Video Advertising Contract Descends Into Possible “Cyberattack”–Radian Weapons v. GY6Vids
This is a lawsuit between Radian Weapons and GY6Vids, a company that Radian hired to promote Radian’s products on YouTube. (GY’s YouTube channel currently has almost seven hundred thousand subscribers. Press coverage of the lawsuit from The Bulletin here.) The parties signed an agreement saying that Radian would pay GY 0.03 cents per view for the first six months the video was posted on YouTube.
GY created a promotional video for Radian and attached it to a video GY posted to YouTube. The video generated approximately five hundred thousand views in the first month of release. GY sent an invoice to Radian for approximately $15K. Radian paid this invoice. GY sent an invoice in the second month for $42K. Radian demurred. Radian then sent GY a letter saying the contract was void. GY’s counsel then sent a letter to Radian seeking damages for failure to pay.
In the aftermath of the exchange of letters, GY’s videos started receiving a suspiciously large number of “dislikes” on YouTube. In February 2018, GY’s videos received nearly 19,000 dislikes.
Radian sued GY. In response, GY asserted several counterclaims, including for what GY characterized as an “orchestrated cyberattack” by Radian. The court dismisses some of the counterclaims on a motion to dismiss.
Breach of Confidentiality: The contract contained a strict confidentiality provision, and GY alleged that Radian breached this provision. Radian challenged GY’s measure of damages ($5M) but the court says the specific figure is determined as a matter of fact.
Interference with Economic Relations: GY alleged interference with economic relations based on Radian’s alleged cyberattack. The court declines to dismiss the claim, concluding that GY alleged a sufficient relationship with its advertisers and viewers that Radian could have improperly intended to disrupt with its campaign (assuming there was such a campaign). The court notes that the allegations are threadbare and approach the line of being conclusory. But ultimately plausible (barely).
CFAA: The court dismisses the CFAA claim. That claim requires pleading that Radian accessed a protected computer “without authorization”. CFAA claims in this context are often based on access to a party’s website or servers without authorization, or in a way that exceeds the authorization in the terms of use. There’s a broader debate over whether a violation of website terms standing alone can state a CFAA claim, and most courts have said no. Here, GY alleged that Radian left repeated negative comments in violation of YouTube’s terms of service. This is the type of a terms of service violation that courts have said should not support a CFAA claim. The court cites to the 3taps case, where the court said that access to a website following express revocation can constitute a violation of the CFAA. This case is distinguishable for a few reasons.
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We have seen a few disputes over alleged cyberattacks perpetrated or orchestrated by a party. Here, the allegations vaguely pointed to involvement by Radian, but GY did not have specific inculpatory evidence in its possession. The court allows the interference claims to proceed but cautioned that they’re on shaky ground.
The CFAA result makes sense in this case, particularly because the website in question was operated by YouTube. Even if the comments had been left on GY’s own website, the court would have likely declined to recognize a claim unless GY had affirmatively revoked consent. (See also Matot v. CH, a district court ruling rejecting CFAA claims premised on parody accounts.)
The contract was attached to the complaint. The parties asked to file it under seal but the court declined, saying the parties “fail[ed] to present compelling reasons overcoming the strong presumption in favor of public access to the documents”. Kudos! The agreement is linked here and is a simple two page document. Radian probably regrets that it had no restrictions on the amount of views it would pay for. It also doesn’t say much about labeling the content as being sponsored. Perhaps that’s obvious from the context of the promotional video. (As a side note: it’s always an interesting question whether a party can simply file a copy of an agreement or reference material terms of an agreement in a dispute over the agreement.)
The contract was silent as to whether GY had an obligation to disclose the payment from Radian. It’s tough to tell without the benefit of context, but this looks like the type of placement that would trigger the FTC’s endorsement rules.
Case citation: Axts Inc. v. G76vids LLC, 2018 U.S. Dist. LEXIS 183492 (D. Or. Oct. 24, 2018).
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Creating Parody Social Media Accounts Doesn’t Violate Computer Fraud & Abuse Act – Matot v. CH