Kinbook LLC v. Microsoft Corp., 2012 U.S. Dist. LEXIS 8570 (E.D. Pa. Jan. 25, 2012)

Microsoft makes the Kinect motion controller for Xbox, and for a while tried out a mobile phone named Kin. Kinbook makes a Facebook app (is this it?) that is intended to capture and organize family memories. Kinbook discovered Facebook's overzealous position that it owns the -book suffix, so Kinbook changed its product name to Kinbox. It alleged that Microsoft's branding of Kinect for the Xbox infringed the Kinbook/Kinbox trademark.

It's hard to tell how successful the Kinbook app is. Microsoft says it had 14 active users in May 2011. Kinbook claims closer to 17,000. Either way, Kinbook is hardly setting the world on fire. The court explains:

"Kinbook credits the arrival of the Kinect for XBOX 360 and Microsoft's accompanying marketing blitz with the poor start of its "Kinbox" Facebook application"

Stop right there. How could that be true? Assuming for a moment that "Kinbox" and "Kinect for the Xbox" are so overlapping that they could confuse consumers (a proposition I don't believe), wouldn't Microsoft's massive marketing blitz increase interest in Kinbox's offerings? So this should have produced a tidal wave of folks looking for Kinbox. Even if some of those users suffer disappointed expectations (they came because they wanted something other than what Kinbook provided), those users will turn over but won't affect the organic interest in Kinbook. Microsoft's promotion could only help Kinbook. Passing the blame to Microsoft isn't very credible.

Instead, the court finds the following:

* Kinbook has never generated any revenues
* they intended to build a website and mobile app but never did
* they intended to spend a quarter-million dollars on marketing but have only invested "a few thousand" dollars instead. Indeed, "Kinbook acknowledges that it has not dedicated any significant time, money, or effort to advertise, promote, or market its marks or services."

It sounds like any alleged trademark troubles with Microsoft are just the tip of the iceberg. Instead of fixing those core issues with their business, they invested their valuable resources in court proceedings.

The court reaches the entirely sensible conclusion that there's no likelihood of consumer confusion and tosses the claims. Among other reasons, the court points out multitudinous other users of the "kin" prefix:

"Kincafe," an online social network for families to connect; "Kin Valley," a secure online social network for the family; "Kinzin," an online social publishing service to allow groups to privately share photos; "Kinnect.Us," an online social networking service to stay connected with family and friends; "Kinector," an online service to help users stay connected with relatives through a private web site where family can share information; "Connect 2 Kin," an online service for families to stay in touch and share photos, share documents, schedule events, etc.; "Kindle," an e-book reader with social networking capabilities; and many others.

The plaintiff admitted that none of these other examples were confusing. Yet, somehow Kinect for the Xbox was. Hmm.

Kinbook also tried to argue that Xbox appeals to 5 year olds, so they should be the paradigmatic "consumer" whose confusion is measured. The court mocks this argument:

No matter what else the ever-remarkable current-day precocious 5 year-old can accomplish, this Court cannot fathom a 5 year-old with either the faculties or the financial means to independently purchase a retail item costing hundreds of dollars. Second, even the hypothetical precocious 5 year-old dispatched by indulgent parents (or grandparents) to make her or his own selections of amusement would likely be able to distinguish between a free software application, and a $150 piece of gaming hardware.

This lawsuit has all the indicia of a small trademark owner trying to squeeze a big company for a nuisance settlement. After all, Microsoft spent $100M promoting Kinect; if Kinbook could get only a 5% taste of the action, that would still be quite tasty. This ruling reminded me a little of the recent Fancaster ruling, which also involved a trademark plaintiff who hadn't really invested much in building a business before running to court. In the Fancaster case, there was some evidence that Comcast may have muscled into the plaintiff's sphere knowing the potential pitfalls, but there's no hint of that on Microsoft's part here (the case indicates that Kinbook didn't show up in Microsoft's trademark search). Instead, I'm just left with the suspicion that the plaintiff thought that a low-merit trademark lawsuit would be a faster path to revenues than building a business. If that's your idea of entrepreneurship, as a LOLcat might say, ur doin it wrong.

Twitter recently announced its decision to censor tweets on a country-by-country basis. People were up in arms and planned a #twitterblackout. It was a big story last week. (Needless to say, I didn't participate in the blackout.)

As an initial note, Twitter's decision is entirely defensible, and I thought Twitter (and its General Counsel Alex Macgillivray) handled it with poise. I also don't know that its decision can easily be placed in the 'censorship' category since it's implemented by a private entity, which has tremendous discretion in blocking content. (Some of this depends on the actual policy, which we don't know the contours of.) Anyway, this is neither here nor there.

What was striking about this story was how it played out in the media--in particular, the muddled nature of the media narrative that followed this story.

What Types of Takedown Requests Will Twitter Honor?: I would have thought the key question here would be the contours of Twitter's policy--did it remove content in response to a court order? An administrative request? A takedown from a private party? Did it matter whether the request was premised on IP infringements? (no) Could it make certain topics totally off-limits in response to a government request? Would it block accounts? (yes) Hashtags? Would it make Twitter totally unavailable in a country? Here's a blurb from a NYT article titled "Censoring of Tweets Sets Off #Outrage" (italics added):

Twitter, like other Internet companies, has always had to remove content that is illegal in one country or another, whether it is a copyright violation, child pornography or something else. What is different about Twitter’s announcement is that it plans to redact messages only in those countries where they are illegal, and only if the authorities there make a valid request.

Huh? What's a "valid request"? An Associated Press story ("Twitter's new censorship plan rouses global furor") was similarly vague about what types of takedown requests Twitter would respond to:

Twitter said it has no plans to remove tweets unless it receives a request from government officials, companies or another outside party that believes the message is illegal. No message will be removed until an internal review determines there is a legal problem, according to Macgilliviray.

There's a big distinction between a takedown notice from a government, one from an individual (including one sent under a takedown regime such as the DMCA) or a corporation. Another story from the Times of India adds some detail and hints at this specific question ("Twitter's censor move with eye on China?"):

some experts wonder if Twitter's position was really different from that of Google or Facebook. "Google and Facebook have said that they would remove content if ordered by the courts, and Twitter too is saying that it can block tweets if required by the law," said an expert. "Where laws are codified, as in Germany and France about pro-Nazi propaganda, Twitter can block pro-Nazi tweets proactively. But in countries like India, where the laws are not that specific, this will be done reactively on the basis of court orders. That's all Twitter is saying."

(??) It's strange that the stories all described the key standards for what type of request will trigger a takedown in totally vague terms. Obviously it wouldn't make sense for the stories to describe in painful detail the innumerable types of requests an entity such as Twitter receives and how it deals with each of these types of requests, but it was clear after reading these stories that the media didn't have a firm grasp on the contours of Twitter's 'policy'. This was somewhat strange because this was the crux of the story, right? There's one larger aspect of the story which was clear which is that Twitter decided that whatever its policy is regarding takedowns, its response can be limited by country or region--i.e., if one particular country or region decides to send a takedown this may not affect all Twitter users. (The content will be available elsewhere. Also, as others quickly pointed out, as a user who is trying to access content on Twitter, there are probably ways to get around Twitter's country-specific block of content.)

Not surprisingly, many press reports cited to EFF's statement regarding Twitter's policy but even EFF's statement was fairly vague on the particular point of what takedown requests Twitter will honor ("What Does Twitter’s Country-by-Country Takedown System Mean for Freedom of Expression?"):

Twitter already takes down some tweets and has done so for years. All of the other commercial platforms that we're aware of remove content, at a minimum, in response to valid court orders. Twitter removes some tweets because they are deemed to be abuse or spam, while others are removed in compliance with court orders or DMCA notifications. Until now, when Twitter has taken down content, it has had to do so globally. So for example, if Twitter had received a court order to take down a tweet that is defamatory to Ataturk--which is illegal under Turkish law--the only way it could comply would be to take it down for everybody. Now Twitter has the capability to take down the tweet for people with IP addresses that indicate that they are in Turkey and leave it up everywhere else. Right now, we can expect Twitter to comply with court orders from countries where they have offices and employees, a list that includes the United Kingdom, Ireland, Japan, and soon Germany.

From what I gather, Twitter's blocking policy will be implemented on a case-by-case basis and it didn't announce any sort of policy for what types of takedown requests Twitter will automatically honor. But to me this is a key point that none of the stories really dug into.

Will Twitter Implement its Policy Only Where it has People and Offices?: This is another question that I was curious about. Will Twitter honor requests from countries where it doesn't have offices or does this work on a case-by-case basis also? If Twitter's assets, offices, or people are at stake then this obviously changes the calculus, but what about far-flung jurisdictions where Twitter has no presence and no expected or future relationships? EFF's post also hints at this but doesn't really offer specifics:

Twitter's increasing need to remove content comes as a byproduct of its growth into new countries, with different laws that they must follow or risk that their local employees will be arrested or held in contempt, or similar sanctions. By opening offices and moving employees into other countries, Twitter increases the risks to its commitment to freedom of expression. Like all companies (and all people) Twitter is bound by the laws of the countries in which it operates, which results both in more laws to comply with and also laws that inevitably contradict one another. Twitter could have reduced its need to be the instrument of government censorship by keeping its assets and personnel within the borders of the United States, where legal protections exist like CDA 230 and the DMCA safe harbors (which do require takedowns but also give a path, albeit a lousy one, for republication).

For what it's worth, the tradeoff between keeping a local presence and complying with a foreign court order is not anything new. Google has dealt with it, among other countries in Italy. (For all I know @amac could have been one of the lawyers who dealt with this while at Google.) Yahoo! dealt with it in France when it was ordered to take down Nazi memorabilia. In evaluating Twitter's policy, I would guess what people would want to know most (apart from what types of takedowns Twitter intends to honor) would be what types of jurisdictions Twitter intends on screening content in.

__

Maybe Twitter's decision isn't really a policy decision to screen content at the request of governments or entities but to make available the capability to screen content by geographic regions. There's a fundamental difference between the two. I certainly got a clear sense that there was a policy change afoot from the stories announcing Twitter's decision. Either way, none of the stories bothered to get into the details on what I thought were the two core issues. The other tangentially related issue that did not get much attention is how Twitter would respond to requests for user information from governments. We're not much wiser in terms of Twitter policy than we were when we started. On the one hand, this is somewhat strange, given that most reporters live and breathe Twitter, regardless of whether this is their reporting beat. On the other hand, maybe it's an example of how social media can infect journalism? Reporters are friendly with Twitter (as an entity, or a product) so maybe they were reluctant to ask the hard questions? Maybe everyone was in a rush to get their stories out so they didn't dig deep?

I think we'll have to wait and see to see how the policy actually plays out, but Twitter's actions demonstrate a commitment to free speech and openness so it should have gotten the benefit of the doubt. For whatever reason, the story just spiraled and took on a life of its own.

[For my money, one of the best stories on this was from Al Jazeera, which raises the fundamental question of what Twitter's policy is exactly: "Making sense of Twitter's censorship."]

Other posts worth checking out:

* Twitter's initial blog post which wasn't crystal clear on the issue: "Tweets still must flow."
* Lauren Weinstein: "Twitter's censorship muddle."
* Inforrm's Blog: "Legal questions about Twitter ‘censorship’ and country-specific content control – Judith Townend"
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Eric's Addendum

To see if we could get our own answers to these unresolved points, Venkat and I took our questions to Alex Macgillivray, and he generously responded to us. Our exchange:

Our Q: What types of takedown notices will be sufficient to get Twitter to take down a post? Court order? Government demand without a court order? Private demand without a court order? (I believe 512(c)(3) takedown notices already work). Others? Does it vary by country?

Alex's answer: "We do analysis of each complaint. For example, even a 512(c)(3) request does not necessarily lead to a removal."

Comment: I infer this means takedown demands are evaluated on a case-by-case basis. If Twitter does not have hard-and-fast rules about takedown demands that clearly work or clearly don't, that would explain why other media outlets weren't precise on this point.

Our Q: Will Twitter take down posts only in countries where it has a physical presence, or will it remove content from countries even where it doesn't have a physical presence?

Alex's answer: "Again, would depend on the requests. For example, a child pornography complaint, even from a user in China, might result in a global removal even though we are not responding in general to requests from China
and are still blocked there."

Comment: child porn is an extreme "test case" because of its toxicity, so I'm still not clear on what happens with less toxic content. I similarly infer everything is done on a case-by-case basis, which would also explain the muddled media coverage.
___________

Eric's Comments

It appears Twitter thought its announcement was good news. Instead of having to remove a tweet from its database entirely, Twitter will now remove tweets only from one country's database. This leaves the tweet up for the rest of the world, and it makes it trivially easy for people in the affected country to get the tweet if they care. Furthermore, the tweet won't vanish; instead, it will be a "noisy withdrawal" by leaving a note that says the tweet was removed. Plus, Twitter will turn over the takedown demand to ChillingEffects, allowing interested folks to monitor the activity and find out what happened. In a world filled with irrepressible censorious impulses, Twitter's policies were designed to make the best of a bad situation.

So how did the messaging, and the community response, go so far wrong? Twitter ran into a small but vocal minority that believe that catering to foreign governments' censorious requests is wrong. I discussed this issue in some detail in connection with Google and China. As I wrote in connection with that situation:

what should a US service provider do when trying to expand internationally? It has a few options, none of them particularly attractive:
* It can skip unreasonably censorious markets altogether, like Google proposes to do in China.
* It can comply with local laws, even though that runs counter to US laws and norms.
* It can ignore local laws, which is typically not a successful plan. In extreme cases, it can lead to local company executives going to jail.
* It can try to change the local country’s laws to be more like ours, either through direct advocacy or by asking the US government to pressure the local government. We routinely use trade negotiations to do this; for example, we have successfully exported our copyright laws this way. But countries usually aren’t thrilled to have the US tell them what their laws should be.

Undoubtedly, the purists would prefer it if Twitter just stayed in the US "bubble" and engage in regulatory imperialism by getting foreign governments to see and do things "our way." A lot of self-satisfied hubris underlies that stance; something we saw with Google's situation where many people appeared to think that denying the Chinese people access to Google would bring the Chinese government to its knees (it hasn't yet). Ironically, American regulators have been on a censorious rampage recently (see, e.g., SOPA, Wikileaks, Operation in our Sites, etc., etc., etc.), so we're hardly on any moral high ground.

The reality is that iif Twitter chooses to expand globally, of course it will have to comply with local law, and of course other countries will require Twitter to take down posts. Twitter has built a technical architecture to reduce the collateral damage of such censorial demands. And I, for one, believe that American dot-coms do more to spread free speech by supplying the technology, even if hobbled through censorship, on an international basis than by not offering the technology at all.

In the end, though, Twitter's move--combined with similar moves, like Google's redirection of Blogspot on a country-by-country basis--remind us that geographic borders remain incredibly relevant to the Internet. This is a political reality, not a technical imperative. Technologically, the Internet is a borderless electronic network, but we continue to erect artificial geographic borders anyway. (See my post, Geolocation and A Bordered Cyberspace). Once again, with censorious proposals like SOPA/PIPA (and, for that matter, OPEN) that seek to create a Fortress USA, America is teaching the world how to embrace artificial geographic borders rather than teaching the world how to tear them down.

One thing I don't understand: if Twitter can turn tweets on and off by country, will that mean countries can assert jurisdiction over it even if Twitter doesn't have a physical presence there? Recall how these issues played out in the LICRA v. Yahoo case, where Yahoo's ad geo-targeting was held against it. Because Twitter can customize views of its databases on a country-by-country basis, foreign governments have a good argument that Twitter can "control" what content goes into a country. Recall, for example, the kerfuffle about Britain's "super-injunction" against Twitter. Even if Twitter didn't have a Britain presence, could Britain now have more leverage to force Twitter to honor its super-injunction? Or, could a foreign country assert that Twitter needs to comply with its data privacy laws on the theory that Twitter could simply turn off tweets in that country if it doesn't want to comply? I'm not sure how Twitter will now explain why it's chosen not to comply with a foreign country's laws, irrespective of its physical presence.

I also asked Alex about this issue:

Our Q: How do you think this policy will affect Twitter's compliance with laws in countries where it doesn't have a physical presence? In other words, because Twitter could simply choose to remove all tweets from showing in a country, Twitter might have a more difficult time arguing that it had no choice about whether or not to show tweets in the country. So, for example, a country may assert that Twitter should comply with its data privacy laws for users in its country even though Twitter has no physical presence there.

Alex's response: "This doesn't change our philosophy with respect to freedom of expression and I don't think it changes the pressure we'll get from countries (other than the transparency piece). Companies that have no way of doing local withholding still get plenty of pressure to do removals. Generally 'I don't have a way to just do this for your country' is a positive from the requesting country's perspective, not a negative or a viable excuse."

Comment: I'm glad I don't have Alex's job. It sounds like Twitter gets a lot of heat from government officials who aren't used to having people say no to them.

Some other discussions about this matter that I found interesting:

* Zeynep Tufekci, Why Twitter’s new policy is helpful for free-speech advocates
* Wired's coverage. Check out Cindy Cohn's quotes.
* WSJ's coverage of Alex Macgillivray's comments
* Blogger.com's New Takedown Policy Thwarts Censorship

Kwan v. Clearwire Corp., C09-1392JLR (W.D.Wash.; Jan. 3, 2012)

Professor Goldman blogged recently about a case involving Facebook where the court enforced Facebook’s terms of use and based on a venue clause in Facebook’s terms transferred a dispute from New York to California. The court delved into (and seemed to get bogged down in) the distinctions between clickwrap and browsewrap agreements while eventually concluding that the plaintiff was apprised of the terms (or should have been) so there was no reason not to enforce the contract. Kwan v. Clearwire doesn’t involve strictly online terms, but Clearwire was not so lucky. It botched its terms of use (judging from the court’s order it also botched its customer service efforts). End result: it can’t summarily move the dispute to arbitration and has to undergo discovery around whether its customers agreed to the terms. The court was fairly skeptical of Clearwire’s position, so its chances of success on the arbitration front don’t seem great.

Background

Kwan brought a lawsuit aginst Clearwire and collection agents for Clearwire alleging that she was harassed by Clearwire and its debt collectors in an effort to reach a Clearwire customer (which wasn’t her). Among other claims, she asserted claims under the TCPA, the Fair Debt Collections Practices Act, and Washington’s Consumer Protection Statute. Her complaint was amended to add Brown and Reasonover, both of whom tried Clearwire services for a short time (or judging by the complaint, attempted to try Clearwire out for a trial period but with little success). The Clearwire terms contained a class action waiver and an arbitration clause, and Clearwire sought to have the dispute arbitrated pursuant to the Clearwire terms.

Brown signed up for a 14 day trial of Clearwire. She received a confirmation email from Clearwire one week prior to receiving her modem. She tried to connect her modem but was unsuccessful, and she alleged that she was not required to click any sort of acknowledgement before trying to connect her modem. She called Clearwire to cancel her service, but was persuaded by Clearwire to renew her trial period. Clearwire had a service technician check on Brown’s modem. The technician arrived while Brown was at work and Brown’s roommate left the technician alone to try to get the modem working. After the technician left, she tried to get the modem working, and it still would not work properly. According to Brown, she discovered that “use of her microwave interfered with her modem signal.” She tried to cancel her service, and after going back and forth with Clewrwire, Clearwire finally agreed that she could cancel her service. Clearwire sent her shipping labels to return the modem, but according to her, by the time she received the shipping labels from Clearwire, the labels had “expired.” This prompted another round of back-and-forth with Clearwire's customer service. Ultimately, she was able to return the modem to Clewarwire.

Reasonover’s experience with Clearwire wasn’t much better. She signed up for a seven day trial period and, because she was not at home when Clearwire shipped the package, Federal Express held it for her. She was unable to pick up the modem within her trial period, so she was worried about being able to cancel. When she plugged in the mdoem, she was only able to obtain “one green bar,” and this too from an “inconvenient location in her house.” Before connecting to the internet, she was presented with an “I accept” screen for Clearwire’s terms, but she bailed. Apparently, Clearwire told her that she could not cancel her serivce. She had some less-than-friendly exchanges with Clearwire, and she reported Clearwire’s actions to her credit card. Ultimately she alleges she paid for the modem (Clearwire disputes this).

Discussion

The court notes that the Federal Arbitration Act provides for arbitration of disputes that are subject to arbitration clauses. While the FAA sets forth a policy in favor of arbitration, it first requires a determination of whether the parties entered into an agreement to arbitrate their dispute. And that’s the hitch for Clearwire.

The court canvasses the law on browsewrap and clickwrap agreements (citing to Specht, Register v. Verio, Hines v. Overstock, and Southwest Airlines v. Boardfirst, among other cases). While Washington courts have not upheld the enforceability of clickwrap or browsewrap agreements, the court notes that shrinkwrap agreements are enforceable under Washington law. The prevailing case in Washington relied on Hill v. Gateway and ProCD v. Zeidenberg, and in both of these cases, “the terms and conditions at issue were included with the product purchased by the consumer.” This is consistent with the court’s inquiry in Specht as to whether the customer had notice of the contractual terms.

The court holds that, on the record before it, Clearwire is not entitled to enforce its arbitration clause. Clearwire pointed to the email confirmation which it sent to customers, but the court notes that the confirmation email did not contain a direct link to Clearwire’s terms—the link pointed to Clearwire’s home page, and Brown would have to “negotiate her way through two more hyperlinks” in order to arrive at Clearwire terms. Clearwire also argued that Brown was aware of the terms and used the product in question. With respect to this argument, the court says:

The breadcrumbs left by Clearwire to lead Ms. Brown to its TOS did not constitute sufficient or reasonably conspicuous notice of the TOS.

In any event, the court notes that Brown returned the modem.

Clearwire fared no better against Reasonover’s claims. It could not rely on the terms on its website because Reasonover testified that she “abandoned the page.” It also could not rely on the confirmation email which it sent because the email did not contain a readily accessible link to the terms—as with the facts with respect to Brown, Reasonover would have had to click through a couple of different links to arrive at Clearwire’s terms. Finally, Clearwire relied on the material that it had sent with the modem. These materials unfortunately suffered from the same flaws:

At the bottom of one of the pages included in the modem packaging was a reference to the TOS and to where the TOS could be located on [Clearwire’s] website. The statement actually contain[ed] two different hyperlinks. Neither link . . . immediately display[ed] the TOS.

D’oh.

As a final bonus, the court also denied the request to arbitrate filed by the collection agency, finding that there was a dispute as to whether it was an agent (with a close relationship to Clearwire) that could enforce the terms, or an arms-length independent contractor, who would not. (citing Swift v. Zynga)
__

Apart from the numerous alleged customer service debacles detailed in the complaint, Clearwire dropped the ball in several ways.

First, it did not have a ‘leakproof’ clickwrap agreement that users had to agree to before they activated the modem or signed on. Clearwire could have forced its users to scroll through and click on an “I agree” button as a prerequisite to activating the modem. (This may not have helped with respect to Brown’s claims since a technician activated the modem, but I assume this was an aberration. Most users probabaly plugged in the modem and signed on without the help of a technician—Clearwire could have forced them to click through and agree to terms.)

Second, to the extent it tried to rely on paper terms which it sent to customers along with the modems, it could have at least included the terms themselves as part of the package. I get the feeling the judge in this case would have worked hard to find a way around enforcing the terms in this scenario, but it would have been harder. (Again, the fact that the customers returned the modems would have affected the analysis. They could have argued that their acceptance of the terms was premised on them keeping the modems and since they didn’t they should not be bound by the terms.)

Finally, there’s the email debacle. I’m not sure the email would have helped since it came after the fact and would be categorized in the same manner as paper terms (i.e., if the customer returns the item, they can argue they should not be bound by the terms). But the email did not even include the terms!

This decision is largely consistent with previous online contracting cases. If you can't easily show the court that the terms were readily accessible, you're going to have a long road to travel down. It also demonstrates that if you can make a compelling case to the court that there's something inequitable afoot (whether in the form of seriously egregious, one-sided terms, or botched customer service, as was alleged in this case) courts will work to find a way around enforcing terms that they may otherwise enforce.

PhoneDog v. Kravitz, 2012 U.S. Dist. LEXIS 10561 (N.D. Cal.; Jan. 30, 2012)

PhoneDog and Kravitz are fighting over ownership of the Twitter account Kravitz used while he was working for PhoneDog. In an earlier order, the court allowed several of PhoneDog’s claims to continue, although it dismissed PhoneDog’s claims for economic interference due to Kravitz’s allegedly improper taking of the Twitter account.

The court's initial order allowed PhoneDog's claims for conversion and misappropriation of trade secrets to proceed, but dismissed PhoneDog's claims for negligent and intentional interference with economic relationships. I thought PhoneDog’s claims were weak at best, and the court could have whittled down the litigation and guided the parties to their ultimate destination—settlement—by culling some of the claims, but no such luck.

With respect to intentional interference with prospective economic advantage, the court accepts PhoneDog’s theory that:

[d]ue to Kravitz’s alleged conduct, there is decreased traffic to [the] website through the [Twitter] Account, which in turn decreases the number of website pageviews and discourage advertisers from paying for ad inventory on PhoneDog’s website.

This looks like a broad theory of economic interference that would sweep up a lot of otherwise innocent conduct, but the court says that at the pleading stage, this is sufficient. The judge’s decision on economic interference seems to view traffic as an asset that can be misappropriated (even if there is no trademark claim, the economic interference claim is like a claim for diversion of traffic). The court also says that PhoneDog’s negligent interference theories also have merit at the pleading stage because “Kravitz owed a duty of care to PhoneDog as an agent of PhoneDog.”

The net result is that all of PhoneDog’s claims move forward, and Kravitz (and PhoneDog) will have to slog through some additional discovery in order to resolve PhoneDog’s claims at the summary judgment stage.

I can't think of any new lessons to draw from this ruling, except that some sympathetic judges will let claims move forward. It would have been cheaper and quicker for everyone involved to have entered into a written agreement addressing the issue, or at least to have addressed this question up front (even if informally).

Previous posts:

An Update on PhoneDog v. Kravitz, the Employee Twitter Account Case
Courts Says Employer's Lawsuit Against Ex-Employee Over Retention and Use of Twitter Account can Proceed

Related posts:

Another Set of Parties Duel Over Social Media Contacts -- Eagle v. Sawabeh
Employee's Claims Against Employer for Unauthorized Use of Social Media Accounts Move Forward--Maremont v. SF Design Group
Ex-Employee Converted Social Media/Website Passwords by Keeping Them From Her Employer--Ardis Health v. Nankivell
Court Declines to Dismiss or Transfer Lawsuit Over @OMGFacts Twitter Account -- Deck v. Spartz, Inc.

Fteja v. Facebook, Inc.,2012 WL 183896 (S.D.N.Y. Jan. 24, 2012). Fteja's initial "complaint" (filed as an order to show cause).

If I could waive a magic wand, I'd retire the phrases "clickwrap" and "browsewrap." Those terms trace their lineage to a radically different technology--plastic shrinkwrap on physical products--and, as a result, they never developed clean or precise definitions in the online world. This opinion is much more prolix than necessary because the court couldn't figure out what either term meant and therefore couldn't decide how to apply the precedent. Fortunately, the court gets to the right place eventually.

Fteja claims that Facebook terminated his Facebook account improperly because it discriminated against him as a Muslim. Facebook will win this lawsuit eventually; see, e.g., my paper about online user account terminations and 47 USC 230(c)(2) and Young v. Facebook.

For now, after removing the case from New York state court to federal court, Facebook sought to transfer the case to its home court in California. Facebook invoked the venue selection clause in its user agreement (its "Terms of Use"). Facebook uses a mandatory non-leaky clickthrough agreement where the terms are hyperlinked from the clickthrough page. (The language says: “By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service," where the words Terms of Service are a hyperlink). This user interaction should have made it an easy case. This formation process (mandatory clickthrough with hyperlinked terms) has been upheld in dozens of cases. Indeed, buried in his overlong discussion, the judge says "Fteja was informed of the consequences of his assenting click and he was shown, immediately below, where to click to understand those consequences. That was enough."

Yet, the judge launches into an extended discourse about the philosophy of online contracts. Overly troubled by the hyperlinked presentation of the actual terms, the court reaches this awkward classification:

Facebook's Terms of Use are somewhat like a browsewrap agreement in that the terms are only visible via a hyperlink, but also somewhat like a clickwrap agreement in that the user must do something else—click “Sign Up”—to assent to the hyperlinked terms. Yet, unlike some clickwrap agreements, the user can click to assent whether or not the user has been presented with the terms.

The judge then snarks about social media exceptionalism:

it is tempting to infer from the power with which the social network has revolutionized how we interact that Facebook has done the same to the law of contract that has been so critical to managing that interaction in a free society. But not even Facebook is so powerful.

(Don't underestimate Facebook, your honor. It is changing our brains).

Despite all the navel-gazing, the judge realizes:

There is no reason why that outcome should be different because Facebook's Terms of Use appear on another screen rather than another sheet of paper....The mechanics of the internet surely remain unfamiliar, even obtuse to many people. But it is not too much to expect that an internet user whose social networking was so prolific that losing Facebook access allegedly caused him mental anguish would understand that the hyperlinked phrase “Terms of Use” is really a sign that says “Click Here for Terms of Use.” So understood, at least for those to whom the internet is in an indispensable part of daily life, clicking the hyperlinked phrase is the twenty-first century equivalent of turning over the cruise ticket. In both cases, the consumer is prompted to examine terms of sale that are located somewhere else. Whether or not the consumer bothers to look is irrelevant.

Having convinced himself that Facebook's venue selection clause is enforceable, the judge then concludes that transfer is proper. All of the relevant evidence is at Facebook's headquarters, Fteja's witnesses don't appear to be near NYC, the alleged contract breach means the "locus of operative facts" took place in California, and Fteja's medical condition ("Ménière's disease") won't keep him off airplanes.

Some related posts:

* Court Disregards Check-the-Box Agreement and Doesn't Enforce Venue Clause -- Dunstan v. comScore
* Forum Selection Clause in "Submerged" Terms of Service Presumptively Unenforceable -- Hoffman v. Supplements Togo
* Anti-Scraping Lawsuit Largely Gutted--Cvent v. Eventbrite
* Interesting Database Scraping Case Survives Summary Judgment--Snap-On Business Solutions v. O'Neil
* Clickthrough Agreement With Acknowledgement Checkbox Enforced--Scherillo v. Dun & Bradstreet
* Contract Formed Even If Customer Never Received It--Schwartz v. Comcast
* Ticketmaster Wins Big Injunction in Hannah Montana Case, But Did the Public Interest Get Screwed?--Ticketmaster v. RMG

Delle v. Worcester Telegram & Gazette Corp., 2011 WL 7090709 (Mass. Super. Ct. Sept. 14, 2011)

I previously mentioned this ruling in a recent Quick Link, but I can write up a full post now that I've seen the actual opinion.

Robert Delle is a lawyer (of course). A reporter surreptitiously called Delle and asked for his views on Obama's citizenship. The reporter then published a story in the T&G calling Delle a "birther" and opining about the relationship between the birther movement and racism. Seven months later, the T&G published a story covering a lawsuit that Delle was litigating. A user commented to that article that "there was no bigger dope than Delle." Delle claims the comment came from a T&G employee/agent, but his only support for this belief is that he'd heard a rumor that sometimes newspapers comment on their own stories.

Bringing a defamation lawsuit over being called a "dope" doesn't seem very savvy to me, and the court easily dismisses the claim due to 47 USC 230. The court correctly concludes "the T & G cannot be held liable for the statements of a third party on the comments section of its website." It doesn't matter if the T&G prescreened the comments, allowed other users to flag the comment as abusive (which Delle did) and decided not to act after users had flagged the comment as abusive. Delle's unsupported allegation that perhaps the T&G wrote the comment wasn't enough to survive the dismissal motion.

The court also tosses the defamation claim against the T&G for its earlier story. Interestingly, the court doesn't directly address the defamatory implications of calling someone a "birther," even though in my world a that's much worse insult than calling someone a dope. Instead, the court says that any implication that birthers are racist, and therefore Delle may be a racist, was clearly based on the reporter's personal beliefs, plus it constituted an interpretation of facts rather than a fact itself.

Prior blog coverage of newspapers' 47 USC 230 wins for user-posted comments.

As usual, I'm running late with my year-end recap. This post begins with my countdown of the top 5 Internet Law developments of 2011, then it lists other interesting developments and cases. It concludes with some of the most linked posts and then my editor's choice of some posts in 2011 that might have been a little overlooked. As usual, thanks for reading the blog in 2011!

Countdown: My Top 5 List of Developments in 2011

#5: Righthaven Implodes. Since the beginning, I've been skeptical of Righthaven's business model. Seriously, who else thinks it's a good idea to sue small-time mom-and-pop bloggers and non-profits on a one-by-one basis? However, even I had no idea that Righthaven would accelerate their own demise by routinely making basic litigation errors. A sketchy business model + a litigation shop that isn't very good at litigation = one dead start-up. It's always fun (in a bloodsporty way) to watch hubristic bullies get their just desserts, but watching the Randazza firm school the Righthaven litigators in Litigation 101 has been amazing. THAT'S how you litigate.

Righthaven lost often in 2011 (see my August reset). They lost fair use rulings (e.g., CIO, Choudry). They lost on standing grounds (e.g., Democratic Underground, Wolf). They were hit with sanctions. They were hit with hundreds of thousands of dollars of attorney fee shifts (e.g., Leon, Wolf, DiBiase). They even lost their domain name in an auction--a delicious irony given that Righthaven's complaints improperly demanded its defendants' domain names on the theory that it might need the domain name to satisfy a judgment against the defendant, when in fact it was Righthaven's domain name that was used to help satisfy a judgment against it!

Righthaven ended 2011 on death's door, but the trend of newspapers trolling for copyright litigation isn't going away. I'll be watching NewsRight closely in 2012.

#4: Medical Justice Gives Up. Speaking of hubristic bullies... You recall Medical Justice, the organization that helped doctors and other medical service providers take copyright assignments from patients in their as-yet-unwritten reviews so that the doctors could expeditiously remove unwanted reviews by sending 512(c)(3) takedown notices to review sites. It's an interesting legal hack, but it has some bad side-effects, including the fact that patients hated it, the copyright assignments almost certainly were void (for public policy reasons and others), doctors were hurting themselves by discouraging patient reviews (patients prefer to choose doctors when there's a critical mass of patient reviews), and (as our research uncovered) most consumer review sites ignored the doctors' 512(c)(3) takedown notices. Obviously, with those defects, Medical Justice wasn't exactly adding a ton of value to its clients. Medical Justice finally gave up, but too late to prevent a lawsuit against one of its clients and a complaint to the FTC. Chances are Medical Justice will be living with a long-term hangover from this entrepreneurial foray.

Seeing Medical Justice stop peddling anti-patient review tools was slightly satisfying, but that result was always a fait accompli. The reason Medical Justice's change of heart matters is that shady or clueless vendors keep developing new ways to suppress unwanted consumer reviews, and I hope Medical Justice's experiences will discourage other vendors from trying the copyright hack. I talk about these dynamics more in my paper on regulating reputational information.

#3: gTLD Expansion. It remains unclear exactly what ICANN's rollout of unlimited top level domains will do. Due to the expansion of new namespaces, brand owners face a long list of complicated--and potentially expensive--choices to make. Unfortunately, these choices don't really benefit society; instead, the gTLDs tax businesses while the benefits accrue to a small number of service providers (and, of course, ICANN itself). I think many businesses will reserve their name in multiple new gTLDs to prevent squatting--with the net effect that businesses will spend more money just to preserve the status quo. Meanwhile, most consumers are likely to be bewildered by the unlimited number of TLDs, which is just going to increase their tendency to rely on search engines and link directories rather than domain names to navigate to their desired destinations.

#2: Internet Consumer Privacy Lawsuits Tank. 2011 initially looked like the year of the Privacy Plaintiff. A torrent of privacy lawsuits had been filed, plaintiffs had wrested a few important and lucrative settlements, and Internet companies continue to make questionable privacy decisions that create a steady supply of potential new lawsuits.

But the path to riches didn't materialize. Instead, 2011 emerged as the year when privacy class action lawsuits mostly failed miserably. Courts principally rejected the lawsuits on standing grounds for lack of cognizable harm, but plaintiffs failed on other related grounds, such as a lack of damages negating the prima facie case. There were some exceptions where plaintiffs made a little progress (see, e.g., Claridge v. RockYou, Anderson v. Hannaford, Fraley v. Facebook). I'm sure the privacy plaintiffs' bar will be studying those rare successes to formulate a better battle plan--and to better prepare their cases and find strong named plaintiffs, a recurring omission that hasn't gotten a lot better over the year. However, for now, it's clear that the privacy plaintiffs' bar can't just show up in court and hold out their hands for a payday.

#1: Regulators Broke the Internet. We've always known that regulators could combat bad online activity by working "up the chain," i.e., by making upstream service providers liable for the bad acts or obligated to cut off the activity. However, for the most part, we've shared a tacit understanding that systematically going up the chain was a "nuclear" option--it would fix the specific problem but only at significant collateral cost that, on balance, makes the option unattractive.

I think we'll look back at 2011 as the year that tacit understanding broke down. In 2011, regulators around the world showed a seemingly insatiable demand for working up the chain. Although we in the USA like to think we're different from other repressive regimes, the evidence suggests otherwise. Some examples of "up the chain" activity in 2011:

* Arab Spring. Repressive regimes got local Internet access providers to turn off Internet access in the country.
* Operation in Our Sites. The Immigrations and Customs Enforcement (ICE) agency keeps seizing domain names of suspected foreign rogue websites on an ex parte basis, making errors and breaking the law in the process. Mike Masnick blew open the story on Dajaz1.com, which ICE seized on an ex parte basis, conducted secret proceedings for a year, and then gave back the domain name with no explanation.
* Graduated Response. Copyright owners got Internet access providers to voluntarily (?) agree to restrict, and eventually terminate, their users' accounts.
* Secondary liability against intermediaries. Rightowners keep expanding their intermediary targets, including lawsuits against ad networks and SEOs/web designers. To be fair, some of these lawsuits aren't going very far, and expansive secondary liability theories aren't new in 2011.
* Ex Parte Seizures. Rightsowners are asking for the moon against third party service providers in ex parte proceedings, and courts are giving it to them because the third parties aren't there to represent their own interests. We recap this epidemic in this post.
* SOPA and PIPA. These proposed bills were the finest examples of rightsowners pursuing the nuclear option regardless of the collateral damage. The bills' basic architecture was to attack a wide range of intermediaries for third party actions--domain name registrars, search engines, payment service providers, ad networks. By seeking to deputize the intermediaries, the bills sought to instantiate "up the chain" duties across virtually the entire Internet. Putting aside their other policy deficiencies, I think we should resist all laws predicated on that fundamental assumption of intermediary deputization. See my post on the OPEN bill for why I reject the compromise "follow the money" solution. Sadly, I stand virtually alone in my stance.

Other Interesting Developments.

Some other interesting developments this year:

* Patent Reform. The America Invents Act is the most dramatic patent reform bill in years, and it has many provisions that may affect Internet companies, including the joinder standards, the prior user defense, and the novelty/priority standards. The law doesn't fix the overall problems with bad Internet patents or unmeritorious assertions of those patents, but it nevertheless could make some dramatic changes in what Internet companies do.

* Google and Antitrust. Google has become the incumbent in search, and all of its rivals--especially the companies Google is disintermediating--are desperately seeking to knock it off its perch. I believe Google and antitrust was the #1 topic prompting reporter phone calls to me in 2011. We are waiting to see what comes from the FTC investigation into Google's practices, and the list of Google-haters keeps growing daily. At the same time, the anti-Google forces made surprisingly little actual progress in 2011, including suffering a conspicuous (and not even close) loss in the myTriggers case. See my paper on why I am so over the Google antitrust battles.

* DC's Obsession with Busting Silicon Valley Companies. Sometimes, it feels like DC insiders wake up in the morning and wonder, "What Silicon Valley company do I feel like busting today?" Drive down the 101 from San Francisco to San Jose and play the "Spot the FTC/DOJ Bust" bingo game. Some of DC's targets in 2011: Google Buzz, Twitter (finalized in 2011), Facebook, Google pharma ads, Apple and others for no-poaching restrictions, and others. Good times!

* Judges Order Litigants to Hand Over Passwords to Social Networking Sites. This year, several judges ordered litigants to turn over their Facebook passwords to their litigation opponents for discovery purposes. See, e.g., Zimmerman v. Weis (which I added to my Internet Law reader this year). In 10 years, we'll look back at this mini-trend and shake our heads at the judicial cluelessness. Social networking sites contain a mix of public and private information, and letting a litigation opponent root around the account is just as objectionable as making a litigant hand over the keys to his/her house so the opponent can rummage around.

Other Key Court Rulings in 2011

Some other interesting court decisions this year:

* Author's Guild v. Google. The court rejected the Google Book Search settlement agreement for good reasons, but it sent the parties back to square 1. Why the parties haven't been able to broker a legislative compromise is beyond me.

* Barclays v. theflyonthewall. The Second Circuit took a big bite out of the hot news doctrine. Unfortunately, the Second Circuit didn't kill the hot news doctrine outright, but the opinion leaves open very little room for hot news plaintiffs.

* Network Automation v. Advanced System Concepts. The most important keyword advertising ruling to come out in several years. While the ruling itself was a mixed bag for the litigants, the opinion tore down a number of crusty plaintiff-favorable legal doctrines that had cluttered up trademark jurisprudence for years--including virtually mooting the initial interest confusion doctrine and killing the "Internet trinity" bypass to the standard multi-factor likelihood of consumer confusion test. I've noticed that the opinion has already noticeably tilted courts towards more defense-favorable rulings.

* Betty Boop case (Fleischer Studio v. AVELA). For a few months, it looked like the Ninth Circuit had eliminated trademark merchandising rights in characters that were out-of-copyright. Then it changed its mind; but still it liberated Betty Boop to the world.

* PhoneDog v Kravitz. An interesting battle over ownership of a Twitter account.

* Levitt v Yelp/Ascentive v. PissedConsumer. 47 USC 230 still works really, really well as an immunity. In Levitt, Yelp got a 230 dismissal that Yelp had tried to get advertisers to pay to manage consumer reviews. In Ascentive, the court rebuffed a plaintiff's effort to use a trademark infringement claim against a consumer review website to work around 230.

* Habush v Cannon. Buying a person's name as the trigger for keyword advertising doesn't violate their publicity rights.

* UMG v. Shelter Capital. While everyone waits for the Second Circuit's decision in Viacom v. YouTube, the Ninth Circuit stole some of that thunder with a powerful endorsement of the 17 USC 512 safe harbor. Too bad Veoh didn't live long enough to enjoy the win.

* In re Rolando S. Rolando was convicted of felony identity theft for taking a classmate's Facebook page for a joyride. My vote for the most interesting Internet Law case of 2011, and an instant cyberlaw classic. I've already added it to my Internet Law reader, and the students seemed to enjoy discussing the case.

Some of the Most Linked Blog Posts in 2011 (Per Topsy)

* New Advertising & Marketing Law Casebook Available for Review
* Court Orders Plaintiff to Turn Over Facebook and MySpace Passwords in Discovery Dispute -- Zimmerman v. Weis Markets, Inc.
* "App Store" Isn't Generic, But Apple Can't Enforce Its Purported Trademark in the Term--Apple v. Amazon (Apple legal issues are always good link bait)
* Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
* Republishing Entire Newspaper Story is Fair Use--Righthaven v. CIO
* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract -- CX Digital v. Smoking Everywhere (the most popular post of the year by far--a modern Contract Law classic)
* Second Life Ordered to Stop Honoring a Copyright Owner's Takedown Notices--Amaretto Ranch Breedables v. Ozimals

Favorite "Overlooked" Posts

A few posts that maybe got overlooked a little:

* Cyberbullying and Restorative Justice [a Long-Delayed Post on DC v. RR]
* Racy Teen Photos Posted to Facebook Are Constitutionally Protected Speech--TV v. Smith-Green
* Marijuana Activist Can't Change His Name to "NJWeedman.com" -- In re Forchion
* Free-to-Consumers Ad-Supported Website Isn't Illegally Priced--Cammarata v. Bright Imperial
* What Would a Government-Operated Search Engine Look Like in the US?

Lists of Yore

Previous top 10 lists from 2010, 2009, 2008, 2007 and 2006. Before that, John Ottaviani and I put together a list of top Internet IP cases for 2005, 2004 and 2003.

US v. Stock, Cr. No. 11-182 (W.D. Pa.; Jan. 23, 2012)

I blogged about a case before where a defendant was charged under a federal threat statute of posting a threatening video to YouTube. (“Court Finds That Threatening Video Posted to YouTube and Facebook Can Constitute a "True Threat.”) A couple of recent cases have raised similar issues.

Stock was charged with posting a notice on Craigslist. Here is what the notice said:

I went home loaded in my truck and spend the past 3 hours looking for this douche with the expressed intent of crushing him in that little piece of shit under cover gray impala hooking up my tow chains and draggging his stupid ass down to creek hills and just drowning him in the falls. But alas I can’t fine [sic] that bastard anywhere . . . I really wish he would die, just like the rest of these stupid fucking asshole cops. So J.K.P. if you read this I hope you burn in hell. I only wish I could have been the one to send you there.

Stock said that the statement was not a "threat" under the statute, so regardless of whether a reasonable person would perceive it as a threat, the indictment should be dismissed as a matter of law.

The court says that, although the statute does not define the term "threat," cases construing similar statutes say that a threat is "a serious statement or communication which expresses an intention to inflict injury at once or in the future" (as distinguished from "idle or careless talk . . ."). Under this definition, the court says that it can’t dismiss the indictment because defendant’s statement would not be considered a threat only if different parts of the post were viewed discretely. While some parts of the post express a mere desire that something bad occur, or reference harm in the past tense, when viewed as a whole, whether the post is a threat is a question for the jury.

The court cites to US v. Elonis, another recently decided district court case where the court declined to dismiss a similar indictment. Elonis was charged with making threats via interstate commerce based on statements he made on his Facebook page. He was formerly employed at an amusement park, and he posted a series of threats directed at the amusement park, local authorities, and his wife. Here’s a flavor of some of the posts:

And if worse comes to worse
I’ve got enough explosives
To take care of the State Police and the Sheriff’s Department.
That’s it, Ive had about enough
I’m checking out and making a name for myself
Enough elementary schools in a ten mile radius
To initiate the most heinous school shooting ever imagines
And hell hath no fury like a crazy man in a Kindergarden class
The only question is . . . which one

The defendant in Elonis made a few arguments similar to the ones made by Stock: the statements were hyperbole, venting, and that the statements were "crude, spontaneous and emotional language expressing frustration." The court rejected these arguments, noting that as long as the defendant "knowingly” made the statements, whether they were threats depends on whether an objective recipient would perceive the statements as threats. The court also noted that although the threats were posted to Facebook, the subjects of the alleged threats (the amusement park co-workers and his wife) were Facebook friends with the defendant and saw the threats.
__

There were a couple of key differences between Elonis and Stock. For starters, the statements in Elonis were scarier (they talked about blowing up a school). The court also notes that defendant continued to post threatening statements after Elonis’s wife obtained a protective order. Additionally, the statements Elonis made were likely to be viewed by the subjects of the threats, which included Elonis’s former co-workers and his wife (or his wife's friends). The statements in Stock on the other hand were contained in a post to Craigslist. The post did not identify the target of the threat by name, and we don’t have any idea of how that person would even come across it. For all we know, no one even viewed the threat at all. The statements were similar to the YouTube video the defendant posted in Jeffries. (For what it’s worth, Jeffries was appealed and the appeal is currently pending.)

Some of this gets to the issue of defendant’s intent. There’s a mix of authority as to whether the defendant must subjectively intend the threat to be a threat, with many jurisdictions saying that subjective intent is not required. (The Ninth Circuit says yes, the defendant has to subjectively intend to make a threat, not just intend to transmit the communication in question.) However, all of the cases acknowledge that the defendant must knowingly transmit the statement in question. And that’s where Jeffries (the YouTube case) and this case feel like they are on shaky ground. In both cases, the defendants made statements in cyberspace that were not directed at the subjects of the ostensible threats. In Jeffries, I’m skeptical that the defendant knew that the subject was likely to come across the threat, but in this case I’m even more skeptical. The statement was posted to Craigslist!

It's also worth pointing out that last month a district judge in Virginia dismissed an indictment based on thousands of allegedly harrasing tweets and various blog posts. (Here's a post from Ars Technica on that case: "Judge: indictment for Twitter harassment is unconstitutional.") Although the charges in that case were different in that the government proceeded under a different statute and argued that the defendant intended to cause "emotional distress" to the victim, the court relied on the fact that the communications were not made directly to the victim. (Here's a pdf of the court's order in US v. Cassidy. The analysis between this case and Stock and Elonis differs because "true threats" are considered unprotected speech, but it's interesting that the court relied on the fact that the communications were not made directly to the victim.)

I understand why the government may want to track and investigate threatening statements made online, but I'm surprised these statements ended up being the subjects of federal criminal prosecutions.

[I made a few changes to the post to clarify the timing between the protective order and the threats in Elonis. There were multiple statements that were allegedly threatening and the defendant continued to post after his wife obtained a protective order. At some point she presumably unfriended him on Facebook. While she may not have been directly exposed to threats the defendant made after she obtained the protective order, people in their mutual social circle would have seen them.]

In the Matter of the Welfare of: D.L.W., Child, 2012 WL 171412 (Minn. App. Ct. Jan. 23, 2012)

The opinion indicates the following facts: BP supplied DLW with $200 of dope for resale. Before DLW could move the merchandise, the police seized the stash. The supplier-dealer contract apparently did not allocate this risk of loss, so BP took the position that DLW still owed $200. DLW either was unwilling or unable to pay. The parties then threatened each other via Facebook.

Subsequently, at a house party, BP and DLW got into a fight. Exactly what happened in the fight is the key issue. BP admitted he was "hovering over" DLW and that he administered "a pretty good beating" to DLW. DLW told the police he didn't fight back. However, after the fight, BP went to the hospital with 7 stab wounds. DLW was later found with a pocket knife that had BP's DNA on it.

In court, DLW claimed he didn't fight back and floated a self-defense claim. In response, prosecutors sought to introduce DLW's Facebook post made one hour after the fight:

D—n, I love drunk fight. Owee. I feel like a country boy in a bar fight. Got to love my bois. Ha! round 2. Let's do it, p-ssy. I got two days and that's enough to cause a little raucous.

Dude, Alicabeth, sorry for fighting at ur crib. Liquor before beer. You're in the clear. Well, that's a understatement. Ha! F—k you. The streets can see what you can't see. [B.P.], you're a p-ssy b—ch who can't fight worth sh-t. You f—king cracker a—b—ch. 4 on 8. D—n, that's sad. All your bois ended up on the ground. Ha! Get at me. You know where to find me. Ya'll make me laugh.

[B.P.], you are the definition of a white b—ch. Come see me. 85th Place North. Let's get it, p-ssy.

And just like last time, you won't get out of ur d—n car when my bois surround the car. Not a threat. Just a promise. You're guna get f—ked up. No lie. LOL.

Although I don't speak this language, the prosecutors asserted that these:

were not the words of a young man who just took a beating, didn't fight back and lost a fight....since we know that [B.P.] was over [appellant] and [appellant] was on the ground while [B.P.] was punching him, the only way that [appellant] could have felt that he won that fight was because he fought dirty, and he stabbed [B.P.].

The court allows the evidence, holding it is both potentially relevant and not unfairly prejudicial, and thus upholding the jury ruling of criminal assault. This suggests a new protip: if you're involved in a fight, check with your lawyer before discussing said fight on Facebook.

Compare People v. Bignone, another case involving house brawls and Facebook posts.

Related blog posts on social media evidence undermining legal arguments:

* Social Media Photos Foil Yet Another Litigant--Clement v. Johnson's Warehouse
* YouTube Video Impeaches Witness' Credibility--Ensign Yacht v. Arrigoni
* Facebook Entries Negate Car Crash Victims' Physical Injury Claims
* Contrary MySpace Evidence Strikes a Litigant Again--HAC, Inc. v. Box
* MySpace Postings Foil Another Litigant--Sedie v. U.S.
* Disturbingly Humorous MySpace Posts Used as Impeaching Evidence in Spousal Abuse Case--Embry v. State
* Latest Example of Social Networking Site Evidence Contradicting In-Court Testimony--People v. Franco

U.S. v. Jones No. 10–1259 (U.S. Supreme Court; Jan 23, 2012)

In 2005 federal agents convinced a judge to issue a warrant so they could affix a cellular-based GPS tracker to the underside of Antoine Jones' wife's car, which the agents then tracked constantly for almost a month. Unfortunately for the federal agents' subsequent criminal prosecution of Jones on cocaine distribution and conspiracy charges, the agents did so after the warrant had expired, and in a different state than the warrant permitted. After an unsuccessful trial, Jones appealed his conviction to the D.C Circuit, which suppressed the warrantless surveillance, finding it was obtained through a Fourth Amendment violation.

In so holding, the D.C. Circuit split with the Seventh, Eighth and Ninth Circuits on the matter. Importantly for the Supreme Court, each of these Circuits found no search occurred (or in the case of the D.C. Circuit, a search had occurred) when analyzing the 'search' under the 'reasonableness' test of Fourth Amendment law developed from Katz v. United States.

Yesterday, the Supreme Court held that the government's search was a Fourth Amendment violation. Importantly, the five-member majority opinion by Justice Scalia reaches that result by effectively resurrecting the 'trespass' element of Fourth Amendment law that has been dormant for almost 50 years--and wasn't a part of any of the underlying Circuits' opinions. I don't want to denigrate the significance of that holding, and I suspect it will dominate much of the scholarly commentary about the ruling. Already, the universally-cited Orin Kerr, blogging at the Volokh Conspiracy, has several posts up already about the trespass and mosaic theories aspects of Jones.]

However, my biggest surprises from the opinions were the unanimity of support for the idea that this was a constitutionally-suspect search, and the numerical majority that also found this search unreasonable for non-tresspassory "reasonableness" reasons. It's kind of a big deal that all nine Justices found this case to be a Constitutionally-infirm search, disagreeing with a significant portion (probably a majority) of the Circuit Courts' benches. Even more so, it's truly a big deal that five (a numerical majority) found this search "unreasonable" under a reasonableness test that looked to the intent of the searching officers and so casually dismissed the atomistic arguments of the government that at each moment the searching was being done in a public place. Both of these arguments have been mainstays in earlier Fourth Amendment decisions.

Additionally, much of the earlier commentary on the D.C. Circuit's unreasonableness rationale, somewhat pejoratively nicknamed a "mosaic theory," had focused on its novelty and un-testedness. However, five justices appear ready to apply it in this case. In particular, Justice Sotomayor 's concurrence makes clear that she agrees with Justice Alito's four-member opinion adopting the D.C. Circuit's reasonableness rationale. In that concurrence, she amplifies the majority opinion's holding relying on trespass principles, but indicates this is an "irreducible constitutional minimum," above which Katz's reasonableness rationale (which Justice Scalia's majority opinion doesn't denigrate, even if it declines to evaluate the applicability of) still controls. Tom Goldstein shares my conclusion that there are effectively two majority opinions in this case. His excellent observations are here and also illuminate just how much was not resolved in the decision.

Eric's Comments

I really only learned two things in my Criminal Procedure class from law school: (1) every fact matters, and (2) the Supreme Court makes up the rules from case-to-case. At the time, I didn't feel I got very much from my class, but in retrospect, perhaps I actually learned everything that really mattered in Fourth Amendment jurisprudence. As Ethan recaps and as Paul Ohm indicated (United States v. Jones is a Near-Optimal Result), this opinion is a mix of good news (get a warrant before GPSing my car) and unresolved issues (basically everything else--ranging from practical questions like the legitimacy of warrantless tracking of cellphone movements to theory battles over whether the Fourth Amendment protects against trespass, violations of reasonable expectations of privacy or both).

Putting aside those important questions, the opinions articulated some deep distrust of government motives. I am always perplexed when the privacy community loses sight that the government is the real privacy threat, not the private sector. It also seemed that the judges did, in fact, internalize the personal threat that police could monitor their own cars without a warrant. It reminded me a little of the RIM case where the judges tried to envision their personal situation without their Crackberries.

In a decision that favored the 1% (copyright owners) over the 99% (consumers and the public domain), the U.S. Supreme Court recently held that neither the Patent and Copyright Clause of the U.S. Constitution nor the First Amendment prohibits the removal of works from the public domain. Golan v. Holder, No. 10-545. Prior blog coverage of the case: certiorari granted and the 10th Circuit opinion.

The majority opinion was written by Justice Ginsburg for herself and five other justices. Justice Breyer, joined by Justice Alito, dissented. (Justice Kagan recused herself, as she had participated in the case as Solicitor General before being named to the Court.) The line-up of justices was therefore essentially the same as the 7-2 opinion in Eldred v. Ashcroft, 537 U.S. 186 (2003), which upheld the Constitutionality of copyright term extension, with Justice Alito replacing Justice Stevens in dissent, and Chief Justice Roberts and Justice Sotomayor replacing Chief Justice Rehnquist and Justice O’Connor, respectively, in the majority.

The case concerned Section 514 of the Uruguay Round Agreements Act of 1994 (URAA), which is codified in 17 U.S.C. § 104A. That section “restored” copyright protection to works of foreign origin that were still under copyright protection in their source countries, but were in the public domain in the U.S. for one of three reasons: (1) lack of national eligibility, for countries with whom we did not have copyright relations prior to joining the Berne Convention; (2) lack of subject-matter eligibility, for sound recordings fixed before February 15, 1972 (the date sound recordings first became eligible for federal protection); and (3) failure to comply with the formalities previously required under U.S. (such as proper copyright notice and registration of the renewal term). Effective January 1, 1996, all such works were taken out of the public domain and placed under copyright protection in the U.S., for the same duration that is granted to domestic works. (For the background of the case, see Tyler T. Ochoa, Is the Public Domain Irrevocable? An Introduction to Golan v. Holder, 64 Vanderbilt L. Rev. En Banc 123 (2011)).

The Petitioners (orchestra conductors and film distributors who had performed and sold foreign works in the public domain before restoration) made three principal arguments, all of which the majority rejected. First, Petitioners argued that the phrase “for limited Times” in the Patent and Clause prohibits Congress from removing works from the public domain once those “limited Times” have expired. Justice Ginsburg, however, relying on her majority opinion in Eldred, held that “limited” does not mean “fixed” or “unalterable,” and noted that terms granted to foreign works are the same as those granted to domestic works, which the court had previously held in Eldred to be “limited.” Slip. op. at 13-14. She also relied on the fact that many of the works whose copyright was “restored” had never enjoyed copyright protection in the U.S. at all, saying “surely a ‘limited time’ of exclusivity must begin before it may end.” Slip. op. at 15. (Here, Justice Ginsburg is not quite correct: all works enjoyed common-law copyright protection before they were published, even those foreign works originating in countries with whom the U.S. had no copyright treaty relations. It was only upon first publication that foreign works entered the public domain in the U.S. if they failed to comply with formalities or were not from an eligible country. But it is true that many of the works involved had not previously received federal statutory copyright protection.) Nonetheless, the majority’s rationale does not apply to those foreign works that did receive 28 years of copyright protection and were not renewed. Not only did the Berne Convention NOT require that such works be removed from the public domain, Article 18(2) of Berne commands that such works “shall NOT be protected anew” (emphasis added). See Daniel Gervais, Golan v. Holder: A Look at the Constraints Imposed by the Berne Convention, 64 Vanderbilt L. Rev. En Banc 147, 149-54 (2011).

Justice Ginsburg relied primarily on the fact that “the Copyright Act of 1790 granted protection to many works previously in the public domain. . . . The First Congress, it thus appears, did not view the public domain as inviolate.” Slip. op. at 16. However, as Tomas Gomez-Arostegui and I pointed out in our amicus brief, the historical evidence on this point is highly equivocal and far from compelling. We cannot say with certainty whether the members of the First Congress thought they were removing works from the public domain or not; but there is a strong argument that they did NOT think so. It is true that in 1834 the Supreme Court held that there was no post-publication common-law copyright, meaning that, to the extent that the First Congress had protected previously published works, that law was later held to have had the effect of removing works from the public domain; but it is far from clear that the members of the First Congress would have foreseen or agreed with that conclusion.

Justice Ginsburg also relied on a handful of private patent and copyright laws that removed specific works from the public domain, and on two acts that gave owners of foreign works who were unable to comply with U.S. formalities during World Wars I and II the opportunity to comply with those formalities after the war, thereby removing works from the public domain. In so doing, however, Justice Ginsburg indulged in the blithe assumption that anything Congress has done a handful of times must be Constitutional. Marshaled against her conclusion is that is the fact that Congress has steadfastly avoided protecting works already in the public domain each time it has passed a general revision of the Copyright Act, and even expressed the opinion in the legislative history of the 1976 Act that doing so would be unconstitutional. (See Breyer’s dissenting opinion, slip. op. at 19.)

The Petitioner’s second major argument was that granting copyrights to existing works does not “promote the Progress of Science,” as the Copyright Clause requires. In the 18th Century, “Science” meant knowledge broadly, and this portion of the Clause is traditionally read to incorporate a “utilitarian” view of copyright; namely, that the purpose of copyright is promote the creation and distribution of new works of authorship. (This is the principal basis of Justice Breyer’s dissenting opinion.) The majority, however, held that the Clause is also intended to promote the dissemination of existing works of authorship. While there is plenty of evidence to support this assertion (see, e.g., Malla Pollack, What Is Congress Supposed to Promote? Defining ‘Progress’ in Article I, Section 8, Clause 8 of the U.S. Constitution, or Introducing the Progress Clause, 80 Neb. L. Rev. 754 (2002)), it is the majority’s application of this principle that is problematic. Basic economic theory holds that an existing work will be more widely disseminated when it is in the public domain than it will be under copyright protection. Copyright exists to solve the “public goods” problem of financing the work’s creation and initial publication (who would invest in the creation and distribution when the work could be copied more cheaply without paying the author?); but after a “limited Time,” dissemination is better served by placing the work in the public domain. The majority, however, refuses to question Congress’ assertion to the contrary, applying only rational basis review, instead of any kind of heightened scrutiny. (Slip. op. at 21-22).

Petitioner’s third argument was the First Amendment requires heightened scrutiny, because leaving works in the public domain was one of the “traditional contours of copyright protection” that the majority alluded to in Eldred that would justify First Amendment scrutiny. The majority rejects this argument, and squarely holds that the “traditional contours of copyright protection” are limited to the idea-expression dichotomy and the fair use doctrine. (Slip. op. at 23-26 & n.29.) So long as those two (vague and inconsistently applied) limits on copyright are preserved, apparently Congress had the power to impose any other type of speech restriction in the name of copyright protection.

The majority’s decision would seem to foreclose almost any future Constitutional challenge to Congress’ patent and copyright power. The majority rejected (or reinterpreted) the dictum in Graham v. John Deere Co., 363 U.S. 1, 6 (1966), in which the Supreme Court stated that “Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available,” saying that this is NOT a Constitutional limit on Congress’ power. (Slip. op. at 19) The majority also states that that the public has no vested rights in the public domain at all. Instead, it characterizes the public domain as the absence of ownership, rather than affirmative ownership by the public. (This characterization is at odds with 19th Century opinions on the subject. In my article Origins and Meanings of the Public Domain, 28 U. Dayton L. Rev. 215, 232-36, 256-66 (2003), I collect the evidence that the public domain was consistently said to have two characteristics in the 19th Century: it was property that was owned by the public, and it was irrevocable.) The absence of any ownership interest in the public domain would seem to foreclose any challenge based on the Fifth Amendment’s Due Process Clause as well.

The Golan opinion is a severe blow for those who believe that the public domain is a vital resource for public education and creativity. I anticipate that owners of copyright in domestic works will now lobby Congress for the same advantage that foreign copyright owners received in 1996: restoration of copyright for those works that are in the public domain for failure to comply with formalities such as copyright notice and renewal. This move, if successful, would have an enormous impact on the public domain. It has been estimated that only about 85 percent of works published in 1923-1963 were renewed; the remaining 85 percent are in the public domain. Congress could apparently restore the copyrights in this 85 percent at any time, leaving the U.S. public domain with only those works that were created before 1922.

Would Congress go back and attempt to restore copyrights in even older works, those that did enjoy the maximum period of copyright protection? I agree that it is far-fetched to suppose that Congress will take advantage of its newly-ratified power to do so, although a broad reading of the opinion would certainly support its power to remove any works from the public domain, including Shakespeare and Beethoven. (Indeed, under the majority’s rationale, none of their works ever enjoyed copyright protection in the United States.) However, at least one passage in the opinion suggests that even this Supreme Court might balk at such a move:

Carried to its logical conclusion, petitioners persist, the Government’s position would allow Congress to institute a second “limited” term after the first expires, a third after that, and so on. Thus, as long as Congress legislated in installments, perpetual copyright terms would be achievable. As in Eldred, the hypothetical legislative misbehavior petitioners posit is far afield from the case before us. In aligning the United States with other nations bound by the Berne Convention, and thereby according equitable treatment to once disfavored foreign authors, Congress can hardly be charged with a design to move stealthily toward a regime of perpetual copyrights.

(Slip. op. at 15) This paragraph suggests that, should Congress attempt to “restore” copyright protection to a work after its maximum statutory period of duration had expired (rather than a work which failed to achieve the maximum period for failure to comply with formalities), the Court might be willing to hold that such “misbehavior” does violate the “limited Times” provision.

Wolk v. Kodak Imaging Network, Inc., 2012 WL 11270 (S.D.N.Y. Jan. 3, 2012). Prior blog post on this case.

As I've indicated before, blogging 17 USC 512 cases has gotten tedious because they are just TOO LONG. I can crank through most 47 USC 230 cases in an hour or two because they are usually quite short and efficient. In contrast, because 17 USC 512 gives copyright plaintiffs so many words to contest, 512 opinions tend to be lengthy and quite time-consuming to blog--with this 69 page opinion as a prime example. This has some implications for drafters of laws like SOPA/PIPA, which have similarly long and detailed provisions that just beg plaintiffs to contest every word and will force courts to write quite lengthy opinions that bloggers like me will struggle to crank through. I cheer for immunities and safe harbors, but I have three cheers for SHORT immunities and safe harbors.

This case is even more unfortunate because the pro se plaintiff had an obviously unmeritorious case, yet the two defendants used three law firms to beat this case. And it's not exactly like Kodak is wallowing in cash any more.

Wolk is an artist. Users uploaded images of Wolk's work to Photobucket (a UGC photo-sharing site). Photobucket, in turn, had a revenue-sharing agreement with Kodak Imaging that allowed users to print the images via Kodak (i.e., Kodak did "photofinishing").

Photofinishing Liability

The court says that Kodak Imaging wasn't directly liable for printing the images (Wolk didn't allege secondary infringement). The court observes that "reproduction, display or transmission of the Plaintiff's images by or through the KODAK Gallery website is an automated process with no human intervention by any employee of the Kodak Defendants." Thus, because its entire system was automated, Kodak didn't act volitionally and thus avoids the strict liability standards of direct copyright infringement.

This ruling is unexpected because it's been conventional wisdom for many years that photofinishers were in fact directly liable for their print jobs. Perhaps that's because humans were always involved in the photofinishing process during that time, as opposed to now where the process from photo upload to mailing of items can be completely automated. Whatever the case, this ruling has to be encouraging for other automated photofinishers (whether they print photos or other items), such as CafePress or Zazzle. Then again, perhaps the copyright plaintiffs will pursue them under secondary infringement doctrines, which Wolk didn't do.

Although I like the result, I remain confused about the scope of the "volitional doctrine." As was the case in Cablevision, Kodak's system was completely automated only because Kodak's engineers designed it that way. We would benefit greatly from a richer theoretical grounding for the volitional doctrine and how it interplays with strict liability. Without that grounding, the results seem a little random.

512(c) Safe Harbor

Photobucket qualified for the 512(c) safe harbor. This isn't surprising; the court indicated as much when it denied Wolk's request for a preliminary injunction. Still, the court works through a 512(c) in fine detail:

* Photobucket is a "service provider"
* Photobucket properly adopted and implemented a repeat infringer termination policy.
* Photobucket accommodates standard technical measures. Wolk argued that Photobucket gives users tools that can remove or hide watermarks. The court doesn't opine whether watermarks are a standard technical measure, but instead the court says Photobucket doesn't encourage users to use the tools, so users--not Photobucket--would be the ones interfering with standard technical measures if watermarks qualified as such.
* Photobucket didn't have actual or constructive knowledge of the infringement. Before the lawsuit, Wolk sent 15 infringement notices covering 9 works. When Wolk sent 512(c)(3) notices, Photobucket expeditiously responded. However, 11 of the notices weren't 512(c)(3)-compliant (because they didn't specify URLs) and thus are irrelevant. (Compare the troubling dicta in the uncited UMG v. Shelter Capital). Wolk argued--as so many copyright owners do--that one notice about a work should cover all existing and future uploads without providing URLs of the other items. The court rejects that argument.
* Photobucket doesn't have the right/ability to control infringement because it does not prescreen content, render extensive advice to users regarding content and edit user content. Photobucket also lacked direct financial benefit from the infringement: "The Defendants' profits are derived from the service they provide, not a particular infringement."
* Photobucket properly identified its agent for notice and designated it with the copyright office.

All of this 512(c) analysis was fairly by-the-book. The most interesting part is where the court discussed how "Photobucket Has No Duty To Police Its Website For Infringements." The court says:

Photobucket is a website that consists of over 9 billion images and videos. Under the plaintiff's theory, Photobucket would be required to police its website for infringing copies of her work wherever they may appear once she has provided a DMCA-compliant notice....[due to 512(m),] the DMCA does not require the policing the Plaintiff suggests.

Secondary Infringement

The court says, without any real discussion, that 512(c) moots Photobucket's secondary liability. Accord UMG v. Shelter Capital. The court continues with other reasons those claims fail. In particular, Photobucket lacked the requisite scienter about the infringing items it transmitted to Kodak at users' requests, nor did Photobucket act "in concert" with Kodak. The court rejects the applicability of Grokster, Napster and Aimster because those cases involved peer-to-peer file sharing (more evidence of the exceptionalism towards P2P) and her incomplete takedown notices didn't confer scienter.

Conclusion

The court granted summary judgment against Wolk, ending her case. The precedential value of this case's discussion about 512(c) probably will be overwritten by the Second Circuit's Viacom v. YouTube ruling, and a win against a pro se litigant isn't much in the grand scheme of things. Nevertheless, the ruling reinforces that courts continue to take the 512 safe harbor seriously. In particular, they continue to rebuff copyright owners who don't send 512(c)(3) takedown notices but still want judicial relief.

Meanwhile, the "volitional conduct" defense appears to be live and well, especially in the Second Circuit, although I'm not sure anyone understands the doctrine's parameters.

State v. Altajir, SC 18706 (Conn. Supreme Ct.; Jan. 3, 2012)

Altajir was involved in an automobile accident while she was under the influence. One of her passengers died. She was sentenced to five years in jail and five years of probation. The accident occurred in 2004 and she was sentenced in 2006. There were numerous conditions attached to the probation. After she got out (early), in 2009, she was involved in another accident. While she was not under the influence, she did not have an ignition lock device on her car and she had not restored her driver’s license. She admitted she violated these conditions of her probation.

At a later hearing, the state argued that Altajir was a “marginal probationer.” In addition to the fact that she hadn’t obtained a job, hadn't furthered her education, and didn’t do much community service, the state sought to highlight her nonchalance by putting a slew of Facebook photos in front of the judge. It argued that:

[the defendant was] worshipping at the altar of alcohol and debauchery and lewd behavior. And why is that significant. It’s significant because the message didn’t get sent, and this individual refused to accept it.

The trial court noted that her Facebook photos had played a role in her initial sentencing and the defendant “has the audacity to go back on Facebook and show herself in the condition of being intoxicated.” The defendant addressed the court but did not deny the photos' veracity. Defense counsel made an objection to admitting the photos, but although some of the photos were eliminated, the judge considered 36 photos. The court terminated probation and sentenced the defendant to three years in jail. Altajir appealed, and the appeals court said review of the issue was not preserved and the claimed violation was not of constitutional magnitude, so it did not merit reversal.

The Connecticut Supreme Court said that while strict evidentiary standards apply to the determination of whether someone violated their probation, in deciding to revoke probation or sentence a defendant, a court can take a broader category of evidence into account. The test is whether there is a high probability that “misinformation infected the [trial judge’s] decision.” While there was some discussion about the possibility that the date the photos were uploaded may not necessarily be the date the photos were taken, there was no evidence that the events depicted in the photos occurred after Altajir served her initial sentence. Instead, the court focuses on the fact that the defendant did not unequivocally deny the veracity of the photos (as to the dates, locations, etc.). The court says that while the evidence of reliability would have been insufficient at trial, the photographs had the minimum indicia of reliability to be admitted at a probation hearing.
__

This case deserves a prime spot on Professor Goldman’s list of cases where people get zapped by social media evidence. As the court notes, the Facebook evidence was taken into account by the court in the initial sentencing. Altajir nevertheless did not keep her Facebook profile clean. She also does not demonstrate much awareness of Facebook's privacy settings or how photos of her would be viewed by others.

On the other hand, the court does not give enough credence to the fact that social media evidence has reliability issues, particularly when it is being used to show things like dates and places. The photos in question were uploaded after the initial sentencing, but the events depicted in the photos may not have occurred on the date they were uploaded. Some of the photos were labeled "old photos." The other problem is that the photos could have been uploaded by someone else or the defendant may have simply been "tagged" in the photos. The state did not present any evidence as to "how [the] photographs had been acquired, who could view the defendant's Facebook profile or how Facebook's features governing publicity and privacy functioned during the relevant time period." The court even says that the images were "purportedly viewable on the defendant's Facebook page."

[As a sidenote, Altajir is the granddaughter of Mahid al-Tajir, a United Arab Emirates man with a net worth of $4.3 billion.]

Previous post:

"It May be Best to Shut Down Your Facebook Account While You are on Probation -- State v. Altajir."

Related posts:

"Maryland Supreme Court Rejects "Circumstantial Authentication" Standard for MySpace Evidence -- Griffin v. Maryland"
"Connecticut Court of Appeals Tackles Authentication of Facebook Messages -- State v. Eleck"

In re Google AdWords Litigation, 2012 WL 28068 (N.D. Cal. Jan. 5, 2012)

Google defeated class certification in an AdWords-related case over Google's placement of ads on parked domains. This almost certainly ends this case in practice, as few if any advertisers will find it worth continuing the case on their own. This ruling also takes us closer to the end of litigation wars over parked domains.

The advertisers sued Google for placing AdWords ads on parked domains and error pages and not adequately disclosing these facts.

The court finds standing under both California UCL/FAL and Article III based the named plaintiffs' allegations that they bought advertising they wouldn't have bought if they knew where Google was going to put it. This was also good enough to confer standing for the unnamed plaintiffs; the court says that "where one class representative in a UCL or FAL class action has already established Article III standing, the court need not analyze the standing of unnamed class members."

The court also finds numerosity, typicality, adequacy, and commonality (on the question of “whether Google’s alleged omissions were misleading to a reasonable AdWords customer”). However, the court rejects class certification on predominance grounds. Even though there are common legal questions among the advertisers, their idiosyncratic factual questions are more important than the common legal questions. Specifically, because only some advertisers were financially harmed by Google's placement of ads on parked domains and error pages, the court would have to investigate each advertiser's results to determine if restitution were appropriate. Further, because each click was auctioned off and sold for a constantly changing price, it would be hard to calculate the "but for" pricing that advertisers would have paid. Plus, not every advertiser is seeking click conversion; presumably (although not articulated in the court's opinion) some advertisers compute their bids on the branding value of ads. The court thus concludes this discussion by saying "any effort to determine what advertisers “would have paid” under a different set of circumstances requires a complex and highly individualized analysis of advertiser behavior for each particular ad that was placed."

To fix this problem, advertisers' counsel suggested a variety of restitution formulae that relied on blanket assumptions applicable to all advertisers. The court rejects these categorical approaches, saying "[s]ince the purpose of restitution is to return class members to status quo, the amount of restitution due must account for the benefits received from ads placed on parked domains and error pages." This too requires a per-advertiser assessment.

Google continues to make substantial progress cleaning up its AdWords litigation docket. Recently, it got rid of Woods v. Google over click fraud and improper pricing discounts; it defeated class certification in FPX v. Google over trademark triggering; and the Ninth Circuit upheld its settlement of the CLRB Hanson case. Even so, it's also clear that litigation forays by advertisers will be a perennial aspect of Google's life going forward; partially due to Google's occasional corner-cutting, but mostly due to advertisers' wish that they could get unlimited traffic at no cost. Then again, the plaintiffs' bar will be sharing some of that joy with Facebook too.

This lawsuit was just one of several lawsuits over the legitimacy of parked domains. I've criticized Google before for its AdSense for Domains program, which fosters an ecosystem that motivates questionable domain name registrant behavior while providing little if any real value to consumers. From my perspective, it's pathetically anachronistic that Google still offers its parked domain program--what is this, 2004? Time for Google to grow up a little more.

While I think it's sad Google can't wean itself from the questionable revenues it derives from its parked domains program, I think it's even sadder to see plaintiffs trying to attack the parked domains ecosystems using proxy defendants like intermediate service providers rather than just going after the domain name owners directly. See, e.g., Vulcan Golf v. Google; In re Yahoo; uBid v. GoDaddy; etc. Let's hope this ruling discourages plaintiffs from bringing future proxy battles over parked domains.

1-800 Contacts v. Lens.com, 2012 WL 113812 (D. Utah Jan. 13, 2012). Prior blog posts on the case dismissal in December 2010 and 1-800 Contacts' fee dispute with its attorneys.

The federal trademark statute says judges may award attorneys' fees to the winning party in "exceptional" cases. What does it take for a case to be "exceptional"? Apparently, it has to be pretty egregious conduct, as this long-running money pit of a case illustrates.

1-800 Contacts sued Lens.com for competitive keyword advertising. Through the course of the litigation, we learn the following facts:

* 1-800 Contacts accrued $650k in legal fees pursuing the case and capped its legal fees at $1.1M before it stiffed its law firm.
* the defendant Lens.com made less than $21 in profits from its competitive keyword ad buys. 1-800 Contacts also tried to attribute to Lens.com keyword ad buys made by Lens.com's affiliates, a legal argument the court ultimately rejected.
* 1-800 Contacts had done the same thing it was suing Lens.com for doing. 1-800 bought Lens.com's keywords and made about $220k in profit from those keyword ad buys, yet it had duplicitously tried to shut down Lens.com for making less than $21.

To me, this looks like an egregious misuse of the litigation process--exactly the kind of sanctionable behavior that should be considered "extraordinary" enough to make the plaintiff reimburse the defendant for its sizable legal fees. Indeed, the court has harsh words for 1-800 Contacts, including calling 1-800 Contacts' behavior "troubling" and specifically referencing its hypocrisy for suing over behavior it had itself engaged in. The court also says "1-800 Contacts’ actions raise questions about vexatious suits to defeat competition."

Nevertheless, the court decides not to award attorneys' fees. The court cites the following factors in denying the attorneys' fee request:

* the legitimacy of keyword advertising remains legally unsettled. Even when it was clear the direct infringement case was weak, 1-800 Contacts still had a non-frivolous claim for secondary infringement.
* Lens.com did engage in competitive keyword advertising, even if its purchases were "minuscule."
* Lens.com itself was sanctioned for discovery violations.
* even though 1-800 Contacts' expert reports were largely tossed, some of the reports were admitted.

It's clear the judge had distaste for both parties. Lens.com also has a parallel antitrust claim going against 1-800 Contacts in a different forum, and the judge seemed to be deferring to that case to remediate any abuses by 1-800 Contacts. Still, given 1-800 Contacts' condemnable conduct, it's curious the judge didn't stick them with a fee shift.

I think this ruling gives us some more insight into the trademark bullying phenomenon. The mockably ridiculous USPTO report on trademark bullying noted that trademark law's fee shift provision acts as a deterrent against abusive trademark litigation. (For example, it says "the potential for an award of attorneys’ fees is an existing deterrent to misuse of the litigation process in trademark disputes.") Given how hard it is to get a fee shift in light of a ruling like this, this was just another way in which the USPTO completely understated a very real problem in the field.