plaintiffs. First, the trier of fact may consider the extent of copyright infringement on Defendants' websites when analyzing a claim of inducement to infringe....Although the number of takedown notices does not alone determine the amount of actual infringement on the site, a large number of notices could indicate that a large portion of the material on the site is infringing. In addition, in order to be eligible for safe harbor protection, Defendants must show that they have policy in place providing for the termination of repeat infringers. 17 U.S.C. § 512(i)(1)(A). Defendants claim that they have such a policy in place, but without the ability to examine the takedown notices and corresponding emails, Plaintiffs have no way of challenging the implementation and enforcement of the policy because they cannot examine whether Defendants actually terminated individual users who repeatedly posted infringing material.
I'm not clear about the relevance of the percentage of infringing activity, but for more on the evidentiary issues associated with inducement, see the Grokster ruling. Finally, the court says:
the destruction of Defendants' internal emails renders it impossible for Plaintiffs to explore Defendants' motivation and state of mind in operating their websites; this is key to Plaintiffs' claim of secondary infringement based on inducement
For the evidence spoliation, the court hits the defendants with adverse inference sanctions:
Plaintiffs are entitled to adverse inference instructions in the form of rebuttable presumptions. Given the specific evidence destroyed by Defendants, the court orders the following rebuttable factual presumptions: 1) third parties posted material on Defendants' websites that infringed Plaintiffs' copyrights; 2) Plaintiffs submitted takedown notices to Defendants regarding the infringing material; and 3) Defendants did not take steps to remove Plaintiffs' infringing material from their websites.
Unless the defendants magically find some exculpatory evidence, it sounds like those inferences will nail them on the substantive rulings. The court also awarded $15,000 in attorneys' fees.
This case raises a number of interesting issues.
First, exactly what evidence is plaintiffs entitled to when trying to overcome a service provider's 512 defense? As far as I can tell, there are few limits because just about anything might support an inducement finding. The otherwise defense-favorable ruling in UMG v. Shelter Capital provides some other ideas about information that plaintiffs can seek. Summing all this up, as a practical matter, 512's safe harbor is nifty, but it's an increasingly expensive proposition for both parties. Contrast this with 47 USC 230, where many immunized lawsuits are tossed on a motion to dismiss without any discovery at all. Not only does that allow judges to issue clean and quick rulings, but it saves both plaintiffs and defendants a lot of coin. Note to statutory drafters: it's so important to consider the evidentiary implications of your legislative drafting. The way the statute implicitly allocates discovery costs has a huge substantive effect--especially if the goal is to create a safe harbor or immunity. On this point, even if 512 usually gets to the right result, the safe harbor is miscalibrated from an evidentiary standpoint.
Second, service providers hoping for a 512 safe harbor are often uncertain about what data they should or must retain. After Grokster, UGC sites became nervous about potential inducement liability. As a result, I believe it's become common to recommend that UGC sites flush as much material as quickly as possible (and before litigation becomes "reasonably anticipatable") to reduce the risk that the material will be cited as evidence of inducement or otherwise disqualify the 512 safe harbor. However, UGC sites don't want to look like they are trying to evade the truth or, worse, disrespecting the court (as the defendants in this case might be perceived as doing) or engaged in evidence spoliation, so how should UGC sites strike an appropriate balance? I'd welcome your thoughts about that.
Third, irrespective of how we feel about these particular defendants, their underlying point about the intersection between 17 USC 512 and user privacy is worth considering. 17 USC 512(m) is entitled "Protection of Privacy," so the drafters of 512 recognized the push-pull issue here. Assume for a moment that the defendants in this case honestly wanted to provide their users with private browsing/uploading/downloading, something that might be desirable in the context of these defendants' service. It seems logical that the service provider seeking a privacy-enhanced UGC service would flush its logs, email and disabled files promptly and make those representations to its users. Here, it appears the court would undo those promises, forcing the service provider to retain data it didn't want to keep for the benefit of copyright plaintiffs. I understand that may be our current state of play, but I see the potential for mischief too.