July 01, 2009
MySpace Wins Another 47 USC 230 Case Over Sexual Assaults of Users--Doe II v. MySpace
By Eric Goldman
Doe II v. MySpace, Inc., 2009 WL 1862779 (Cal. App. Ct. June 30, 2009)
Capping off a busy month for 47 USC 230 jurisprudence, MySpace has won another case over its role in facilitating sexual assaults of underaged female users. This victory follows the 2008 Fifth Circuit Doe v. MySpace case and Doe IX v. MySpace from May. (Note: although California is apparently lagging behind Texas in Doe complaints, this opinion consolidates 4 plaintiffs, including Julie Doe V). As with the previous lawsuits, this lawsuit is generally premised on MySpace's allegedly inadequate measures to protect its underaged users and use appropriate age-verification technology.
The court could have simply tossed the case by citing the Fifth Circuit opinion, which had already addressed and rejected these arguments. (I believe the plaintiffs’ attorneys are the same in both cases). As the court points out, the plaintiffs didn’t really try to work around the Fifth Circuit opinion: "Not surprisingly, appellants cannot and do not distinguish the Fifth Circuit's opinion…which is exactly on point. They only contend that the Fifth Circuit was wrong."
Nevertheless, after canvassing the federal precedent (all of which is adverse to the plaintiff), the court considers if California's 230 jurisprudence leads to a different result. The court cited three California cases that have used 230 to reject negligence claims against service providers (Barrett, Delfino, Gentry). The court then correctly concludes that plaintiffs seek to hold MySpace liable for user-to-user communications:
It is undeniable that appellants seek to hold MySpace responsible for the communications between the Julie Does and their assailants. At its core, appellants want MySpace to regulate what appears on its Web site.
That's precisely what 230 precludes plaintiffs from being able to do. The plaintiffs' attempt to focus on the offline physical harm doesn't change that analysis:
In all but one of these [precedent 230] cases, the harm actually resulted from conduct that occurred outside of the information exchanged, whether that information was actionable or not.
This is a crucial point that sometimes gets overlooked. The 1997 Zeran case involved online postings that led to offline harms--in that case, a high volume of angry telephone calls, including death threats. And Zeran was a negligence case, not a defamation case. So the MySpace cases, alleging the service provider was negligent in preventing offline harms, seem to be substantively indistinguishable from the Zeran precedent from a dozen years ago.
The plaintiffs also try a Roommates.com attack on 230, arguing that MySpace loses 230 protection because it helped users create profiles and structured the search of these profiles. Doe IX v. MySpace had already expressly addressed and rejected this argument. The court doesn't cite Doe IX (or any other cases interpreting Roommates.com, for that matter), but still rejects the argument:
Unlike the questions and answers in Roommates.com, however, Appellants do not allege that MySpace’s profile questions are discriminatory or otherwise illegal. Neither do they allege that MySpace requires its members to answer the profile questions as a condition of using the site.
The voluntariness of the profiles was the same ground relied upon in the Doe IX case. The lack of illegality in the questions is a new point.
So, yet again, Roommates.com is cited in a defense win. My updated scorecard on Roommates.com citations is 8-2 for the defense:
Roommates.com Cited for Defense: GW Equity v. Xcentric, Best Western v. Furber, Goddard v. Google, Joyner v. Lazzareschi, Atlantic Records v. Project Playlist, Barnes v. Yahoo (note: although the case was a partial loss for the defendant, the Roommates.com discussion came in the defense-favorable part), Doe IX v. MySpace and this opinion (Doe II v. MySpace)
Roommates.com Cited for Plaintiff: NPS v. StubHub, FTC v. Accusearch
Posted by Eric at 11:17 AM | Derivative Liability | TrackBack
June 30, 2009
Roommates.com Infects the Tenth Circuit--FTC v. Accusearch
By Eric Goldman
F.T.C. v. Accusearch Inc., 2009 WL 1846344 (10th Cir. June 29, 2009). My blog post on the district court opinion.
Introduction
June has been an active month for 230 jurisprudence. Cases this month include Doe IX v. MySpace (actually a May opinion but I blogged it in June), Gibson v. Craigslist, the Barnes v. Yahoo amendment, and Zango v. Kaspersky--all defense-favorable outcomes. As I mentioned in my post on the Doe IX case, the Ninth Circuit Roommates.com en banc decision has not cast a long shadow on 230 jurisprudence; it has been cited less than 10 times in the past year, and prior to yesterday, only once in favor of the plaintiff. Unfortunately, those good times may be over. The Tenth Circuit has largely adopted the rule and reasoning of Roommates.com in FTC v. Accusearch, effectively making Roommates.com the governing law west of the Rockies.
The FTC's Enforcement Action Against Accusearch
This is a prime example of bad facts making bad law. Accusearch runs Abika.com, a website that tried to style itself as a matchmaker between customers seeking, and vendors selling, private/personal records about people. The specific records at issue here contain "customer proprietary network information" (CPNI), the metadata about telephone calls. CPNI resales were probably illegal at the relevant time periods; following the Hewlett-Packard pretexting scandals, Congress cleared up any confusion and criminalized the resale of CPNI via the Telephone Records and Privacy Protection Act of 2006, 18 U.S.C. §1039.
If Abika.com was structured as a pure advertising site to facilitate off-site transactions, like Craigslist or eBay, perhaps Abika.com would have a stronger case for qualifying for 47 USC 230 protection for the sale and delivery of CPNI reports from Abika's vendors to their customers. However, Abika.com apparently was structured as a classic retailer in that it advertised the third party reports, processed customer payments, and delivered the subsequent reports to customers as if the reports were its own (Abika.com even stripped out the third party vendor's identifying information). So the veneer of Abika.com simply being a passive intermediary between customers and vendors may have been overwhelmed by Abika's active and overwhelming presence in the transaction.
The FTC went after Accusearch claiming that Abika.com was engaged in "unfair" trade practices under the FTC Act. (Note: the FTC has the power to pursue unfair commercial practices, even when they are not deceptive. However, the standards for "unfair" are amorphous, making such enforcements potentially problematic and controversial. Fortunately, the FTC generally wields this power sparingly). Accusearch's principal defense was 47 USC 230 on the theory that Accusearch procures the CPNI reports from third party vendors and merely republishes the third party reports to Accusearch's customers.
It's really hard to defend CPNI resales, and the court says that Accusearch had the requisite scienter that such resales were illegal/impermissible. With the combination of scienter, illegal transactions, active intermediation and the FTC as a plaintiff, it really seemed to me that Accusearch had no chance of winning this case. But this combination also tempted the judges to use loose reasoning to reach that unavoidable result.
The Opinion’s Discussion of 47 USC 230
A defendant must establish three elements of a successful 230 defense, and the majority opinion muddles the discussion on all of them:
1) "provider or user of an interactive computer service." Based on the funky definition of ICS, the FTC argued that websites qualify for 230 protection only when they enable user-to-user communications. The majority declines to accept this argument but doesn't reject it outright either, basing its decision on another prong. Although the statute could be clearer (like, for example, saying that websites qualify for 230 protection), the caselaw is extremely thick that every website qualifies for 230 protection. Unfortunately, with the majority's pathetic response, I wouldn't be surprised if plaintiffs unnecessarily put this issue into play in future 10th circuit cases.
2) "publisher or speaker of content" The concurring judge argues for a speech/conduct distinction and argues that the FTC is pursuing Accusearch for its conduct, not its speech. The speech/conduct distinction is almost meaningless in this case given that Accusearch was reselling information, which means that Accusearch was electronically republishing that information. The majority disagrees with the speech/conduct distinction but otherwise doesn't discuss this prong.
3) "created or developed by another information content provider." Adopting the arguments from the Roommates.com case, the majority says that Accusearch didn't "create" the reports but it was "responsible" for "developing" the reports. To reach this conclusion, the majority defines "responsible" and "develop":
* citing old French, "develop" means to "unwrap." Huh? Thus, "when confidential telephone information was exposed to public view through Abika.com, that information was 'developed.'" Does this definition make "develop" a synonym for "publish"?
* the majority initially says when "responsible" doesn't mean: "to be 'responsible' for the development of offensive content, one must be more than a neutral conduit for that content." This reference to "neutral conduit" parallels the Roommates.com case, which used the term "neutral tools" five times but never defined the term once.
The majority then says "a service provider is 'responsible' for the development of offensive content only if it in some way specifically encourages development of what is offensive about the content." This phrasing allows the court to distinguish the old 10th Circuit Ben Ezra precedent, which absolved AOL of liability for republishing inaccurate stock quotes. There, AOL didn't ask its vendors to give it false reports; here, the majority says that Accusearch asked its vendors to get information it knew was illegal to obtain:
Accusearch solicited requests for such confidential information and then paid researchers to obtain it. It knowingly sought to transform virtually unknown information into a publicly available commodity. And as the district court found and the record shows, Accusearch knew that its researchers were obtaining the information through fraud or other illegality.
Implications
I doubt the literal holding of this case is all that troubling to most folks. If you're in the business of reselling illicit phone records and the FTC comes calling, 230 isn't likely to help you.
However, this opinion could be problematic for any online retailers who thought they could use 230 to insulate themselves. It's never been clear how much 230 protects online retailers when they are making sales for their own account (as opposed to advertising services like eBay or Craigslist), and this opinion raises the specter that 230 won't apply even when "retailing" involves republishing third party content. Indeed, the loose language means the case could be a major carveback of 230's coverage in the Tenth Circuit. As the concurrence points out, the majority's reading is "an unnecessary extension of the CDA’s terms 'responsible' and 'development,' thereby widening the scope of what constitutes an 'information content provider' with respect to particular information under the Act."
Then again, between its role as a retailer and the illicit nature of its goods, Accusearch was always at the periphery of 230's coverage. Today, 230 would be irrelevant if a federal government agency pursued a CPNI reseller under the new criminal provisions in 18 U.S.C. § 1039. So I think a better interpretation of this case is that where an online provider is dabbling too close to third party illegal activity, judges simply will ignore 230 as a bailout. Framed that way, this ruling is akin to Roommates.com, which was a largely a normative judgment by the Ninth Circuit that the Fair Housing Act should trump 230 regardless of 230’s precise statutory contours.
I'll conclude with a few more thoughts about the concurrence. Although the concurrence's proposal to distinguish between speech and conduct wasn’t a good one, there was a useful nugget embedded in it. To bypass 230, perhaps the case could have focused on first party content published by Accusearch--namely, copy written by Accusearch advertising the availability of CPNI records, including any express or implied statements that it was reselling legitimate records. I've repeatedly blogged on the challenges of first-party/third-party content distinctions in 230 (see, e.g., my recent discussion about 230 and consumer protection), but in this case, I think focusing on Accusearch's own representations may have led to a cleaner doctrinal result than the one we got.
Finally, in the concurrence's FN5, Judge Tymkovich says:
If Accusearch had run a traditional business out of a physical location and offered similar services, it would seem the FTC would have the same unfair business practices complaint. Nothing would immunize Accusearch’s conduct had it chosen to deliver the confidential telephone records to requesters through hard copy print-outs either in person or through the mail. Accusearch’s duty to refrain from engaging in the solicitation and distribution of unlawfully-obtained confidential telephone records should not depend on the medium within which it chooses to operate.
Uh, NO. As with some other bright judges dealing with 230 cases, Judge Tymkovich has fallen into the mental trap that smart common law judges applying their powers of reasoning can simply intuit what the law should be. Congress has made it abundantly clear that it did exactly what Judge Tymkovich rejects; via 230, Congress created medium-specific rules that make some activities online permissible even if their offline analogue would not be. As challenging as it may be, judges should resist the temptation to make these kinds of normative assumptions in the face of clear Congressional intent.
Posted by Eric at 10:28 AM | Derivative Liability , E-Commerce , Privacy/Security | TrackBack
June 29, 2009
Sixth Lawsuit Filed Over Google AdWords, Plus an Assault on Google's Organic Search Results--Ascentive v. Google
By Eric Goldman
Ascentive, LLC v. Google, Inc., 2:09-cv-02871-JS (E.D. Pa. complaint filed June 25, 2009)
Guess who got sued again? Google now has 6 pending lawsuits challenging its AdWords service. The previous five are:
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (this wasn't a trademark case last I checked)
* Soaring Helmet v. Bill Me
The latest lawsuit has a different spin than the others. Ascentive makes software that it claims will improve the speed of its users' computers and combat spyware. Earlier this year, Ascentive had a run-in with StopBadware, which initially labeled Ascentive as a scamware-like offering that hyped the threats on users' computers to induce them to pay to upgrade their Ascentive software. (See the initial StopBadware alerts 1, 2). StopBadware has since reached a compromise with Ascentive and repealed its warning, a move that appears to have been fairly unpopular in some segments of the security community. (This post gives a sense of the sentiments towards Ascentive and StopBadware).
Around the same time, the Ascentive-Google relationship deteriorated, which Ascentive speculated was due to StopBadware's classification (Google's correspondence just cryptically cited "multiple policy disapprovals"). After Ascentive had spent over $645k as an AdWords customer in 2008, Google kicked Ascentive out of the AdWords program. A week later, Google completely dropped Ascentive's website from its search index. As a result, Ascentive was frozen out of both Google's organic search results and sponsored links, and not surprisingly, Ascentive suffered a "severe drop in online sales" from this double-whammy. Ascentive's entreaties to Google were rebuffed.
Ascentive makes two broad legal attacks on Google. First, as has become typical, Ascentive alleges that Google commits trademark infringement and related torts by selling competitive ads keyed to its trademark and by suggesting that advertisers buy Ascentive's trademarks in Google's keyword suggestion tool. Among other specific issues, Ascentive complains that Google didn't respond to its trademark appearing as a third-level domain in a competitor's ad copy or the inclusion of "Finally Fast" in ad copy (Ascentive's applicable trademark is "FinallyFast.com"). Overall, these complaints don't break much new ground compared to prior allegations against Google's AdWords program.
Second, Ascentive alleges a variety of legal violations because Google kicked Ascentive out of its organic search results index. This is a bit like KinderStart redux. The allegation that really caught my attention starts in Para. 83, which reads "Google's refusal to list Ascentive's website in its natural search result listings violates the Lanham Act" as a false designation of origin. Whoa! The complaint doesn't explain this allegation thoroughly, but the theory seems to be that consumers expect to see the trademark owner in organic search results for the trademark and therefore consumers will be actionably confused if the trademark owner doesn't appear there.
Framed that way, of course we know such a claim is DOA. Indeed, as exciting as it would be to see some meaty discussion on the topic of Google's liability (or lack thereof) for deciding who gets into its search index, I'm guessing Google will beat this prong of the complaint quickly and completely. One way Google could get there is through 47 USC 230(c)(2) (which I just blogged about last week), which completely protects Google's ranking decisions as a subspecies of filtering choices generally. However, to get there, a court will have to conclude that a false designation of origin claim isn't an "IP claim" which is excluded from 230's coverage. If it doesn't want to reach that doctrinal issue, the court has a wide smörgåsbord of other doctrinal choices to squash this claim.
Posted by Eric at 07:32 AM | Derivative Liability , Search Engines , Trademark | TrackBack
June 26, 2009
Anti-Spyware Company Protected by 47 USC 230(c)(2)--Zango v. Kaspersky
By Eric Goldman
Zango, Inc. v. Kaspersky Lab, Inc., 2009 WL 1796746 (9th Cir. June 25, 2009)
The case involves Kaspersky, an anti-spyware software vendor, and Zango, the former purveyor of adware (I say "former" because Zango shut down a few months ago). Kaspersky classified Zango's software as adware and did some other things that allegedly interfered with Kaspersky users' ability to download and enjoy Zango software. Zango sued Kaspersky, and Kaspersky defended on 230(c)(2) grounds.
Note: 47 USC 230(c)(2) is the underlitigated/under-discussed sibling of 230(c)(1), which provides nearly absolute immunity for third party online content and actions.
In my opinion, 230(c)(2) fairly clearly protects all types of online filtering decisions, and this panel confirms that it protects anti-spyware classifications. As the court concludes:
a provider of access tools that filter, screen, allow, or disallow content that the provider or user considers obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable is protected from liability by 47 U.S.C. § 230(c)(2)(B) for any action taken to make available to others the technical means to restrict access to that material.
While I think this is the right result, both normatively and descriptively, 230(c)(2) is not exactly the best-drafted statute, and this panel (being the first appellate court to work through the language) appeared to struggle with some of its frayed edges.
For example, to become eligible for 230 protection, the defendant must be a provider or user of a service that "provides or enables computer access by multiple users to a computer server." [In this case, Kaspersky didn’t claim it was a user.] How does this language apply to an anti-spyware software provider? Typically, anti-spyware software phones home for new spyware definitions, but if a phone-home capability qualifies for 230 protection, then many/most software vendors should qualify (so long as they offer some filtering capability). I’m personally OK with that result, but I suspect it takes the statute beyond the drafters’ initial intent.
The panel also sidestepped some other drafting problems in 230(c)(2), including:
* does it immunize decisions to filter other software, as opposed to filtering content? The drafting clearly meant to immunize filters of porn and similar kid-unfriendly content, but the language doesn’t apply as clearly to software filtering.
* must the filtering provider make its categorizations in good faith? The court ducks this question. However, Judge Fisher’s concurrence expresses concern that 230(c)(2) might literally protect a vendor’s anti-competitive or capricious blocking. He gives an example of “a web browser configured by its provider to filter third-party search engine results so they would never yield websites critical of the browser company or favorable to its competitors. Such covert, anticompetitive blocking arguably fits into the statutory category of immune actions.” I agree with this, although I’m also confident that any such browser provider would lose its customer base if such biases were ever publicly exposed. Therefore, legal liability may not be necessary to discourage this behavior.
Ultimately, this ruling may not affect the litigants very much, as Zango has already gone belly-up, making this effectively an advisory opinion. However, I think this ruling is important for everyone else for two reasons:
First, the Ninth Circuit's last two 230 opinions (Roommates.com and Barnes) have exhibited some hostility to expansive 230 readings. In refreshing contrast, this opinion gives a robust interpretation to 230’s immunizations.
Second, this opinion is terrific news for vendors of anti-spam/anti-spyware/anti-virus services. Although we have long suspected that they would be protected under 230(c)(2), this opinion codifies their immunization as Ninth Circuit law. As a result, these vendors should continue to have a high degree of freedom to make judgments about how to best serve their customers. On the flip side, this opinion confirms that anyone blacklisted by these software vendors can’t use judicial proceedings to change the classification. Fortunately, most reputable vendors offer an extra-judicial mechanism to correct their misclassification errors.
It remains less clear if this opinion protects search engines for their ranking determinations. The statutory words interpreted in this opinion aren’t germane to search engines. Even so, the panel’s broad reading of 230(c)(2) can’t be bad news for the search engines.
The case library:
* Ninth Circuit oral arguments
* Zango's reply brief [warning: 3+ MB file]
* Amicus brief by CDT in favor of Kaspersky
* Kaspersky's answering brief [warning: 5MB file]
* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 01:13 PM | Adware/Spyware , Derivative Liability | TrackBack
June 24, 2009
47 USC 230 and Consumer Protection Talk Notes
By Eric Goldman
Last week I made a very short presentation on 47 USC 230 and consumer protection at the ABA Antitrust Section’s Consumer Protection Conference. (I was scheduled for 6 minutes, but I think I took about 8). My talk notes:
47 USC 230 tries to divide online content into first party content and third party content. In its simplest form, 230 says that online actors can’t be liable for third party content unless (1) ECPA, (2) federal criminal enforcement, or (3) IP claims.
230 is the flagship example of cyberspace exceptionalism. As a result, its outcomes can challenge our traditional notions of tort law. This befuddles bright lawyers.
Despite 230, websites always remain liable for first party content.
* Ex 1: if they post their own content, they are liable
* Ex 2: if they make marketing representations, they are liable under standard doctrines like contract and false advertising law. Even so, some courts have been giving websites a pass for marketing representations which are rendered untrue by third party actions.
* Ex 3: Barnes v. Yahoo: website can by liable under promissory estoppel theory if it promises to remove third party content
Plaintiffs often try to argue that third party content becomes first party content.
* Ex 1: website contract may take ownership of user-supplied content
* Ex 2: SEC says that issuers endorse/adopt content that they link to
However, these arguments generally fail under 230. If content starts out as third party content, there is almost nothing the website can do that will convert the content into first party content. As a result, agency civil enforcement actions can unexpectedly run afoul of 230 when they collapse the distinctions between first party and third party content.
However, there is a possible workaround. In the Roommates.com case, the Ninth Circuit said that websites can lose their 230 protection in civil cases if they “encourage illegal content” or “require users to input illegal content.” The FTC is relying on this language in its recent Pricewert/3FN enforcement action against an Internet access provider who facilitated customers allegedly engaged in illegal activities. From my perspective, the Pricewert enforcement action could make sense in the following postures:
* if the FTC is bringing a criminal enforcement action, 230 is irrelevant
* if the FTC’s civil enforcement action is premised on Pricewert’s actual illegal behavior, 230 is irrelevant
* otherwise, if the civil enforcement action is premised on the illegal behavior of Pricewert’s customers, then this might fit into the Roommates.com exception if such an exception exists. However, I am troubled by such an exception, especially given that the enforcement action might also adversely affect Pricewert’s customers who only engaged in completely legal activity.
Two concluding observations:
1) 230’s basic division between first party content and third party content sounds great in theory but is tough to apply in practice.
2) In light of 230, enforcement agencies should rethink their expansive liability theories that basically assume that everyone should be responsible for a common set of online behavior (unless the agency is pursuing a criminal enforcement action).
Posted by Eric at 10:08 AM | Derivative Liability , Marketing | TrackBack
June 22, 2009
Ninth Circuit Helpfully Amends Barnes v. Yahoo Opinion
By Eric Goldman
Barnes v. Yahoo, Inc., 05-36189 (9th Cir. Amended Opinion June 22, 2009)
The Ninth Circuit has issued an amended opinion in last month's Barnes v. Yahoo opinion. The amended opinion makes two changes to the initial opinion, both of significant value.
First, the opinion deletes the entire old section II, a two paragraph section where the panel declared that, under Ninth Circuit law, 47 USC 230 is an affirmative defense that could not support a 12b6 motion to dismiss. That discussion was poorly researched, sloppy and completely gratuitous. Rather than try to fix the section, the panel wisely decided just to kill it. This still leaves open the possibility that a district court will reject a 230 defense to a 12b6 motion, although I think the better result is that 230 can support a 12b6 motion as the Gibson v. Craigslist case just held.
Second, the panel added a new footnote to its recap of the prima facie elements of a 47 USC 230 defense. You may recall that in my initial blog post, I excoriated the panel for saying, in plain language, that 47 USC 230 only applied to state law claims. To fix this obvious error, the panel added the following footnote:
"We limit our restatement of section 230(c)(1) to state law claims because we deal in this case with state law claims only. We have held that the Amendment’s protection also extends to federal law causes of action, see, e.g., Fair Housing Council of San Fernando Valley v. Roommates.com, 521 F.3d 1157 (9th Cir. 2008) (en banc) (applying the Amendment to a cause of action under the Fair Housing Act, 42 U.S.C. § 3601 et seq.). Because no federal law cause of action is present in this case, we need not decide how or whether our discussion of section 230(c)(1) would change in the face of such a federal claim."
I don't know why the last sentence of the footnote is there. I guess this is super-CYA, but everyone knows that the 230(c)(1) analysis doesn't change one bit between federal and state law claims. Nevertheless, this footnote should eliminate any efforts by plaintiffs' lawyers to misuse the prior unnecessarily sloppy language.
Both of the changes in this amended opinion were directly responsive to the requests Yahoo and its amici made. I suspect both groups are pleased with these changes. I certainly am, although I remain disappointed that the entire exercise was necessitated by the panel's sloppy work up-front. Given that this is the second time in 2 years that the Ninth Circuit has had to fix badly drafted 47 USC 230 opinions, I remain (over?)optimistic that the Ninth Circuit will be more careful with its 230 jurisprudence in the future.
In conjunction with the amendments, the Ninth Circuit rejected both sides' request for an en banc hearing, although the amendments were so responsive to the defense requests that they largely mooted the defense's requests. (My intuition is that the plaintiffs never expected to get an en banc hearing but made their request just because Yahoo and the amicis had put an en banc hearing in play). I would be surprised if there are further appeals to the Supreme Court at this point. As a result, I believe this case is now effectively ready for further proceedings on remand on the promissory estoppel claim. Personally, from the limited material I've seen, Yahoo might find it prudent to cut short further proceedings and settle up rather than have its choices scrutinized too carefully. So I would not be surprised if this amended opinion prompts a settlement soon.
The case library:
* Amended Ninth Circuit Opinion
* Barnes' petition for rehearing
* Public Citizen et al amicus brief in support of rehearing
* Yahoo's petition for rehearing
* Ninth Circuit opinion and my blog post on it
* Ninth Circuit oral arguments
* District court opinion and my blog post on it
* Barnes' response to Yahoo's motion to dismiss
* Yahoo's brief in support of its motion to dismiss
* Yahoo's motion to dismiss
* Yahoo's notice of removal to federal court (which contains Barnes' initial complaint)
The Justia page has even more materials from the district court proceedings.
Posted by Eric at 11:57 AM | Derivative Liability | TrackBack
June 18, 2009
47 USC 230 Can Support 12b6 Motion to Dismiss-Gibson v. Craigslist
By Eric Goldman
Gibson v. Craigslist, 2009 WL 1704355 (SDNY June 15, 2009). The CMLP page. The Justia page.
In my lengthy deconstruction of the Barnes v. Yahoo case, I criticized the Ninth Circuit for concluding that 47 USC 230 was an affirmative defense (and thus could not support a 12b6 motion to dismiss) without proper briefing or analysis. First, this was sloppy work by the court. Second, the elimination of a 12b6 possibility for the defendants creates a real risk that defendants will be exposed to expensive and time-consuming discovery to eliminate plainly meritless cases. Yahoo and a group of amici have asked the Ninth Circuit to reconsider this aspect of the ruling, and I hope they do so.
Meanwhile, today’s case does a competent job reviewing whether or not 47 USC 230 can support a 12b6 motion to dismiss. Unlike the Ninth Circuit, it actually cites and discusses the numerous cases in the area although, remarkably, it does not cite or address the Barnes v. Yahoo case…! The court reaches the sensible positions that (1) 47 USC 230 does support a 12b6 motion, (2) as a result, the plaintiff was not entitled to discovery, and (3) the case should be dismissed. For more discussion on why 47 USC 230 supports a 12b6, see Paul Levy's excellent brief.
Substantively, today’s lawsuit is brought by a shooting victim who claims that the shooter bought the gun via Craigslist. The complaint argues that Craigslist had a duty to prevent the sale of guns to future criminals and therefore Craigslist breached the duty. This argument is similar to the Doe v. MySpace cases (1, 2) in which the plaintiffs argued that MySpace had a duty to police its website "premises" to prevent online communications that lead to offline crimes. The plaintiff's argument here fares no better here than it did in the MySpace cases. 47 USC 230 precludes the imposition of liability for any breach of duty by failing to police its users' communications (putting aside the also-relevant inquiry of whether Craigslist could have any duty that would have prevented this offline tragedy). The plaintiff tries to get around 230 by arguing it's just trying to hold Craigslist accountable as a "business" rather than as a speaker or publisher of third party content, but the court rejects this goofy argument as "unpersuasive."
More on the case from Eugene Volokh.
Posted by Eric at 06:41 PM | Derivative Liability | TrackBack
June 11, 2009
Google Sued Again for Trademark Infringement--Soaring Helmet v. Leatherup.com
By Eric Goldman
Soaring Helmet Corp. v. Bill Me Inc., 2:2009cv00789 (W.D. Wash. complaint filed June 9, 2009). The Justia page.
It's clearly open season on trademark infringement lawsuits against Google. The latest is a lawsuit by Soaring Helmet, manufacturers of "Vega" helmets. This case is similar to the recent Hearts on Fire v. Blue Nile case in that the manufacturer (Hearts on Fire/Soaring Helmet) complained that a retailer (Blue Nile/Leatherup.com) purchased the manufacturer's trademark and said/implied in its ad copy that it sold the manufacturer's goods even though it allegedly didn't carry the manufacturer's goods at all.
The main difference between this lawsuit and the Hearts on Fire lawsuit is that the manufacturer also dragged Google into the lawsuit--even though Google treated Soaring Helmet's initial cease-and-desist letter as a trademark opt-out and blocked subsequent references to Vega in Leatherup.com's ad copy. Thus, unless Soaring Helmet seeks to reach back to the ads displayed before its C&D, it appears Soaring Helmet is trying to hold both Google and Leatherup.com liability simply for showing ads triggered by Soaring Helmet's "Vega" trademark.
For those of you keeping score, this is the fourth time in a month that trademark owners have sued Google over its AdWords programs. The other three are:
* FPX v. Google
* John Beck Amazing Profits v. Google
* Stratton Faxon v. Google (this wasn't a trademark case last I checked)
A fifth pending AdWords trademark lawsuit is the Rescuecom case. I'm not aware of any others pending beyond these 5, but surely this action is making Google's outside counsel smile.
I note that the John Beck lawsuit is a putative class action covering all US trademark owners. I wonder if Google could consolidate this case with that...?
Posted by Eric at 07:16 AM | Derivative Liability , Search Engines , Trademark | TrackBack
June 09, 2009
May 2009 Quick Links Part 2
By Eric Goldman
Blogs and Boards
* WSJ: Bloggers, Beware: What You Write Can Get You Sued
* j2 Global Communications v. Zilker Ventures, CV 08-07470 SJO (AJWx) (C.D. Cal. April 22, 2009). A consumer review website can putatively qualify for anti-SLAPP protection, but not in this case because the plaintiff established its prima facie case.
* Biggs Cardosa Associates Inc. v. Bradbury, 2009 WL 1508703 (Cal. App. Ct. May 29, 2009). Here's another one for all of you Rip-off Report fans. A former employee lost a jury trial (and was hit with over $100,000 of damages) for breaching a "non-disparagement" clause in his separation agreement by posting negative comments about his former employer and colleagues on a variety of online fora, including numerous posts on the Rip-off Report.
* Houston Chronicle article on a lawsuit against a website operator for a user post saying that a woman has herpes when she, in fact, does have herpes. She is claiming public disclosure of private facts. [Stupid Houston Chronicle expired the article and moved it to its archives, breaking a number of links throughout the web. Here's a short recap of the article.]
* Stengle v. Office of Dispute Resolution, 2009 WL 1138119 (M.D. Pa. April 27, 2009). The contract of an independent contractor government "hearing officer" was non-renewed because she blogged on the topics of her hearings, raising questions about her impartiality. As the court says in dismissing the resulting lawsuit from the hearing officer:
To reiterate, this Court fully recognizes the cherished right of free speech, as well as the commendable goals of the RA. But these cannot wash away the bona fide concerns that arise when a judicial officer elects to disseminate her opinions in cyberspace with little or no restraint. Because of her position, Plaintiff's attempts to qualify her stances as solely her own were entirely ineffectual. With particular jobs come certain precise responsibilities. In Plaintiff's case, one of these included avoiding even the appearance of bias via extra-judicial comments. Plaintiff's deep concerns about the special education issues and the resulting creation of her blog ultimately caused her to face a dilemma that she alone created. The choices she freely made thereafter led to her non-renewal, and as aforestated we do not find any of the Defendants' conduct actionable under the circumstances.
This case reminded me some of Richerson v. Beckon from last year.
* JuicyCampus redux: People's Dirt. Let the angst over anonymous online forums begin anew.
* Doe v. Ciolli, 2009 WL 1204361 (D. Conn. April 30, 2009). In the AutoAdmit lawsuit, the court rejected Matthew Ryan's (aka ":D") motion to dismiss for lack of jurisdiction.
* Facebook v. Power Ventures, Inc., 2009 WL 1299698 (N.D. Cal. May 11, 2009). Largely following the troublesome Ticketmaster v. RMG case, Power Ventures' motion to dismiss Facebook's copyright and DMCA claims was denied. (Other claims survived too). Comments from Jeff Neuburger and Tom O'Toole.
Miscellaneous
* Colleen Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents, North Carolina Law Review, Vol. 87, 2009
* Mazur v. eBay Inc., 2009 WL 1203937 (N.D. Cal. May 5, 2009) Class certification denied. My blog post on this case’s more troubling ruling about 47 USC 230.
* Riggs v. MySpace, Inc., 2009 WL 1203365 (W.D. Pa. May 1, 2009). Venue selection clause in MySpace user agreement upheld.
* Salter v. State, 2009 WL 1409484 (Ind. App. Ct. May 20, 2009). Saving pornographic photos of a minor to a CD does not constitute the "creation" of child porn, even though a new "copy" has been created.
* State v. Bell, 2009 WL 1395857 (Ohio App. Ct. May 18, 2009). MySpace chat sessions aren't MySpace "business records" for hearsay purposes.
* Forbes: the Hidden Costs of Privacy. This article has been written, and written again, many times in the last decade; yet the regulatory dynamics have not improved.
Posted by Eric at 10:35 AM | Content Regulation , Copyright , Derivative Liability , Patents , Privacy/Security , Publicity/Privacy Rights | TrackBack
June 08, 2009
May 2009 Quick Links Part 1
By Eric Goldman
Just a reminder that I'm posting some quick links exclusively to my Twitter account.
Trademarks
* Texas International Property Associates v. Hoerbiger Holding AG, 2009 U.S. Dist. LEXIS 40409 (N.D. Tex. May 12, 2009). Domainer loses ACPA claim over typosquatted domain name. The PPC advertising constituted bad faith intent to profit. Ryan Gile recaps the action.
* GunBroker.com LLC v. Heckler & Koch Inc., No. 09-cv-00051 (M.D. Ga. complaint filed May 14, 2009). Interesting lawsuit by an online auction site for guns seeking a declaratory relief action against a trademark owner who deployed an enforcement agency, Continental Enterprises, to send a driftnet takedown letter that apparently targeted used gun resales or compatible goods. Ryan Gile has more.
* Miranda v. Guerroro, 2009 WL 1381250 (S.D. Fla. May 14, 2009). Miranda is “Paola Morena,” a Latin singer. Her former manager convinced her to do some nude photo shoots in an effort to get a Playboy gig. The Playboy gig didn't materialize, and the manager stopped representing Miranda/Morena. After Morena's career took off, the manager then allegedly threatened to publicly post the photos unless she paid him $70k. Morena rebuffed the request, so the manager allegedly followed through with his threats by launching a website paolamorena.com [I got a nasty Google malware warning when I tried to visit the site], calling it her “official” site and posting some of the photos. The court enjoined the manager under trademark law. I'm a little confused how Morena had protectable trademark rights in her name. Did she make any use in commerce in the United States? Did her name achieve secondary meaning? This could be another case where trademark law is being stretched to stop bad behavior.
* Eric Menhart, the self-purported owner of a trademark in the term Cyberlaw, has gotten his very own personal gripe site.
Advertising and Marketing
* How much can Behavioral Targeting Help Online Advertising? HT Greg Linden
* Yingling v. eBay, 5:2009cv01733 (N.D. Cal. complaint filed April 21, 2009). A class action lawsuit alleging that eBay Motors overcharged merchants.
* IAB has issued its Click Measurement Guidelines designed to answer the Q “What is a Click?” See if their 28 page report actually answers the Q.
* A confusingly written LA Times article reports that 4 South Korean dissident bloggers are being criminally prosecuted for artificially inflating impression counts in order to game rankings of most popular pages.
* Perennially funny: unfortunate product names.
Copyright
* Solicitor General recommends against granting cert in Cartoon Network v. CSC.
* AV v. iParadigms, April 16, 2009. The Fourth Circuit says that the Turnitin system is fair use. My initial blog post on the district court ruling.
Security
* News.com: Interview with FBI cybercrime agent working undercover.
* Oddee: problematic CAPTCHAs. Funny.
* Everyone wants to talk about whether Google is a monopolist
- In early May, I heard Susan Athey, Microsoft's Chief Economist, give a lunchtime attack speech on Google at a George Mason event
- Google is circulating a document explaining why it's good for competition
- Google is blanketing DC with lobbyists too.
- And Google says it's actually small potatoes.
- Wired: Will Wolfram Alpha forestall antitrust inquiry into Google? As I've argued before, we continue to see new entrants into the search business all the time—it’s just too big a market to ignore.
- NYT weighs in too. And the Washington Post discusses how Microsoft and others are complaining about how many Google folks are going into the Obama administration.
* Danny Sullivan: State Of Search: Google Will Stay Strong Despite Bing & Yahoo
* Wired: Secret of Googlenomics: Data-Fueled Recipe Brews Profitability
Posted by Eric at 04:03 PM | Copyright , Derivative Liability , E-Commerce , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Trademark | TrackBack
June 01, 2009
Doe v. MySpace--Same Case Name, Different Plaintiff, Same Result
By Eric Goldman
Doe IX v. MySpace, Inc., 2009 WL 1457170 (E.D. Tex. May 22, 2009). The Justia page.
This is yet another lawsuit involving an underage sexual assault where MySpace mediated some communications between abuser and victim. The flagship decision involving this fact pattern is Doe v. MySpace, a Fifth Circuit case granting an unambiguous win to MySpace per 47 USC 230. We're up to Doe IX v. MySpace, but the results are no different; and this case gets quickly tossed per 230 as well.
Knowing it had to overcome the 230 immunization, Doe IX tried two arguments. First, the plaintiff argues that MySpace had a duty to police its premises. However, this exact argument was addressed and soundly rejected by the Fifth Circuit, and it's easily dismissed.
Second, the plaintiff argued a Roommates.com-style attack, saying that MySpace was an information content provider because it allowed users to build a structured profile (and even converted user-supplied birthdays to corresponding zodiac symbols) and allowed other users to browse and search these profiles by defined attributes. The court rejects these arguments as well, construing Roommates.com as applicable only when the service provider mandates the completion of the profiles. MySpace made users' completion of the profiles voluntarily, thus (according to the court) rendering Roommates.com inapplicable.
As Tom O'Toole notes, this is yet another case where Roommates.com was cited in favor of the defendant. I think the citation count is even more stacked for the defendant than he indicates, though--I am aware of at least seven cases doing so, compared to only one case where Roommate.com was cited for the plaintiff. My census:
Roommates.com Cited for Defense: GW Equity v. Xcentric, Best Western v. Furber, Goddard v. Google, Joyner v. Lazzareschi, Atlantic Records v. Project Playlist, Barnes v. Yahoo (note: although the case was a partial loss for the defendant, the Roommates.com discussion came in the defense-favorable part) and this opinion
Roommates.com Cited for Plaintiff: NPS v. StubHub
Irrespective of the exact count, I fully agree with Tom's conclusion: "it's fair to say that while Roommates.com was a loss for one particular online publisher, it is causing very few problems for the rest of the Web."
Posted by Eric at 11:11 AM | Derivative Liability | TrackBack
May 28, 2009
Contributory Cybersquatting and the Impending Demise of Domain Name Proxy Services?--Solid Host v. NameCheap
By Eric Goldman
Solid Host, NL v. NameCheap, Inc., 2:08-cv-05414-MMM-E (C.D. Cal. May 19, 2009)
Facts
This case involves an alleged domain name theft. Solid Host is a web host and initial owner of the domain name solidhost.com, which it registered through eNom in 2004. Solid Host claims that in 2008, a security breach at eNom allowed an unknown interloper (Doe) to steal the domain name and move the registration to NameCheap. Doe also acquired NameCheap's "WhoisGuard" service, a domain name proxy service that masked Doe's contact information in the Whois database. Solid Host contacted Doe and sought the domain name; Doe asked for $12,000, and Solid Host took a pass. Instead, Solid Host demanded that NameCheap hand back the domain name and identify Doe, but Doe claimed that he had bought the domain name legitimately. NameCheap, apparently feeling like the cheese in a sandwich, demurred to Solid Host's requests. Solid Host then got a TRO ordering NameCheap to transfer the name and reveal Doe's identity, both of which occurred. For unclear reasons, Solid Host hasn't amended the complaint to name the Doe, but it is proceeding against NameCheap on various claims, including an Anti-Cybersquatting Consumer Protection Act (ACPA) claim.
The Opinion
Who is the Registrant?
My understanding of domain name proxy services is that the service acts as the legal registrant, thus supplying its contact information, but it registers the domain name for the benefit of its customer, making the customer the beneficial registrant. An analogy: a bank may take legal title of a property as part of securing a loan on the property, but the borrower retains beneficial title to the property.
So, for purposes of the ACPA, is the proxy service the “registrant” of the domain name? ICANN’s agreement with registrars seemingly contemplates this characterization in Section 3.7.7.3 of its Registrar Agreement, which says “A Registered Name Holder licensing use of a Registered Name according to this provision shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly discloses the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm.” However, it’s not clear to me that a proxy service “licenses” the domain name, especially if you accept my lender-borrower analogy above. Alternatively, if the proxy service is the “agent” of the customer, the licensing analogy also breaks down.
Whether the proxy service is the registrant matters a great deal to the legal outcome, and unfortunately, the court’s analysis of this important question was cursory, muddled, and possibly internally inconsistent.
In this case, the court’s inquiry is made more difficult by the fact that NameCheap acted as both the registrar and the proxy service provider. As a registrar, an ACPA claim against NameCheap should be squarely preempted by the domain name registry/registrar safe harbor enacted as part of the ACPA (15 U.S.C. §1114(2)(D)). For example, 1114(2)(D)(iii) says:
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
(This provision only moots damages, not an injunction, but since Solid Host has the domain name back in its possession, damages seem like the only remaining issue).
The court concludes that NameCheap is not eligible for the domain name registrar safe harbor because NameCheap is the domain name registrant. It says, "NameCheap is, by virtue of the anonymity service it provides, the registrant of a domain name that allegedly infringes Sold [sic] Host’s trademark." Thus, NameCheap is ineligible for the registrar safe harbor, which applies only when the registrar acts as a registrar.
But, having rejected the domain name registrar safe harbor because NameCheap was the domain name registrant, the court then inconsistently says that NameCheap is not the registrant for purposes of the prima facie ACPA claim. Instead, for ACPA purposes the court treats Doe as the registrant, leaving NameCheap exposed to a possible secondary ACPA liability claim. (The court acknowledges that NameCheap would defeat a direct ACPA claim because NameCheap did not have any bad faith intent to profit from the domain name. Offering the proxy service wasn't enough to qualify as a bad faith intent to profit).
Wait a minute—how can NameCheap simultaneously be both the registrant (no safe harbor) but not the registrant (thus, subjected to a secondary claim)? The court does not acknowledge or explain this apparent inconsistency.
Contributory Cybersquatting
Courts have rarely discussed a contributory ACPA claim. The only one cited by the court was a 2001 case (the Ford Motors vs. Greatdomains.com case) and I can’t think of any others. Perhaps this isn’t surprising because (1) as the Greatdomains.com case indicated, a contributory ACPA claim is available "in only exceptional circumstances," and (2) registrars are the most likely targets of a contributory ACPA claim, and the domain name registrar safe harbor effectively eliminates their contributory ACPA liability.
Adopting the analysis in the Greatdomains.com case, this court equates contributory ACPA liability with the Ninth Circuit’s 1999 Lockheed standard for online contributory trademark infringement (as opposed to ACPA liability), which requires that "a plaintiff must prove that the defendant had knowledge and ‘[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark.'"
So how did NameCheap have the requisite control over Doe's instrumentalities? Good question. The court tosses out this gem: NameCheap was "the “cyber-landlord” of the internet real estate stolen by Doe." WHAT??? The court continues:
NameCheap’s anonymity service was central to Doe’s cybersquatting scheme. If NameCheap had returned the domain name to Solid Host, Doe’s illegal activity would have ceased.
The second sentence is true with respect to NameCheap, but it is also true of every registrar for every domain name they register--and we know from the 1999 Lockheed case that registrars lack control over the instrumentalities of their registrants. So the proxy service seems to make a legal difference, but how does the proxy service evidence NameCheap's greater control over the registrant's instrumentalities? I think something is amiss here.
To complete the prima facie contributory ACPA claim, in addition to control, Solid Host must show that NameCheap has the requisite knowledge of Doe's ACPA violation. The court sets a high scienter bar--mere notice from an aggrieved party isn't enough--but the court conclusorily says that the complaint alleged enough knowledge to survive the motion to dismiss.
Why This is a Troubling Ruling
As I trust is clear, I think the court's analysis is questionable at best. I’m also troubled about the normative implications. Most obviously, this case could portend the demise of domain name proxy services. Read literally, every proxy service is exposed to potential contributory ACPA liability for every domain name it services. I can’t imagine proxy service providers will be excited about that liability exposure, and some may choose to exit the business.
If proxy services evaporate, domain name registrants will have a tougher time maintaining their privacy. This could affect at least two groups. First, businesses seeking to register domain names for unlaunched new brands often want to procure the new brand's domain names without publicly announcing their intentions through the Whois database. (Of course, some businesses register such domain name through agents or shell companies, but at a much greater expense than a proxy service). Second, gripers, whistleblowers, critics and others may want to use proxy services to make it harder for their targets to unmask their identities. This ruling jeopardizes the potential privacy options available to both groups.
I’m also troubled by this ruling’s narrow reading of the domain name registrar safe harbors. There haven’t been many cases interpreting those safe harbors, and this case might influence other courts to read them narrowly.
A Mini-Trend of Lawsuits Against Registrars
I’ve noticed a small but troubling increase in lawsuits against domain name registrars in the past few months. In addition to this case, see the Vulcan Golf v. Google lawsuit (which named some registrars as defendants), OnlineNIC cases, Philbrick v. eNom and uBid v. GoDaddy. Personally, I believe this litigation trend mirrors the expansion of new and legally untested non-registration services offered by registrars. I explored this issue with Elliot Noss of Tucows in the most recent installment of TWiL (worth listening to, IMO). Discussing the uBid lawsuit, Elliott explained how registrars monetize dropped domain names before being returned to the available pool of unregistered domain names. The delay is putatively for the benefit of customers who mistakenly let a registration lapse; but this also has the happy (?) by-product of letting registrars create new ad inventory that they are monetizing.
In the past, a lot of the legal attention regarding domain names has focused on trademark owners vs. registrants. From my perspective, those lawsuits are becoming passé. The real litigation growth industry appears to be trademark owner vs. registrar lawsuits over new registrar service offerings that trademark owners don't like. Rulings like this one, with a broad reading of contributory ACPA liability and a narrow reading of the domain name registrar safe harbor, raise the specter that registrars may find more legal trouble than they anticipated.
UPDATE: Commentary from Domain Name News
UPDATE 2: A call for registrars to exit the domain name proxy business.
Posted by Eric at 03:27 PM | Derivative Liability , Domain Names , Privacy/Security , Trademark | TrackBack
May 27, 2009
Barnes Also Seeks Rehearing in Barnes v. Yahoo
By Eric Goldman
Cecilia Barnes has also filed a brief requesting a rehearing in Barnes v. Yahoo. The brief says it's seeking rehearing on a single issue, although it doesn't actually summarize that issue in a single sentence. However, the brief at the end says it wants the court to "conclude that once Yahoo! had voluntarily assumed a publisher’s responsibility to remove the postings, the responsibility is enforceable by any lawfully applicable remedy." The brief describes that Yahoo's voluntary promise to take down the content should give rise to tort liability in addition to the promissory estoppel claim.
The brief is short. It's also remarkable as the first appellate brief I can recall seeing where the "discussion" section has zero citations.
The case library:
* Barnes' petition for rehearing
* Public Citizen et al amicus brief in support of rehearing
* Yahoo's petition for rehearing
* Ninth Circuit opinion and my blog post on it
* Ninth Circuit oral arguments
* District court opinion and my blog post on it
* Barnes' response to Yahoo's motion to dismiss
* Yahoo's brief in support of its motion to dismiss
* Yahoo's motion to dismiss
* Yahoo's notice of removal to federal court (which contains Barnes' initial complaint)
The Justia page has even more materials from the district court proceedings.
Posted by Eric at 07:42 PM | Derivative Liability | TrackBack
May 26, 2009
Speth on Barnes v. Yahoo and 230 as an Affirmative Defense
By Eric Goldman
I've already blogged a couple times on the Ninth Circuit's Barnes v. Yahoo ruling (commentary post; post on rehearing request). In response, I got an email from Maria Crimi Speth of Jaburg & Wilk in Phoenix, AZ. Maria has appeared in this blog before and is well-known as outside counsel to the Rip-off Report, which has appeared in this blog more times than I can remember. With her permission, I'm sharing Maria's email:
_______
As the attorney who may hold the record for 12(b)(6) motions on the CDA, I would like to address that portion of the opinion. Your analysis discusses the procedural change inherent in finding that a 12(b)(6) motion is not the appropriate vehicle. I agree completely, but the harm goes further.
The Ninth Circuit has now unequivocally referred to 230 as an affirmative defense. I believe that is wrong. I have been taken the position in my pleadings that it is not an affirmative defense; it addresses the prima facie case. I avoid referring to 230 in my motions as an affirmative defense and I plead 230 in my answers as a failure to state a claim rather than an affirmative defense.
The reason: If I ever have to take one of these to trial, the plaintiff should have the burden of proving that my client is an information content provider of the content at issue. I should not have to prove the negative. Especially in light of the author's right to anonymous free speech, it can be very difficult to prove that your client did not write something when the real author is anonymous.
The reasoning: 230 provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provider by another information content provider." The plaintiff must plead and prove the elements of its claim. In defamation, for example, the plaintiff generally must prove the following elements: a defamatory statement; published to third parties; and which the speaker or publisher knew or should have known was false. Thus, the Plaintiff must prove that my client was the speaker or publisher of the false statement. 230 further defines that element of the claim and provides that the Plaintiff can only prove that element if they can show that my client is the actual information content provider. "A defense which demonstrates that plaintiff has not met its burden of proof is not an affirmative defense." See Flav-O-Rich v. Rawson Food Service, Inc. (In re Rawson Food Service, Inc.), 846 F.2d 1343, 1349 (11th Cir.1988) (recognizing that a defense which points out a defect in the plaintiff's prima facie case is not an affirmative defense); Zivkovic v. Southern California Edison Co., 302 F.3d 1080, 1088 (9th Cir. 2002).
_______
This is an excellent point, and one that I had not focused on previously. I know I've seen other courts refer to 230 as an affirmative defense, but I can't recall any meaningful judicial explication of that characterization. In this case, I'm sure the panel tossed off the characterization breezily, but this is another gratuitous aspect of the opinion that the panel needs to defend or, better yet, correct.
Posted by Eric at 02:16 PM | Derivative Liability | TrackBack
May 22, 2009
Yahoo and Amici Seek Rehearing in Barnes v. Yahoo
By Eric Goldman
Last week I ruminated at length (3,200 words!) about the Ninth Circuit's Barnes v. Yahoo opinion. As you may recall, I thought the court's actual holding--230 preempted a negligence claim but did not preempt a promissory estoppel claim--was mostly correct, although I worry about the normative implications of a promissory estoppel bypass to the 230 immunity. However, I complained loudly about the sloppy drafting and loose reasoning used by the opinion to reach the right result, and I speculated this would be a good case for rehearing by the panel or en banc.
Fortunately, Yahoo has requested such a rehearing. Plus, a coalition of public interest groups led by Public Citizen (and including CDT, CMLP and EFF) have filed an amicus brief in support of Yahoo's request (see Paul Levy's post). Both briefs focus on the two most egregious mistakes by the court:
* the sloppy dicta that 230 does not support a 12(b)(6) motion to dismiss, and
* the even sloppier misstatement of the 230 prima facie defense to say that it only applied to state law claims, not federal claims.
Let's hope the judges grant the rehearing and, at minimum, clean up those two points. Kudos to the Yahoo and amici teams for pushing these issues.
The case library:
* Public Citizen et al amicus brief in support of rehearing
* Yahoo petition for rehearing
* Ninth Circuit opinion and my blog post on it
* Ninth Circuit oral arguments
* District court opinion and my blog post on it
* Barnes' response to Yahoo's motion to dismiss
* Yahoo's brief in support of its motion to dismiss
* Yahoo's motion to dismiss
* Yahoo's notice of removal to federal court (which contains Barnes' initial complaint)
The Justia page has even more materials from the district court proceedings.
Posted by Eric at 03:29 PM | Derivative Liability | TrackBack
May 18, 2009
Takedown Notice Sent to Parent Doesn't Affect Subsidiary's 512(c) Defense--Perfect 10 v. Amazon
By Eric Goldman
Perfect 10, Inc. v. Amazon.com, Inc., 2009 WL 1334364 (C.D. Cal. May 12, 2009)
This long-running case is working its way through the district court after the Ninth Circuit's 2007 remand. See my previous blog posts about the May 2007, December 2007 and post-remand July 2008 rulings.
Last week's ruling involves A9, Amazon's search subsidiary, that Perfect 10 sued for republishing allegedly infringing Google syndicated search results. Starting in 2004, Perfect 10 sent at least 8 takedown demands to A9's parent, Amazon, with the apparent intent that the takedowns apply to both Amazon and A9. However, Perfect 10 never actually sent a proper takedown notice to A9 until November 2008--well after its complaint was filed.
Judge Matz gives Perfect 10 no benefit of the doubt. Instead, the judge grants summary judgment to A9 based on the 512(c) safe harbor because Perfect 10 could not show that A9 knew of the copyright infringement (thus, Perfect 10's contributory copyright infringement claim failed; the other copyright claims had already been dismissed). The judge takes a formalistic approach (appropriately so, IMO) to 512(c)(3) takedown notices, concluding that:
1) The 512(c)(3) notices sent to the parent Amazon did not confer knowledge to the subsidiary A9.
2) The November 2008 notice sent to A9 are too late to support the allegations in the already filed complaint. Presumably, the November 2008 notice could now support a new complaint, but only if A9 hasn't expeditiously responded to it.
3) Amazon was not A9's agent for notice. This is complicated because Amazon's site disclosures could have been clearer about the Amazon-A9 relationship. However, A9 had its own 512 designation of an agent for service of process on file with the Copyright Office, and a search of the Copyright Office website would quickly reveal this. This is a good practice pointer for copyright owners: you need to research the 512 filings of every website you are targeting with 512(c)(3) notices. The search is free and super-simple, and a failure to communicate with the website's designated agent can kill a copyright claim when the website invokes the 512(c) defense. This is also a good reminder to websites seeking a 512(c) defense: if you plan to rely on the formalities, make sure your 512 designations are up-to-date and error-free!
4) Even if Amazon hosted the A9 website, it had no responsibility to communicate Perfect 10's 512(c)(3) notices to A9.
5) A9's designation of a web form for complaints, rather than the statutorily required email address, was an immaterial deviation from the statute.
I'm always amazed when copyright owners flub the fairly simple requirements of 512(c)(3). The statutory requirements are so easy to comply with! These omissions are especially perplexing in Perfect 10's case given that they've gone on a litigation frenzy and spent hundreds of thousands of dollars (probably millions) relying on mishandled facts. A little more care and investment upfront could have prevented an avoidable loss like this.
UPDATE: Plagiarism Today explores the meaning of this ruling.
Posted by Eric at 11:21 AM | Copyright , Derivative Liability , Search Engines | TrackBack
May 13, 2009
Ninth Circuit Mucks Up 47 USC 230 Jurisprudence....AGAIN!?--Barnes v. Yahoo
By Eric Goldman
Barnes v. Yahoo!, Inc., 2009 WL 1232367 (9th Cir. May 7, 2009). My 2005 blog post on the lower court ruling.
Reading Barnes v. Yahoo, I had an overpowering sense of deja vu. Almost precisely 2 years ago, a 3 judge panel wreaked havoc on 47 USC 230 jurisprudence in the initial Ninth Circuit Fair Housing Council v. Roommates.com ruling via a set of terribly drafted opinions that sent shock waves through the Internet industry. That mess was so bad that the Ninth Circuit needed to take the case en banc to clean up the mess. The Roommates.com en banc ruling didn't change the substantive result--Roommates.com still lost--but the en banc majority opinion was much cleaner and had less pernicious superfluous language. As a result, the lower courts have so far cabined its effects on 230’s strong immunization; out of a half-dozen cases citing the opinion, only the StubHub case has cited it in favor of the plaintiff.
In light of the Ninth Circuit’s troubled history with 230, it seemed reasonable to assume that Ninth Circuit judges would draft 47 USC 230 opinions with extra care and precision. No such luck. Instead, this opinion in Barnes v. Yahoo is filled with gratuitous and dangerous dicta, sloppy reasoning and sloppy language--just like Kozinski's first opinion in the Roommates.com case. Reading it, I thought, "oh no, not again." What is it about 47 USC 230 cases that causes otherwise talented Ninth Circuit judges to lose it?
To be clear (and I know some of you will give me grief for saying this), I think the court's two main substantive conclusions are correct. Stripping away all of the opinion's unfortunate excess, the court says:
1) 47 USC 230 preempts any claims under negligence law for failing to remove third party tortious content, even if the website promises to do so. The court calls this "negligent undertaking;" I might have called it "negligent takedown."
2) 47 USC 230 does not preempt a claim for promissory estoppel that a third party might have against a website that promises to take down third party tortious content and fails to do so. To me, this is just another way of saying that websites can be liable for the words they choose (1st party content) even if those words relate to user content (third party content).
Unfortunately, Judge O'Scannlain, seemingly intoxicated by a 47 USC 230 case, goes so much further in the opinion than these two conclusions, and without any reason to do so except apparently a desire to hork 47 USC 230 jurisprudence. Among the court's missteps along the way include:
3) establishing as Ninth Circuit law that 47 USC 230 cannot support a 12(b)(6) motion to dismiss--even though neither party asked the court to opine on that procedural issue and, I believe, did not adequately brief or argue that point for the court
4) saying, for absolutely no reason whatsoever, that 47 USC 230 only preempts state law claims, not federal claims. WTF? Everyone knows this is wrong wrong WRONG, but the language is right there in black-and-white, begging for plaintiffs to cut-and-paste it into their briefs.
Before I outline some implications of this ruling, let me drill down a little on each of these 4 points.
Facts
This case is one of many involving fake dating profiles (other cases in this category include Carafano, Landry-Bell, Friendfinder, Anthony v. Yahoo--I’m sure I’m forgetting some). The situation typically goes as follows: sexual partners break up, aggrieved partner A sets up a fake dating profile saying that target partner B is looking for sex, and B then is harangued by strangers seeking sex. I'm amazed at how often this story occurs (or a variation, like a fake Craigslist ad designed to target an individual for unwanted inquiries) but it's hardly new; the Zeran prank didn’t involve sex but did involve publication of false information online to deliberately make a target’s life miserable. I'm also amazed at how often people fall for these fake profiles and treat them as legitimate even though the content is not authenticated. I believe a number of laws potentially criminalize the posting of fake profiles, so in theory there should be ample recourse to punish the miscreants who cause such mischief. However, enforcement may be spotty, especially when the prank is effectively anonymous.
The Ninth Circuit’s opinion doesn't really revolve around the fake dating profile. Instead, the essential facts are that Barnes, the target of the prank, contacted Yahoo to get the fake dating profile removed but instead got the brushoff. The press learned of Barnes' plight and scheduled a broadcast on the incident. Yahoo's PR flack then told Barnes that she would fix Barnes' problem, presumably so that the broadcasted story would be more flattering to Yahoo. However, nothing happened to the fake profile for 2 more months, at which point Barnes sued Yahoo. Only then did Yahoo finally remove the profile, but the lawsuit failed in court with a quick 230 dismissal.
Negligent Undertaking
Barnes’ "negligent undertaking" claim is, in all material respects, identical to the legal issues in the 1997 Fourth Circuit Zeran case. In that case, the target of the fake content (offensive ads) contacted AOL, was told AOL would remove them, and ultimately sued AOL for negligence (not defamation) for failing to remove the content. A court less determined to muck up 47 USC 230 jurisprudence could have simply cited Zeran without lengthy exposition.
This court ultimately reaches the same conclusion as Zeran, and along the way the panel addresses and explicitly rejects some anti-230 arguments that still appear, including:
* 230 only applies to defamation claims. The court rejects the argument, saying "what matters is not the name of the cause of action—defamation versus negligence versus intentional infliction of emotional distress—what matters is whether the cause of action inherently requires the court to treat the defendant as the “publisher or speaker” of content provided by another."
* 230 no longer applies after the website has received notice of a problem. The court says that 230 applies to both affirmative decisions to publish as well as affirmative or inadvertent decisions not to take down content. As the court says, "removing content is something publishers do, and to impose liability on the basis of such conduct necessarily involves treating the liable party as a publisher of the content it failed to remove."
* 47 USC 230 protects only content publishers, not distributors. The court does a nice job destroying this argument, but I think the strongest argument it makes is that the statute covers lots of causes of action, and it wouldn't make sense to import a defamation-specific distinction between “publishers” and “distributors” into a statute of general applicability.
* the statute is inconsistent with its legislative history. The court also does a nice job with this argument, concluding that we can safely ignore any conflicting legislative history of the statute.
* 230 encourages websites not to undertake any site policing, and Congress could not have meant that. The court says that (c)(2) was designed to protect active policers, which means that it's rational for Congress to say that (c)(1) protects the do-nothing folks.
Promissory Estoppel
Having rejected that Yahoo had any duty under default tort law to remediate the third party tortious content, the court then considered if Yahoo nevertheless voluntarily created the duty. For this, the court charitably construes the plaintiff's garbled pleadings as an allegation of promissory estoppel. The court says that the complaint properly alleged promissory estoppel when Yahoo's PR flack promised to intervene as a way of suppressing a forthcoming story.
Although the court didn't address the existing precedent on this point, this case appears to conflict with the 2001 Schneider v. Amazon.com ruling, which said that 230 preempted a claim for breach of contract based on a promise to take down content. I assume that ruling is now shaky precedent. [last sentence edited to correct error]
This conclusion indirectly addresses the festering issue about how 230 deals with marketing representations made by a website that are rendered untrue by third party content or actions, an issue I first raised with the Mazur case a year ago. Since then, the issue has been coming up regularly. Most noteworthy is the 6th Circuit's December ruling in Doe v. SexSearch, which waived off the lower court’s ruling that a website could be protected by 230 for its own marketing representations. This case seems even more appropriate to waive off 230; here, Yahoo's PR flack's promise to Barnes related to third party content, but no third party could render Yahoo's promise untrue. In a regulatory regime where we try to distinguish between first party and third party content, it seems like Yahoo's promise should be appropriately characterized as first party content.
While superficially the promissory estoppel ruling looks like a potentially big hole in 230, I don't think it will materially change 230 jurisprudence for at least two reasons. First, promissory estoppel claims are notoriously hard to win. You may recall Prof. Grant Gilmore's 1970s assessment that promissory estoppel was the "Death of Contracts"
Second, websites can easily manage their potential exposure to this claim by picking their words carefully. As the court says, "a general monitoring policy, or even an attempt to help a particular person, on the part of an interactive computer service such as Yahoo does not suffice for contract liability. This makes it easy for Yahoo to avoid liability: it need only disclaim any intention to be bound."
As a result, I don’t expect this conclusion to rip open 230 jurisprudence. Nevertheless, this is not a good ruling for the 230 immunization. Going forward, I expect that plaintiffs will *always* raise promissory estoppel claims when they fear their main claim is preempted by 230, and the promissory estoppel allegations are not easily resolved at the motion to dismiss/judgment on the pleadings stage. As a result, plaintiffs will be able to get further into the litigation process (to the summary judgment stage or even to trial) and substantially raise the costs of a 230 defense.
47 USC 230 as an Affirmative Defense
(For more on this point, see Paul Levy)
Although the litigants and the lower court did not address the issue, the panel on its own initiative (with a single cite to the 2003 Doe v. GTE case from the 7th Circuit) characterized 47 USC 230 as an affirmative defense that cannot support a 12(b)(6) motion to dismiss. This issue has been discussed in several cases before, and many courts have had no problem supporting a 12(b)(6) motion to dismiss based on 47 USC 230. The court did not discuss any of this precedent or acknowledge that it was rejecting numerous cases from Ninth Circuit-governed courts. I'd also have to research the issue more closely, but I suspect this implicitly or explicitly contravenes the holding of other federal appellate courts. It would have been nice if this panel had acknowledged that this was a change from current practice and defended its conclusion accordingly, rather than simply treating this as a matter the appellate panel could resolve sua sponte. To be clear then, this panel now established Ninth Circuit law--changeable only by an en banc panel or the Supreme Court--without adequate briefing by the parties. That's not cool.
I am not a proceduralist, but my understanding is that defendants in the Ninth Circuit will now have to file an answer to the complaint, at which point they can simultaneously file a 12(c) motion for judgment on the pleadings. Despite the extra paperwork, if the judge acts promptly on the judgment on the pleadings, then the net result will not be materially different (in cost or time) from the current procedure of filing a 12(b)(6).
However, discovery can commence on the filing of the answer. As a result, while plaintiffs have been unable to launch discovery attacks against 230-immunized defendants under the current rule, I expect plaintiffs will use this new opportunity to significantly jack up the defense costs. Indeed, a slow or cautious judge might allow discovery to proceed pretty far before the judge rules on the 12(c) motion. As a result, this procedural change has potentially significant economic consequences by creating the opportunity for expensive and abusive discovery.
Immunization of Federal Claims
The court recaps the prima facie 230 defense as follows:
subsection (c)(1) only protects from liability (1) a provider or user of an interactive computer service (2) whom a plaintiff seeks to treat, under a state law cause of action,[FN4] as a publisher or speaker (3) of information provided by another information content provider. [emphasis added]
On the surface, this looks fine (as it should, because it largely tracks the statutory language), but where did the bolded language come from? Immediately before this, the court discusses 230(e)(3), which says that the statute preempts inconsistent state or local law. So is the court saying that 230 ONLY preempts state law and not any federal law? The blockquoted text is pretty darn clear.
FN4 only clouds matters further: "Section 230(e) also refers to the Amendment’s effect on several federal laws, but those laws are not relevant to this case." OK, so is the court saying that the limiting language in the blockquoted text was OK only because this case didn't involve federal claims, or is the court saying that it actually intends to preclude federal claims from 230 coverage unless Congress expressly instructed otherwise?
There is ZERO question in my mind that 230 preempts federal claims except for those expressly protected in 230(e). The statute's architecture is entirely clear, and the caselaw has been crystal clear about this as well. After all, if federal claims weren't preempted by 230, the Ninth Circuit could have easily and quickly disposed of the Roommates.com case on that ground without its other angst. So why, then, did the panel recap the prima facie defense with an express and easily quoted but clearly imprecise limitation in it? In my opinion, this is just sloppy, irresponsible, gratuitous dicta. If the Ninth Circuit doesn't correct this error, I'm confident plaintiffs will force them to do so soon enough.
(Making this error especially irresponsible is that the Ninth Circuit has already struggled with distinguishing 230's application to federal and state claims, adopting in the ccBill case that all state IP claims were preempted by 230--a ruling that two district courts have already rejected, and I expect none will follow).
What's Next?
I see two main alternative futures. The first is that there could be further proceedings in this case, either a rehearing by the same panel or a rehearing en banc. In theory, this case could be appealed to the Supreme Court, but I can't imagine the defendants would seek cert before trying another round at the Ninth Circuit. Frankly, if I were Yahoo, I would rather try my luck on the promissory estoppel claim in the district court (or settle up with the plaintiff) than try my luck with the Supreme Court. Personally, I think this is an outstanding candidate for rehearing, especially on the affirmative defense issue where the panel inappropriately freelanced, and in an ideal world the panel or the 9th Circuit would issue a new opinion that is better than this one. This is exactly what happened in the Roommates.com case, and part of why I'm having a deja vu feeling.
The other main alternative is that the opinion could stand as written. Irrespective of what happens on remand, in this alternative we will see plaintiffs routinely allege promissory estoppel as part of virtually every litigation where 47 USC 230 might be a defense. We'll also see plaintiffs bang on the other sloppy interstices of the opinion, looking for new loopholes in the immunization. Finally, I expect we'll see more plaintiffs seek out the 9th Circuit as the venue of choice for claims that involve 47 USC 230--not only can the plaintiffs try to exploit the holes in the Roommates.com and Barnes opinions, but it's also overwhelmingly clear that a number of Ninth Circuit judges are hankering for an opportunity to take their whack at 47 USC 230.
Ironically, to the extent websites change their behavior in response to the opinion, the primary effect will be counterintuitive and perhaps counterproductive. This opinion might actually *reduce* the flow of information to people who complain to a website about third party content because the website could be liable for what it says in any emails or other communications in response to the complaints. In many cases, the website's non-responses should be so content-free that they are useless. As a result, I think people complaining about third party tortious content are going to find it even more frustrating dealing with websites when trying to get those websites to take down the content.
Finally, I expect this opinion to force the issue that has been percolating since the Mazur case: can a website be liable for its marketing representations even if those marketing representation are rendered untrue by third party content or actions? I think this panel indirectly answers the question with a loud YES. Thus, I expect more plaintiffs will use website marketing copy or other site disclosures to allege a breach of contract or one of the many related claims (false advertising, promissory estoppel, unfair competition, etc.) and thereby bypass 47 USC 230 altogether. Website operators, this is your cue to clean up your site disclosures or other marketing copy PRONTO.
A Final Thought: What is Going on With 230 Jurisprudence in the Past 6 Months?
47 USC 230 has weathered plaintiff attacks very well in the past dozen years, but the last 6 months have opened up a number of angles for plaintiffs to explore. Consider the track record:
* Woodhull (October): soliciting and publishing a defamatory third party email wasn't covered by 230
* Doe v. SexSearch (December): as mentioned, the court stepped back from saying 230 preempted liability for marketing representations
* StubHub (January): interference with business claim wasn't preempted by 230
* Gourlay (March): web host who provided extra commercial services to its customer couldn't claim 230
* Project Playlist (March): 230 doesn't preempt state IP claims (this is a loss only because it contravenes the wrongly decided Ninth Circuit ccBill case, which was more defense-favorable).
* This case, saying that a promissory estoppel claim isn't preempted by 230.
I'm not sure what to make of this trend, but it's clear that we're finally finding some substantial limits in 230's reach, and that's creating new litigation opportunities for plaintiffs. For more on this, see Evan Brown.
Other Commenters
* Paul Levy
* Evan Brown
* Tom O'Toole
* Lee Gesmer
* Wendy Davis
* Jeff Neuburger
* Marc Randazza
* Howard Bashman
Posted by Eric at 08:04 PM | Derivative Liability
May 11, 2009
George Mason Talk and Paper on Economics of Reputational Information
By Eric Goldman
Last week I presented a version of my Economics of Reputational Information talk at the Third Annual Conference in the Law and Economics of Innovation series, an event co-sponsored by George Mason Law School and Microsoft. My talk slides. Apologies for the slide formatting, but I honored the organizers' request to use a standardized template. If you've seen my slides from previous presentations of this topic, these slides will look familiar, but I did change them around a bit for this audience.
In conjunction with the talk, I also posted a short draft essay giving an overview of the research project generally. This is my first time I've organized my thoughts about this project into an essay, so those of you interested in a high-level overview of the project might find this interesting. Then again, it's a rough draft, incomplete and not very decisive.
In response to the talk, I got some excellent questions from the audience, including:
Q: How do we know service providers will honor their promises in the future? A: life is uncertain, so there will always be future risk. However, my goal is to help design systems that gather the relevant information available at the decision-making time that allows the best decision about future performance.
Q: Why don't platforms have more incentives to police against fraud? A: 47 USC 230 provides some of that incentive by insulating websites for their fraud-policing efforts. With this regulatory freedom, we have seen many websites voluntarily adopt increased anti-fraud efforts. For example, consider how much more eBay does to mediate the buyer-seller transaction today than it did 10 years ago (see, e.g., this article). Indeed, we've repeatedly seen reputable websites increasingly undertake more voluntary efforts to protect their users over time.
Q: Reputational information is strewn all over the web. Why isn't there one-stop shopping for reputational information? A: One-stop shopping would be convenient. But competition among reputational systems is also useful.
Q: Why shouldn't reputational systems turn over information about anonymous posters? A: First, reputable websites already have incentives to manage content from anonymous posters to avoid garnering a reputation as a cesspool of content. Hence, JuicyCampus went out of business because it lacked credible content. Second, with respect to turning over information, websites already do in many cases, but only if they keep IP address information. However, we may not need a law requiring websites to retain IP address info. As proceedings in the AutoAdmit lawsuit showed, plaintiffs sometimes can overcome the information deficiency to unmask anonymous posters through other means.
Posted by Eric at 05:29 PM | Derivative Liability , E-Commerce | TrackBack
May 03, 2009
April 2009 Quick Links
By Eric Goldman
[Just a reminder that I am posting some “quick links” exclusively to my Twitter account, so if you want to keep up with everything, follow me at Twitter or subscribe to the RSS feed.]
Marketing/Spam
* Zango is dead (and so is adware), Ken Smith, Zango's CTO, conducts a post mortem: What Zango Got Wrong and What Zango Got Right. Mike Masnick's post-mortem.
* The FDA's instructions about pharmaceutical search marketing have led to lots of confusion. See Search Engine Land and the NYT.
* NYT: "Never Mind What It Costs. Can I Get 70% Off?"
* Tsan Abrahamson on social media and marketing law.
* Asis Internet Servs. v. Consumerbargaingiveaways. A district court diverges from Mummagraphics and says CAN-SPAM does not preempt CA's anti-spam law even if there is no common law fraud.
* Jackson v. American Plaza Corp., No. 08-8980 (S.D.N.Y. April 28, 2009), A Craiglist advertiser isn't a third party beneficiary of Craigslist's contract for purposes of stopping another advertiser from breaching the contract (in this case, spamming the forum).
Defamation
* Gardner v. Martino (9th Cir. April 24, 2009). I'm not a fan of talk radio, and the 9th Circuit apparently isn't either. The court upheld an anti-SLAPP dismissal of a defamation claim against the radio talk show host because "The Tom Martino Show is a radio talk show program that contains many of the elements that would reduce the audience’s expectation of learning an objective fact: drama, hyperbolic language, an opinionated and arrogant host, and heated controversy." Accord DiMeo v. Max. As Marc Randazza notes, rulings like this pose a challenge for those who think contextually ridiculous statements should be treated as "cyberbullying" or "cyber-harassment." Cf. the Finkel v. Facebook case involving asinine but clearly meaningless chatter on a private Facebook page.
* Some big defamation losses reported by CMLP:
- Blogger hit with $1.8M damage award.
- $12.5M defamation judgment against a gripe site.
* CMLP has a page organizing all of its 47 USC 230 material.
Intellectual Property
* Publicly republishing a private email leads to a default judgment of copyright infringement.
* Bryant v. Europadisk, Ltd., 2009 WL 1059777 (S.D.N.Y. April 15, 2009). In 2000, musicians authorized distributors to distribute their [hard copy] recordings, which the defendants ultimately ripped and allowed Amazon and Rhapsody to deliver via downloading. The resulting lawsuit turned on the interpretation of the license agreement term “internet sites.” The court says the term "is not ambiguous and does not extend to websites selling digital copies of songs. At the time the parties entered into the agreements, The Orchard sold physical copies only. As its Vice President explained by affidavit testimony, digital downloads of music did not become a “viable business” until iTunes was launched in approximately April 2004, long after Media Right and Gloryvision entered into contract."
* Octomom is seeking trademark registrations.
Miscellaneous
* GeoCities is shutting down.
* eBay will referee customer disputes.
* Wilson Sonsini's VC financing term sheet generator.
* Oddee: 10 Most Bizarre [Online] Gaming Incidents
Posted by Eric at 06:31 AM | Adware/Spyware , Content Regulation , Copyright , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Spam , Trademark , Virtual Worlds | TrackBack
April 29, 2009
Two 47 USC 230 Defense Losses--StubHub and Alvi Armani Medical
By Eric Goldman
Even though both of these cases are a little dated, they both just showed up in Westlaw in the past couple weeks. Their juxtaposition, plus the recent Woodhull case, suggests a mini-trend against 230.
NPS LLC v. StubHub, Inc., 2009 WL 995483 (Mass. Super. Ct. Jan. 26, 2009).
This case involves an interesting cat-and-mouse game between StubHub and the New England Patriots regarding resales of Patriots' season tickets. The New England Patriots have done a number of things to clamp down on ticket resales, including stating on the ticket that they are revocable licenses, printing unique bar codes on each ticket to make them easily voidable, canceling season tickets holders who impermissibly resell them, and creating a single legitimate channel for ticket resales (operated by TicketMaster). For its part, StubHub allows ticket sellers to obscure the exact location of the seats (making it difficult for the Patriots and others to identify the offending season ticketholders without a court order, which they ultimately got) and offers quasi-insurance against StubHub-purchased tickets being denied at the gates.
Tiring of this cat-and-mouse game, the Patriots sued StubHub for several claims, including interference with contract. This ruling involves StubHub's summary judgment motion to dismiss that claim, which the court denies.
Among StubHub's arguments is that it is not breaking anti-scalping laws because if anyone is breaking those laws, it is StubHub's sellers. The court rejects this argument several ways, including saying that StubHub is inducing the sellers' illegal behavior (with a conspicuous cite to Grokster). StubHub replies that it is protected by 47 USC 230 for any seller behavior. Because of StubHub's alleged inducement, the court, citing Roommates.com, says StubHub isn't protected by 230:
there is evidence in the record that StubHub materially contributed to the illegal "ticket scalping" of its sellers. In effect, the same evidence of knowing participation in illegal "ticket scalping" that is sufficient, if proven, to establish improper means is also sufficient to place StubHub outside the immunity provided by the CDA
The case also mentions that StubHub's variable commission gives them incentives to see sellers increase their prices and thus break the anti-scalping law (more on Massachusetts's antiquated anti-scalping law here). In the end, the Patriots may have successfully engineered their anti-resale protections to block both sellers and facilitators like StubHub. If so, expect to see other ticket vendors jump on the bandwagon and deploy similar anti-resale techniques. Of course, the Patriots do have an authorized resale channel; I think if other ticket vendors similarly created one as well, there would be less angst about ticket resales.
Some other thoughts about this ruling:
* This is not the first time StubHub has had problems with a 230 defense. See Hill v. StubHub (but compare the Fehrs case)..
* To my knowledge, this is the first and only case so far to favorably cite the Roommates.com case for the plaintiff. Thus far, I have seen about a half-dozen cases citing Roommates.com for the defense.
* To my knowledge, this is the first case to expressly link the Grokster "inducement" standard with a possible 230 exclusion. While I am troubled by any 230 defense loss, an "inducement" theory does a nice job explaining a possible common theme between Roommates.com, the Woodhull case and this case. At the same time, an "inducement" exclusion to 230 could create significant trouble for future 230 defenses, so I am hoping these cases are the exception rather than an emerging rule.
* The specific facts at issue here (the intentional interference claim) isn't very likely to arise in many cases. At the same time, it appears that a prima facie case of intentional interference with contract may inevitably satisfy any "inducement" exclusion to 230. As a result, this case opens up a new path for plaintiffs to explore to bypass the 230 brick wall.
Other comments on this case:
* CMLP
* Lee Gesmer
Alvi Armani Medical, Inc. v. Hennessey, 2008 WL 5971233 (S.D. Fla. Dec. 9, 2008). The Justia page. See two blog posts (1, 2), apparently from the defendant.
The publication of online reviews of doctors and medical procedures appears to be a rough-and-tumble world right now. See, e.g., the Lifestyle Lift litigation, Medical Justice's scheme to silence patients, and this lawsuit.
The plaintiff is a hair restoration/transplant doctor. The defendant operates a website "Hair Restoration Network" that provides "information to the consumer public about the hair restoration and transplant industry." The plaintiff alleges that the defendant "knowingly posti[ed] disparaging and false statements about Dr. Armani and Armani Medical on the website" and created "the impression that posters on the website are bona fide disgruntled patients of Plaintiffs, when in fact the posters are either fictitious persons or undisclosed affiliates of doctors who are on the website's recommended list of "pre-screened" doctors." The plaintiff claimed these activities constituted defamation and deceptive/unfair trade practices under Florida law.
Among other defenses, the defendant claims 47 USC 230. On its face, the plaintiff's allegations of unfair business practices should (and did) survive a 230 dismissal motion because (among other things) (1) the complaint claimed that the website operator created fake content itself, and (2) the complaint claimed that the website did not adequately disclose its sponsorship relationship with rival doctors.
At the same time, the complaint's allegations on their face support a 230 dismissal to the extent any claim is based on postings by affiliates of site-recommended doctors. The court seems to miss this subtlety, apparently incorrectly treating those affiliates' content as if it were from the website operator's. This runs directly counter to a number of cases from last year, such as the Higher Balance and Furber cases.
The news wasn't all bad for the defense. The court dismissed with defamation claim with prejudice because the plaintiff failed to comply with the mandatory pre-litigation notification statute. There is some discussion about whether the Internet qualifies as a protected medium under the statute (the court says yes); this brought to mind the old It's In the Cards v. Fuschetto case from nearly 15 years ago (which reached a different result).
The case settled in February. Terms were not disclosed.
Posted by Eric at 12:34 PM | Derivative Liability | TrackBack
April 21, 2009
Certain Approval Program v. Rip-off Report Update: Misappropriation Claim Dismissed
By Eric Goldman
Certain Approval Programs, L.L.C. v. XCentric Ventures L.L.C., CV08-1608-PHX-NVW (D. Ariz. April 13, 2009).
Yet another update on Rip-off Report litigation. In March, a ruling in Certain Approval Program v. Xcentric caused a minor stir. The plaintiff sought to amend its complaint against the Rip-off Report to add a claim for "misappropriation of name or likeness." Rip-off Report defended that the new claim was futile due to 47 USC 230. The court allowed the amendment, saying that the complaint had alleged enough facts that Rip-off Report was involved in the requisite activity to overcome 47 USC 230. Based on the plaintiff's allegations in its complaint, this was the correct ruling on a 12(b)(6) motion to dismiss, yet some commentators seemed to think this was a crack in Rip-off Report's litigation armor. I didn't see that ruling as a big deal. Instead, I wrote "This is not the first time that plaintiffs' allegations against Rip-off Report have survived the equivalent of a motion to dismiss, but getting further into the litigation process has proven difficult for plaintiffs."
Indeed, after allowing the claim, the court immediately granted Rip-off Report's 12(b)(6) motion to dismiss, saying that:
While the alleged conduct may or may not be immune from defamation liability, the necessary use of Plaintiffs’ names to identify them fails to state a claim upon which relief can be granted for misappropriation. No one could possibly think that Plaintiffs are somehow endorsing Defendants, and the count adds nothing to Plaintiffs’ defamation claims.
I'd like to think that this may provide a significant new defense against publicity rights claims when websites are making "commercial referential uses" of an individual's name, but a laconic ruling like this isn't likely to have much precedential weight.
Posted by Eric at 02:59 PM | Derivative Liability , Publicity/Privacy Rights | TrackBack
April 17, 2009
230 Doesn't Preempt State IP Claims--Atlantic Records v. Project Playlist
By Eric Goldman
Atlantic Recording Corp. v. Project Playlist, Inc., 2009 WL 766224 (S.D.N.Y. March 25, 2009). The Justia page.
This ruling addresses one of the known "circuit splits" in 47 USC 230 jurisprudence: does 230 preempt state IP claims based on third party content/conduct? The statute (230(e)(2)) says that "Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property." In the surprising 2007 ccBill opinion, the 9th Circuit read this language to mean that 230 does not preempt FEDERAL IP claims, but all state IP claims were preempted. Then, in the 2008 Friendfinder case, a New Hampshire district court expressly declined to follow the ccBill opinion, concluding that state publicity rights claims weren't preempted by 230.
As I've said before, I think the Ninth Circuit's statutory analysis in ccBill was daft, so I am not surprised to find another court expressly rejecting it. (In fact, I doubt any court outside the Ninth Circuit will follow the ccBill case).
In this case, a consortium of music copyright owners sued Project Playlist, a website where users could create song "playlists" that linked to playable versions of the songs. I have serious reservations about the legitimacy of the plaintiff's efforts here, both doctrinally and normatively. However, this ruling focuses on Project Playlist's efforts to dismiss any claims based on state copyright laws.
[Note: as you probably know, federal copyright law expressly preempts most state copyright laws. However, sound recordings made before 1972 were protected only under state copyright law, not federal copyright law. The plaintiffs are suing to enforce those rights (among others).]
The court conducts a very sensible textual analysis of 47 USC 230 to conclude that it preempts neither state nor federal IP. Thus, the net result is that this court, like the NH Friendfinder court, votes against the Ninth Circuit's ccBill ruling. Personally, I think the Ninth Circuit's reading is untenable, in which case either the Ninth Circuit will have to revise its reading (which would require an en banc opinion) or the circuit split may potentially bubble up to the Supreme Court. Congress could also amend the statute, but the chance of 230 being amended to endorse the Ninth Circuit's rule is near-zero.
While the court says that Project Playlist can't avail itself of the 230 immunity based on the IP subject matter of the claims, it does address other elements of a 230 defense. Most interestingly, it addresses whether Project Playlist loses immunization due to the Roommates.com opinion. In what is effectively dicta, it concludes the answer is no. The court says:
In this case, unlike Roommates.com, Playlist does not itself supply the content to which plaintiffs object-the songs. Playlist merely provides the interface for accessing that content-by permitting users to listen to the songs on Playlist's Website-and provides links so users can download the songs on third-party websites. It is, in these respects, no different than Lycos, which provides chat rooms in which third-parties can voice their opinions, and Google, which provides users with lists of links responsive to user searches. At best, Playlist is guilty of "passive acquiescence in the misconduct of its users," and, even under Roommates.com, Playlist is entitled to immunity under Section 230(c)(1).
Yet more evidence that courts aren't embracing a broad reading of Roommates.com.
More on this ruling from Law Wire and MS&K.
Posted by Eric at 08:45 AM | Copyright , Derivative Liability | TrackBack
April 15, 2009
Graeme Dinwoodie on Rescuecom v. Google
By Eric Goldman
[Eric's note: As I mentioned, I'm getting a lot of private emails about Rescuecom v. Google, including the email from Margreth Barrett that I blogged last week. Today, I got the following email from Graeme Dinwoodie, a law professor currently at Chicago-Kent Law and soon to be at Oxford. Like Margreth, Graeme has written on the trademark use in commerce doctrine and search engine liability. I've blogged on a few of Graeme's papers before as well; see his SSRN page. Graeme has graciously permitted me to share his email on the blog:]
I think that your bottom-line take on Rescuecom is largely right, though it will not surprise you that I do not regard the decision as “disappointing.” I think the Second Circuit largely accepted the arguments that Mark Janis and I have made in our articles, and so I am pleased with the outcome. I agree that there are some oddities in the reasoning, though these are in large part a product of (1) having to distinguish the very badly reasoned decision in 1-800 Contacts, and (2) the fact that the trademark use requirement does not map well to the concerns that should drive the scope of trademark protection. In fact, looking at where the court appears to want to go, I have to think that – if the 1-800-Contacts decision was not out there -- they would have concluded that there was no such thing as a trademark use requirement.
I think that the court largely accepts the critique that some of us have offered of the trademark use requirement: the court recognizes that there is no inevitable symmetry between use sufficient to create rights and use that causes likelihood of confusion; the court recognizes that uses by defendants that fall outside the strict scope of the section 45 definition could be “pernicious”; and the court thinks it important to adopt a rule that allows courts to hold defendants liable when confusion is created (footnote 4 clearly reflects the concern that courts should be able to police this activity).
Of course, because of 1-800-Contacts they could not simply say that Section 45’s definition did not apply to defendants’ uses, which would have been much cleaner. If one accepts, as they do, that the definitions only apply “unless the contrary is plainly apparent from the context,” one could simply have said that almost none of the section 45 definition is intended to constrain what type of activities by a defendant might be actionable. Instead, the appendix proffers a reading of the two sentences in the definition that is truly weird. (Indeed, under one reading, you might even say that they were endorsing -- in the last couple of pages -- a trademark use requirement linked to the affixation language in what the court called the second sentence of the definition.) But their having to do all this is simply a function of the fact that the Second Circuit had previously applied the second sentence to sections of the act of defining infringement in 1-800 contacts: see fn 12.
Likewise, some of the factual distinctions seem a bit odd (even though they were to some extent predictable given the dicta in 1-800-Contacts). The URL/mark distinction is inconsistent with typical infringement analysis that permits use of a term similar to the mark to be infringing and is functionally ridiculous given the prevalence of Mark.com URLs. I suppose the distinction between an ad triggered by a “product category” in 1-800 Contacts and one triggered by a mark as in Rescuecom (also a predictable distinction given the dicta in the earlier case) might reflect some vague notion of directness or frequency of harm, but the alleged harm that is experienced when the ad appears is surely pretty similar. (It reminds me of the link-counting analysis to determine commercial use?). See Dinwoodie and Janis, Confusion Over Use at 1635.
What I take from the decision is that they really would like to go back and rethink 1-800 Contacts. I agree though they have effectively undermined 1-800-Contacts. The bad news is that the messy way in which they have done it -- if they take seriously the details of their analysis rather than the message that they are sending -- might generate some silly litigation in the meantime. The good news is that, if courts focus on the message, we might now get greater judicial consideration of the central issues of what types of confusion -- if any -- are created by this type of advertising, and what types of confusion should be actionable (and I hope that those are separate inquiries). That this is the court’s preferred focus is evident from their alternative explanation for the outcome in I-800-Contacts (see p. 17), their analysis of the product placement analogy, and some of the factual distinctions that they draw between 1-800 Contacts and Rescuecom (at least at the 12(b)(6) stage). It does not seem inevitable to me that search engines or advertisers will lose on the confusion analysis in the cases to come (including this one). And at least I hope we will now have some judicial exploration of whether there is any confusion and whether that should be actionable. To be sure, there are some litigation and compliance costs associated with this, but even those may dissipate over time through accretion of case law. And I hope and expect that defendants will begin to explore the types of uses of marks in ads that might be immunized through defenses such as nominative fair use (we've had a couple of lower court cases beginning to move in that direction). The combination of all of this analysis will, I hope, be more helpful to search engines in formulating appropriate policies and responses to trademark owner requests -- something they have already given a tremendous amount of thought to – than debate about “trademark use”
In short, although there are some problems with the opinion, the outcome should at least start us talking about types of issues that I believe we should be talking about in this area. To put it (I hope not too) tendentiously, the Second Circuit has decided to opt for analysis of “confusion” over “use”, and has decided that we should litigate the scope of trademark law, with due regard for “context.” See Graeme B. Dinwoodie and Mark D. Janis, Confusion Over Use: Contextualism in Trademark Law, 92 Iowa L. Rev. 1597 (2007). Alternatively stated, I think the law that will be developed in the next few years in the wake of this decision will be heavily driven by factual particular rather than broad legal rules (though rules of sorts may accrue over time).
Posted by Eric at 07:28 AM | Derivative Liability , Search Engines , Trademark | TrackBack
April 13, 2009
Blogspot Sued for Dead Blogger's Content--Davis v. Google
By Eric Goldman
Davis v. Google, 09 CH 15753 (Cook County Ct. complaint filed April 9, 2009)
Venkat sent a very interesting lawsuit this morning that raises some complex policy issues. The complaint alleges that Sean Healy created a blog at unknowncolumn.blogspot.com and posted defamatory content about speedskater Shani Davis' mom, Cherie Davis. [I believe the post in question is at http://unknowncolumn.blogspot.com/2006/02/memo-to-cherie-davis.html -- I'm not going to link to it, but it did show up as my first search result for "Cherie Davis"]. The complaint further alleges that Healy is now deceased, so he can no longer remove the content on Cherie's demand, and he did not have a "probate estate" to take over his blog. As a result, Cherie feels like she has nowhere to turn to clean up the alleged defamation, so she is suing Google's Blogspot for a takedown injunction.
On the face of it, the lawsuit is clearly preempted by 47 USC 230, and Google ought to get a quick and unambiguous win. However, there are some lurking policy issues about dealing with online content posted by now-deceased individuals:
* Presumably the content and the account passed through Healy's estate. Even if there was no "probate estate," whatever that means, there is still a legal protocol for succession of Healy's assets--including the copyrights in his blog. So someone now owns Healy's blog, and it should be possible to determine who that is.
* Even if the legal rights have been allocated, taking control over a deceased accountholder's account is not always easy. The last time I recall this issue being discussed, it was in the context of taking control over deceased military personnel's email accounts. Online providers have different policies about how to deal with this--and for good reason, as too loose a policy could enable account hijacking, plus there may be concerns about the deceased accountholder's privacy. I wonder what Blogspot's policy is. This issue won't come up often, but it will definitely come up again.
* If Cherie can't sue Healy's estate, instead of suing Blogspot, I wonder if Cherie could seek a declaratory judgment that the content is defamatory. I would be shocked if Blogspot wouldn't honor a declaratory judgment in Cherie's favor, and it's not exactly like Healy would contest it.
* If Blogspot won't voluntarily remove the content, I wonder if Cherie could have more cost-effectively achieved the same net result through a reputation management service. A good reputation management service should be able to obscure several year old content that hasn't been recently refreshed.
Posted by Eric at 08:52 AM | Content Regulation , Derivative Liability | TrackBack
April 11, 2009
Q1 2009 Quick Links, Part 3
By Eric Goldman
Blogging and Social Networking Sites
* A new version of the EFF Legal Guide to Blogging. While you're there, consider joining EFF as a member. The EFF does first-rate work, and they can use all the support they can get in this economic downturn.
* Red Tape Chronicles: "Blogger: Cash4Gold tried to 'bribe' me."
* Klein v. City of Laguna Beach, 594 F. Supp. 2d 1142 (C.D. Cal. Jan. 23, 2009): "many of the cases striking down ordinances that restrict sound-amplification equipment are artifacts of a bygone age that offered activists few media of mass communication. Twenty, thirty, or fifty years ago, a sound truck was an important means of spreading a message to a large group of people. Now, one must only have a computer and a printer to publish a newsletter or handbill. The Internet, e-mail, text messaging, and widespread mobile communications devices have made it easier than ever to reach a large audience on a small budget. Indeed, it might be easier for Mr. Klein to reach the youth he wishes to target by using Facebook or MySpace."
* Maybe everyone already knew this, but I learned something interesting about Blogger. Apparently in some cases they will place an interstitial warning in front of certain user-posted content.
* Doninger v. Niehoff, 2009 WL 103322 (D. Conn. Jan. 15, 2009). On remand from the Second Circuit, the district court denies damages for a student whose off-campus blog entry led to school discipline. At the same time, Wendy Davis reports on how a Conn. Bill Would Protect Students' Free Speech Online:
* Funny article on Facebook's efforts to police against people who create funny account names, which sometimes ensnares people who actually have funny names like Batman, Six, Super, Pancake and Kisser.
* Facebook Sex-Extortion Plot: a boy pretends to be a girl, gets boys to send naked photos to him, and then threatens to go public with the photos unless they consent to sex with him.
* Dynamic Sports Nutrition, Inc. v. Roberts, 2009 WL 136023 (S.D. Tex. Jan. 16, 2009). A former employee republishing confidential information via his blog is enjoined.
* We now know that Facebook settled with ConnectU for $65M. However, ConnectU might get a little more cash after this information was inadvertently disclosed by its former counsel, Quinn Emanuel, in a marketing brochure.
* Facebook gets TRO against Wallace.
* Some people gave up Facebook for Lent.
* Reuters writes up a shocking study: many teens on MySpace post things they might regret.
* State v. Hause, 2009 WL 295404 (Ohio App. Ct. Feb. 9, 2009). Facebook photos help convict a woman for allowing minors to drink alcohol in her house.
* U.S. v. Villanueva, 2009 WL 455127 (11th Cir. Feb. 25, 2009). MySpace photo and YouTube video showing defendant holding firearms contribute to sentence enhancements for firearms charges.
* John Palfrey & Adam Thierer discuss Palfrey's arguments to "improve" 47 USC 230 by reversing Doe v. MySpace.
Defamation/Cyberbullying
* JuicyCampus has shut down. LA Times, Chronicle of Higher Education, CMLP.
* Lengthy article on the AutoAdmit lawsuits. And a mixed ruling in Ciolli v. Iravani.
* Noonan v. Staples (1st Cir. Feb. 13, 2009). Truth is NOT an absolute defense to defamation in Massachusetts, which apparently also has seceded from the Union because the First Amendment no longer seems to apply.
* Neuwirth v. Silverstein, 2009 WL 294737 (Cal. App. Ct. Feb. 9, 2009). Reiterating that a website can be a public forum for purposes of anti-SLAPP laws. The CMLP writeup.
* Douchebags Lawsuit dismissed. Marc Randazza mocks the lawsuit.
* Rios v. Fergusan, 2008 WL 5511215 (Conn. Super. Ct. Dec. 3, 2008). Connecticut court has jurisdiction to issue restraining order against North Carolina man who posted YouTube video threatening Connecticut woman.
* Fahmy v. Hogge, 2009 WL 33418 (C.D.Cal. Jan. 2, 2009). Court denies Fahme's motion to set aside the dismissal based on lack of jurisdiction because Fahme made the error that caused the dismissal.
* 24Grille v. TripAdvisor (complaint filed April 2, 2009). Restaurant sues TripAdvisor for anonymous TripAdvisor review. Hello 230!
* Censorious laws brewing in WV and NJ.
Yelp
I have been meaning to post about my experiences with Yelp as a reader and a writer, but that has been repeatedly deferred. So, instead, how about a quick recap of Yelp’s woes? Yelp has been under the microscope quite a bit in the last few months.
* Wendy Davis recaps all the Yelp-related litigation she and I could find--at least 5 known cases. CMLP recaps a couple of the lawsuits.
* This East Bay Express article about Yelp caused quite a stir. It was followed up with more attributed sources. A number of other media outlets covered Yelp, including News.com and the NYT. For a full rundown of Yelp haters, check out the Eater coverage.
Wikipedia
* 25 Biggest Blunders in Wikipedia History.
* Two books about Wikipedia I’ve been checking out.
- Wikipedia, the Missing Manual.
- How Wikipedia Works.
Pornography
* Mukasey v. A.C.L.U., No. 08-565. The Supreme Court declined the cert petition regarding the challenge to the 1998 Child Online Protection Act, officially killing the law after a decade of litigation. Putting aside the merits of the law, it would have been a huge shock to the Internet community to have a circa-1998 criminal act resurrected! I'd like to think Congress will be wiser than to try to criminalize Internet porn a third time, but the regulation of Internet porn is like a siren song to Congressmembers.
* State v. Hurst, 2009 WL 580453 (Ohio App. Ct. March 6, 2009). From the unfortunately-named Licking County courts, the defendant downloaded 14,000 pornographic photos into his work computer's local cache in a five day period (he acknowledged he spent 70% of his workday downloading porn). An expert said that about 50 of the photos were child pornographic. The defendant was convicted of possessing child pornography even though he argued that he didn't intentionally download the photos, getting a 39 month sentence and classified as a sex offender.
* Excellent article by Colette Vogele on suing over a sex tape.
Gambling
* The credit card payment systems blocked the New Hampshire Lottery due to the Unlawful Internet Gambling Enforcement Act of 2006.
* Peer-to-peer gambling OKed in Washington.
Posted by Eric at 12:53 PM | Content Regulation , Derivative Liability , Internet History , Privacy/Security | TrackBack
April 07, 2009
47 USC 230 Talk at Fordham
By Eric Goldman
A couple weeks ago, I gave a 12 minute talk at Fordham Law School as part of a day-long conference on intermediaries. My talk notes:
___
230(c)(1) means websites and other actors aren’t liable for third party content…PERIOD. The “period” makes lawyers think surely they can devise a way around the statute. However, 230 is an incredibly robust immunity. There have been 100+ cases interpreting it in the past 13 years, and only a very small handful have led to defense losses. Plaintiffs lawyers who think they can “outsmart” 230 are probably wrong; many clever arguments have already been tried and failed.
Nevertheless, there are two bona fide limits on the “period.”
First, the statutory exclusions:
* ECPA = null set
* Federal crimes. Examples: gambling, obscenity, child porn. But state crimes are preempted
* “Intellectual property claims.” Federal IP claims (copyright and trademark) are not preempted, but there is a split of authority on state IP claims (state copyright, state trademark, trade secret, publicity rights, hot news). In the 9th circuit: they are preempted. But in other jurisdictions, they are not preempted.
Second, a website’s marketing representations. The theory of the case is to hold a website liable for its first-party statements, not third party content. But what if the marketing representations are rendered untrue by user content/behavior? Ex: this social networking site is “safe” for kids. In Mazur v. eBay, eBay represented that a third party service was “safe.” The court says 230 doesn’t apply. A bigger problem is when plaintiffs try to turn EULA negative covenants into affirmative marketing representations
From a policy standpoint, 230’s “problem” is that it “breaks” tort law the way we learned it in law school. It's black letter common law that a participant in tortious conduct is liable for the tort. As applied in the publishing context, exercising editorial control over content creates liability for that content. To avoid such liability, one must be a “passive conduit” of third party content.
230 breaks apart those principles: active participation/control do not create liability:
...even if they receive a C&D/takedown notice
...even if they prescreen or manage the database or edit specific entries
...even if they profit from, or take ownership of, the content
This helps explain why bright judges impressed with their analytical abilities resist 230—it doesn’t comport with standard legal reasoning.
From my perspective, 230’s breaking of traditional tort law is a feature, not a bug. 230 prevents lopsided databases, i.e., databases filled only with positive comments because all of the negative comments have been taken down. I explain more about the lopsided database problem here. Further, as I will explore in my Economics of Reputational Information project, 230 has contributed to the most robust reputation ecosystem we’ve ever seen--so many existing reputational systems are broken, but online reputational mechanisms (such as product reviews) are among the healthiest and deepest reputational systems ever. This isn't to say that 230 is cost-free--it's not--but every system has its costs, including a system that creates greater liability.
___
Blog posts about the talk:
* Fordham's live-blogger
* Rebecca Tushnet
Posted by Eric at 04:36 PM | Derivative Liability | TrackBack
April 04, 2009
Republishing MySpace Post in Local Paper Might Be Intentional Infliction of Emotional Distress--Moreno v. Hanford Sentinel
By Eric Goldman
Moreno v. Hanford Sentinel, Inc., 2009 WL 866795 (Cal. App. Ct. April 2, 2009)
This is one of the most interesting cases I've seen in a while. Moreno was a UC Berkeley undergraduate who grew up in Coalinga, a small town in California's Central Valley whose attractions include a prison, a mental health institution and Harris Ranch, one of the most odoriferous spots on Highway 5. (Coalinga was also the site of a big quake in 1983). After revisiting her hometown, Moreno posted an essay, "An Ode to Coalinga," on her MySpace page. I have not seen the ode, but it was a 700 word essay that started "the older I get, the more I realize how much I despise Coalinga" and then made very negative comments about the town and its residents. Moreno apparently had a change in heart and took the essay down in 6 days. However, while it was posted, the Coalinga high school principal saw the post and submitted it to the Coalinga Record newspaper, which published it as a letter to the editor under Moreno's full name. The community response to the published essay was severe; according to the court, "Appellants received death threats and a shot was fired at the family home, forcing the family to move out of Coalinga. Due to severe losses, [the dad] closed the 20-year-old family business."
Moreno and some of her family members sued a variety of defendants for public disclosure of private facts and intentional infliction of emotional distress. The newspaper defendants were dismissed through an anti-SLAPP motion to strike, leaving the principal and the school district as the defendants.
The privacy invasion claim was easily rejected. Once Moreno posted the essay to an open-to-the-public MySpace page (even if only briefly), it was no longer private. As the court says, "the fact that Cynthia expected a limited audience does not change the above analysis. By posting the article on myspace.com, Cynthia opened the article to the public at large. Her potential audience was vast." It also did not matter that Moreno did not use her last name on her MySpace page; the court says that her identity was readily ascertainable from her MySpace page (which included a photo)..
However, the intentional infliction of emotional distress claim wasn't ready to dismiss. The jury will get to decide if the defendants' conduct was extreme and outrageous. Personally, I would like to know more why the principal did what he did.
Observations about this case:
1) According to this article, the Coalinga Record editor who republished the essay was fired.
2) Although the newspaper publishers fortunately escaped liability on anti-SLAPP grounds, if they had republished the essay only online, it should have been an easy 47 USC 230 win.
3) You know the cliche: never post anything online that you don't want repeated on the front page of the newspaper. Proven true once again.
4) And on that front, I think some folks assume that they can "take back" Internet-published content by taking it down. As this case reinforces, in some circumstances there is no "do-over." As I describe in my talks on blogs and social networking sites, every time I hit the "publish" button, I'm betting my house. In this case, Moreno effectively bet her parents' house and business when she hit the publish button.
5) The court notes that a copyright infringement claim isn't in front of it. I wonder what the publishers' copyright liability analysis would look like. I suspect the copyright damages wouldn't be great, but I still wonder why the claim wasn't apparently brought.
6) This case provides more evidence that community members don't like to see their community disparaged. I'm reminded of the recent James Andrews kerfuffle. Andrews, a PR executive at Ketchum, was on his way to Memphis to make a presentation at FedEx about using social media when he Twittered "True confession but i’m in one of those towns where I scratch my head and say “I would die if I had to live here!”" That didn't go over so well with the FedEx folks following his Twitter account.
7) Nevertheless, I wonder if the violent and ostracizing community response to Moreno's post didn't in fact validate some of her critiques.
More on this case from Law.com and the Central Valley Business Times.
Posted by Eric at 06:47 PM | Content Regulation , Derivative Liability , Publicity/Privacy Rights | TrackBack
April 03, 2009
Second Circuit Says Google's Keyword Ad Sales May Be Use in Commerce--Rescuecom v. Google
By Eric Goldman
Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. April 3, 2009)
The Second Circuit has issued its long-anticipated opinion in Rescuecom v. Google over Google's sale of trademarked keywords as ad triggers. In a disappointing but not surprising conclusion, the Second Circuit reversed the lower court and says that Rescuecom properly alleged that Google's keyword ad practices constituted a "use in commerce." This ruling merely reverses the 12b6 dismissal for Google, but it raises some important questions--including whether this ruling effectively eliminates any future "use in commerce" defense in keyword advertising cases and whether Google and other search engines could reform their practices so that they are no longer deemed uses in commerce.
1-800 Contacts v. WhenU Distinguished
The most interesting part of the opinion is how this panel distinguishes its 2005 1-800 Contacts v. WhenU precedent, which held that an adware vendor did not make a use in commerce through its keyword ad triggering processes. The court says that Google is different in two main respects:
"First, in contrast to 1-800, where we emphasized that the defendant made no use whatsoever of the plaintiff’s trademark, here what Google is recommending and selling to its advertisers is Rescuecom’s trademark. Second, in contrast with the facts of 1-800 where the defendant did not “use or display,” much less sell, trademarks as search terms to its advertisers, here Google displays, offers, and sells Rescuecom’s mark to Google’s advertising customers when selling its advertising services. In addition, Google encourages the purchase of Rescuecom’s mark through its Keyword Suggestion Tool."
The court appears to be making two distinctions. First, WhenU didn’t sell trademarked keywords directly but instead rolled up search queries into product categories that didn’t contain the trademark anywhere but in an internal database table, so there was an additional layer of abstraction away from trademarks built into WhenU's matching process. Second, the court clearly doesn't like Google's Keyword Suggestion Tool, which I think has also frustrated trademark owners and been repeatedly cited against Google in pleadings.
In theory, then, Google could eliminate its trademark use in commerce by adding a product category abstraction--although this may not be a good idea, as it would not work with long-tail queries--and by modifying or dropping the Keyword Suggestion Tool.
The case also discusses Google's "sponsored link" label and distinguishes it from WhenU's labeling of its pop-up ads. The court gives credence (as it must on a 12b6) to Rescuecom's allegations that Google's placement of ads above the organic results might confuse consumers into thinking those ads were organic. In contrast, in WhenU, the "pop-up ad appeared in a separate browser window from the website the user accessed, and the defendant’s brand was displayed in the window frame surrounding the ad, so that there was no confusion as to the nature of the pop-up as an advertisement, nor as to the fact that the defendant, not the trademark owner, was responsible for displaying the ad, in response to the particular term searched." Personally, I think Google’s interface is sufficiently clear to consumers, but this is a factual assertion not ready for judicial review in this case yet.
One oddity: the court repeatedly says that WhenU displayed ads "randomly" chosen in response to searcher behavior. I'm not sure what the court was trying to say, but the ads were hardly chosen at random, and this is a pretty significant factual error on the court's part.
Finally, the court discusses the analogies to shelf-space adjacency in the retail context. This is a topic of special interest because I've parsed this issue in gory detail in my Brand Spillovers paper. The court, without any citations, reaches the conclusion that
It is not by reason of absence of a use of a mark in commerce that benign product placement escapes liability; it escapes liability because it is a benign practice which does not cause a likelihood of consumer confusion. In contrast, if a retail seller were to be paid by an off-brand purveyor to arrange product display and delivery in such a way that customers seeking to purchase a famous brand would receive the off-brand, believing they had gotten the brand they were seeking, we see no reason to believe the practice would escape liability merely because it could claim the mantle of “product placement.”
Fair enough—if consumers purchase a passed-off good, that would be actionable. However, the court sidesteps all of the nuance in concluding that shelf-space adjacency is a "benign practice that does not cause...consumer confusion." Retailers are hardly “benign” in their practices; see my Brand Spillovers paper for more on that. Further, and perhaps more importantly, it's unclear how Google's ads misdirect anyone. The court had to accept Rescuecom's allegations of diversion as true, but I think those bear very close scrutiny on remand.
What Is a Use in Commerce?
The opinion also contains a scholarly appendix, expressly labeled as dicta, explaining its statutory analysis of the Lanham Act's use in commerce phrase. Not surprisingly, at the end of the appendix it says "It would be helpful for Congress to study and clear up this ambiguity." Although it is dicta, I expect many other courts will follow and embrace this appendix when discussing use in commerce. I also expect that this will put an end to the cottage industry of law review articles debating what the phrase means in the keyword context.
Implications of this Ruling
1) This opinion narrows the 1-800 Contacts v. WhenU opinion substantially to a very specific set of facts. I'm not sure how many courts will be favorably citing that precedent in the future.
2) This case jeopardizes the half-dozen or so district court cases (in Second Circuit-controlled jurisdictions) that have held that keyword advertising purchases aren't a trademark use in commerce. This case involves Google's sale of keyword advertising, not an advertiser's purchase of keyword advertising, but I think those cases are now very shaky precedent. (The court particularly says that the Merck and S&L Vitamins cases "overread" the 1-800 Contacts precedent). The Second Circuit still could find a way to distinguish ad buys from ad sales, but I would be surprised if it did so.
3) This case also jeopardizes the rulings in those cases that keyword metatags aren't a trademark use in commerce. The court says specifically "We did not imply in 1-800 that an alleged infringer’s use of a trademark in an internal software program insulates the alleged infringer from a charge of infringement, no matter how likely the use is to cause confusion in the marketplace." I'm not sure how this applies to keyword metatags, which can't cause consumer confusion under any circumstance. Nevertheless, if the keyword metatags don't have the layer of abstraction that WhenU used, I don't think the court would regard them favorably.
4) Although this is clearly a loss for Google because Google no longer has a reliable way to kick out cases on a 12b6, Google might still prevail in the case. Google had won on a 12b6, and the court merely said that Rescuecom alleged enough in its complaint to survive the 12b6. Google could still win on summary judgment or trial, or the parties might settle. Either way, Rescuecom merely lives to fight another day. (In theory, Google could also appeal this ruling to the Supreme Court; I would be surprised if they went that route or if the Supreme Court would take it).
5) Accordingly, I don't expect this ruling to do much for cases like American Airlines v. Yahoo. Indeed, perhaps anticipating this loss, Yahoo didn't try to get the case into the Second Circuit. I suspect that's because Yahoo had already decided not to expect the use in commerce defense to go in its favor.
6) I'm interested to see what this ruling will do to state efforts to attack keyword advertising, such as Utah's ill-fated forays in this area. In theory, this ruling might alleviate some of the pressure state legislators feel that they have to do something. However, I suspect state legislators are only mildly interested in legal proceedings elsewhere, so I doubt this will make state legislators second-guess their own brilliance.
7) As the court says, it would make a lot of sense for Congress to clean up the statutory drafting muddle over use in commerce in the Lanham Act. I don't think this is likely because of the political gridlock that would emerge over the topic. As I discuss in my Deregulating Relevancy paper, a more pragmatic approach would be for Congress to expressly provide a safe harbor for search engines selling keywords analogous to the safe harbor for domain name registrars selling domain names, but I doubt Google has the muscle for that either. As a result, I don't anticipate legislative intervention to overturn this ruling.
The case library:
* Commercial Referential Trademark Uses (Rescuecom v. Google Amicus Brief Outtakes)
* Rescuecom reply brief
* Law professors' brief by Stacey Dogan and me
* Electronic Frontier Foundation amicus brief by Jason Schultz, Corynne McSherry and Fred von Lohmann
* Public Citizen amicus brief by Paul Levy
* eBay/Yahoo/AOL amicus brief by Celia Goldwag Barenholtz, Janet Cullum and others of Cooley Godward Kronish [now mooted]
* Google's initial brief
* Rescuecom's initial brief
* District Court's opinion
Posted by Eric at 11:51 AM | Derivative Liability , Search Engines , Trademark | TrackBack
March 25, 2009
Web Host Convicted of State Child Porn Crimes Despite 230--People v. Gourlay
By Eric Goldman
People v. Gourlay, 2009 WL 529216 (Mich. App. Ct. March 3, 2009)
Hot on the heels of the Cook County Sheriff's publicity stunt filing against Craigslist, we get an interesting but complicated ruling exploring the application of 47 USC 230 to state criminal laws. The ruling tries to distinguish between ordinary web hosts and the defendant's behavior, and in doing so finds an adequate basis to punish the defendant for his role in producing and disseminating child pornography.
This prosecution is part of the fallout from "Justinscam," a tragic and well-documented story first told in exhaustive detail in this 2005 New York Times article (and its correction; see the NY Magazine for more about the NYT reporter's unorthodox and controversial role in the story). According to the opinion, at age 13, Justin Berry got a webcam and eventually started broadcasting pornographic images of himself over the Internet. The defendant, Kenneth Gourlay, operated Chain Communications, the host of the Justinscam website. Gourlay then engaged in a dialogue with Berry that ultimately led to the creation of two additional websites, JFWY and mexicofriends. With respect to the crimes on appeal, I quote the relevant portion of the opinion:
"The prosecution of defendant was based on the theory that defendant, knowing that the purpose of the JFWY and mexicofriends websites was to allow Internet viewers to watch Berry engage in pornographic acts, was an active participant in the creation of the two websites. The...prosecution presented evidence (1) that defendant knew Berry hosted his own pornographic website, that Berry wished to take this website, the justinscam website, to the “next level,” and that the purpose of both the JFWY and mexicofriends websites was for others to see pornographic images of Berry, (2) that defendant hosted the two websites with Chain Communications and registered the domain names, (3) that defendant programmed the websites with the JAVA applet to create a near live streaming video image, (4) that defendant created the members-only sections for the websites, and (5) that defendant provided Berry with an advanced web camera when he visited Berry in Mexico. In addition, in online conversations, defendant told Berry that Berry should “milk the cam for all its worth,” that Berry “got the money shots right before” Berry turned the web cam off, and that some high resolution images of the “money shots” would be nice in the website's members-only section."
The Wikipedia entry on Justin Berry also discusses Gourlay's repeated molestation of Berry. Based on this fact alone, Gourlay is destined for significant jailtime, and Gourlay's involvement in Berry's website is almost besides the point. Accordingly, personally I think the court's discussion about the web hosting relationship is hugely colored by the criminal molestation, which makes it hard to disaggregate the court's feelings if this was truly only a customer/vendor relationship.
Nevertheless, focusing only on the facts discussed by the court, Gourlay was more involved with Berry's websites than a typical hosting vendor would be. Gourlay was allegedly providing custom software programming, hardware and recommendations about content decisions to Berry. In a footnote, the court says:
We note that, although defendant claims on appeal that he was merely providing standard web hosting duties to Berry for the JFWY and mexicofriends websites, there was no evidence presented at trial that many of the services defendant provided to Berry for the two websites, such as use of the applet, the creation of members-only pages, the technical assistance given to members of the two websites, and the registration of domain names, were provided for any of Berry's other websites or to other clients of Chain Communications.
A jury ultimately convicted Gourlay of:
* two counts of child sexually abusive activity, MCL 750.145c(2)
* two counts of using a computer to communicate with another to commit child sexually abusive activity, MCL 750.145d(2)(f)
* two counts of distributing or promoting child sexually abusive material, MCL 750.145c(3)
* two counts of using a computer to communicate with another to commit distribution of child sexually abusive material, MCL 750.145d(2)(d)
* third-degree criminal sexual conduct (CSC), MCL 750.520d(1)(a), and
* soliciting a child for immoral purposes, MCL 750 .145a.
Although in this ruling the appellate court reversed the sentencing decision of the trial judge, Gourlay will be going to jail for a substantial period of time.
On appeal, Gourlay claims that the pornography-related offenses were preempted by 47 USC 230. The court says that some of the elements of a 230 defense are met; "There is no dispute that Berry was an information content provider for the JFWY and mexicofriends websites and that defendant, acting as Chain Communications, was an interactive computer service provider."
The state argued that 230 didn't apply because 230 covers only civil claims, not criminal claims. It's true that 230(e)(1) excludes federal crimes from the immunity, but the plain language of the statute is clear that state criminal prosecutions are preempted. The court easily concludes that "Congress intended that no liability may be imposed under a state criminal law that is inconsistent with § 230."
Nevertheless, the court concludes that the jury didn't need to be instructed about 47 USC 230 (which, it sounds like, defense counsel at trial may not have been aware of). The crime of child sexually abusive activity requires the state "to prove that the defendant 'persuade[d], induce[d], entice[d], coerce [d], cause[d], or knowingly allow[ed] a child to engage in a child sexually abusive activity for the purpose of producing any child sexually abusive material.'" The court says that a typical web host does not fulfill the scienter requirements:
An interactive computer service provider, by providing bandwidth, by publishing content that was generated by an information content provider's use of the service's general features and mechanisms, or by knowing of the nature of the published content, has not taken an intentional action directed toward a child to engage the child in child sexually abusive activity.
Therefore, the conviction could be consistent with 230. I didn't exactly follow the court's logic here, and I would be very interested to see how a jury would react in this case if told the foregoing quote. Inferentially, the court is saying that 230 does not apply because Gourlay as a vendor did more than provide bandwidth, publish content and know the contents being published.
With respect to the distribution count, the court lays out the prosecution's burden: "(1) the defendant distributed or promoted child sexually abusive material, (2) the defendant knew the material was child sexually abusive material at the time of distribution or promotion, and (3) the defendant distributed or promoted the material with criminal intent." The court says that some prosecutions under this statute would be preempted by 230 if the prosecution's theory was that "an interactive computer service provider distributes child sexually abusive material with the intent that it be seen by others when, after receiving notice of the material, keeps the material available to be viewed or discovered by others." In other words, failure to respond to a C&D/takedown notice would not convert the provider into a criminal distributor under 230.
Instead, based on the facts I quoted above, the court says that the prosecution's theory is that "defendant, knowing that the purpose of the JFWY and mexicofriends websites was to allow Internet viewers to watch Berry engage in pornographic acts, was an active participant in the creation of the two websites." Given that Gourlay defended on lack of knowledge grounds, not lack of involvement, the court said the conviction was consistent with 230.
This is a complicated case overlaying a tragic situation, but let me offer three implications:
* this case is a good reminder of the toxicity of child porn. As I teach in Cyberlaw class, if you run into child porn, you want to put it as far away from you as possible. Gourlay did not do that. Gourlay’s behavior would be more understandable if Gourlay didn't know there was child porn taking place and thought Berry was over 18 (he claimed both). I suspect the jury found those assertions hard to believe. If Gourlay had any doubts about his beliefs, he should have done more--a lot more--to investigate them.
* Although I think it's a close call, I think that on these facts and based on the precise wording of these statutes, I think the appellate court got it right that 230 doesn't protect Gourlay for the creation and dissemination of child porn. I would be very troubled by that conclusion if Gourlay was purely a technology provider, but the court was clear to distinguish 230's application to the provision of technology. What put Gourlay over the edge for me is the alleged facts that Gourlay appeared to become a co-venturer with Berry and took on a quasi-producer role, and apparently encouraged Berry to increase the pornographic content of the sites--all in the face of Berry being a young teen.
* While I think the court got it right, I'm also disappointed that the jury didn't learn about 47 USC 230. I'm not sure it would have produced a different result, but I imagine a jury would find the fact that Congress provided strong immunities for some of Gourlay's behavior potentially important. All of this reinforces the importance of finding lawyers who know the technology and the applicable law. I suspect many criminal defense lawyers have never heard of 47 USC 230, so it's not surprising if the trial lawyer didn't raise it, but a lawyer who knew that law might have been able to tilt the odds a little more in Gourlay's favor.
Tom O'Toole is similarly unsure what to make of the case.
Posted by Eric at 07:26 AM | Content Regulation , Derivative Liability | TrackBack
March 24, 2009
"Locate Plastic Surgeon" Trademark Registrant Brings Dubious Enforcement Action--Ezzo v. Google
By Eric Goldman
Ezzo v. Google, 2:09-CV-00159 (M.D. Fla. complaint filed March 17, 2009). The Justia page.
I'm suffering ennui about blogging pro se lawsuits against companies like Google. Most of them are completely unmeritorious and poorly expressed, so they don't warrant the time and legal risk associated with writing them up. Nevertheless, I decided this lawsuit is blog-worthy because it, combined with the Medical Justice no-talk waivers that I hope to blog about soon, appears to be part of a troubling trend of using IP to make it harder for consumers to find appropriate medical services.
Jamil Ezzo has a registered trademark on the Supplemental Register for the phrase "Locate Plastic Surgeon," which he apparently uses in connection with his website locateplasticsurgeon.com. Armed with this registration, in this lawsuit he sues Google and AOL (apparently for selling the trademark as an ad keyword) and a bunch of other folks in the plastic surgery business who apparently advertised on the keyword. (The complaint is so indecipherable that I'm not really sure what he's beefing about; this is my best guess).
Among other dubious aspects, he comes up with a claim for $90M in damages. He says that over 5 years, the competitive keyword advertising cost him 5,000 customers who would have paid $100/mo each. That's pretty powerful keyword advertising and a gravity-defying 100% margin business. Add in treble damages, and that produces $90M in damages. Nevertheless, the good faith in his computations is palpable because he kept the damages claim under 9 figures.
In any case, putting aside the indecipherability of the complaint, this lawsuit will be quickly crunched because (among other defects) I am extremely confident that "Locate Plastic Surgeons" is not a protectable trademark. Registration on the Supplemental Registry only confirms that the phrase could become a protectable trademark some day, but it's not necessarily protectable today. To make progress, he'll need to show secondary meaning in the phrase, and given the highly descriptive phrase plus the apparently low profile of the site, I think the chances of showing secondary meaning are near zero. Given this, I think this lawsuit is a good candidate for the court to award attorneys fees to the defendants (awardable in exceptional cases, which I think this is).
Even if this lawsuit is a little off-kilter, it still depresses me that anyone could think they can own a protectable trademark in the phrase "Locate Plastic Surgeon" for the process of locating plastic surgeons. It's dramatic evidence of the abysmal and overexpansive state of trademark doctrine today.
More on this lawsuit from Tom Seery of RealSelf.com.
Posted by Eric at 11:01 AM | Derivative Liability , Search Engines , Trademark | TrackBack
March 23, 2009
Soccer Coach Shut Out in Message Board Lawsuit--Joyner v. Lazzareschi
By Eric Goldman
Joyner v. Lazzareschi, 2009 WL 695539 (Cal. App. Ct. March 18, 2009)
Joyner is a Southern California soccer coach who merged two girls soccer teams into one, a decision that sparked a near-riot in the local girls soccer community. In particular, the discussion got hot-and-heavy on socalsoccertalk.com (a site currently offline), operated by defendant Lazzareschi. Socalsoccertalk.com had 600+ members and got 200-500 messages per day--including allegedly a total of over 2,000 messages about the team merger. A number of allegedly defamatory messages about Joyner were posted by unregistered "guests," although Joyner claimed that Lazzareschi posted some of those messages. Joyner sued Lazzareschi and a variety of Doe defendants for defamation and related torts.
The trial court initially granted Lazzareschi's anti-SLAPP motion, but in a prior ruling the appellate court reversed because the lawsuit lacked the requisite public interest. The trial court subsequently granted summary judgment for Lazzareschi, and this ruling deals with Joyner's appeal.
Like the recent Raggi v. Las Vegas Metropolitan Police case I blogged about last week, this is an easy case for 47 USC 230. We all know that message board operators aren't liable for third party posts to the boards. To get around the 230 brick wall, Joyner invokes Moreno's concurrence in Barrett v. Rosenthal, arguing that Lazzareschi was in a conspiracy with the posters and 230 doesn't preempt conspiracy liability. However, Joyner didn't allege conspiracy in the complaint or introduce any evidence supporting a conspiracy, so these arguments fell flat.
Joyner also tries to exploit the ambiguous language in Roommates.com. (FWIW, this is a great example of a "duck biting lawsuit" predicted by Kozinski). The court rejects the analogy to Roommates.com, saying that "no evidence suggested defendant engaged in any filtering remotely related to defaming plaintiff" because Lazzareschi never edited the allegedly defamatory messages, even though he created the forum titles that elicited the allegedly defamatory messages.
To my knowledge, defendants are now 4-0 in opinions that substantively discuss the Roommates.com en banc opinion (the others are Goddard, Furber & GW Equity). As a result, I continue to believe that Roommates.com is not the 230 jurisprudential train wreck we feared. Nevertheless, the court's inquiry for evidence of website operator filtering shows exactly why the Roommates.com opinion was so lousy. A website operator's deletion of user-submitted messages clearly would not disqualify the operator for 230(c)(1) liability, and in any case an operator's filtering decisions should be independently protected under 230(c)(2). So the court's doctrinal standard here is odd and confusing, and we can blame the extensive sloppy language in Roommates.com for that.
Posted by Eric at 09:38 AM | Derivative Liability | TrackBack
March 20, 2009
Union Isn't Liable for Members' Postings to Union Message Board--Raggi v. Las Vegas Police
By Eric Goldman
Raggi v. Las Vegas Metropolitan Police Dept., 2009 WL 653000 (D. Nev. March 10, 2009)
Unexpectedly, we're celebrating union week at the Technology & Marketing Law Blog. Earlier this week, I blogged that union organizers aren't liable for trademark infringement from their online activism. Today, I'm blogging that 47 USC 230 protects unions from liability for online postings by their members.
The plaintiff sued a variety of defendants for allegedly defaming and discriminating against the plaintiff. This particular ruling involves an SJ motion from the Las Vegas Police Protective Association (“LVPPA”), a union of Las Vegas law enforcement personnel. Two LVPPA union members allegedly posted impermissible messages to a message board operated by LVPPA, and the LVPPA did not remove the targeted messages after the plaintiff's demand. Even with the refusal to take down the messages, this set of facts supports an easy 47 USC 230 case for the message board operator (see, e.g., Eckerd, DiMeo v. Max, Universal Communication Systems v. Lycos, Higher Balance), and frankly I think most plaintiffs are finally getting that message.
The complicating factor here is some caselaw suggesting that there may be a principal-agent relationship between unions and their members when members are conducting union business. Elsewhere, I've raised the issue of whether principal-agency relationships allow plaintiffs to bypass 47 USC 230; I think that's still an open issue. See more discussion of this issue in my Higher Balance blog post. The court can avoid this doctrinally thorny issue because the posting members weren't conducting union business while posting. The plaintiff argued that, by failing to remove the postings, the union ratified the members' posts, but the court rejected that bypass as well. As a result, the court reaches the sensible result that 47 USC 230 protects unions for their members' online postings.
Posted by Eric at 12:28 PM | Derivative Liability | TrackBack
March 19, 2009
IEEE ComSoc SCV Talk: "Engineers' Role in Internet Law Development"
By Eric Goldman
Last week, I gave a talk at a meeting of the IEEE Communications Society, Santa Clara Valley chapter. I don't often get the chance to speak to a group of engineers, so I decided to go in a little different direction than my normal talks. I gave a procedure-oriented talk about how lawyers and engineers can work together to improve legal compliance. Along the way, I pointed to the Roommates.com and Cablevision cases as two case studies of how product design choices can influence the legal analysis (one good, one bad). My talk slides.
Posted by Eric at 10:25 AM | Copyright , Derivative Liability , Internet History | TrackBack
March 12, 2009
Rip-off Report Lawsuit Updates: Certain Approval Programs and Ecommerce Innovations
By Eric Goldman
Certain Approval Program v. Xcentric
Certain Approval Programs, L.L.C. v. XCentric Ventures L.L.C., 2009 WL 596582 (D. Ariz. March 9, 2009). I previously blogged about this case in November. This ruling is in response to the plaintiff's request to file an amended complaint, which Rip-off Report resisted on several grounds. Of particular interest is the plaintiff's desire to add a claim for “misappropriation of name or likeness." Rip-off Report responded that such a claim is futile due to 47 USC 230. The court rejected the futility argument at this early procedural stage, saying
Plaintiffs have alleged enough facts regarding Defendants' “creation or development of information provided through the Internet or any other interactive computer service” to make it plausible that Defendants are an “information content provider” for some content and therefore the CDA does not completely immunize Defendants.
This is not the first time that plaintiffs' allegations against Rip-off Report have survived the equivalent of a motion to dismiss, but getting further into the litigation process has proven difficult for plaintiffs.
The court didn't reach the issue, but it's also germane to the futility argument whether a "misappropriation" claim is even preempted by 230 at all or if qualifies as an "intellectual property" claim that is excluded from the immunization. Compare ccBill and Friendfinder.
Ecommerce Innovations v Doe
Ecommerce Innovations, L.L.C. v. Does 1-10, No. MC-08-93 (D. Ariz. Feb. 10, 2009). Thanks to Jeff Neuburger for calling attention to this case. In this case, a defamation plaintiff is seeking identifying information for an anonymous Rip-off Report contributor. The Rip-off Report initially fought the request, but the district court ordered Rip-off Report to comply because the plaintiff had established a prima facie case. The Rip-off Report responded that it plans to appeal the judge's order to the Ninth Circuit, and the district court has stayed the order pending the appeal (although I can't find any evidence that the appeal has been filed yet). As Jeff points out, an appeal by Rip-off Report may prompt the Ninth Circuit to articulate its standards for when plaintiffs can unmask anonymous defendants; it also could become a backdoor way to gauge the Ninth Circuit's attitude towards Rip-off Report in light of some ambiguous language in the initial Ninth Circuit Roommates.com opinion.
Posted by Eric at 11:54 AM | Content Regulation , Derivative Liability , Privacy/Security , Publicity/Privacy Rights | TrackBack
March 11, 2009
The Third Wave of Internet Exceptionalism
By Eric Goldman
[I initially wrote this as an editorial for our University magazine and republished that version through InformIT as well. Here's the original unedited version I submitted.]
From the beginning, the Internet has been viewed as something special and “unique.” For example, in 1996, a judge called the Internet “a unique and wholly new medium of worldwide human communication.”
The Internet’s perceived novelty has prompted regulators to engage in “Internet exceptionalism,” crafting Internet-specific laws that diverge from regulatory precedents in other media. Internet exceptionalism has come in three distinct waves:
The First Wave: Internet Utopianism
In the mid-1990s, some people fantasized about an Internet “utopia” that would overcome the problems inherent in other media. Some regulators, fearing disruption of this possible utopia, sought to treat the Internet more favorably than other media.
47 USC 230 (a law still on the books) is a flagship example of mid-1990s efforts to preserve Internet utopianism. The statute categorically immunizes online providers from liability for publishing most types of third party content. It was enacted (in part) “to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.” The statute is clearly exceptionalist because it treats online providers more favorably than offline publishers—even when they publish identical content.
The Second Wave: Internet Paranoia
Later in the 1990s, the regulatory pendulum swung in the other direction. Regulators still embraced Internet exceptionalism, but instead of favoring the Internet, regulators treated the Internet more harshly than analogous offline activity.
For example, in 2005, a Texas website called Live-shot.com announced that it would offer “Internet hunting.” The website allowed paying customers to control, via the Internet, a gun on its game farm. An employee manually monitored the gun and could override the customer’s instructions. The website wanted to give people who could not otherwise hunt, such as paraplegics, the opportunity to enjoy the hunting experience.
The regulatory reaction to Internet hunting was swift and severe. Over 3 dozen states banned Internet hunting. California also banned Internet fishing for good measure. However, regulators never explained how Internet hunting is more objectionable than physical space hunting.
For example, California Sen. Debra Bowen criticized Internet hunting because it “isn't hunting; it's an inhumane, over the top, pay-per-view video game using live animals for target practice….Shooting live animals over the Internet takes absolutely zero hunting skills, and it ought to be offensive to every legitimate hunter.”
Sen. Bowen’s remarks reflect numerous unexpressed assumptions about the nature of “hunting” and what constitutes fair play. In the end, however, hunting may just be “hunting,” in which case the response to Internet hunting may just be a typical example of adverse Internet exceptionalism. [For more, check out my 2005 editorial on Internet hunting.]
The Third Wave: Exceptionalism Proliferation
The past few years have brought a new regulatory trend. Regulators are still engaged in Internet exceptionalism, but each new advance in Internet technology has prompted exceptionalist regulations towards that technology.
For example, the emergence of blogs and virtual worlds has helped initiate a push towards blog-specific and virtual world-specific regulation. In effect, Internet exceptionalism has splintered into pockets of smaller exceptionalist efforts.
Regulatory responses to social networking sites like Facebook and MySpace are a prime example of Internet exceptionalism splintering. Rather than regulating these sites like other websites, regulators have sought social networking site-specific laws, such as requirements to verify users’ age, combat sexual predators and suppress content that promotes violence. The result is that the regulation of social networking sites differs not only from offline enterprises but from other websites as well.
Implications
Internet exceptionalism is not inherently bad. In some cases, the Internet truly is unique, special or different and should be regulated accordingly. Unfortunately, more typically, exceptionalism cannot be analytically justified and instead reflects regulatory panic.
In these cases, regulatory exceptionalism can be harmful, especially to Internet entrepreneurs and their investors. It can distort the marketplace between web enterprises and their offline competition—occasionally advantaging the website (such as 47 USC 230), but typically hindering the web business’ ability to compete. In extreme cases, such as Internet hunting, unjustified regulatory intervention may put companies out of business.
Accordingly, before enacting exceptionalist Internet regulation, regulators should articulate how the Internet is unique, special or different and explain why these differences support exceptionalism. Unfortunately, emotional overreactions to perceived Internet threats or harms typically trump such a rational regulatory process. Knowing this tendency, perhaps we can better resist that temptation.
Posted by Eric at 12:20 PM | Content Regulation , Derivative Liability , Internet History | TrackBack
March 05, 2009
Cook County Sheriff Sues Craigslist for Erotic Services Category
By Eric Goldman
Dart v. Craigslist, Inc., 09-CV-1385 (N.D. Ill. complaint filed March 5, 2009)
Dart, the Cook County, Illinois sheriff, has sued Craigslist in federal court for creating a "public nuisance" because its "Erotic Services" category facilitates prostitution. Unfortunately for Dart, this lawsuit is almost certainly preempted by 47 USC 230:
* 47 USC 230 covers the publication of third party ads. See Cisneros v. Yahoo.
* 47 USC 230 preempts a civil claim that is derived from a criminal statute. See, e.g., Voicenet v. Corbett; Doe v. Bates. The federal crimes exception only applies to the enforcement of federal criminal statutes. Therefore, a civil claim based on state or local criminal laws is unambiguously preempted.
* Although hardly a model of clarity, last year the Seventh Circuit clearly held that Craigslist was covered by 47 USC 230 in a claim that Craigslist violated the Fair Housing Act.
* In distinguishing the Seventh Circuit Craigslist case, the Ninth Circuit's Roommates.com case pointed out that Craiglist's listings were open narratives and therefore fully covered by 47 USC 230. The complaint's allegations that Craigslist was involved in creating the bad content because of its category title, search functions and other attributes aren't likely to get around either the Seventh Circuit or Ninth Circuit precedent.
* Indeed, the Seventh Circuit concluded its opinion by pointing out that the Craigslist ads made it easier to find lawbreakers:
Using the remarkably candid postings on craigslist, the Lawyers’ Committee can identify many targets to investigate. It can dispatch testers and collect damages from any landlord or owner who engages in discrimination....It can assemble a list of names to send to the Attorney General for prosecution. But given §230(c)(1) it cannot sue the messenger just because the message reveals a third party’s plan to engage in unlawful discrimination."
All of which is true here as well, and all of which is a good reason why the Seventh Circuit isn't likely to reach a different result here.
At a few points, the complaint implies that Craiglist harmed the sheriff's office because the office spent $105,000 busting 156 individuals for prostitution through Craigslist. WHAT?! Enforcing laws is what the sheriff's office is given taxpayer money to do! And, at less than $700/arrest, I wonder if this is CHEAPER than trying to bust prostitution criminals through other techniques. In other words, it's possible that Craigslist makes it cheaper for the sheriff's office to do its job, so to claim any harm by spending taxpayer money to do its job is ludicrous.
While this lawsuit is little more than a sad publicity stunt by the sheriff's office, I remain uncertain whether or not it's a good thing for Craigslist to have an "erotic services" category. I understand the argument that it centralizes these ads in one place rather than having these ads spammed through other Craiglist categories, but I'm confused what, if any, "erotic services" advertised in this category are ever legal. If everything directed to this category is always illegal, it seems like Craigslist could, and perhaps should, voluntarily choose to eliminate the category altogether. That may require Craigslist to invest some more resources policing its other categories to prevent their spamming/hijacking by the dispersed ads, but that may be the unavoidable cost of a free classified ads service.
UPDATE: A reader points out the Craigslist FAQs:
Q: Why does craigslist have an "erotic services" category?
A: It was established at the request of craigslist users, who were tired of seeing ads for escort services, sensual massage, adult web cams, phone sex, erotic dancing, adult websites, nude housecleaning, etc mixed into the regular personals and services categories.
So it seems that there could be some non-illegal activities mixed into this category. Not having checked out the category myself (and not really wanting to do so from my work computer...), I wonder what percentage of posts actually offer these alternative services? i.e., do users actually regularly post nude housecleaning ads?
UPDATE 2: Craigslist says that its existing deal with the state AGs has reduced erotic services ads 90-95% in 12 months.
Posted by Eric at 01:45 PM | Content Regulation , Derivative Liability | TrackBack
March 04, 2009
Utah Trying to Regulate Keyword Advertising....Again!? Utah HB 450
By Eric Goldman
When I first heard that the Utah legislature is considering yet another law to regulate keyword advertising, I thought: Are you kidding me? After all, Utah has pursued these regulations twice with disastrous results. The first time, in 2004, Utah's attempt to regulate adware-mediated keyword advertising was declared unconstitutional, and Utah amended the law in 2005 to make it irrelevant. In 2007, Utah tried again, passing a law that restricted keyword advertising across-the-board. That law was a spectacular failure, garnering derision both within Utah--especially from angry Utah citizens shocked that their elected representatives passed a law that the state AG thought was unconstitutional and that was going to cost valuable taxpayer money to defend in court--and globally as everyone wondered if the Utah legislature was really that crazy. In 2008, the legislature tucked its tail between its legs and repealed the 2007 law.
With this track record, the Utah legislature wants to try regulating keyword advertising again...? Are you kidding me?
Then again, perhaps this latest foray really isn't all that surprising. My sources tell me that 1-800 Contacts is the prime mover behind this statute, and 1-800 Contacts has testified in support of the law. 1-800 Contacts has an hard-to-explain love/hate relationship with keyword advertising. 1-800 Contacts has been a repeat litigant against keyword advertising, including being the losing plaintiff in the landmark 1-800 Contacts v. WhenU case, and 1-800 Contacts has continued to bring other lawsuits against competitive retailers (such as the LensWorld case I blogged about a year ago). At the same time, 1-800 Contacts has been a buyer of trademarked keyword ads, and it was one of the companies that protested the 2007 law because it was concerned the law would limit its own advertising practices (although, at the last minute, 1-800 Contacts flip-flopped and tried to sneak in new restrictions on keyword advertising into the putative repeal of the 2007 law). Clearly, 1-800 Contacts has a complex attitude towards keyword advertising, although it might just be pure duplicity. Either way, with 1-800 Contacts’ flip in 2008 and its continued litigation against keyword advertising, it’s not unexpected that they might try to bend the ear of the apparently pliable Utah legislature.
The Proposed Law
The 2004-05 laws banned trademark-triggered pop-up ads triggered by adware. The 2007 law allowed trademark owners to register their marks with a newly created Utah administrative registry (which never got created) and prohibited keyword buyers and sellers from using registered marks as triggers for keyword advertising. HB 450, the proposed 2009 law, takes a very different approach than the 2007 law:
Fewer Defendants. The law only applies to keyword buyers (advertisers). Unlike the last two laws, keyword sellers such as search engines are immune from liability under this law. However, the law is expansive in other ways: the law expressly holds an advertiser liable for affiliates' keyword purchases (a currently open point in trademark law), and the law expressly references telephone directory assistance advertiser as being within its scope.
Opt Out. The law only applies after the trademark owner sends a takedown notice/cease & desist demand to the advertiser. Further, if the advertiser stops within 10 days of the takedown notice, it is not liable for any remedies under this law. (They might still be liable under other legal doctrines).
Limited Remedies. My reading of the law is that the only remedies against an advertiser are an injunction and attorneys fees--no damages. I'm not 100% sure about this because some states have laws that create damage claims outside the scope of any specific statute (I'm thinking of California B&P 17200). I don't know if Utah has a catchall provision like that.
Geographic Restrictions. One of the most deficient aspects of Utah's 2007 law was that it required advertisers throughout the country to check the new registry before buying keyword advertising on a third party trademark, even if the advertiser, the keyword seller and the trademark owner all had zero connection with Utah. This law tries much more clearly to restrict its reach to Utah. First, the law only applies to ads "in Utah," whatever that means. Second, the law only restricts keyword buys made from sellers that allow "an advertiser to limit the display of advertisements by geographic location." I'm not exactly sure what this means--after all, a site like eBay segregates its listing database by country; does that mean eBay gives advertisers geographic choices?--but it's clear that an advertiser purchasing ads from a seller that doesn't offer any geolocation choices isn't covered by the law. Third, the law doesn't apply if segregating Utah ad viewers from non-Utah ad viewers isn't "technologically feasible" or would impose "an undue financial burden." I'm not saying that this law will survive a dormant commerce clause challenge--personally, I think all state regulation of the Internet is inherently suspect--but the law certainly tried to limit its reach to Utah.
Narrow Scope. The law applies when "the delivery or display of an advertisement in Utah...is the product of a bad-faith attempt to profit from the registrant's mark by diverting a consumer from the registrant, the registrant's authorized licensees, or another source authorized by the registrant." The statute provides for a multi-factor evaluation of what constitutes a "bad faith diversion" by keyword advertising, with the first factor being that the ad "is likely to create an initial, misleading impression that the person is a legitimate source of the goods or services" (which itself is subject to another multi-factor evaluation). Personally, I don't think there is such a thing as bad faith diversion or initial misleading impressions with respect to truthful ad copy, so this ought to be a null set. Even so, the law lists a number of categorical exclusions from its coverage, including:
* advertiser belief that the ad is fair use. Note: the bill uses the term "fair use" several times, even though this term is not well-defined in trademark law. So it isn't clear to me if "fair use" meant descriptive fair use, nominative use, both, neither, or yet something else.
* the sale is permissible under the First Sale doctrine. This should exclude keyword buys by other parties in a trademark owner's distribution channel. However, as I recently blogged, courts are struggling with the First Sale doctrine's application to e-commerce.
* "(a) fair use of a mark in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark; (b) noncommercial use of a mark; and (c) all forms of news reporting and news commentary." This is an interesting set of exclusions; it looks like the drafter tried to (incompletely) mimic the federal dilution exclusions. However, the implicit redundancy with the other fair use aspect mentioned above also raises a question why (a) only applies to famous marks. That's either a drafting error or a significant limitation on that prong.
So What Does This Law Do?
From my reading, it appears that this law does not apply to gripe ads or trademark conflicts within a distribution channel. Therefore, I think the law really only applies to advertising on competitors' trademarks, and even then, only some of the ads.
Given the application to competitive keyword advertising and the focus on an injunction as a remedy, this law covers only limited circumstances that are not already addressed by the search engines' trademark policies, which provide an extrajudicial "injunction." Indeed, this law is nearly co-extensive with Yahoo's and Microsoft's trademark policies. On the other hand, the law would govern situations that Google isn't remediating with its trademark policy because it could force advertisers off keywords that Google would happily sell. Furthermore, the ambiguous application of the law to keyword buys from places other than search engines, such as telephone directory assistance services, may implicate some keyword sellers who don't currently have trademark policies.
Conclusion
If I'm right that this law simply codifies current search engine trademarks policies and extends them some, then this law isn't as problematic as Utah's last two efforts. But it also makes me wonder--what's the point? Doesn't Utah have more important problems to solve???
Even if the law is less troublesome than the last two, let's be clear: this is not a good proposal. As with Utah's past two efforts, this law has nothing to do with improving consumer welfare. Instead, it would allow companies to suppress competition by helping companies keep their competitors from gaining exposure among the company's potential customers; meaning that companies won't have to work as hard competing on price and quality. I understand why companies such as 1-800 Contacts, who has a pattern of trying to use legal tricks to suppress competitors, would find it attractive to ply their local legislators for some corporate welfare. But why any legislator would waste their time with such an unabashed anti-competitive, anti-consumer request is simply beyond me. As I have explained elsewhere, policy-makers should be helping consumers get relevant content, not enacting laws to take it away from them.
The bill is making its way through the Utah House, and my observation of Utah legislative proceedings is that bills can be amended substantially from beginning to end. So this bill could get better, or it could get much worse. Fortunately, a coalition of Internet companies is lobbying against the bill, and the bill barely survived its first committee hearing on an 8-6 vote. Thus, it's not guaranteed that this law will make it through. My hope is that the Utah legislators will recognize the law’s depravity and their own poor track record in the area and squelch this latest effort.
Posted by Eric at 09:55 PM | Adware/Spyware , Derivative Liability , Domain Names , Marketing , Search Engines , Trademark | TrackBack
March 03, 2009
Facebook Sued Over Private Facebook Group--Finkel v. Facebook
By Eric Goldman
Finkel v. Facebook, Inc., 102578-09 (N.Y. Supreme Ct. complaint filed Feb. 24, 2009).
A New York teenager has sued Facebook and four Facebook users (plus their parents) for allegedly defamatory content posted in a private Facebook group called "90 Cents Short of a Dollar."
This case fits neatly with other legal battles over "cyber-bullying" (whatever that means), such as the AutoAdmit lawsuits, the Sandler case and the Lori Drew case. (For another recent and troubling example of cyber-bullying that I read just this morning, see Wolfe v. Fayetteville, Arkansas School Dist., 2009 WL 485400 (W.D. Ark. Feb. 26, 2009)).
In this case, the plaintiff's school peers said some not-nice things about her in a private Facebook page. The Newsday article has some more color about the sour relationships between Finkel and the defendants. The plaintiff claims that the posts meant that "the plaintiff was a woman of dubious morals, dubious sexual character, having engaged in bestiality, an 'I V drug user' as well as having contracted the H.I.V. virus and AIDS."
With respect to the claim against Facebook, this lawsuit is unquestionably DOA. Frankly, I'm not sure why the plaintiff bothered to sue Facebook. Facebook is completely immunized per 47 USC 230, and this should be an easy dismissal. The complaint didn't even try to do anything fancy to get around 230; in fact, the complaint alleges that Facebook "published" the content, the absolutely wrong allegation to make if you're trying to bypass 230. I think it significantly detracts from the sympathy we might otherwise feel for plaintiff for her to have futilely dragged Facebook into the lawsuit. And, it ensures there will be at least one aggressive defendant in the lawsuit.
With respect to the school peers' liability, this case raises some interesting and complex questions. First, and most obviously, how did the plaintiff get a copy of the private group's postings? This reminds me a little of the Washingtonienne case, although access to Cutler's blog wasn't technologically restricted like it was in Facebook.
Side note: the republication of the private group's posts in this complaint reminds us once again that we always have to be prepared for our digital words to show up on the front page of a national newspaper. In particular, including the transcript to the complaint without a protective order was an aggressive move; I suspect other people reading the transcript for the first time will not be happy.
Second, there were only 6 group members listed on the exhibit, which means the total universe of listeners for any defamatory statement was 5 other folks (the person posting the statement doesn't count). This may severely circumscribe any damages. Third, given that this group of 6 presumably represented a social clique with its own norms and mores, it's entirely possible that the small universe of readers completely understood that superficially factual statements weren't really factual and were never intended to be. In this respect, I'm reminded a little of the DiMeo v. Max case, where the judge adjusted the evaluative standards to reflect the fact that message boards fostered a laxer conversation, and readers understood that. A quick perusal of the posts suggests that all of them clearly were utter nonsense and, I suspect, fully understood by all readers to be inane and meaningless chatter. Finally, the posts apparently never referred to the plaintiff by name, although this may be irrelevant if everyone knew who was being discussed.
The lawsuit also goes after the students' parents. Among other things, to try to establish liability, the complaint alleges that the parents negligently supervised their children. I'd gladly write a $100 check today if the plaintiff or her lawyers could articulate a foolproof way that parents can use to prevent high schoolers from doing stupid things on Facebook (without denying them access to Facebook altogether).
From my perspective, going to court over this matter was not a good decision. Nevertheless, I remain troubled by the examples of mean behavior among students that I'm seeing in the alerts I'm getting. For example, the Wolfe and Sandler cases I mention above are absolutely horrifying. Even though I graduated high school nearly 25 years ago, reading about meanness among high schoolers still gives me the shakes, reminding me how bad high school can be! And it weighs heavily on my mind as a parent. However, I can't imagine any legal solution that will make people be less mean to each other.
Posted by Eric at 02:34 PM | Content Regulation , Derivative Liability | TrackBack
February 27, 2009
Republishing Solicited Email May Not Qualify for 47 USC 230 Immunization--Woodhull v. Meinel
By Eric Goldman
Woodhull v. Meinel, 2008 WL 5663874 (N.M. App. Ct. Oct. 24, 2008). This one just showed up in my Westlaw alerts; not sure why it took so long. The NM Supreme Court denied cert Jan. 7, 2009.
The last time I blogged about an Internet decision from New Mexico, I wrote that I suspected "the New Mexico judicial system still doesn't understand Internet technology very well." Today's case gives us further reason to be suspicious.
On its face, this appears to be a garden-variety defamation claim. The plaintiff, Angela Victoria Woodhull, claims that Carolyn Meinel, a blogger at "happyhacker.org" (and self-described "only over-50 woman hacker in the world"), posted two defamatory messages. The first post, in 2003, alleged that Woodhull had asked Meinel to illegally hack a site that had unflattering content about Woodhull. In 2006, Meinel posted about Woodhull again, recapping the 2003 incident and saying "that Defendant's only recourse against Plaintiff for her alleged unlawful request was 'to make fun of her on this website.'" The 2006 post also contained an email from a staff member at a University of Florida student newspaper, which Meinel had apparently asked if they had any dirt on Woodhull. The resulting email "contained details about a dispute between Plaintiff and the [student newspaper] related to whether a play by Plaintiff featured 'dancing penises and condoms.' Defendant additionally commented that further research revealed that Plaintiff had 'been on America's Funniest Home Videos' and 'says she is proud to be known as Wedgie Woman.'" The defamatory import of these emailed statements is not immediately clear to me, but maybe I'm missing something.
The court first addresses the statute of limitations issue. The court adopts the single publication rule for Internet postings, meaning that the SOL does not reset with every access of the web page. It also means that the SOL does not reset when other parts of the website are modified or even if technical modifications are made to the post. However, substantive modifications can reset the SOL, and the court says it's up to a jury to decide if the 2006 post was a substantive modification of the initial 2003 post sufficient to reset the SOL on the 2003 post.
The court then moves on to the 47 USC 230 discussion. This should have been easy because the law is really, really clear. 47 USC 230 does not apply to the content authored by Meinel, but it unambiguously immunizes Meinel for reposting the third party email See Barrett v. Rosenthal, Batzel v. Smith, D'Alonzo, the multitudinous Ripoff Report cases, and many others.
Somehow the court misinterprets the precedent, saying that Meinel's solicitation of the email and incorporation of the email into her larger post might negate the 230 immunization:
Instead of merely editing an email from a third party, Defendant apparently requested potentially defamatory material for her own stated purpose of “‘making fun of’ Plaintiff.” That material was incorporated into an overall larger posting containing her own thoughts and contributions....Therefore, Defendant's actions could reasonably be viewed as going beyond what is protected by the CDA, exposing Defendant to potential liability as an original “information content provider.”
This conclusion might find some support in the Roommates.com en banc opinion, but the court does not cite Roommates.com at all. How in the world did the court miss the Roommates.com precedent??? The court does cite to Batzel several times, although I'm not clear what's left of Batzel after the Roommates.com decision.
The court partially corrects its legal error by noting that the factfinder might view the single blog post as two discrete components--one protected by 230; the other not. Nevertheless, this means the defendant now has to win at trial instead of getting the quick and easy 230 dismissal.
We've seen a few other cases where plaintiffs have successfully overcome 230 as applied to third party content, but those opinions are extremely rare, which makes this case noteworthy on that basis alone. Even so, I'm going to chalk up this goofy ruling to New Mexico courts' demonstrated struggles understanding Internet law. Especially in light of the opinion's poor citation of the applicable precedent, I expect very few cases will follow in this court's footsteps.
Posted by Eric at 11:26 AM | Derivative Liability | TrackBack
February 24, 2009
Zango v. Kaspersky Ninth Circuit Oral Arguments
By Eric Goldman
The Ninth Circuit has posted the audio of the February 2, 2009 oral arguments in Zango v. Kaspersky, the important 47 USC 230(c)(2) case about vendors' abilities to classify third party content as spam, viruses, adware/spyware, etc. The judges were Betty Fletcher, Pamela Rymer and Raymond Fisher.
The judges' questions were pretty good. Judge Fisher was by far the most spirited jurist at this hearing. It was interesting to hear him tell Zango's counsel that he thought Batzel and Roommates.com are irrelevant to the case. But Judge Fisher also asked a tough question of Kaspersky's counsel about why McAfee has blocked him from getting to websites he wanted.
HT: Venkat
The case library:
* Zango's reply brief [warning: 3+ MB file]
* Amicus brief by CDT in favor of Kaspersky
* Kaspersky's answering brief [warning: 5MB file]
* National Business Coalition on E-Commerce and Privacy amicus brief in favor of Zango
* Zango's appeal brief [warning: 2.1MB file]
* The district court's dismissal and my commentary
* TRO Denial and my commentary
* Kaspersky's Response to TRO Motion
* Zango's TRO motion
Posted by Eric at 05:44 PM | Adware/Spyware , Derivative Liability | TrackBack
February 17, 2009
Affiliate Liability Talk Notes from SMX West
By Eric Goldman
Last week, I spoke for 10 minutes (actually, I took 12) at SMX West on the topic of advertiser liability for affiliates' actions. My talk notes:
General Principles
Issue: when are advertisers liable for their affiliates’ behavior?
General rule: a company isn’t automatically liable for the acts of independent contractors.
Main exception: principal-agency liability. Principals are automatically liable for agent’s behavior within scope of agency. Agency can be express, implied or apparent. Generally, to form an agency, principals must control the agent’s behavior; an agency isn't formed merely by telling an independent contractor the desired results.
Application of general rule: Unless affiliates are agents, advertisers aren’t liable for their behavior, and most affiliates aren’t agents.
CAN-SPAM
CAN-SPAM is a statutory exception to the general rule. State anti-spam laws may have similar statutory extensions.
15 USC 7705: Advertiser liability if advertiser (1) knew that affiliate is spamming, (2) is economic beneficiary of spam, and (3) doesn’t take reasonable steps to prevent or report.
Numerous advertisers have settled with the FTC based on the FTC’s theories of how to interpret this statute. However, the FTC's interpretations don’t have a great track record in court:
* U.S. v. Cyberheat, Inc., 2007 WL 686678 (D. Ariz. March 2, 2007). Government’s theory of strict liability for affiliate behavior rejected—liability requires advertisers’ knowledge and control of affiliate behavior.
* US v. Impulse Media. Government took Impulse Media’s liability for affiliate spam to a jury and lost.
Also, most civil plaintiffs have lost trying to hold advertisers liable for affiliate spam. See, e.g., Fenn v. Redmond Venture, Inc., 2004 UT App 355 (Utah Ct. App. Oct. 15, 2004); Hypertouch, Inc. v. Kennedy-Western University, No. 3:04-cv-05203-SI (N.D. Cal. Mar. 8, 2006); People v. Synergy6, Inc., Index No 404027/03 [Sup Ct N.Y. Co 2006]; ASIS Internet Services, v. Optin Global, Inc., 2008 WL 1902217 (N.D. Cal. March 27, 2008; unsealed April 29, 2008),
Other Types of Affiliate Liability
* Fraudulent ads prepared by affiliates. Florida's AG office has pursued mobile content ads, including those prepared by affiliates to promote the advertiser.
* Adware. The FTC and NYAG have taken expansive view of advertiser liability for running ads in adware. Indeed, based on these theories, the NYAG procured a settlement from Priceline, Travelocity, and Cingular Wireless in Jan. 2007 for $30-$35k each. But the NYAG’s expansive theories about affiliate installations of adware were soundly rejected in People v. Direct Revenue LLC, 2008 WL 1849855 (N.Y. Sup. Ct. March 12, 2008).
* Trademarks. In at least three cases, trademark owners have alleged that advertiser liable for trademark infringement due to affiliate behavior (such as affiliates bidding on trademark owner’s keywords). See DSW v. Zappos.com (S.D. Ohio complaint filed May 12, 2008); NameSafe v. LifeLock (M.D. Tenn. complaint filed June 26, 2008); Rosetta Stone v. Rocket Languages (C.D. Cal. complaint dated July 2, 2008). This is an unsettled area of trademark law. I think it should be analyzed as contributory trademark infringement, which probably would result in no liability for advertisers. As a point of comparison, advertisers are not liable for ads appearing on a site that infringes trademarks. See Fare Deals v. World Choice Travel.com case, 180 F. Supp. 2d 678 (D. Md. 2001),
Other Consequences of Affiliate Liability
Even if advertiser isn’t liable for affiliate’s behavior, advertiser-affiliate relationship may still create problems:
* NY sales tax collection obligation. NY Tax Law Section 1101(b)(8)(vi) enacted April 2008 says:
a person making sales of tangible personal property or services taxable under this article ("seller") shall be presumed to be soliciting business through an independent contractor or other representative if the seller enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an internet website or otherwise, to the seller, if the cumulative gross receipts from sales by the seller to customers in the state who are referred to the seller by all residents with this type of an agreement with the seller is in excess of ten thousand dollars during the preceding four quarterly periods
Legal challenge to the statute: Amazon and Overstock v. NY, decided Jan. 12, 2009. The court upheld the statute against dormant commerce clause, due process and equal protection claims. I think this is a goofy ruling.
Implications of the NY Sales Tax law:
1) If upheld, other states undoubtedly will adopt the same model.
2) Web retailers will either double-down on affiliate programs or kill them (Overstock killed its NY affiliates).
3) This may be the effective death knell for retailer-sponsored online affiliate programs, which could have a significant consequence on the Internet advertising community.
* Competition with affiliates for AdWords/organic placement.
* Public opinion, including FTC shaming, adverse media coverage, and disgruntled consumers.
Best Practices for Advertisers
1) Advertisers' affiliate contracts should prohibit ads in spam, adware, etc. This has successfully cut off advertiser liability in several cases (Fenn, Hypertouch, Impulse Media, Synergy6)
2) Affiliate contract should restrict the affiliates' keyword ad practices. Note, however, the more the affiliate contract controls affiliate behavior, the greater the risk that a court will misinterpret the contract to form an agency relationship.
3) Escrowed/delayed payments are the best way to minimize affiliate fraud and manage contract compliance. It's rare for advertisers to bring lawsuits against affiliates (e.g., Land’s End v. Remy, eBay v. Digital Point Solutions). The best way to curb bad affiliates is to keep dollars out of their pockets.
4) Advertisers must actually police affiliate behavior
5) Especially in light of NY tax law, advertisers must do a cost-benefit analysis of affiliate programs. Are they net-profitable, after considering all of the costs? The answer may surprise you.
For more reading on this topic, see my lengthy article from last year, Affiliate Liability Extravaganza.
Posted by Eric at 10:07 AM | Derivative Liability , E-Commerce , Marketing , Trademark | TrackBack
February 13, 2009
Yahoo's Sale of Competitive Keyword Ads Isn't False Designation of Origin--Heartbrand Beef v. Lobel's
By Eric Goldman
Heartbrand Beef, Inc. v. Lobel's of New York, LLC, 2009 WL 311087 (S.D.Tex. Feb. 5, 2009). The Justia page.
Heartbrand sells Akaushi beef, a special and very expensive Japanese variety of beef. Heartbrand brought an enforcement action against several defendants, including Yahoo for selling a retailer, Lobel's, the first ad position for the keyword "Akaushi." Lobel's sells very expensive beef but not Akaushi beef. Heartbrand alleged that Yahoo's display of the ad constituted Lanham Act false designation of origin and common law unfair competition. I suspect that other plaintiffs have alleged that the search engine makes a false designation of origin by presenting keyword ads, but I can't recall an actual ruling on this issue before.
From my perspective, the natural analytical approach would be to assume the advertiser makes the false designation of origin and then consider Yahoo's liability under some kind of "contributory" or "derivative" false designation claim (if such a thing exists). However, stated this way, the claim then should be preempted by 47 USC 230; other cases have concluded that 47 USC 230 preempts non-trademark portions of the Lanham Act. See, e.g., Kruska v. Perverted Justice Foundation Inc. But see Doe v. Friendfinder.
The court sidesteps this direct-v.-contributory issue entirely, even though it acknowledges that Heartbrand's claim doesn't make sense because "Yahoo! obviously does not fit into these classic models [of false designation of origin] because Yahoo! is not in the business of selling beef." Instead, the court rejects the false designation claim because (1) Yahoo doesn't make any "statement" (the advertiser does), and (2) even if Yahoo does make a statement, it's not designating the origin of Yahoo's offerings.
This case reminded me of the Overstock v. SmartBargains opinion from last August, where the Utah Supreme Court said that trademark-triggered competitive pop-up ads do not constitute common law unfair competition or tortious interference. (Note that in that case, the defendant was the ad buyer, not the ad seller, so there is a significant factual difference). In both the Overstock case and this one, the courts rejected plaintiffs' efforts to fit their claims in doctrines that are ancillary to the more traditional trademark infringement claim. In that respect, this case helps channel the lawsuits back to trademark infringement and might help curb claim sprawl.
Ryan Gile has also blogged on the case.
UPDATE: Rebecca weighs in.
Posted by Eric at 12:02 PM | Derivative Liability , E-Commerce , Marketing , Search Engines , Trademark | TrackBack
February 06, 2009
2008 Cyberlaw Year-in-Review
By Eric Goldman
It's a sign of my schedule that I'm just now getting to this, and this post will be more pithy than I initially conceived. This post recaps some of the Cyberlaw highlights from last year. Frankly, the two biggest stories of 2008 were the financial markets meltdown and the ascension of President Obama, neither of which have a lot of Cyberlaw angles. In light of those big developments, Cyberlaw in 2008 was comparatively quiet. However, there is still plenty of interesting developments to revisit.
Broad Themes
A few broad themes emerged last year:
* Ludicrous trademark claims. 2008 hardly had a monopoly on dumb trademark claims; those are perennial. But 2008 certainly saw some asinine entries, including putative Cyberlawyer Eric Menhart's claim to own a trademark in the term "Cyberlaw," Jones Day's efforts to claim that a web page referencing its name as the employer of some homebuyers violated its trademark rights, and putative Cyberlawyer John Dozier's claim that if his name is used as anchor text, the link must go to his website or it violates his trademark right.
* This was a good year for expansive readings and applications of user agreements. Some examples:
- the Lori Drew prosecution, where Lori was convicted of violating an agreement that someone else clicked through.
- Jacobsen v. Katzer, where a user of copyrighted material is bound by a contract that he/she never clicked through at all.
- AV v. iParadigms, where kids were not allowed to void a user agreement despite their status as minors (and despite the fact that some of them had no meaningful choice about whether or not to consent).
- JuicyCampus enforcement action, where the New Jersey Attorney General's office tried to treat a negative user behavioral restriction in a user agreement as an affirmative marketing representation that such user behavior would not occur on the site.
* One of the long-standing Cyberlaw memes is that websites must either be passive conduits to avoid liability or active editors to manage their liability, but if a website chooses the latter, the website is liable for any editorial mistakes. That is, if the website edits its site but misses something, it's fully liable for what it missed. This simply isn't true under 47 USC 230, which allows websites to choose to be passive, active or anything in between without varying liability. In the IP context, this passive v. active meme has had more traction, but 2008 saw two solid cases suggesting that if a website tries to police its premises and fails, courts will be sympathetic and excuse any omissions. Example #1: Tiffany v. eBay, where the court gave eBay extra credit for its VeRO program as a basis to excuse any counterfeit goods that slip through. Example #2: Io v. Veoh, where the court was more willing to excuse Veoh because it had undertaken extra policing efforts than was required for the 17 USC 512 safe harbor. Finally, although not an IP case, the court in Cisneros v. Yahoo also lauded search engines for their affirmative efforts to block gambling ads, which the court acknowledged was a hard challenge.
* Despite some adverse rulings early in the year, punctuated by the Ninth Circuit's en banc ruling in Roommates.com, the 47 USC 230 immunization is still extremely robust. We saw a number of expansive and pro-defense rulings per 230 throughout the year, including Craigslist, Doe v. MySpace, Cisneros v. Yahoo and Goddard v. Google. Perhaps more importantly, in the three 230 cases I've seen since Roommates.com that cited to the opinion, all three cited the opinion in ruling for the defense.
* Battles over keyword advertising are hardly over, even though Utah officially backed off its attempt to ban them. The ABA IP Section tried to get into the act, and American Airlines sued Google, settled, and then sued Yahoo.
Top 11 Cyberlaw Developments of 2008
#11: Utah Trademark Protection Act repealed. The Utah Trademark Protection Act had the potential to throw the entire keyword advertising business into turmoil. Instead, now that it's repealed, it just remains as a dramatic reminder of the Utah legislature's incompetence regarding Internet legislation.
# 9 and 10: Fair Housing Council v. Roommates.com and Goddard v. Google. The Roommates.com en banc opinion makes the list based mostly on its potential consequences, not its actual effect. It remains one of the most significant pro-plaintiff incursions into the solidly defense-favorable interpretations of 47 USC 230, but it's so riddled with contradictory and ambiguous language that no one really knows what to do with it. I think Judge Fogel's reading of the case in Goddard v. Google has the potential to become the defining interpretation of the case, and his solidly defense-favorable reading of the precedent in excusing Google for ads placed by its advertisers may only reinforce how little Roommates.com changed the law.
#8: AV v. iParadigms. This case was a terrific win for online fair use enthusiasts because the for-profit commercialization of a database of third party copyrighted works was still deemed fair use. The upholding of the contract against the minors forced to enter into it was also significant. Before this ruling, my assumption is that any plaintiff trying to form a class action lawsuit in the face of an adverse user agreement could always form the class on behalf of any minors who had the right to void the contract. This case seems to shut down that loophole in user agreement protection.
#7: Io v. Veoh. The 17 USC 512(c) safe harbor has been law for over a decade and has produced a couple dozen rulings, but few are cleaner and more decisive for the defense than this one. It was a textbook example of a court rejecting the many different arguments plaintiffs make to kick a defendant out of the safe harbor, and as mentioned before, it was a great validation for Veoh's decision to do more than 512 required.
#6: Jacobsen v. Katzer. From a doctrinal standpoint, this case raises really difficult questions about how a copyright consumer can be bound to terms that he/she never "assented" to. Even so, this case had huge implications because it effectively validated that open source licenses can be binding on licensees, giving much more legal credibility to the entire multi-billion open source software industry. However, an odd footnote: on remand, the district court denied an injunction for the plaintiff, raising more issues about what exactly the plaintiff won at the Federal Circuit.
#5: Tiffany v. eBay. A fantastic validation of eBay's practices against a very serious and sympathetic challenger who had plenty of evidence that counterfeit goods were being sold on eBay's site. The case also shows that courts can grow tired of IP owners simply making up their own rules about how online sites should protect them and then suing the sites for breaching these artificial rules.
#4: Mazur v. eBay. A more scary case to 47 USC 230 defense enthusiasts than the Roommates.com opinion. The court says that eBay isn't protected by 230 for some of the marketing representations it makes, even if those representations are rendered untrue by third parties. While this makes a lot of doctrinal sense, it is also a green light for plaintiffs to mine a website's marketing representations as a way to bypass the otherwise-fatal consequences of 230 on a lawsuit triggered by user behavior or content.
#3: Google Book Search settlement. This makes the list for two independent reasons. First, many folks were hoping the case would establish solid precedent on online fair use, and the settlement ended that hope. Second, the proposed Book Rights Registry has the potential to reshape a number of major industries, including the book publishing business, the book retailing industry and the library industry.
#2: the Lori Drew prosecution. I think this may have been the most polarizing Cyberlaw development of 2008, exposing deep divides in people's appetite for punishing bad conduct online. It's hard to assess the overall implications of her conviction because no one rallied to praise Lori Drew's choices, and her case is still a ways from a final legal outcome. However, the possible implications of the case were so complex that it took a special three part series for me to explore its nuances (1, 2, 3).
#1: Cartoon Network v. CSC (the "Cablevision" case). Boy, the more I think about this case, the more important it becomes. The case upends our assumption that if we see it online, it's fixed, creating a new class of unfixed electronic works. Also, the court treats the users, not the service, as making the requisite copies, which reinforces the possibility that online providers can be just "dumb technology providers" for copyright law purposes and reinvigorates the possible defense that a service provider's copying is just done as a proxy for its users. However, the Supreme Court's ambiguous response to the cert petition--not yes, not no, but a request to the Solicitor General for comments--leaves this decision in a precarious position.
Other Developments of Special Note
47 USC 230
* Doe v. MySpace. The Fifth Circuit soundly rejects the argument that MySpace had an obligation to police its “premises.”
* Craigslist. Judge Easterbrook's language in Doe v. GTE had given plaintiffs some hope that the Seventh Circuit would provide a friendly venue to plaintiffs trying to overcome 47 USC 230. Judge Easterbrook may still love his language (which he quoted extensively in the Craigslist ruling), but his practical and no-nonsense ruling for the defense squelches the hope that the Seventh Circuit will become a plaintiff's haven.
* New Jersey's enforcement action against JuicyCampus. State AG offices HATE 47 USC 230.
Affiliate Liability
* Impulse Media. A jury thumped the FTC's overly expansive views of affiliate liability for spam.
* NY v. Direct Revenue. A state judge emphatically rejected the NY AG's office's expansive views of affiliate liability for adware.
Trademarks/Domain Names
* American Airlines' lawsuits against Google and Yahoo. No one I know fully understands why American Airlines sued Google for selling its trademarks for keyword ads. No one I know understands what concessions Google gave to American Airlines to settle the case. And no one I know understands why American Airlines decided to sue Yahoo after procuring the Google settlement. It's all a big mystery.
* NSI's grabbing of domain names in response to WHOIS queries. Is there any better example of ICANN's failings to police domain name retailers than to have one retailer selling a scarce good grabbing the good exclusively (blocking attempted sales by all other retailers) when a customer merely inquires about it?
* Kentucky's attempted seizure of 141 gambling-related domain names. As I wrote before, "Is a domain name property? Yes. See the Sex.com case. Can a plaintiff seize a domain name pursuant to a favorable judgment? Yes. Is it appropriate for Kentucky to seize domain names for gambling websites available in Kentucky? Of course not, because this would effectuate an extraterritorial reach by curtailing non-Kentucky residents from making possibly legal uses of the domain name."
* Eric Menhart, a lawyer who claims to practice Cyberlaw, doesn't know that Cyberlaw is a generic term.
* New gTLDs. Maybe I should reserve this development for 2009...if it happens.
Others
* McCain complains about 512(c)(3) notices taking down his YouTube videos. Surprise! 512(c)(3) notices are unforgiving. Sen. McCain, now that you've had a first-hand taste of their power, maybe you'd like to revisit the statute to see if it's producing the right incentives?
* FCC's bust of Comcast. The pro-regulatory forces were queued up to pounce on any examples where an IAP violated Net Neutrality principles, and Comcast's chicanery in forging reset packets was impossible for anyone to defend.
* NebuAd's flameout. Behavioral ad targeting is in our future unless regulators stop it. NebuAd won't be the winning provider of targeting services, but legislators will keep trying to regulate it further out of existence nonetheless.
Posted by Eric at 05:50 PM | Adware/Spyware , Copyright , Derivative Liability , Domain Names , E-Commerce , Internet History , Licensing/Contracts , Marketing , Publicity/Privacy Rights , Search Engines , Spam , Trademark | TrackBack
February 03, 2009
Social Networking Sites and Blogs Talk for Students
By Eric Goldman
Today I gave a talk entitled "Social Networking Sites and Blogs" for the on-campus Student Intellectual Property Law Association (SIPLA). My slides. In conjunction with this, I thought it might be useful to organize a bibliography of my previous postings and materials on these topics.
Blogs Generally
* Three part series on blogging: How I decide which blogs to read?, Should I blog? and If I decide I want to blog, how do I get started?
* LexBlog Q&A with Rob La Gatta, parts 1 and 2
* Blogging, Scholarship and the Bench and Bar Panel Recap
* North Carolina Blogging Conference Recap
* Recaps of the first and third gatherings of the Bay Area Blawgers
Blog Law
* A Guest Blogger's "Meta" Post About Guest Blogging
* Blog Content Aggregation, RSS Feeds and Copyright Law
* Steinbuch v. Cutler: New Lawsuit Over Blogging--Steinbuch v. Cutler, Steinbuch v. Cutler Update--Cutler's Motion to Dismiss, Steinbuch v. Cutler Update, Steinbuch v. Culter Update: Cox Out, Cutler Bankrupt, Steinbuch's Second Battlefront Against Cutler Shut Down
* BidZirk v. Smith: Griping Blog Post Leads to Lawsuit--BidZirk v. Smith and Blogger Wins Lawsuit Over Gripe Post--BidZirk v. Smith
* Defamation Lawsuit Against Blogger Dismissed on Jurisdictional Grounds--Fahmy v. Hogge
* Bloggers' Defamation Liability Not Dismissed--Saadi v. Maroun
* Blogger Protected by Anti-SLAPP Statute--GTX v. Left
* Connecticut Blogger Not Subject to Texas Jurisdiction--Healix Infusion v. Helix Health
* Co-Blogger Identity Isn't Disclosed via 512(h), but Takedown Letters Are Copyrightable
* Blog Defamation Lawsuit Lacks Jurisdiction--TrafficPower.com v. Seobook.com
Social Networking Sites Generally
* Social Networking Sites and the Law
* Facebook v. ConnectU. See also Facebook's Lawsuit Against Competitive Email Harvesting Continues--Facebook v. ConnectU
* Telephone Numbers as Identity Authenticators--Abrams v. Facebook
MySpace
* MySpace Defeats Sherman Antitrust Claim for Blocking Links to Competitor--LiveUniverse v. MySpace
* Lori Drew Conviction Reflections Parts 1, 2 and 3. See also Lori Drew Prosecuted for CFAA Violations--Some Comments, and a Practice Pointer
* MySpace Gets 230 Win in Fifth Circuit--Doe v. MySpace. See also MySpace Suit for Liability for Sexual Assault Dismissed and Doe v. MySpace.com --- Continued
* Principal Loses Lawsuit Against Students and Parents Over Fake MySpace Page--Draker v. Schreiber
Other Social Networking Sites
* Website Isn't Liable When Users Lie About Their Ages--Doe v. SexSearch and Doe v. SexSearch Affirmed by 6th Circuit, But Not on 230 Grounds
* Xanga.com Busted for COPPA Violation
Posted by Eric at 01:25 PM | Content Regulation , Derivative Liability , Internet History | TrackBack
January 28, 2009
Web Host Faces Potential Contributory Trademark Liability--Louis Vuitton v. Akanoc
By Eric Goldman
Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., C 07-03952 JW (N.D. Cal. Dec. 23, 2008)
This is one of countless anti-counterfeiting actions by luxury brands against allegedly infringing websites—but the twist is that the brand owner is going after the sites' web host. In Tiffany v. eBay, the big brand got very little traction against eBay based on eBay hosting auctions for allegedly infringing goods. This case doesn't turn out as well for the web host. The court, without citing Tiffany, leaves open the possibility that the web host could be liable for its customers' infringing activities. Why the difference?
Contributory Copyright Infringement
The court starts with contributory copyright infringement. The court doesn't clearly specify the direct copyright infringement taking place. It discusses evidence that the defendant's customers are selling counterfeit goods, but it doesn't connect the dots to show that the counterfeit goods are actually protected by copyright law. (It's not automatic that counterfeit goods infringe copyright).
Also, the DMCA online safe harbors are not mentioned, which makes sense if the copyright-infringing behavior is the actual sale of the counterfeit goods instead of publishing information about those goods. However, as we saw in the Tiffany case, the web host cannot determine if the goods being sold are actually counterfeit. Nevertheless, the court says a jury could find the web host had actual knowledge of the infringement due to a series of defendant emails and demands from the plaintiff. From my review, it appeared that the referenced emails involve the web host relaying the plaintiff’s takedown notices to the hosted customers, so I'm not sure how these emails could evidence knowledge of the counterfeiting.
With respect to material contribution, the court references the confusing language from Perfect 10 v. Amazon and the archaic Napster precedent to say that failure to take simple measures to stop infringement can qualify as a material contribution (a standard referenced in Amazon), and the web host here could easily disable the IP address of the putatively infringing website. As a result, its failure to take such simple steps could constitute material contribution.
All told, the contributory copyright infringement analysis in this case is heavily plaintiff-favorable. It appears that the plaintiff’s prima facie showing is (1) allegedly counterfeit goods being sold outside the host's purview (the direct infringement), (2) demand letters plus emails from the host to customers relaying takedown notices (knowledge), and (3) the host’s ability to turn off accounts or disable IP addresses (material contribution). This is a disconcerting standard, because just about every web host could satisfy this test.
Contributory Trademark Infringement
The court references the contributory trademark infringement standard from the Ninth Circuit's 1999 Lockheed v. Network Solutions case, requiring knowledge of the infringement plus “[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark.” In practice, it appears the court equates the contributory trademark and contributory copyright analysis. The court does so expressly for the knowledge prong, where the judge simply references its prior copyright discussion.
As for the host’s control, the court analogizes the host to an offline swap meet (just like Tiffany did), shoots down some of the defendant's arguments and then says that, per Fonovisa, the defendant cannot remain willfully blind to infringement on its servers. This sounds a lot more like a contributory copyright infringement analysis than the Lockheed “direct control and monitoring” requirement.
I was disappointed that the court (like so many others) does not address the web host's eligibility for the printer/publisher defense. This might very well be apropos to web hosts.
Other Claims
The court dismisses the vicarious copyright infringement claim because there was no evidence that the web host's profits varied with the infringing activity. The court also dismisses the vicarious trademark infringement because the web host lacked the requisite agency relationship with its customers (why do apparently smart IP lawyers routinely allege vicarious trademark infringement when there is no agency???).
Implications
I think the contributory trademark infringement ruling is entirely consistent with the obvious hole left open by the Lockheed case, which excused a domain name registrar for selling allegedly infringing domain names but implied that web hosts might be treated differently. More surprising, perhaps, is that in the decade since the Lockheed case, we've had almost no cases mapping out the boundaries of web host liability for contributory trademark infringement. It's remained one of those known Cyberlaw frontiers. While it's nice to get a case addressing that frontier, I wish it were more favorable to web hosts.
Posted by Eric at 10:11 PM | Copyright , Derivative Liability , Trademark | TrackBack
January 22, 2009
Brand Spillovers Article Now Available
By Eric Goldman
I have finally posted my article, Brand Spillovers, to SSRN. It will be published in the Harvard Journal of Law & Technology later this year. I have blogged about this project several times over the past 4 years, but for most of you, this is your first public opportunity to read the article in full. Please take a look!
This article has been in the works nearly 5 years, so a few words about this project. It started with my Deregulating Relevancy article. While writing that in 2004, I had a few paragraphs regarding the analogies between retailer shelf adjacency and keyword triggering--a popular meme then, and one that still gets used a lot. I ultimately removed most of that discussion from the draft and set it aside to explore in a separate paper. I initially conceptualized the paper about the role of physical and temporal adjacencies in trademark law, and I presented on that topic at Law & Society Association in May 2005. (See my slides from 2005).
After several drafts, many presentations and lots of very helpful comments, the paper has evolved substantially. The paper now explores the analogy between shelf adjacencies and keyword triggering in careful detail, explaining why the analogy is legally and factually complicated but also useful. My hope is that the paper will become the key reference any time anyone in the future wants to make that analogy.
Also, the paper is one of the few articles that analyzes the unique role of retailers in trademark infringement lawsuits. My research suggests that retailers are universally ignored by trademark lawyers, judges and regulators, even though retailers do a lot of things with third party trademarks that look actionable. I've thought a lot about this over the past 5 years, and I keep coming back to the unavoidable conclusion that trademark plaintiffs seem to be erring by not suing more retailers even in manufacturer-vs-manufacturer lawsuits. The paper tries to explain why retailers get a free pass nonetheless, but if you have alternative explanations after reading my attempts, I would be extremely grateful.
Finally, this paper is noteworthy because it is the last stop in a multi-year project on how trademark law can damage the Internet. Other papers in the series include Deregulating Relevancy, Online Word of Mouth (which also was a branch-off of the Deregulating Relevancy article) and, to a lesser extent, a Coasean Analysis of Marketing. I'm still interested in Internet trademark law, but next few projects are going to focus on other topics. The next article in queue is a short essay detailing why Wikipedia will fail. After that, I will be focusing on my Economics of Reputational Information project, which I expect to be working on over the next couple of years, and a big stealth project.
In any case, the Brand Spillovers paper remains a draft, and I have limited opportunities to make changes. Accordingly, I gratefully welcome any comments you have.
The abstract:
This Article considers the spillover effects of trademarks—in particular, “brand spillovers,” which occur when consumer interest in a trademark increases the profits of third parties who do not own the trademark. Using techniques such as loss leaders and shelf space adjacency, retailers routinely create brand spillovers for their profit, and trademark law generally has not restricted these activities. Online intermediaries, such as search engines, also create and profit from brand spillovers by selling manufacturers’ trademarks for advertising purposes (“keyword triggering”). However, in contrast to retailer practices, keyword triggering has sparked a heated and irresolute battle over its legitimacy under trademark law. By drawing lessons from retailers’ experiences with brand spillovers and through an analysis of the ways intermediaries can add value to consumers, this Article offers a new way to resolve the keyword triggering debate. The Article proposes that all intermediaries—including both retailers and online intermediaries—should be permitted to use brand spillovers as part of their effort to reduce consumer search costs, even if the intermediaries profit from the brand spillovers along the way.
Posted by Eric at 09:57 AM | Derivative Liability , E-Commerce , Marketing , Search Engines , Trademark | TrackBack
January 19, 2009
Rip-off Report Rolls to Another Win--GW Equity v. Xcentric Ventures
By Eric Goldman
GW Equity LLC v. Xcentric Ventures LLC, 2009 WL 62173 (N.D.Tex. Jan. 9, 2009)
I previously blogged about this case in October when the magistrate judge issued his report and recommendations finding that Rip-off Report was immune from the plaintiff's claims per 47 USC 230. I thought that ruling was noteworthy because it addressed--and rejected--three principal arguments that plaintiffs use against the Rip-off Report:
1) Rip-off Report offers users pulldown menus to tag their reports
2) Rip-off Report writes titles and other parts of user reports
3) Rip-off Report profits from its Corporate Advocacy Program
As I mentioned in my last post, the plaintiff objected to the magistrate recommendations, so the district court judge reviewed the objections. In this careful and thoughtful ruling, Judge O'Connor overrules the objections and upholds the magistrate recommendations in total--affirming summary judgment dismissal in favor of Rip-off Report.
Although the judge doesn't add much new analysis to the magistrate report, there are still some good nuggets:
* the MCW precedent (a rare adverse ruling for the Rip-off Report) is distinguishable because it only dealt with a motion to dismiss, not summary judgment.
* the Roommates.com en banc ruling does not apply because that decision turned on the fact that merely asking the discriminatory question was illegal under the Fair Housing Act, whereas here the pulldown tagging options are not per se illegal.
* the opinion discusses Rip-off Report's "content monitors," who in some cases admitted that they have added the words "rip-off," "fraud" and geographic information to user-submitted postings. However, the testimony indicated that it had been "years" since the word "rip-off" was added by Rip-off Report, and any added geographic information would be inconsequential to the legal analysis.
* in a different lawsuit involving GW Equity, Dickson Woodard testified in a deposition that Magedson, not Woodard, wrote some postings putatively from Woodard. The court does not permit the deposition to be introduced in this case because Rip-off Report did not have a chance to participate in that deposition.
* In this lawsuit, the plaintiffs introduced an affidavit from Josh Bammel that he uploaded negative reports about GW Equity to Rip-off Report and the published reports contain words he didn't write. At his deposition, he acknowledged that he had been drinking before making the postings, and in his words, "[a]fter four or five Crown and Cokes, man, you aren’t going to remember what you wrote." It reminds me a little of the Lucy v. Zehmer case, where the putative seller of real property--documented in a bar on a bar receipt--said that he was "high as a Georgia pine." With an admission like this, the affidavit was properly excluded.
Posted by Eric at 07:56 AM | Derivative Liability | TrackBack
January 13, 2009
47 USC 230 Talk for Businesspeople
By Eric Goldman
As I mentioned in my previous post, I will be speaking tonight in Sacramento about 47 USC 230. The audience will have a heavy component of businesspeople mixed among the lawyers. Although I've spoken frequently about 230, I couldn't recall the last time that I had an extended presentation in front of non-lawyers about 230. So I put together a new slide deck entitled "Introduction to 47 USC 230."
Posted by Eric at 11:09 AM | Derivative Liability | TrackBack
January 07, 2009
December 2008 Quick Links, Part 1
By Eric Goldman
Copyright
* Stockwire Research Group, Inc. v. Lebed, 577 F .Supp. 2d 1262 (S.D. Fla. Sept. 18, 2008). $2.5M default judgment for violation of anti-circumvention provisions.
* The RIAA announced that it is shifting away from suing its customers to putting more pressure on Internet access providers to do their dirty work. Fred at EFF and Mike Masnick weigh in. But Mike wonders if the RIAA is really changing its practices?
* Capitol Records v. Thomas, No. 06-1497 (MJD/RLE) (D. Minn. Dec. 23, 2008). In the Jammie Thomas case, the judge refused to certify the "making available" theory for an interlocutory appeal.
Trademarks/Domain Names
* Nerds on Call (Indiana) v. Nerds on Call (California), 1:07-cv-00535-DFH-TAB (S.D. Ind. Dec. 22, 2008):
The court realizes that a simple internet search for "nerds on call" could return the Nerds/California site. If a person has lived in Indiana and used Nerds/Indiana's services before, the person might be confused momentarily. Given trademark law's explicit approval of concurrent uses of marks in different geographic areas or product markets, see 15 U.S.C.A. §1052(d), this momentary confusion on the internet is not a sign of intentional targeting. The internet is available worldwide. Use of a locally established trademark on a website may cause momentary confusion among consumers. The solution to that problem is not to require that all trademarks be given worldwide effect even if their non-web use is limited to a narrow geographic area. Instead, users of the web simply need to understand that a worldwide web search may turn up results from distant businesses.
* Saint Louis University v. Meyer, 2008 WL 5412263 (E.D. Mo. Dec. 24, 2008). SLU allegedly threatened to close the student newspaper, so the paper's faculty advisor registered a new non-profit organization with the secretary of state under the name "The University News, a Student Voice Serving Saint Louis University Since 1921" in case the students wanted to go independent. The university and the students worked out a deal, and the faculty advisor promptly dissolved the organization without ever having done anything with it. Still, the university sued the advisor for trademark infringement, dilution and other claims. In this ruling, the court rejects most of the claims because the advisor never made a "trademark use in commerce." Why was the university suing its own tenured faculty member for forming and then promptly dissolving a non-profit organization without ever using it? Makes no sense to me.
* 1-800 Contracts, Inc. v. Lens.com, Inc., 2008 WL 5191705 (D. Utah Dec. 10, 2008). In a trademark lawsuit over keyword purchases, Lens.com is hit with sanctions for discovery abuses.
* The EFF has collected amicus briefs in the Tiffany v. eBay appeal to the Second Circuit.
* WSJ on the growth in numerical SLDs.
* Paul Levy shines the spotlight on yet more questionable marketing practices by Lifestyle Lift.
Linking
* GateHouse v. New York Time. The CMLP page. Another silly anti-deep linking and headlines-as-copyright infringement lawsuit, this time between two media companies. Some of the claims are clearly off-base, like the trademark claims. Note to dilution plaintiffs: it is almost impossible by definition to be both a hyper-local business and a famous trademark. Also oxymoronic is the allegation that the sites are competitors when a competitor is prominently promoting the website and apparently passing PageRank. If you are my competitor and would like to pass me some PageRank, I would be happy to chat. The most novel part is the plaintiff's attempt to use the Creative Commons license as an affirmative contract to claim breach of contract. I can't recall a similar allegation in the past where the Creative Commons license was used as a sword instead of a shield. Finally, the complaint doesn't mention anywhere that the plaintiff's website apparently offers RSS feeds, which raises a bunch of problems for its arguments.
* McVey v. Day, 2008 WL 5395214 (Cal. App. Ct. Dec. 23, 2008). This is a dispute between rival members of the teacher's union. Among other activities, the defendant sent an email linking to a website that had allegedly defamatory statements about the plaintiff, but the website's statements were authored by third parties. In this ruling, the court grants the defendant's anti-SLAPP motion, saying that the defendant wasn't liable for the emailed links per 47 USC 230. This is another nice anti-SLAPP win for Internet content, following on December's Higher Balance case.
Some Personal Notes
* I'll be at AALS and plan to attend the blogger's get-together Thursday night. If you're going to be around, hope to see you there!
* If you're in the Sacramento area on January 13, come to this free event!
* Most of you know that I maintain my personal blog for posts that don’t really belong on this blog. But you may not know that I’ve also been Twittering with some regularity. Check it out!
* Good news: this blog is a finalist for Best Law Blog from Weblog Awards.
Posted by Eric at 09:48 AM | Copyright , Derivative Liability , Domain Names , Marketing , Search Engines , Trademark | TrackBack
January 05, 2009
Veoh Gets Another Nice 512(c) Win--UMG v. Veoh
By Eric Goldman
UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D. Cal. Dec. 29, 2008)
Last year, in Io v. Veoh, online video sharing site Veoh got a significant win under the DMCA online safe harbors (17 USC 512(c)). That opinion makes my list as one of the top 10 cyberlaw cases of 2008, and I'm considering teaching it in Cyberlaw next year.
Last week, Veoh--a site where users upload and share video--got another nice 512(c) win. UMG claimed that the following activities by Veoh did not constitute "storage at the direction of a user":
"(1) automatically creating “Flash-formatted” copies of video files uploaded by users; [the Io court had already ruled that this didn't block a 512(c) defense]
(2) automatically creating copies of uploaded video files that are comprised of smaller “chunks” of the original file;
(3) allowing users to access uploaded videos via a technology called “streaming”;
(4) allowing users to access uploaded videos by downloading whole video files"
UMG's statutory reading is novel, but this is partially due to the fact that it's a really goofy way of reading the statute. Accordingly, the court rejects UMG's argument that any of these technological manipulations of user-uploaded videos disqualify Veoh from coverage under 512(c). This does not mean Veoh will qualify for 512(c)--the court wasn't opine on that issue--but the court's opinion is a strong signal that Veoh will qualify.
I don't expect the ruling to have much bearing on the Viacom v. YouTube case. I don't recall Viacom making the goofy statutory argument that UMG made here, so this ruling should be tangential to the arguments in that case. On the other hand, the ruling adds another defense-favorable interpretation of 512(c) as applied to online video sites and gives another data point that the courts just aren't buying the copyright owners' arguments. Maybe that will help nudge Viacom and YouTube to settle.
Posted by Eric at 07:25 AM | Copyright , Derivative Liability | TrackBack
December 30, 2008
Doe v. SexSearch Affirmed by 6th Circuit, But Not on 230 Grounds
By Eric Goldman
Doe v. SexSearch.com, 2008 WL 5396830 (6th Cir. Dec. 30, 2008)
I previously summarized this case as follows:
Defendants operate a website that helps people hook up to have sex. Roe posted a profile saying that she was 18 and wanted sex. After Doe connected with Roe via the profile, they met offline at Roe's home and had "consensual" sex. But Roe was actually 14, and Doe was busted for felony statutory rape. Doe turned around and sued the website on 14 counts, which the court summarizes as claims that "(a) Defendants failed to discover Jane Roe lied about her age to join the website, or (b) the contract terms are unconscionable."
In August 2007, the district court dismissed the case. Frankly, I always thought this should be an easy case for the reason articulated by the district court judge: "Plaintiff clearly had the ability to confirm Jane Roe’s age when he met with her in person, before they had sex, yet failed to do so." But fitting the claim into legal doctrines is trickier, and the district court relied on both 47 USC 230 and substantive contract/marketing law to dismiss the case.
On appeal, the defendant fared no better, and the Sixth Circuit has little trouble dismissing the case. However, the Sixth Circuit disavows the district court's 47 USC 230 discussion:
we do not reach the question of whether the Communications Decency Act provides SexSearch with immunity from suit. We do not adopt the district court’s discussion of the Act, which would read § 230 more broadly than any previous Court of Appeals decision has read it, potentially abrogating all state- or common-law causes of action brought against interactive Internet services.
The court instead dissects the substantive contract and marketing law claims one-by-one (all 14 of them) to show why none of them were valid. The opinion is a pithy read, so if you're interested in seeing how an online contract survives a multi-front attack, check it out. I did get a chuckle out of the part when the court explains why the contract's dollar cap wasn't unconscionable: "Given the nature of the service, which encourages members to meet in person for sexual encounters, SexSearch’s potential liability is nearly limitless. For example, arrest, diseases of various sorts, and injuries caused by irate family members or others may be the result of such hedonistic sex. When selling such services, then, it is commercially reasonable for SexSearch to limit its liability to the price of the contract."
It's easy to see why the Sixth Circuit was troubled by the 230 issues in this case. This case involves a knotty question that has become a blog perennial: when is a website liable for its marketing representations that are rendered false by user content or actions? In this case, the website said in a variety of ways that users were over 18, but it never authenticated users' ages, and Roe affirmatively lied about her age. As I've mentioned before, this creates a legal conundrum--on the one hand, websites should be responsible for the marketing representations that they choose to make; but on the other hand, this can open up a bypass to 230 as plaintiffs use the marketing representations as a proxy to hold websites liable for third party content. I'm disappointed the Sixth Circuit didn't decide to tackle this issue head-on, but I understand why they chose to sidestep the issue and make clear that they weren't ratifying the district court's rationale.
I noticed that the court also doesn't mention Doe v. MySpace, the recent Fifth Circuit 230 opinion also involving online hook-ups leading to offline statutory rapes. That case turned on a negligence-style "premises liability" theory rather than a breach of contract/false marketing representation theory, but the Sixth Circuit could have tried to equate the two if it wanted (especially in its discussion about "failure to warn").
So, where does this ruling leave us? This ruling, along with the Goddard opinion from earlier this month, reinforces that plaintiffs trying the breach of contract/false marketing representations workaround to 47 USC 230 still have to establish their prima facie substantive case or they will be dismissed (in this case, on a 12b6 motion). Plus, numerous district court cases still hold that 47 USC 230 applies to false marketing representations, including the Mazur and Friendfinder cases from earlier this year. So I think the news remains very, very good for defendants. Nevertheless, I remain confused about the precise boundaries between 47 USC 230 and breach of contract/false marketing representations, and clarity will have to wait until 2009 (or beyond).
Unless something really big happens in the next 36 hours, I'll see you in 2009. Happy new year!
Posted by Eric at 09:53 AM | Derivative Liability , Licensing/Contracts , Marketing | TrackBack
December 29, 2008
MySpace Defeats Sherman Antitrust Claim for Blocking Links to Competitor--LiveUniverse v. MySpace
By Eric Goldman
LiveUniverse, Inc. v. MySpace, Inc., 2008 WL 5341843 (9th Cir. Dec. 22, 2008). The June 2007 district court ruling in MySpace's favor. LiveUniverse's Nov. 2006 press release upon filing the lawsuit.
LiveUniverse runs VidiLife.com, which it characterizes as a social networking site that competes with MySpace. There is also some personal drama here: LiveUniverse's CEO is Brad Greenspan, the former CEO of eUniverse/Intermix--the company that sold MySpace to News Corp in 2005 for a half-billion dollars, although Greenspan opposed the deal at the time and remains disgruntled to this day.
In October 2006, MySpace allegedly redesigned its site to block VidiLife.com, including allegedly preventing MySpace users from embedding LiveUniverse-hosted videos into their MySpace pages or even mentioning VidiLife on MySpace. LiveUniverse sued MySpace for a Sherman antitrust violation and 17200 unfair competition.
In an opinion unfortunately designed as non-precedential, the Ninth Circuit dismissed the Sherman Act and 17200 claims, saying that MySpace could break links to competitive sites if it wanted and that such behavior did not constitute an actionable "refusal to deal." While the opinion itself is brief and unremarkable, the implications of this ruling are potentially significant:
First, I see this case as an interesting and useful counterpart to the KinderStart v. Google case (and, to a lesser extent, the Person v. Google and Langdon v. Google lawsuits). In KinderStart, the court said that Google wasn't liable for its editorial decisions about indexing and ranking third party sites, including sites that compete with Google. This case extends those principles to kibosh a possible Sherman Act "refusal to deal" bypass to the KinderStart ruling.
Second, I remain intrigued that my limited review of materials never revealed a good explanation for exactly what changes MySpace made in October 2006 and why it did so. Perhaps the explanation is somewhere, but it certainly wasn't front and center. Could MySpace be systematically interfering with user outlinks not for putatively legitimate reasons (such as to reduce the risks of drive-by downloads or the in-line linking of unwanted porn) but instead for questionable motivations, such as reducing its users' awareness of competitors or a personal vendetta against a former CEO? Greenspan's initial press release indicated that in 2005 and 2006 MySpace also tried to block outlinks to similarly competitive YouTube and Revver before MySpace users revolted against those blocks. I'm glad the marketplace mechanisms worked there, but I'd still like to know more about MySpace's practices and motivations. Public scrutiny and monitoring can be a reasonably good substitute for legally compelled disclosures, but I wonder if MySpace's choices are getting enough attention. I can't vouch for its authenticity, but I thought this was a fascinating and disturbing chart. Not that I was in the target audience anyway, but if this chart is anywhere close to correct, MySpace sure doesn't look like the right community for me.
Third, the case didn't discuss 47 USC 230(c)(2), the statutory immunization for filtering decisions. It seems fairly obvious to me that the statute should protect MySpace's filtering choices--even from an antitrust challenge so long as the challenge is civil, not criminal. We should learn a lot more about 230(c)(2) from the Ninth Circuit's ruling in the Zango v. Kaspersky case, which is still pending on appeal.
Fourth, I try to stay away from net neutrality topics, but this case may have some implications for that debate. My understanding is that some anti-net neutrality advocates argue that antitrust law, including the Sherman Act, will regulate discriminatory decisions made by the carriers sufficient to deter bad practices. That may be true, but here the court rejects a refusal-to-deal challenge when one online competitor freezes out another online competitor. This might portend poorly for a refusal-to-deal challenge to non-neutral practices by carriers, which in turn might eliminate a safety valve that the anti-net neutrality folks have pointed to as an alternative to regulation. Don't get me wrong, I'm very suspicious of net neutrality regulation, but this case might indicate that existing regulations won't prohibit discriminatory carrier practices as well as some people hope.
Posted by Eric at 11:59 AM | Content Regulation , Derivative Liability , Search Engines | TrackBack
December 24, 2008
Stress-Relieving Company Gets Anti-SLAPPed Per 230
By Eric Goldman
Higher Balance, LLC v. Quantum Future Group, Inc., 2008 WL 5281487 (D.Or. Dec. 18, 2008). The defendants' (lengthy) celebratory blog post.
If you're a 47 USC 230 junkie like me, there are few better Christmas gifts than a nice defense-side 47 USC 230 win. So just when I thought I was done blogging for the holidays, this goodie appears in my satchel. Ho ho ho!
Maybe I'm overcome by the holiday feeling, but I naively assume that a company selling products to help "customers relieve stress, reduce anxiety, and achieve emotional balance and spiritual enlightenment though meditation techniques” wouldn't need to use tough litigation tactics. But this lawsuit belies my utopianism. Can't we all just get in touch with our chakras?
The plaintiff is in the stress-relieving business. The defendants all have some connection to SOTT.net, a/k/a "Sign of the Times," a website that describes itself as "The World for People Who Think." Depending on your definition of "think," they should have either a very large or very small audience, but a few moments poking around the site left me baffled about their editorial focus. (Pictures like this one are interesting and slightly disturbing, but I don't quite understand the message). Their "quick guide" isn't very quick and doesn't do much to guide me, but I get a vague sense that the site may occasionally dabble in conspiracy theories.
OK, back to the lawsuit. Laura Knight-Jadczyk is the key defendant in this lawsuit. In response to some anonymous postings on an SOTT.net message board, Laura allegedly posted disparaging comments about the plaintiff (HBI) to the website, including alleged assertions (quoting from the court's opinion) "that “HBI is a ‘front for pedophilia;’ HBI is a “cointelpro” organization; HBI markets nothing more than an act of “falling into confluence with a psychopathic reality;” and HBI is “conning” the public." Other SOTT.net forum moderators also posted some allegedly defamatory material. The plaintiff sued Laura plus:
* her employer, QFG
* QFS, a think-tank operated by QFG
* the SOTT.net website. Laura pays the website's expenses and the domain name is owned by her husband
The plaintiff alleged that these parties fund each other's activities and share a common physical location. The plaintiff does not appear to have sued the anonymous posters who contributed to the allegedly defamatory discourse.
This opinion rules on the defendants' joint anti-SLAPP motion. The court grants the motion for Laura because the assertions were her protected opinions and for the other defendants per 47 USC 230.
The court establishes the defendants' two required elements of Oregon's anti-SLAPP statute:
* "Website forum pages allowing users to read and post comments free of charge constitute a public forum under the anti-SLAPP statute."
* "There is no doubt that the statements here were made in connection with an issue of public interest, specifically, the quality of HBI's products and services developed by Pepin [HBI's co-founder]."
With these two points established, the burden shifts to the plaintiff to establish its prima facie case. Laura is the putative tortfeasor, so QFG, QFS and SOTT all claim 47 USC 230 for her postings. The plaintiff responded that these parties are alter egos of Laura, but the court rejects that assertion: "Notwithstanding significant links between Knight-Jadczyk, QFG, QFS, and SOTT that indicate some measure of control over general operations, plaintiff fails to show control over the specific conduct at issue that is required to find QFG, QFS, and SOTT alter egos or instrumentalities of Knight-Jadczyk."
The plaintiff also argued that some of the forum moderators were QFS employees, but the court says that the plaintiff failed to make the requisite evidentiary showing. As a result, all of the forum moderators are third parties for 47 USC 230 purposes, and the defendants aren't liable for their postings either.
In addition to validating that robust online message board discussions can be protected and evidencing the power of anti-SLAPP motions to quickly quash unmeritorious lawsuits, this opinion reinforces that:
1) Website operators aren't liable for the work or postings of independent forum moderators. This is consistent with the recent Best Western v. Furber case.
2) Employers can claim 47 USC 230 protection for employee actions that they do not control. This reminds me a little of the Delfino v. Agilent case.
3) Attempts to get around 47 USC 230 by alleging that the defendants are “alter egos” of each other are unlikely to work, just like the “aiding and abetting” pleadaround also fails.
Posted by Eric at 11:19 AM | Content Regulation , Derivative Liability | TrackBack
December 22, 2008
Lawsuit Over Google Ads for Mobile Services Dismissed Per 230--Goddard v. Google
By Eric Goldman
Goddard v. Google, Inc., 2008 WL 5245490 (N.D. Cal. Dec. 17, 2008). My initial post when the complaint was filed. The Justia page.
Goddard sued Google because Google displayed third party AdWords ads for allegedly fraudulent mobile subscription services. On its face, this lawsuit appeared preempted by 47 USC 230 (consistent with other opinions granting 230 for third party ads, such as the recent Cisneros case), although the plaintiff included some allegations to try to get around 230. No such luck for them. This ruling kicks the lawsuit out on 230(c)(1) grounds with leave to amend (more on that in a moment).
I'm a big fan of Judge Fogel's opinions. He's a meticulous and thoughtful judge, and his opinions are always carefully constructed. In particular, this opinion is a terrific read for anyone who would like to see a cutting-edge 230 opinion. It discusses many of the major recent 230 cases (Roommates.com, Mazur, Doe v. MySpace, Craigslist, National Numismatic) and contextualizes them nicely. It's like a 230 year-in-review opinion. If you want a one-stop resource to see what's happened in 47 USC 230 jurisprudence in 2008, read this opinion.
Among other interesting aspects, this is the first opinion by a Ninth Circuit-bound district court judge that has a robust analysis of how Roommates.com applies to the case. (Roommates.com has been cited in a few other opinions, but usually in a very cursory fashion). Judge Fogel deftly wrestles with the multiple contradictory provisions of Roommates.com, noting that it is principally is a defendant-favorable ruling with only a thin layer of plaintiff-side opportunity. For example, Fogel reads the Roommates.com opinion very narrowly when he says "The [Roommates.com] court emphasized repeatedly that the website lost immunity only by forcing its users to provide the allegedly discriminatory information as a condition of access." The opinion did say that, but I'm not sure about the "only," and it said lots of other contradictory things as well.
The Unfair Competition Claim
The plaintiff argued that Google engaged in 17200 unfair competition by receiving funds from fraudulent ads. Though this may be a novel way of framing Google's involvement, it doesn't adequately mask the underlying argument that the defendant should lose 230 coverage because it received an economic benefit from third party tortious conduct--an argument that has been rejected many, many times before and doesn't fare any better here. The court reframes the argument as a premises liability argument and rejects it per Gentry and Doe v. MySpace.
Along the way, the court addresses the plaintiff's allegation in the complaint that Google helped draft the impermissible ad copy. The plaintiff didn't press this point after the complaint, and the court says (referencing its reading of Roommates.com) that "there is no suggestion in the current record that Google “encouraged” the [advertisers] to create the allegedly fraudulent content, or that the creation of such content was anything less than voluntary."
The court also addressed the plaintiff's argument that the claim was anchored in the federal anti-money laundering criminal statute and therefore should drop out of 230 per the exclusion for federal criminal law (230(e)(1)). The court correctly rejects this but doesn't cite precedent on this point, missing Doe v. Bates.
Breach of Contract/Negligence
The plaintiff's other main attack vector is that Google should be liable because it failed to enforce a provision in Google's AdWords contract with advertisers restricting fraudulent conduct. I've complained repeatedly about arguments trying to treat a vendor's contractual negative behavioral restriction as an affirmative representation by the vendor that such behavior won't occur on the website (my latest rant on this point). Fortunately, Judge Fogel has little difficulty rejecting this argument, correctly pointing to the Green v. AOL precedent involving the distribution of third party viruses in an AOL chatroom (the Noah v. AOL precedent would have been an appropriate additional citation).
To try to get around this, the plaintiff cites to the Mazur case, which said that eBay can be liable for its affirmative marketing representations even if they are rendered untrue by third party conduct. I've repeatedly expressed my concern that the Mazur case is a more scary ruling to defendants than Roommates.com, but this opinion slightly calms my fears. Judge Fogel correctly notes that Google never made affirmative marketing representations on this point and the negative behavioral restrictions in the AdWords contract weren't an affirmative marketing representation.
Google also argued that this line of claims are barred by 230(c)(2), the immunization for filtering decisions. Citing to National Numismatic v. eBay, Judge Fogel rejects the argument based on the statutory list of immunized harmful content, saying "the relevant portions of Google's Content Policy require that [advertisers] provide pricing and cancellation information regarding their services. These requirements relate to business norms of fair play and transparency and are beyond the scope of § 230(c)(2)." I'm not sure the 230(c)(2) argument was Google's strongest, but I would have loved to see Judge Fogel unpack this discussion and the implicit assumptions a little more.
Aiding and Abetting
Finally, the court rejects the attempted 230 pleadaround that Google aided and abetted the advertisers, saying "there are no allegations here that Google “developed” the offending ads in any respect." (Cite to Roommates.com).
Leave to Amend
Given that this case was filed after the Roommates.com en banc opinion, and therefore the plaintiff had the chance to structure the complaint based on a reading of the latest Ninth Circuit standard, it would have made sense to dismiss this complaint without leave to amend. Instead, Judge Fogel gives the plaintiff another chance and articulates his reading of allegations that should survive 230 preemption:
there may be instances in which an internet content provider will be considered “ ‘responsible’ at least ‘in part’ for [posted third-party content] because every [posting] is a collaborative effort” between the internet provider and the third-party content provider. Fair Housing Council, 521 F.3d at 1167. If Plaintiff could establish Google's involvement in “creating or developing” the AdWords, either “in whole or in part,” she might avoid the statutory immunity created by § 230. In light of that possibility, Plaintiff will be given an opportunity to amend her complaint in order to allege such involvement.
Reading between the lines, the writing is on the wall for this lawsuit. The plaintiff can't win, and it would be a mistake for the plaintiff to refile. The judge even says as much in a footnote to this quote, saying "at present it appears unlikely that Plaintiff can" make the requisite allegations. Nonetheless, I'd be shocked if the plaintiff didn't refile. If they do, I hope Judge Fogel vigilantly polices the boundaries of Rule 11 for any allegations the plaintiffs make but can't back up--just like he did in the KinderStart v. Google case.
A Final Point
By my count, this is the third post-Roommates.com case where Roommates.com has been cited in favor of the defendant in kicking the case out of court. (The other two are Best Western v. Furber and GW Equity). In contrast, I am not aware of any case yet citing Roommates.com in favor of a plaintiff. It's obviously early, but at this point the limited evidence suggests that Roommates.com was not a watershed change to 230 jurisprudence. On that basis, Roommates.com may not be as bad a substantive ruling as we had initially feared.
Posted by Eric at 07:48 AM | Derivative Liability , Marketing , Search Engines | TrackBack
December 15, 2008
Lori Drew Conviction Reflections, Part 2 of 3: Who is Bound by Clickthrough Agreements?
By Eric Goldman
[Note: this is Part 2 of a special 3-part series on the Lori Drew conviction. Part 1 discussed why MySpace, the putative victim of Lori Drew’s crime, might end up regretting the conviction. Part 3 will discuss some lessons for Cyberlawyers who draft online user agreements.]
From everything I’ve seen, Lori Drew apparently never affirmatively manifested assent to the MySpace user agreement. My understanding is that Drew’s babysitter, Ashley Grills, testified that she, not Drew, created the MySpace account and clicked through the MySpace user agreement. (I understand that the jury disbelieved Grills, although I am not aware of any contrary testimony on this point). Furthermore, I am not aware of any testimony that Grills informed Drew that Grills was accepting the MySpace user agreement on Drew’s behalf or that Grills provided any other form of notification to let Drew know that a contract was being formed--let alone educating Drew about the terms of that contract.
If this is true, then how can Drew be legally connected to the contractual restrictions that she was convicted of violating? Principal-agency doctrines would be one way. If Grills was Drew’s agent, then Grills would have actual or implied authority to bind Drew contractually. However, I am skeptical that Grills was Drew’s agent for contract formation purposes. First, I am not clear about whether Grills was Drew’s employee or was an independent contractor. The latter status would cut off most forms of agency liability for Drew. Second, even if Grills was an employee, it is difficult to argue that entering the MySpace user agreement was within the scope of Grills’ employment, even if it was putatively done at Drew's request.
As a result, I think the only way Grills could bind Drew to the MySpace user agreement was via the apparent authority doctrine. This argument is not completely untenable. For example, in the 2005 Abramson v. AOL case, the plaintiff’s son bound his mother to the AOL user agreement based on his apparent authority to act on her behalf. (The court also said that mom ratified the contract by continuing to use the service knowing of the contract terms). Similarly, an earlier 2004 case, Motise v. AOL (briefly discussed here), held that a stepfather bound his stepson, who shared use of the same computer, to the AOL user agreement.
It should be obvious why the courts have reached these conclusions. After all, if a click on the clickthrough agreement binds only the clicker, but the vendor cannot authenticate the identity of the person who clicked, then online user agreements could be easily defeated by anyone who simply claims someone else using their computer did the clicking. Consider an analogy (I’ve been holding this one as a possible future contracts exam question, but oh well): is a contract formed when a retailer cashier presses the “OK” button on the credit card swiping pad on behalf of a befuddled/distracted customer who is holding up the line? I’ve seen this happen dozens of times, but could the customer renege on the contract because he/she wasn’t the one literally pressing the button?
At the same time, the Abramson and Motise cases both involved family relationships. Although family members don’t automatically have agency authority to bind other family members, judges seeking equitable results would have little discomfort holding family members accountable for their online clicks. In contrast, the Grills-Drew relationship wasn’t familial and therefore not as susceptible to equitable readings.
More importantly, it’s one thing to use apparent authority to uphold a venue selection clause in a civil lawsuit (the only stakes at issue in the Abramson and Motise cases), but it’s quite another to apply that doctrine, or something similar, in the criminal context with the consequences of depriving liberties based on a user agreement the defendant never saw and didn’t affirmatively agree to. Indeed, I am not aware of any evidence that Drew ever learned of any applicable restrictions in the MySpace user agreement or otherwise “ratified” the agreement.
Therefore, based on everything I’ve seen, Grills would have been an appropriate target for criminal enforcement predicated on the MySpace user agreement because she actually clicked through. In contrast, holding someone else legally responsible for that click, especially if they never learned of the contract terms, makes no sense. Convicting them of a crime based on these contract terms is unconscionable.
More generally, the issue of who is bound by a click (other than the clicker, of course) seems like a recurring issue for the future. I’m not sure if we can draw too many insights from Drew’s conviction on this question, but this case—combined with Abramson and Motise—does suggest that courts and juries may take an expansive view of the circle of responsibility for clicks. While this is fantastic news for the sites trying to form these user agreements, in the criminal context, it can be tragic.
Posted by Eric at 11:39 AM | Derivative Liability , Licensing/Contracts | TrackBack
December 12, 2008
Lori Drew Conviction Reflections, Part 1 of 3: Why MySpace Might Regret the Conviction
By Eric Goldman
[As I’ve mentioned before, I think Lori Drew’s conviction is a tragic denouement to an already tragic situation. After thinking more about the conviction, I initially planned to blog some brief additional commentary to my initial post. However, that post grew so long that I decided to split it into a special three-part series. This post, Part 1, explains why MySpace, the putative victim of Lori Drew’s crime, might end up regretting the conviction. Part 2 will address some problems with holding Lori Drew responsible for a contract she never clicked through. Part 3 will discuss some lessons for Cyberlawyers who draft online user agreements.]
On this year’s Cyberlaw exam, I tested students on the federal crimes exception to 47 USC 230. As I’ve thought more about that, I realized that once Lori Drew was convicted of a federal crime, everyone else associated with Drew lacks 47 USC 230 protection if the government decides to prosecute them as well.
As a result, if overzealous prosecutors decided to prosecute any of Lori Drew’s online support vendors—such as, say, her Internet access provider—these additional defendants cannot defend using 47 USC 230. Of course, prosecutors may not be able to establish a prima facie claim against these third parties, but the point remains that companies that normally expect to rely on 47 USC 230 for user behavior now face a new exposure risk.
The most obvious potential defendant who might fear this consequence is MySpace, which facilitated the fateful conversation between Drew/Grills and Meier. However, Drew was convicted of violating the Computer Fraud & Abuse Act, which protects against harms to computer servers. This means that, as a matter of criminal law, MySpace was the victim of Drew’s crime in this case.
It’s easy to forget that MySpace is the victim. First, for a victim of such a high profile case, MySpace has been surprisingly quiet in this matter. I believe MySpace provided some support to the prosecution and made a few public remarks critical of Drew, but overall my impression is that they have tried to avoid public scrutiny of their role in this tragedy. Second, it stretches credibility to believe that Drew harmed MySpace. MySpace is hardly a sympathetic victim; and if anything, given the serious problems taking place on MySpace (1, 2, 3, 4, 5), many Americans probably view MySpace as part of the problem, not a victim.
Ironically, then, MySpace could go from victim in this case to defendant in the next. For example, if any of its users use the MySpace network to commit a similarly de minimis Computer Fraud & Abuse violation against a third party website, MySpace may not be able to invoke the 47 USC 230 shield that it normally depends upon. As a result, MySpace may have to rely on prosecutorial discretion to avoid a high-risk and expensive criminal prosecution. As highlighted by Drew’s prosecution, we all know how comforting that is.
More generally, I realize that the federal crimes exception to 47 USC 230 is underexplored (making it another good paper topic if you’re looking for one). I’ve only blogged on it a few times, including my comments to the SEC anti-linking proposal, the Google and Yahoo settlement regarding gambling ads and civil plaintiffs’ (failed) arguments that civil claims deriving from federal criminal laws are not preempted (they are) (1, 2). I could see why this dearth of material might change: the angst about 47 USC 230’s broad immunization inevitably will put more pressure the immunity’s few exclusions.
(Parts 2 and 3 will follow next week).
Posted by Eric at 02:45 PM | Derivative Liability , Licensing/Contracts | TrackBack
December 02, 2008
November 2008 Quick Links
By Eric Goldman
Trademark
* NYT: "A handful of new Web sites with names like Typo Bay and Typo Buddy are out to help shoppers save money by searching eBay for misspelled brand names." In 2005, I blogged that typographical errors are a significant issue for eBay's search engine.
* It's a bull market for Obama-related trademark filings and Obama merchandise.
* Domain name tasting down 84%?
* Wired: "Think Godzilla's Scary? Meet His Lawyers"
Copyright
* Reuters: "Instead of triggering the usual take-down notices, copyright-infringing footage of select MTV Networks programing uploaded by MySpace subscribers would be automatically redistributed with advertisements that would generate revenue for the companies." I'm interested to see how this system applies to fair uses of the works!
* Arista Records LLC v. Usenet.com, Inc., 2008 WL 4974823 (S.D.N.Y. Nov. 24, 2008). The court dismisses USENET.com's counterclaims for declaratory relief that it doesn't violate 17 USC 512 because the claims duplicate its affirmative defenses.
* James Grimmelmann does an excellent job parsing the Google Book Search settlement agreement and makes some sage recommendations for how it should be modified before court approval.
Advertising/Marketing
* The Google-Yahoo ad syndication deal is dead. Some behind-the-scenes discussions.
* I'm not sure about the implications of this, but Google is expanding its efforts to allow website and ad targeting based on automatic geographic detection. See my prior post about the future of geolocation and a bordered Internet.
* Good news: entrepreneurs want to authenticate children's ages to keep them out of online trouble. Bad news: entrepreneurs might use age authentication to hit the kids with targeted marketing.
* Classmates.com sued for misrepresenting that former school chums were actually looking to reconnect. Yet more pushback on bogus "X is looking for you!" ads.
47 USC 230
* The Supreme Court denied cert in Doe v. MySpace, 2008 WL 4218722. According to Tom O'Toole, this is the seventh time that the Supreme Court has denied cert in a 47 USC 230 case.
* It appears that Children of America v. Magedson has settled.
* The Santa Clara University community is having a catharsis about Juicy Campus.
* Dan Solove and I chatted with Doug Lichtman about social networking sites (asynchronously--I spoke with Doug after Dan had), with most of my conversation focusing on 47 USC 230. Doug edited the conversations together into a one-hour podcast entitled "Privacy in the Networked World." An added bonus for listening--you may be able to earn one hour of CLE FREE!
Spam
* Facebook v. Guerbuez. Facebook wins $873M default judgment under CAN-SPAM. Now, if Facebook could only collect any of this, they would have finally figured out a way to make money!
* Gordon v. SubscriberBASE Holdings, Inc., 2008 WL 4809833 (E.D. Wash. Oct. 31, 2008). Serial anti-spam plaintiff lost again on whether he has standing under CAN-SPAM.
* Evan Brown: Government spam filters do not deprive citizen of right to petition the government.
* Venkat: Unsolicited Marketing Extravaganza in the Ninth Circuit.
Miscellaneous
* eHarmony settles claim that it discriminates against gay singles.
* NYT: "almost five years into its expansion into Europe...Google is getting caught in a web of privacy laws that threaten its growth and the positive image it has cultivated as a company dedicated to doing good."
Posted by Eric at 09:47 AM | Copyright , Derivative Liability , Domain Names , Privacy/Security , Search Engines , Spam , Trademark | TrackBack
November 28, 2008
Roommates.com Loses Summary Judgment on Remand, and Then Partially Settles
By Eric Goldman
Fair Housing Council of San Fernando Valley v. Roommate.com, LLC, CV 03-9386 PA (RZx) (C.D. Cal. Nov. 7, 2008). Nov. 19 stipulation.
The Ninth Circuit en banc ruling in the Roommates.com remains one of the most noteworthy Cyberlaw developments of the year, but it didn’t end the case. In the April ruling, the court held that some aspects of the Roommates.com service did not qualify for immunization under 47 USC 230 and remanded the case back to the district court to determine if, in fact, there had been a violation of the Fair Housing Act (and the state law analogue) and whether the First Amendment applied.
However, the remand order, while facially neutral, did not provide a blank slate for the district court judge. The majority en banc opinion repeatedly described the service as illegal and referenced its illegality as a key part of the 230 analysis. While the Ninth Circuit didn’t conclude that Roommates.com should lose on remand, any district judge trying to avoid reversal on appeal really only had one way to go.
It's not surprising, then, that Roommates.com principally lost its substantive case on remand. In a November 7 ruling, the court held that Roommates.com’s system violated the Fair Housing Act and the state law analogue, and Roommates.com was not eligible for constitutional protection (either the First Amendment or any right to intimate association). Consistent with the idea that the court only had one viable option, the court’s analysis is pithy and unforgiving.
After this ruling, the parties conducted a mediation and reached a settlement agreement that partially resolved the case (unfortunately, the settlement agreement wasn’t posted to PACER). The parties agreed on damages, including punitive damages, but didn’t resolve the plaintiff’s claim to attorneys’ fees. The parties also did not reach agreement on injunctive relief. As a result, the parties will go to trial on injunctive relief in January, and the plaintiff can ask for attorneys’ fees after that.
Posted by Eric at 07:56 AM | Content Regulation , Derivative Liability | TrackBack
November 25, 2008
Search Engines Aren't Liable for Gambling Ads Per 230--Cisneros v. Yahoo
By Eric Goldman
Cisneros v. Yahoo, CGC-04-433518 (Cal. Superior Ct. "Tentative Trial Decision" Nov. 6, 2008)
I am frequently asked if 47 USC 230 protects websites for claims based on the ads they run. My answer is emphatically "yes" unless the claim relates to IP, federal criminal law or the ECPA. The fact that the third party content is advertising is irrelevant to the immunization, and so is the fact that the website is being paid to display the allegedly tortious material. I have never organized the 230 jurisprudence to identify all of the cases that confirm immunization for third party ads, but two examples come to mind: (1) the eBay cases over listings, such as the Stoner and Gentry cases, and (2) Ramey v. Darkside Productions. Because it reinforces the lack of liability for third party ads, I should add that 230 protects websites for their own ads in some cases--see here.
However, Internet gambling can violate federal criminal law, and sites associated with third party Internet gambling could drop out of 47 USC 230 coverage accordingly. However, this exclusion only applies when it's a federal criminal agency bringing the enforcement action. Furthermore, when it relates to gambling ads, the criminal claim can be trickier, and the First Amendment can provide some protection for the ads. Nevertheless, I understood why the search engines settled up with the DOJ over gambling ads. They may have had powerful defenses, but 230 wasn't one of them, and it may have been cheaper/smarter to settle up than continue to fight.
In contrast, when a state agency or a private plaintiff complains about a website running third party gambling ads online, the law clearly says that the plaintiff should buzz off. A recent ruling in a long-running lawsuit (filed Aug. 2004; see John O's post from 2005) confirms that, proposing to dismiss a private plaintiffs' lawsuit against Google and Yahoo because it's preempted by 47 USC 230 (among other reasons).
The plaintiffs' 17200 unfair competition lawsuit had already taken some hits along the way, including a ruling that damages weren't available. This left only injunctive and declaratory relief on the table, but the injunctive relief claim was effectively mooted by the search engines' settlement with the DOJ (which, interestingly, the court does not directly discuss).
The plaintiffs persisted, alleging that some gambling ads slip past Google's and Yahoo's efforts to suppress the ads. The court expresses some sympathy for the filtering challenge, noting that "much like bacteria that mutate in order to survive antibiotics, would be on-line gambling operators change their tactics to escape detection, necessitating different enforcement techniques by the defendants." (This sounds like a good basis for a 47 USC 230(c)(2) dismissal, also not discussed by the court). The court gives props to the defendants' suppression efforts and refuses to promulgate a technology-based injunction telling the search engines how to run their business, saying "the defendants are doing as good a job as possible at removing on-line gambling links, and that job is far better than anything this court could come up with in an injunction."
The 230 discussion is pretty straightforward. One nice touch: the court explicitly talks about the plaintiffs' allegations that Google and Yahoo were "aiding and abetting" the illicit gambling. Citing the 7th Cir. Doe v. GTE ruling from 2003, the court correctly says that 230 trumps aiding and abetting claims, even if Google and Yahoo made money from the advertising. This is a good reminder that "aiding and abetting" or similar claims (like conspiracy) should not be a viable plead-around to 47 USC 230.
Posted by Eric at 01:49 PM | Content Regulation , Derivative Liability , Marketing , Search Engines | TrackBack
November 17, 2008
Yellow Pages Publisher Hit with $1.5M Fraud Judgment for Publishing False Ad--Knepper v. Brown
By Eric Goldman
Knepper v. Brown, CC 9903-02495 (Or. Sup. Ct. Oct. 9, 2008)
A woman got a botched liposuction job (which plaintiff's expert described as an "uncorrectable disaster") from Dr. Brown, a dermatologist. She sued the dermatologist and Dex, the publisher of his Yellow Pages' ad, for fraud based on Brown's ad. The court describes the ad and the interplay between the doctor and Dex as follows:
In 1996, Brown placed a second advertisement in Dex's Yellow Pages -- this time under the subheading "Surgery, Plastic and Reconstructive." The new advertisement stated that Brown performed liposuction, wrinkle treatments, and sclerotherapy. It also stated that Brown was "Board Certified" -- without specifying any area of certification.
The new advertisements were added at the urging of a Dex sales representative, Mueller. Brown's office manager, Newman, told Mueller that Brown was interested in attracting more liposuction patients. Mueller met with Newman to help her "mock up" a new advertisement. Mueller told Newman that the "plastic and reconstruction surgery" subheading in the Yellow Pages would be the best place to reach that target market. Mueller also told Newman that the advertisement should identify Brown as "board certified," because "patients were expecting a [board certified] plastic surgeon to do these techniques." Newman repeatedly told Mueller that she was concerned that such an advertisement would be misleading, because Brown's board certification was in dermatology, not plastic and reconstructive surgery. Mueller continued to push for a nonspecific "board certified" designation under the "Surgery, Plastic and Reconstructive" subheading, and Brown, who had the final say, acceded to Mueller's advice.
Brown (probably wisely) settled, leaving Dex as the only defendant. After a mistrial, the jury in the second trial awarded the plaintiffs $1.5M for the fraud claim against Dex. The Oregon Supreme Court upheld this judgment.
There are a number of interesting points to observe about this case:
1) I'm sure all of the lawyers reading this post are shaking their heads at the apparently rogue salesperson!
2) I understand why Dex thought it could win on the legal merits, but this looks like the kind of situation where a jury will pay the plaintiff regardless of the legal merits. Given that the doctor had settled, Dex was the only target for the jury to nail. And that's exactly what they did.
3) The dermatologist's use of the undefined phrase "board certified" is a good example of an implied false representation. It also seems like something the medical profession ought to regulate. For example, for most lawyers, there are very specific rules about how lawyers can describe themselves as "specialists."
4) Assume that Google sold the keyword "liposuction" to Brown and Brown's ad included the undefined phrase "board certified." What result? 47 USC 230 almost certainly would protect Google in that case. Of course, the Dex salesperson allegedly did far more in encouraging the falsity than Google would likely do. If an online publisher/ad network's salesperson was similarly aggressive at pushing a false representation, it may be possible that the 47 USC 230 shield would drop. Even so, this is a good example of how 47 USC 230 may privilege online publishers over offline publishers in a way that grants significant competitive advantages to online publishers.
Tom Seery at RealSelf has more to say on the case.
Posted by Eric at 05:31 PM | Derivative Liability , Marketing | TrackBack
November 13, 2008
October 2008 Quick Links, Part 1 (Copyright Edition)
By Eric Goldman
* Happy (?) 10th birthday, DMCA. The EFF birthday cards (1, 2).
* Speaking of the DMCA, Sen. McCain got a first-hand experience with it when his lawyer complained to YouTube that YouTube was taking down campaign videos in response to 512(c)(3) notices too quickly. Really…what a shock. We’ve documented problems with 512(c)(3) notices and 512(f) lawsuits repeatedly on this blog (see, e.g., 1, 2, 3, 4, 5, 6, 7), and yet it only becomes a problem when the legislators personally experience the consequences of the laws they passed. Ironically, Sen. McCain’s response wasn’t to seek legislative solutions that ameliorate the incentives that service providers have to take down content on notice. Instead, Sen. McCain looked for favoritism treatment just for politicians, perhaps hoping that his candidacy for the position as leader of the free world might intimidate YouTube into doing his biding. No such luck (1,2). Maybe YouTube decided McCain was too far behind in the polls. Now that Sen. McCain has a little more time on his hands, maybe he will draw upon his first-hand experience with the tyranny of 512(c)(3) notices to seek out legislative solutions. Paul Levy made some good suggestions.
* Google is having legal problems with Image Search in Germany.
* Universities are bearing the cost of fighting copyright infringement, and it’s not cheap (1, 2).
* Redbox v. USHE. Redbox is an in-store kiosk for renting DVDs. According to Redbox, Universal Studios ordered Redbox to give it a cut of its action or Universal would cut off its wholesale supply of DVDs. See EFF story. Universal Studios may simply be trying to clear the DVD kiosk market of competitors so that it can enter the market itself.
* Mygazines was a website that enabled users to post magazine articles to share them with their peers. It was sued for copyright infringement, settled the lawsuit (1, 2), And then promptly went out of business.
* A recap of the latest in Oracle v. SAP. Separately, the judge has asked Oracle to name its price.
* H.R. 6531: Vessel Hull Design Protection Amendments of 2008. After a few years of trying, Congress amended the vessel hull protections to include copying of boat decks.
* S. 3325, the "Prioritizing Resources and Organization for Intellectual Property Act of 2008." Congress keeps ratcheting up the penalties for civil and criminal infringement, a process I describe more here. The statute also creates an “Intellectual Property Enforcement Coordinator.” It will be very interesting to see who Obama appoints for this position. The position cries out for an IP maximalist, but wouldn’t it be wild if Obama appointed one of his law prof supporters instead?
* Lenz v. Universal Music Corp., 2008 WL 4790669 (N.D. Cal. Oct. 28, 2008). Judge Fogel denied a motion to certify an interlocutory appeal in the Lenz case.
* There is a CRS report on the Cablevision case. Is this a leading indicator of potential Congressional action?
* Due to a copyright dispute with the artist, California will be getting a new "whale tail" design for its custom license plates. Did California really put the whale tail design on 175,000 license plates on a handshake?
Posted by Eric at 08:52 AM | Copyright , Derivative Liability , Search Engines | TrackBack
November 10, 2008
Rip-off Report Wins Dismissal--GW Equity v. Xcentric
By Eric Goldman
I'm thinking about renaming this blog the "Rip-off Report Blog." After all, I blog about them frequently, and there seems to be a never-ending supply of new legal developments. Plus, I know readers are interested in them based on my in-box; emails related to Rip-off Report may be the single largest topic of private blog-related emails I get.
I am being partially facetious, but it is telling (and consistent with my past experience) that my Friday post on the Rip-off Report generated a few emails about yet more Rip-off Report litigation. I promise not to turn this into the Rip-off Report Blog, but the recent court dismissal of a case warranted an update.
GW Equity, LLC v. Xcentric Ventures, LLC, 3:07-cv-00976-O (N.D. Tex. Oct. 8, 2008)
This is a fairly "representative" lawsuit against Rip-off Report. The plaintiff trots out the standard arguments that have bubbling in numerous other cases, including:
1) The Rip-off Report created some of the content at issue because it offers pull-down tagging choices to consumers. The court cites to Roommates.com and others to conclude that the users are responsible for those choices, not the website.
The court does struggle a little with the 2004 MCW v. Rip-off Report precedent, also from the N.D. Tex., which is one of the few remaining "pure" 230 wins for a plaintiff. The court distinguishes MCW based on the prior defendant's failure to introduce rebuttable evidence that it didn't create the content at issue, as well as the defendant specifically telling the user to prepare content according to its specifications, which meant that "defendants in MCW had gone substantially beyond the traditional publisher’s editorial role and had participated in the process of developing information." I think the more recent caselaw is now pretty clear that soliciting user content doesn't convert third party content into first party content, so we'd all be better served if MCW were expressly overturned as precedent (which this court couldn't do). For now, fortunately the archaic MCW precedent is being drowned out by the chorus of subsequent more defense-favorable precedent.
2) Rip-off Report employees write some of the titles/headings and other content in a user report. Parsing the evidence, the court concludes that none of the evidence is competent enough to create a material factual dispute sufficient to survive summary judgment. This is a pretty significant win for Rip-off Report because these factual allegations are being repeated in a lot of cases (like the Barnes case below), so now the Rip-off Report can cite this ruling in those other cases.
3) The Rip-off Report's Corporate Advocacy Program is a racket that strips the company of 230 protection. The court quickly dismisses this argument, saying "it is not a bar to immunity for an Internet provider to refuse to remove defamatory material created by a third party, or to otherwise use it to their advantage, even though the Internet provider’s conduct may be considered reprehensible and offensive."
This opinion was just a magistrate's recommendation, and unsurprisingly GW Equity has filed objections to the recommendation. I suspect this case has plenty more gyrations.
Barnes v. Xcentric Ventures, LLC, GC041766 (Cal. Superior Ct. complaint filed Nov. 3, 2008)
This is a "garden-variety" complaint against Rip-off Report that doesn't break any new ground. Its most striking feature is its juxtaposition to the GW Equity case, because that ruling rejects most of the significant factual allegations in the complaint. If this court follows the GW Equity precedent, I smell summary judgment for the defense.
One more thing about the Barnes complaint. The plaintiff is affiliated with the Law Crossing website, which itself has attracted some criticism throughout the blogosphere. Indeed, Cathy Gellis reports that Law Crossing may have launched an attack campaign using Amazon's mTurk to flood a negative blog post with positive comments.
Posted by Eric at 09:09 PM | Derivative Liability | TrackBack
November 07, 2008
Rip-off Report Back in Court
By Eric Goldman
It's been a few months since I've blogged on new Rip-off Report litigation. For many companies, a blog hiatus might signal good news, but in Rip-off Report's situation, it merely reflects that I've been falling behind in tracking all of the new lawsuits. I don't blog all of their cases, but two relatively new lawsuits caught my attention:
Certain Approval Programs v. Xcentric Ventures, 2:08-cv-01608-MHB (D. Ariz. complaint filed Aug. 29, 2008).
Among the plaintiff's allegations are that automatically putting the words "Rip-off Report" into a user report page's title tag is defamatory and not covered by 230. The complaint has some useful screen shots depicting how Rip-off Report works.
Xcentric Ventures, L.L.C. v. Opinion Corp. dba Pissed Consumer, 2:08-cv-01841-JAT (D. Ariz. complaint filed Oct. 7, 2008).
Rip-off Report is on the plaintiff's side (again), this time suing a putative competitor and its web host for copyright and trademark infringement. Among the interesting tidbits:
(1) Rip-off Report successfully sent three DMCA 512(c)(3) takedown notices to the web host but is suing the web host anyway for failing to terminate the hosting relationship.
(2) if Rip-off Report has ownership or an exclusive license to the user-supplied reports sufficient to have standing to sue, would this alter its ability to disclaim responsibility for the content of the reports? I think the answer should be "no"--see Schneider v. Amazon and Blumenthal v. Drudge--but exclusive control over user content for copyright enforcement purposes but without concomitant responsibility for other purposes will strike most people as counter-intuitive.
(3) the putative competitor allegedly infringed the Rip-off Report's trademarks by creating and using the URL "http://rip-off-report.pissedconsumer.com" and putting "Rip-off Report" in the site metatags. Hmm...does Rip-off Report really want to establish the precedent that these activities infringe???
Posted by Eric at 09:40 AM | Content Regulation , Copyright , Derivative Liability , Trademark | TrackBack
November 05, 2008
SEC's Proposed Guidance on Hyperlinking Contravenes 47 USC 230
By Eric Goldman
In August, I blogged about the SEC's most recent guidance regarding companies' liability for linking to third party content. Today, I submitted comments to the SEC pointing out that their general position regarding linking contravenes 47 USC 230 with respect to civil lliability. (I believe the SEC guidance also pertains to SEC criminal enforcement actions, and those would not be preempted by 230). Unfortunately, I ran out of time to attack the overall illogic of trying to treat outlinks as the basis of liability in any circumstance. That will have to wait for another day. You can read my comments in PDF (that's the best because of the formatting and footnotes). Or, you can read the comments below.
_________________
November 5, 2008
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: File No. S7-23-08, Commission Guidance on the Use of Company Web Sites
I am an Associate Professor at Santa Clara University School of Law and Director of the school’s High Tech Law Institute.[FN1] My research focuses on Internet law, especially Internet marketing law and search engine law. I have taught an Internet law course every year since 1995-96, and I practiced as an Internet lawyer in the Silicon Valley for 8 years before becoming a full-time professor.
My comments pertain to Section II(B)(2) of Release No. 34-58288. I write to point out that 47 U.S.C. §230 preempts the SEC’s imposition of civil liability for hyperlinked material.
In 1996, Congress enacted 47 U.S.C. §230 to immunize websites and other online entities from liability for third party content. §230(c)(1) says:
No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
As the statute’s plain language indicates, the SEC cannot treat a company as the publisher or speaker of third party online content under any circumstance. As applied to the SEC’s proposed guidance, §230 means that the SEC cannot hold companies responsible for any content they hyperlink to.[FN2] Although I am not aware of a §230 case that specifically addressed hyperlinked content,[FN3] the case law has been virtually unanimous that websites are not responsible for third party content even when they exercise significant editorial control over the content. For example:
• In D’Alonzo v. Truscello, 2006 Phila. Ct. Com. Pl. LEXIS 244 (Phila. Ct. C.P. 2006), a blogger copied the entire contents of a newspaper article and republished those contents, apparently without authorization, on his blog. The newspaper article was allegedly defamatory (and the newspaper retracted it), but §230 immunized the blogger from any defamation liability even though the blogger affirmatively republished the article.
• In Barrett v. Rosenthal, 40 Cal. 4th 33 (2006), an email list operator made the editorial decision to forward a third party’s allegedly defamatory email to the entire email list. The California Supreme Court held that the email list operator was not liable for defamation for forwarding the email.
• In Blumenthal v. Drudge, 992 F. Supp. 44 (D.D.C. 1998), AOL was not liable for republishing a contractor’s allegedly defamatory content even though AOL had the express contractual right to exercise editorial control over the content.
Although these cases all involved defamation claims, the statute is not limited to those. Instead, §230 preempts all civil causes of action based on third party online content[FN4] —even causes of action enforced by the SEC—unless otherwise specified in §230(e).[FN5]
Further, the immunization applies even when a website explicitly or implicitly “adopts” the third party content. For example, in Global Royalties, Ltd. v. Xcentric Ventures, LLC, 2007 WL 2949002 (D. Ariz. 2007), a website was not liable for continuing to publish third party content that the author had asked the website to withdraw, even if the website had “adopted” the content as its own.;[FN6] Accordingly, the SEC’s standards for “adoption” of third party content may need some revamping for the online context.
Finally, §230 may protect websites’ self-authored characterizations when third parties cause those statements to become untrue. For example, in Doe v. SexSearch.com, 502 F. Supp. 2d 719 (N.D. Ohio 2007), §230 immunized a website’s marketing representation that all of its users were over 18 when a user rendered that statement false by lying about her age.[FN7]
Therefore, the SEC’s proposed guidance may contravene §230 to the extent that it tries to establish civil liability based on a company linking to third party content or for the company’s characterizations of that content. I encourage the SEC to consider revising Section II(B)(2) to reflect §230 and, as appropriate, acknowledge that companies do not face civil liability for hyperlinking to third party content.
I appreciate the opportunity to submit these comments, and I would be happy to elaborate on them further if that would be helpful. Thank you for your consideration.
Respectfully submitted,
Eric Goldman
Associate Professor, Santa Clara University School of Law
Director, High Tech Law Institute
500 El Camino Real
Santa Clara, CA 95053
(408) 554-4369
egoldman@gmail.com
http://www.ericgoldman.org
FOOTNOTES
1. I am speaking only for myself. I provide my affiliation for identification purposes only.
2. See, e.g., Christopher J. Volkmer, HyperLinks to and from Commercial Websites, 7 COMP. L. REV. & TECH. J. 65, 67-68 (2002).
3. The most analogous precedent that came to mind is Smith v. Intercosmos Media Group, Inc., 2002 U.S. Dist. LEXIS 24251 (E.D. La. 2002), which held that a domain name registrar was not liable for an allegedly defamatory website hosted at a domain name registered by its customer. Also analogous is Doe v. MySpace Inc., 528 F.3d 413 (5th Cir. 2008), which held that MySpace was not liable for tortious conduct (sexual abuse) that took place beyond its “premises,” even though the parties had met each other and communicated via the website.
4. See, e.g., Ben Ezra Weinstein & Co. v. Am. Online Inc., 206 F.3d 980 (10th Cir. 2000) (AOL was not liable for publishing inaccurate stock information provided by third parties).
5. §230(e) excludes federal criminal law from the §230(c) immunizations, so §230 does not preempt the SEC’s criminal laws. However, civil claims based on those laws are preempted. See Doe v. Bates, 2006 WL 3813758 (E.D. Tex. 2006); cf. Voicenet Commc’ns, Inc. v. Corbett, 2006 WL 2506318 (E.D. Pa. 2006).
6. However, I should note that the recent Roommates.com en banc opinion, which addressed facts the SEC is unlikely to encounter, has some ambiguous but arguably contrary discussion regarding adoption of third party content. See Fair Hous. Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008). Similarly, I am not addressing the application of 47 U.S.C. §230 to the SEC’s “entanglement” discussion.
7. See also Prickett v. infoUSA, Inc., 561 F. Supp. 2d 646 (E.D. Tex. 2006) (§230 immunized information syndicator for its representation that it had verified the syndicated information); Mazur v. eBay Inc., 2008 WL 618988 (N.D. Cal. 2008) (§230 immunized eBay for its representation that its live auction service vendors were screened). But see Anthony v. Yahoo! Inc., 421 F. Supp. 2d 1257 (N.D. Cal. 2006) (§230 does not immunize the dissemination of expired dating profiles with the implicit representation that they were still active); Mazur v. eBay Inc., 2008 WL 618988 (N.D. Cal. 2008) (§230 does not immunize marketing representations that live bidding is “safe,” is conducted against “floor bidders” and involves “international” auction houses).
Posted by Eric at 08:58 PM | Content Regulation , Derivative Liability | TrackBack
October 16, 2008
Search Engine "Cache" Function Covered by Implied License--Parker v. Yahoo
By Eric Goldman
Parker v. Yahoo, Inc., 2008 WL 4410095 (E.D. Pa. Sept. 25, 2008).
Gordon Roy Parker is a serial pro se Internet law plaintiff and putative owner of copyrights in seemingly misogynistic works such as "Outfoxing the Foxes" and "Why Hotties Choose Losers." A quick review of Parker's website reminded me a little of the cute date-movie Hitch, but without any of Will Smith's charm.
Last year, the Third Circuit dismissed Parker's copyright infringement lawsuit against Google over Google Groups. In this ruling, the district court rejects most of his copyright infringement claim against Yahoo and Microsoft over the "cache" option in search results.
[Side rant: I once again protest that calling these copies "cached" copies is a serious bastardization of the term. Despite the mislabeling, the search engines present archival copies, not cached copies, and treating them as equivalent creates significant legal doctrinal tension.]
This lawsuit squarely revisits the ground covered in the Field v. Google case, which Google won for 5 different reasons--including that anyone who posts content to the web knowing that search engines display cached copies impliedly licenses the search engines to do so. Here, the search engines apparently obtained the copyrighted works from Parker's site (instead of from some third party infringing site), and Parker admits he knew of the cache function. As a result, Yahoo and Microsoft can claim an implied license for their cached copies.
However, implied licenses are a weak defense because they can be trumped by express restrictions (see, e.g., Ticketmaster v. RMG). As a result, Parker's claim survives to the extent that Microsoft and Yahoo retained their cached copies after learning of his objection through the complaint filing.
Along the way, the court also says that Parker cannot complain about the search engines' initial robotic collection of the copyrighted works for index inclusion because the Third Circuit's ruling in Parker v. Google implicitly rejected the claim, leading to claim preclusion here. That struck me as a pretty liberal reading of the breezy and brief Third Circuit opinion.
Parker also claimed that individual web users downloading the cached copies are direct infringers. However, the court extends the implied license to them as well. The court offhandedly says that the search engines lack both direct financial benefit from the cached copies and knowledge of the infringement, thus giving further reason to dismiss the secondary infringement claims.
Finally, the court breezily dismisses a breach of contract and negligence claim as being preempted by copyright law. I think the preemption of the breach of contract claim is plainly wrong and should be reversed if the case is appealed.
While Parker's lawsuit (barely) lives to fight another day, overall this is another great opinion for search engines. Once again, courts are finding broad legal protection for basic search engine operations. This lawsuit also reiterated how pro se plaintiffs can be very helpful to an Internet defendant seeking to establish favorable low-cost legal precedent.
More on this case from Jeff Neuburger.
Posted by Eric at 10:31 AM | Copyright , Derivative Liability , Search Engines | TrackBack
October 14, 2008
September 2008 Quick Links, Part 3
By Eric Goldman
eBay
* Universal Grading Service v. eBay, Inc. More fallout from the National Numismatic v. eBay case--another lawsuit alleging antitrust and defamation because eBay designated some coin rating services as preferred and impliedly devalued others.
* Windsor Auctions v. eBay has been refiled in a new jurisdiction.
* Mehmet v. Paypal, Inc., 2008 WL 3495541 (N.D. Cal. Aug. 12, 2008). Upholding the consequential damages waiver in PayPal’s user agreement.
* A company's failure in the marketplace can drive up the value of its collectibles on eBay.
* Stelor Productions, Inc. v. Google, Inc., 2008 WL 4218107 (S.D. Fla. Sept. 15, 2008). In the lawsuit alleging that Google causes reverse confusion of Googles.com [warning: annoying music ahead], the plaintiff doesn't get to depose Sergey or Larry yet. Rose Hagan, Google’s long-time chief trademark counsel, is the lucky substitute.
* Lots of rhetoric in the Google/Yahoo ad syndication deal. Google’s advocacy website. Google Chief Economist Hal Varian explains why the deal won’t raise ad prices in the auction. Randall Stross weighs in.
* Google has changed course and now allows religious groups to advertise on the keyword “abortion.”
* Kubit v. Google Groups, 2:2008cv00738 (M.D. Fla. complaint filed Sept. 29, 2008):
I then would like to sue Google Groups for not removing the posts when I repeatedly asked them to for 2 years. I believe I am entitled to at least a small amount of compensation for the emotional distress and lost business income that has resulted from them allowing these posts to remain on their Google Groups, even though I offered them VERY solid proof that I do not have HIV. If they had stopped the posts when they first occurred, they would not have proliferated to hundreds of websites. I became suicidal for a period of time after the posts started. I incurred a lot of emotional pain and fear because of the posts and had to seek psychiatric and psychological help to get my life back together. I still suffer from fears of dating, living a public business life and trusting others.
Yes, this is a pro se complaint. Yes, it is preempted by 47 USC 230.
Marketing/Advertising
* NebuAd is dead (1, 2). Even so, the lure of intermediaries aggregating deep data about consumers for commercial purposes will never die.
* Is Gator/Claria dead?
* The EU passed a non-binding resolution against sexual stereotypes in advertising.
* Celebrity branded merchandise run amok.
Miscellaneous
* Valleywag: "The 5 most laughable terms of service on the Net." For more laughs, see Mark Lemley’s Terms of Use paper.
* Murakowski v. University of Delaware, 2008 WL 4104087 (D. Del. Sept. 4, 2008). This reminded me a lot of the Jake Baker case from the mid-1990s.
* The Virginia Supreme Court reversed itself on the Jaynes anti-spam prosecution, and Jaynes walks. Does Virginia routinely pass unconstitutional laws?
* Becker v. Toca, 2008 WL 4443050 (E.D. La. Sept. 26, 2008). Ex-wife's alleged delivery of "Infostealer" program to grab passwords from ex-husband could violate the ECPA, SCA and CFAA.
* Interesting article on ESPN’s exclusive distribution and bundling agreements with Internet access providers.
* Silly? Horrifying? A sign of the apocalypse?
Posted by Eric at 06:17 PM | Adware/Spyware , Content Regulation , Derivative Liability , E-Commerce , Internet History , Licensing/Contracts , Marketing , Privacy/Security , Search Engines , Spam | TrackBack
October 11, 2008
September 2008 Quick Links, Part 2
By Eric Goldman
Copyrights
* In the Harry Potter fair use case, the court declared that the Lexicon encyclopedia isn't fair use.
* The judge declared a mistrial in the Jammie Thomas case.
* Designer Skin v. S&L Vitamins has reached its denouement. Previous blog coverage of the case (1, 2). In the prior ruling, the judge denied the plaintiff damages for the copyright infringement. In the final ruling, the court enjoins cutting and pasting product shots but allows the defendant to recreate the product shots. Ronald Coleman has more here and here (noting that the court says that, per MercExchange, an injunction does not automatically follow from a finding of copyright infringement).
* Wired's 5 year retrospective on the RIAA's litigation campaign against file sharing.
Social Networking Sites, Blogs and Online Publishing
* J.S. ex rel. Snyder v. Blue Mountain School Dist., 2008 WL 4279517 (M.D. Pa. Sept. 11, 2008). Upholding student discipline for creating a fake MySpace page of principal. The school initially based the discipline on the student infringing copyright (by cutting and pasting the principal's photo) but this aspect of the case wasn't mentioned at all in the court’s reasoning.
* O.Z. v. Board of Trustees of Long Beach Unified School Dist., 2008 WL 4396895 (C.D. Cal. Sept. 9, 2008). Two seventh graders make a video about killing their teacher, described as:
The slide show is essentially a dramatization of the murder of Mrs. [redacted]. The first slide photo states, "Mrs. [redacted] dies." Throughout the slide show there are photos of Plaintiff dressed up in a costume, depicting a woman meant to resemble Mrs. [redacted]. There is red text on each slide photo that describes the scene. One slide says, "Jelly Donut's knife: haha fat bastard. here i come!" In this same photo, the viewer can see a butcher knife lunging at Mrs. [redacted] character from the camera's point of view. The butcher knife is then laid on the fallen victim while the text reads, "hehehe. i'm a shank yoooooooooo!" At the end of the slide show, it reads, "your [sic] dead, BITCH! :D".
I think they thought it was funny, but no one else did. One of them posted the video to YouTube. It's unclear what happens to the poster, but the co-content creator was suspended and forced to transfer to another school for her eighth grade. In this case, her TRO request is denied, even if she didn't intend the video to be publicly distributed and even if the video was not a "true threat."
* Spanierman v. Hughes, 2008 WL 4224483 (D. Conn. Sept 16, 2008). Teacher who was fired for inappropriate MySpace communications with students can't sue the school.
* An encouraging update on the Lori Drew prosecution.
* Bill McGeveran on Facebook Beacon and legal liability.
* Good NYT article on the sociology of Facebook and Twitter.
* Sam Bayard on an interesting but confusing ruling from Montana on its shield law applied to anonymous online posters.
* Verdana Partners v. Giles. Online newspaper wins anti-SLAPP claim.
* Jardin v. Datallegro, Inc., 2008 WL 4104473 (S.D. Cal. Sept. 3, 2008). A litigant's taking down a blog post and its comments is not destruction of evidence.
* Nemet Chevrolet has appealed its 230 loss. Previous blog coverage.
* Do Facebook's anti-spam policies overregulate Facebook's power users?
Posted by Eric at 07:49 AM | Content Regulation , Copyright , Derivative Liability , Internet History , Spam | TrackBack
September 24, 2008
Co-Website Operator Gets 47 USC 230 Defense--Best Western v. Furber
By Eric Goldman
Best Western International, Inc. v. Furber, 2008 WL 4182827 (D. Ariz. Sept. 5, 2008). The CMLP page.
In my Co-Blogging paper, I wrote about my uncertainty whether co-bloggers would be able to claim 47 USC 230 for the content/actions of their co-bloggers. This case hardly resolves the issue, but the court does grant 230 dismissals to co-website operators for all posts they did not author.
Three defendants claim 230. Furber is one of the website operators. There are three alleged facts at issue:
* Furber "created the website homepage to solicit content from others"
* he publicly posted emails he received from others
* he "created and posted a “Site Master Notice Post” stating that some posts were being moved to an alternative website"
Acknowledging these three facts, the court gives Furber a 230 dismissal for any posts he did not create or develop. He is still potentially on the hook for 12 posts he made himself. It's interesting that the court cites the Roommates.com case to say that Furber isn't liable for soliciting content from others.
Loren Unruh's only involvement in the website operations was that he allegedly "solicited content from others through his marketing of the website." This is an easy 230 dismissal.
On the other hand, Nidrah Dial is denied a 230 defense for acting as the typing agent/scrivener for her husband's dictated comments. The court said that a jury could find that the posts were a collaborative effort. I think this is right, but I find this discussion really interesting because this is exactly the kind of hypothetical example that judges have pondered and struggled with in trying to determine 230's limits. Also interesting: the opinion seems to leave open that Nidrah might still get 230 if she can show that she was a passive recorder of a third party's thoughts (her husband's).
The rest of this case is pretty interesting, too. It involves an effort by the Best Western hotel chain to shut down a group of dissident franchisees (technically, in this case, members of a non-profit corporation). The court sees through this campaign and largely shuts it down, cleaning out a lot of Best Western's causes of action and rejecting some of their ludicrous damages claims. Overall, the case is a good example of a plaintiff that initiated a litigation armageddon that has almost no chance of turning out well for anyone but the lawyers.
Posted by Eric at 10:03 PM | Derivative Liability | TrackBack
September 22, 2008
Perfect 10 v. Google on Remand, and 230 as an Affirmative Defense
By Eric Goldman
Perfect 10, Inc. v. Google, Inc., 2008 WL 4217837 (C.D. Cal. July 16, 2008)
You recall this case involving Perfect 10's allegations that Google and Amazon (and, in a subsequent complaint, Microsoft) are infringing its rights by indexing third party posts of Perfect 10's photos. You may also recall the 9th Circuit issued an important but confusing ruling in this case in May 2007, which the 9th circuit corrected in an amended opinion in December 2007. The 9th Circuit rulings sent the case back to the district court for further proceedings, and this opinion (which just came through Westlaw--not sure why it took so long) is part of those proceedings.
Perfect 10 sought to file a second amended complaint making new factual allegations, including extending the lawsuit to include Google's Blogger service and claiming nearly a thousand new infringed copyrights, and pleading new causes of action, including California and common law unfair competition, unjust enrichment, and misappropriation. Google tries to knock out the amendment on a variety of grounds, but all of Google's arguments fail, and the court lets Perfect 10's second amended complaint through.
I was most interested in Google's attempt to knock out the unfair competition, unjust enrichment and misappropriation claims as moot due to 47 USC 230. The court rejects the argument because it says that 230 is an affirmative defense that does not support a 12(b)(6) motion. I remain surprised that this meme has taken root so deeply, because my guess is that well over 50% of the 230 defense wins have been in a 12(b)(6) motion or its state law equivalent, like a demurrer. (The percentage is reduced by cases where the defendant didn't try for 12(b)(6) and instead raised the 230 motion in the first instance in summary judgment). In other words, the vast weight of caselaw supports that 230 can be used for a 12(b)(6) dismissal, so this court's breezy refusal to do so is disappointing.
Perfect 10 also argued that Google is the content creator of the tortious content. I wonder how Perfect 10 will factually support that assertion, but it also was enough for the court to reject the 12(b)(6):
The question whether any of Google's conduct disqualifies it for immunity under the CDA will undoubtedly be fact-intensive. Neither party has proffered evidence sufficient for the Court to determine at this stage whether Google is entitled to CDA immunity. Although it is highly likely that P10 will encounter difficulty in establishing that Google engaged in the “creation or development in whole or in part” of unlawful content, see Fair Housing Council, 521 F.3d at 1168-69, it would be improper for the Court to resolve this issue on the pleadings and the limited evidentiary record before it.
Also interesting is that the court lets Perfect 10 add 650+ new infringed copyrights that were unregistered at the time of filing the complaint. In my opinion, 17 USC 411(a) is fairly clear (as statutory language goes) that copyright plaintiffs can sue only on registered (or pre-registered) copyrights, which should make this an easy dismissal. However, some courts have found the statutory language ambiguous and thus have allowed plaintiffs to proceed on copyright applications while they are pending with the Copyright Office--and this court does so as well.
Posted by Eric at 09:05 AM | Copyright , Derivative Liability | TrackBack
September 13, 2008
StubHub Wins 230 Dismissal in Anti-Scalping Case
By Eric Goldman
Fehrs v. StubHub, Inc., #0801-00515 (Ore. Cir. Ct Sept. 9, 2008). The plaintiff's lawyer has posted some of the litigation materials filed in this case.
This is yet another lawsuit in the ongoing battle over online ticket sales. In the past year, I've blogged about a lawsuit over initial ticket allocation, a lawsuit over ticket resales, and a statute restricting ticket allocations (and another proposed law). Someone ought to create a blog just about online ticket sale legal regulation. There's a lot of emerging source material.
This lawsuit is very similar to the Hill v. StubHub lawsuit I blogged about in July, Both plaintiffs sued StubHub (and, in this case, eBay) for allowing third parties to resell tickets allegedly in violation of anti-scalping laws (in Hill, it was the Hannah Montana concert tour; this lawsuit, the Boss' tour). In the Hill case, the court rejected StubHub's dismissal request per 47 USC 230. In this case, the court grants the 230 dismissal for StubHub and eBay in a brief non-substantive order--the opposite result. StubHub's eligibility for 230 is currently legally unresolved, but clearly courts will have plenty more cases to develop a consistent rule.
Posted by Eric at 01:21 PM | Derivative Liability | TrackBack
September 08, 2008
August 2008 Quick Links, Part 1
By Eric Goldman
eBay
* Mazur v. eBay Inc., 2008 WL 2951351 (N.D. Cal. July 25, 2008). See my previous blog post on the case. Some commentators are excited about this ruling because it rejects eBay's motion to dismiss a RICO claim.
* Missing Link, Inc. v. eBay, Inc., 2008 WL 3496865 (N.D. Cal. Aug. 12, 2008). This is a lawsuit by eBay sellers complaining that eBay didn’t immediately index their listings in its search engine and eBay raised the price on “Good Until Cancelled” listings. This is the second time the court has dismissed some claims, but even so some claims have also survived the motion to dismiss process.
* As expected, Tiffany appealed the eBay ruling. My initial post.
* Vulcan Golf, LLC v. Google Inc., 2008 WL 2959951 (N.D. Ill. July 31, 2008). The court dismisses a few claims made in the plaintiff's third amended complaint. My post on the initial complaint.
* JIT Packaging v. Google (E.D. Ill. complaint filed Aug. 11, 2008) A third lawsuit against Google over the placement of AdWords ads on parked domains and other putatively undesirable pages.
* A heavily redacted version of the Google/Yahoo agreement. The SEC examiner who let the agreement go through with this many redactions was asleep at the wheel!
47 USC 230
* Bauer v. Glatzer (N.J Superior Ct. July 21, 2008). Wikimedia easily wins a lawsuit against it alleging that a Wikipedia entry was defamatory.
* Capital Corp. Merchant Banking, Inc. v. Corporate Colocation, Inc., 2008 WL 4058014 (M.D. Fla. Aug 27, 2008). 47 USC 230 defense denied against allegations that "Leonard Norwich posted defamatory statements about [the plaintiff] on three websites and Francesca Norwich allowed Leonard to use “a computer registered in her name” to make the defamatory statements." The denial makes sense for Leonard but seems clearly erroneous with respect to Francesca.
* Vanginderen v. Cornell (S.D. Cal. June 3, 2008). CMLP page. This isn't specifically a 230 case but it's still relevant. Interesting lawsuit against Cornell and related entities for electronically posting a school newspaper story from 1983 that was allegedly defamatory. The court dismisses the lawsuit on an anti-SLAPP motion.
Blogging
* A Las Vegas nightclub loses its cool and sues a blogger for, among other things, including its logo in the blog post.
* As part of the fallout from the Troll Tracker blog, Dennis Crouch, of PatentlyO fame, has received a subpoena for communications related to his blog. Dennis' comments and LegalWatch. In a related lawsuit, Frenkel (a/k/a Mr. Troll Tracker) was dismissed from a lawsuit again. Ward v. Cisco Systems, Inc., 2008 WL 4079286 (W.D. Ark. Aug 28, 2008)
Content Restrictions
* Kings English, Inc. v. Shurtleff, 2008 WL 3285898 (D. Utah Aug. 8, 2008). The judge denied the plaintiffs’ motion to reconsider its highly unfavorable prior ruling. My initial post on the lawsuit.
* Reisinger v. Perez (E.D. Wis. complaint filed Aug. 18, 2008), First amendment lawsuit against the City of Sheboygan for intimidating a woman into removing a website link to the city's police department.
* National Federation for the Blind v. Target has settled, with Target paying $6M and redesigning its site.
Posted by Eric at 09:47 PM | Content Regulation , Derivative Liability , Licensing/Contracts , Search Engines , Trademark | TrackBack
September 01, 2008
Io v. Veoh Comments--a Terrific 512(c) Defense-Side Win
By Eric Goldman
IO Group v. Veoh Networks, Inc., 5:2006cv03926 (N.D. Cal. Aug. 27, 2008)
We spend so much time thinking about and debating 17 USC 512(c) that it's easy to lose sight of how few cases really interpret the statute. As a result, a clean and thorough opinion like this one makes a significant contribution to the precedent and teaches us a lot.
There are two architectural features of this ruling that make it particularly defense-favorable. First, the question of whether 512 trumps secondary liability or secondary liability trumps 512 is one of the most important frontiers in online copyright law because the statute is inherently ambiguous on this key point, and the cases have been erratic on this topic. Here, the court doesn't dwell on the issue and instead assumes (without any real discussion) that 512 trumps secondary liability. As a result, the court dismisses the case without ever reaching the plaintiff's prima facie case; meaning that even if the plaintiff could establish a prima facie secondary infringement, Veoh still wins. If the court in Viacom v. YouTube reaches the same conclusion, then YouTube will win.
Second, Veoh took a number of steps to suppress user-caused copyright infringement, including some steps that were not required to satisfy 512(c). The court recognizes that it's impossible to eliminate user-committed copyright infringement but instead rewards Veoh for trying so hard. As the court says, "far from encouraging copyright infringement, Veoh has a strong DMCA policy, takes active steps to limit incidents of infringement on its website and works diligently to keep unauthorized works off its website." In this respect, the opinion reminded me of the Tiffany v. eBay ruling, where that court also lauded eBay for going beyond what the law required and excusing the infringement that slipped through the cracks. I think these two opinions put a huge exclamation mark to reject the notion that courts will only tolerate passive conduits (who do nothing to police their network) or perfect editorial control, with no middle ground for courts to excuse omissions by good faith actors. As with my first point, if the Viacom court adopts this philosophy, then YouTube will win.
A few other noteworthy aspects of this ruling:
* a website's failure to prevent terminated users from re-registering under alternative credentials does not preclude 512(c)
* 512(c) is not lost even if employees spot-check user submissions after publication and make minor edits to the metadata
* 512(c) still applies even if the website automatically extracts some metadata (in this case, some still previews of the video) and uses that metadata for promotional purposes. 512(c) even applied to the screenshots.
* The court rejects Io's argument that Veoh should change its business operations to do a better job of infringement suppression. The court recaps Io's argument as:
plaintiff contends that, if Veoh cannot prevent infringement on its site given the current volume of its business, then Veoh should be required to either hire more employees or to decrease its operations and limit its business to a manageable number of users (whatever that number might be). Its not-so-subtle suggestion is that, if Veoh cannot prevent infringement from ever occurring, then it should not be allowed to exist.
This change-your-business argument is popular among copyright plaintiffs, but the court emphatically rejects it:
Declining to change business operations is not the same as declining to exercise a right and ability to control infringing activity...Moreover, as discussed above, the DMCA does not require service providers to deal with infringers in a particular way...Further, plaintiff’s suggestion that Veoh must be required to reduce or limit its business operations is contrary to one of the stated goals of the DMCA. The DMCA was intended to facilitate the growth of electronic commerce, not squelch it.
While this ruling is very good news for the defense, there are plenty of reasons why it may not portend a similar result in the Viacom v. YouTube lawsuit, including:
* different courts (9th Cir. v. 2d Cir.). In particular, the Veoh court makes numerous references to Ninth Circuit precedent, and the Viacom court could simply say that Second Circuit law is different
* Io did not send any 512(c)(3) notices before suing. Viacom did. This is significant because the Io judge had little reason to be sympathetic to Io if they didn't take advantage of the non-litigation recourse mechanism specified in the statute. Then again, the Viacom court could simply expect Viacom to continue using the 512(c)(3) mechanism as well rather than looking for a court-imposed workaround.
* The Io court notes that the user-uploaded videos did not have a copyright notice in them. I'm sure Viacom can find examples where its copyright notice was included in the uploaded videos.
* Io is a pornographer. Their copyrights are as good as anyone else's, but courts might feel less sympathy towards pornographers.
* Veoh had gotten out of the porn business, and this mooted the injunction. However, Viacom could get an injunction against YouTube with significant bite. Most people misassume that 512(c) eliminates all liability for user-caused copyright infringement, but it only eliminates damages and limits the scope of injunctive relief in 512(j)--but a court can still issue an injunction. 512(j) is, as far as I know, not been litigated, and frankly I don't understand all of its provisions. But the bottom line is that an injunction is possible in the Viacom lawsuit even if 512(c) applies, and the Io ruling doesn't shed any light on that possibility.
Despite all this, YouTube has to be heartened by this ruling.
One final point: this is such a nice clean discussion about 512(c) that it may be a useful pedagogical tool. As a result, I am considering adding it to my Cyberspace Law reader in the future.
Posted by Eric at 09:54 PM | Copyright , Derivative Liability | TrackBack
August 28, 2008
SEC Proposes that Companies Should Be Liable for Content Linked from the Company's Website
By Eric Goldman
[Note: I haven't had a chance to blog the Veoh case--coming soon!]
The Securities and Exchange Commission (the SEC) is proposing an interesting policy with respect to a securities issuer linking to discussions about it. See pages 31-37 of this document. Effectively, the SEC is proposing that a securities issuer can be liable for any misstatements on linked pages if "the context of the hyperlink and the hyperlinked information together create a reasonable inference that the company has approved or endorsed the hyperlinked information." The SEC's discussion about linking also has some interesting and largely exceptionalist discussion about the ontological meaning of a link.
At minimum, the SEC's proposed position may create a fascinating doctrinal clash with 47 USC 230, which seems to preempt any liability for content on third party websites--even if the linker "endorses" the linked content, and even if the SEC says otherwise (unless the SEC makes it part of federal criminal law, which is excluded from 230's immunization). If anyone is interested in working with me to submit a comment to the SEC (due Nov. 5) to explain why 47 USC 230 may preclude the SEC's approach, let me know.
This proposal raises an even broader issue how 47 USC 230 overlays on securities laws generally. I can't really think of a defendant who has litigated 230 as a defense to securities fraud claims, but it seems like a tenable defense for any online securities marketing done by third parties--a result which might wreak havoc on existing secondary doctrines of civil liability for securities fraud. This looks like an excellent but complicated paper topic.
UPDATE: James Grimmelmann takes exception to my reference of the SEC's policies as exceptionalist. I didn't build out the concept in this brief blog post, but I am thinking about making it part of the comments to the SEC, so I'm planning to elaborate on why I think it's exceptionalist soon.
Posted by Eric at 06:10 PM | Derivative Liability , Marketing | TrackBack
August 27, 2008
7Search Sues McAfee For Red Flagging It
By Eric Goldman
7Search.com v. McAfee, Inc., 1:2008cv04831 (N.D. Ill. complaint filed Aug. 25, 2008). The Justia page.
I don't have a good sense of how many lawsuits have been filed against anti-spyware vendors for classifying third party software as "adware" or "spyware." I've blogged on a few (including Kaspersky, PC Tools and Symantec v. Hotbar), and Ben Edelman maintains a larger catalog of such lawsuits (not sure how up-to-date this is). However, I don't know if these lawsuits are relatively rare (as Ben's chart implies) or if they are multitudinous but most quietly fly under the radar screen.
If there aren't many unpublicized lawsuits, that may reflect that suing an anti-spyware vendor over its classification decisions almost never makes sense. First, many vendors have a private adjudicatory/appellate process that resolves many potential disputes without a lawsuit. Certainly, most vendors don't want to make errors, which undermines their own credibility, and most reputable vendors want to fix their mistakes. Second, lawsuits bring generally unwanted publicity to the plaintiff, calling extra attention to their alleged deficiencies and bringing out all of the gripers. Third, the costs of the lawsuit may be more than the value of any frustrated transactions. Finally, many of the lawsuits have low probabilities of legal success for the reasons I'll discuss in a moment. So there is good reason to believe classification-related lawsuits such as this one are rare. (I'm not saying that grumbles or C&Ds are rare; I'm just referring to formal lawsuits).
In this lawsuit, 7Search says that it was in the toolbar business but stopped offering downloads from its site in 2003. However, McAfee's SiteAdviser gives 7Search the big red X and says "Feedback from credible users suggests that downloads on this site may contain what some people would consider adware, spyware, or other potentially unwanted programs." 7Search claims that this statement is false because it isn't offering any downloads at all. 7Search thus alleges false advertising (Lanham 43(a)), deceptive trade practices, defamation and unfair competition.
The most obvious barrier to 7Search's lawsuit is 47 USC 230. Both (c)(1) and (c)(2) could be implicated. (c)(1) is less likely, but if in fact McAfee is republishing information from third parties (as suggested by the statement's reference to "credible users"), they may be able to claim (c)(1) for the republication. Either way, (c)(2)--the immunization for filtering decisions--is directly on point and potentially immediately fatal to the lawsuit. Zango's lawsuit against Kaspersky was soundly and quickly knocked out on 230(c)(2) grounds (though that is now on appeal to the Ninth Circuit), and a district court in Illinois gave broad deference to the Zango ruling in finding that Comcast could claim 230(c)(2) for email filtering decisions.
At the same time, 7Search alleges that McAfee's classifications were in bad faith. If so, then 230(c)(2) wouldn't apply even under the liberal Kaspersky or Comcast approaches, both of which required subjective good faith. We'll have to see how McAfee responds to determine if 7Search's allegation has any chance of getting traction.
There are two other possible holes in the potential 230 coverage for this lawsuit. First, courts have been inconsistent whether a false advertising 43(a) claim under the Lanham Act fits within the "IP" exclusion to 230. Second, most of 7Search's gripe goes to McAfee's statement that bad downloads are available--words chosen by McAfee to describe its filtering decision. It remains unclear if 230(c)(2) protects an intermediary's characterization of its filtering decision as much as it protects the filtering decision itself--just like 230(c)(1) may protect against liability for third party information but may not protect against marketing representations rendered untrue by third party content or actions.
In any case, I think this lawsuit and others over classification decisions raise interesting and important issues that I plan to explore in my Economics of Reputational Information project. We want skillful intermediaries to digest the overwhelming amount of information available in the marketplace and make reputational judgments that speed up our consumer decision-making. On that basis, we definitely don't want reputational judgments removed from marketplace actors and put into the hands of the judges. However, we also want the reputational intermediaries to make factually accurate judgments because their misjudgments also could distort marketplace decision-making.
Posted by Eric at 03:54 PM | Adware/Spyware , Derivative Liability , Marketing , Trademark | TrackBack
August 12, 2008
Google Denied Attorney's Fees in 230 Dismissal--Steele v. Mengelkoch
By Eric Goldman
Steele v. Mengelkoch, 2008 WL 2966529 (Minn..App. Ct. Aug. 5, 2008)
A professor at Bemidji State University wrote a story saying some putatively unflattering things about a local journalist, who didn't take kindly to the allegations and brought a lawsuit alleging defamation and related torts against a number of defendants, including seeking $50 BILLION from Google. (GOBOGH!) This opinion is unclear exactly how the plaintiff alleged that Google was involved in the defamation, but it wouldn't matter because we know that 47 USC 230 fully protects Google in all cases. The trial court knew this too, and granted a dismissal per 230. The trial court went further and sanctioned the pro se in pauperis defendant under the state law equivalent of Rule 11 by sua sponte ordering him to pay Google's attorney's fees of over $12k. As far as I know, this was the first time a judge issued Rule 11 sanction for filing a lawsuit preempted by 47 USC 230.
The appellate court glibly upholds the 230 dismissal, but it reverses Google's attorney's fees award on a technicali