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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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Adult Entertainment - Updated November 01, 2007

502 F.Supp. 2d 719, Case No. 3:07 CV 604 (N.D. Ohio, August 22, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230, immunizes operator of online adult dating service from claims arising out of a user’s false statement in her user-profile that she was over 18.  Relying on this profile, plaintiff met and had consensual sexual relations with a minor, for which he was subsequently arrested.  Plaintiff brought this suit, seeking redress.  Importantly, the contract between the parties expressly provided that SexSearch.com does not “assume any responsibility for verifying the accuracy of the information provided by other users of the Service.”  Because plaintiff sought to hold SexSearch.com, a provider of Interactive Computer Services, liable for its publication of content authored by another, his claims, whether couched as breach of contract, fraud or negligent misrepresentation, were barred by application of the CDA.  Plaintiff’s breach of contract claim similarly failed because SexSearch did not assume responsibility for verifying the age of users.

2002 U.S. Dist. Lexis 7333, CV 01-2595 LGB (C.D. Ca., April 22, 2002)

Court issues preliminary injunction against Cybernet Ventures, which operates an Age Verification Service, based on the use by web sites operated by third parties of various images in which plaintiff held the copyright, or featuring a model who had assigned her right of publicity to plaintiff. 

Cybernet Ventures operates the Age Verification Service "Adult Check."  Participating web sites put a script on their site which direct first time users to Cybernet, who sells them access to the Adult Check family of sites.  The user is thereafter free to visit Adult Check sites for a set period of time.  The fees generated by this user are paid to Cybernet, who splits them with the web site which sent the user to Cybernet.  To assist the user in finding Adult Check sites to his liking, Cybernet provides both a series of links as well as a search engine.  It also advertises its network. 

Cybernet takes an active interest in the content of Adult Check sites, employing a staff of 12 to review the site both before it is admitted to the Adult Check family, and periodically thereafter.  The content of the site is reviewed by Cybernet to prevent the inclusion of prohibited images.  Cybernet also provides comment on the site's layout.  The images on each site, however, are not provided by Cybernet.  Instead, each site is run by a third party, who is responsible for locating the images, arranging to have the site hosted, and advertising the site.

Perfect 10, which holds the copyright in a number of images of nude women made available to the public both on its web site and in a magazine, brought this suit, charging that web sites in the Adult Check family contained over 10,000 images in which Perfect 10 held the copyright. 

The court determined that Perfect 10 was likely to prevail on its claims contributory and vicarious copyright infringement against Cybernet, as well on its claims of unfair competition under Cal. Bus. and Professions Code Section 17200.  The court held that Perfect 10 was likely to prevail on its contributory infringement claim because Cybernet was likely to be held to have the requisite notice of the infringing activities at issue, and to have materially contributed to this infringement by its operation of the Age Verification Service, and particular its collection of fees for, and advertising of the web sites in question.

The court further held that Perfect 10 was likely to prevail on its vicarious infringement claim, because Cybernet had the ability to control the web sites, as evidenced by the review of its content it conducted, and received a direct financial benefit from the presence on these web sites of the infringing images.  Lastly, the court held that Perfect 10 was likely to prevail on its unfair competition claim, because Cybernet was likely to be held to have aided and abetted a violation of various models' right to publicity, again by virtue of its knowledge of infringement, and contributed thereto by virtue of its operation of the AVS system.

The court further held that Cybernet was unlikely to be able to avoid this liability under the safe harbor provisions of the Digital Millennium Copyright Act, because the court was likely to hold both that the DMCA policy Cybernet adopted failed to comply with the DMCA, and that Cybernet failed to reasonably implement such a policy, or terminate repeat infringers.  Cybernet was also unlikely to be able to seek the protections of the DMCA because it received a financial benefit directly attributable to infringing activity it had the right and ability to control.

The court accordingly issued a preliminary injunction, which prohibited Cybernet from utilizing or linking to the images in question.  The injunction further obligated Cybernet to stop linking to sites containing the images in question where Cybernet had either notice thereof, or knew or should have known of the presence of the images, under circumstances specified in the injunction.  The injunction also obligated Cybernet to undertake reviews both of sites seeking to become members of the Adult Check network, and of designated existing sites, to ascertain whether they were using any of the images at issue, and to bar such new sites from entering the network without proper rights documentation.  The scope of this injunction is discussed in greater depth in the accompanying "in depth" analysis of this decision.

265 F.3d 1232 (11th Cir., September 21, 2001)

Plaintiffs operate the Voyeurdorm.com web site, at which subscribers, for a price, can view the activities of five women in a house located in Tampa, Florida, including those that occur in bedrooms, bathrooms and showers. Reversing the decision of the District Court, the United States Court of Appeals for the Eleventh Circuit held that plaintiffs' operation of this web site does not constitute a violation of the Tampa City Code, which prohibits the operation of an adult entertainment establishment in the residential neighborhood in which the house at which plaintiffs' filming activities took place is located.

Advertisements Online - Updated November 03, 2008

This section of the Internet Law Library contains a host of court decisions that address the legality of the use of another's trademark to trigger the display of various forms of online advertising, typically marketing a competitor's product, including sponsored links displayed on search engine results pages as part of a keyword advertising program, and pop-up ads that are displayed in a separate window on the user's computer screen.  Among other issues, these cases address whether such use of a party's trademark constitutes a use in commerce, or a trademark use of the trademark sufficient to give rise to trademark infringement claims. 

309 F.Supp.2d 467 (S.D.N.Y., Dec. 22, 2003), reversed in part and remanded, -- F.3d -- (2d. Cir., June 27, 2005)

Finding plaintiff likely to prevail on its claims of trademark infringement, the District court issued a preliminary injunction, enjoining the pop-up advertiser WhenU from delivering ads which are triggered by a consumer's entry of plaintiff's domain name in either his browser or a search engine, or from including plaintiff's domain name in defendant's proprietary directory, which is used to identify the ads to be delivered to consumers.  Defendant WhenU delivered pop-up ads of plaintiff's competitor to computer users when they typed plaintiff's domain name into either their browser or a search engine.  The court found such conduct likely to cause actionable "initial interest confusion" and to allow defendants to divert consumers seeking plaintiff's products to their own offerings, and thereby unfairly profit from plaintiff's goodwill.  Applying the eight factor Polaroid test, the court found that consumers were likely to be confused by defendants' actions, despite the branding of defendant's advertisements as "a WhenU offer."  As such, the court held that plaintiff was likely to prevail on its trademark infringement claims, and enjoined defendants from continuing to use plaintiff's domain name as a trigger for the delivery of advertisements. 

The court also held that plaintiff was unlikely to prevail on its copyright infringement claims, which arose out of the delivery of pop-up advertisements in a "window" which partially covered the 'window' in which plaintiff's site appeared on a consumer's computer screen.  The court found that this conduct neither violated plaintiff's right to display its copyrighted website, nor its right to create derivative works therefrom.  This later ruling was premised on the court's determination that defendant's ads are not sufficiently fixed to constitute an infringing derivative work.

The court's holding on plaintiff's trademark infringement claims is at odds with that reached by two other district courts - the District Court for the Eastern District of Virginia in U-Haul International, Inc. v. WhenU.com, 279 F.Supp. 2d 723 (E.D.Va. 2003), and the District Court for the Eastern District of Michigan in Wells Fargo & Co. v. WhenU., 2003 WL 22808692 (E.D. Mich. 2003), each of which refused to issue similar injunctive relief.  As the Southern District of New York court noted, "this Court disagrees with, and is not bound by these findings."

414 F.3d 400 (2d Cir., June 27, 2005)

Reversing the court below, the Second Circuit dismisses trademark infringement claims brought by a mark holder and website operator against a distributor of pop-up ads.  Such claims fail because "as a matter of law, [defendant] WhenU does not 'use' [plaintiff] 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. § 1127 when it (1) includes 1-800's website address … in an unpublished directory of terms that trigger delivery of WhenU's contextually relevant advertising to [computer] users; or (2) causes separate, branded pop-up ads to appear on a [computer] user's computer screen either above, below, or along the bottom edge of the 1-800 website window."

The absence of such a use by WhenU of plaintiff's trademarks is fatal to 1-800 Contacts' trademark infringement claims, and mandated reversal of the District Court's grant of preliminary injunctive relief.  The District Court had enjoined WhenU from including the domain name of plaintiff's website in its unpublished directory, or causing pop-up ads to be displayed when that domain name is entered into the URL bar of a web browser, or as a search term.

In reaching this result, the Second Circuit agreed with the decisions of two other district courts - the Eastern District of Virginia in U-Haul Inc. v. WhenU.com Inc., 279 F. Supp. 2d 723 (E.D.Va. 2003) and the Eastern District of Michigan in Wells Fargo & Co., et al. v. WhenU.com Inc., 293 F.Supp.2d 734 (E.D.Mich. 2003) - each of which similarly held that WhenU's activities did not infringe the respective plaintiffs' trademarks because such activities did not constitute the requisite use of the plaintiffs' respective marks.

437 F. Supp. 2d 273 (D.N.J., July 13, 2006)

Federal District Court holds that the use of plaintiff's 'JR Cigars' trademark as a keyword in GoTo.com's pay-for priority search engine to trigger the display of advertisements from third party competitors constitutes a "trademark use" sufficient to support trademark infringement and dilution claims under the Lanham Act.  Such trademark use arises out of GoTo.com's acceptance of bids from JR Cigar's competitors for a linkage to plaintiff's marks, by which GoTo trades on the value of those marks.  Such trademark use also arises out of GoTo's act of giving such advertisers priority over 'natural' search results, and thereby steering potential customers away from JR Cigar to its competitors.  Finally, such trademark use arises out of GoTo.com's use of a "Search Term Suggestion Tool" to assist in marketing JR Cigar's marks to its competitors, which tool shows the search traffic attracted by plaintiff's mark.

The Court went on to deny cross-motions by JR Cigar and GoTo.com for summary judgment, holding issues of fact precluded its determination of the likelihood of consumer confusion arising out of such usage of plaintiff's marks, and hence from resolving the trademark infringement claims at issue.

Finally, the Court dismissed claims advanced by plaintiff under both New Jersey's Consumer Fraud Act, N.J.S.A. §56:8 et seq. and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §6102(b).  The Court held that plaintiff lacked standing to proceed under New Jersey's Consumer Fraud Act, and that the reach of the Telemarketing Act did not extend to the acts at issue in the case at bar.

461 F.Supp.2d 681, Case No. 06 C 0657 (N.D. Ill., November 14, 2006) aff'd -- F.3d -- (7th Cir. Mar. 14, 2008)

Court holds that the Communications Decency Act ("CDA") immunizes defendant Craigslist, Inc. ("Craigslist") from liability for publishing housing ads authored by third parties that allegedly violate the Fair Housing Act, 42 U.S.C. § 3604(c) ("FHA").  In reaching this result, the Court held that the immunity afforded internet service providers under section 230(c)(1) of the CDA only extends to claims seeking to hold an ISP liable as a publisher for content authored by third parties, and not to all claims arising out of the ISP's role in giving the public access to such content.  Because the FHA claims at issue were premised on Craigslist's publication of offensive ads authored by third parties, the Court held they were barred by the immunity granted under Section 230(c)(1).

No. 07-1101 (7th Cir., March 14, 2008)

Affirming the District Court below, the Seventh Circuit holds that Craigslist cannot be held liable for violating the Fair Housing Act as a result of its online publication of discriminatory housing ads authored by third parties. To hold Craigslist liable for such conduct would require it to be treated as a ‘publisher’ of these advertisements, which is prohibited by Section 230(c)(1) of the Communications Decency Act.  As a result, the Seventh Circuit affirms the District Court’s grant of summary judgment, dismissing plaintiff’s Fair Housing Act claims against Craigslist.

No. CV 05-3699-PHX-JAT (D. Arizona, May 19, 2008)

Court holds that unauthorized internet reseller of plaintiff’s tanning products is not guilty of trademark infringement as a result of its use of plaintiff’s trademarks in the meta tags of a website at which such products are sold, and as search engine keywords triggering the display of a link to such a website.  In reaching this result, the Court rejected plaintiff’s claim that such use of its marks causes actionable ‘initial interest confusion’ by directing those searching for plaintiff’s site to that of the defendant.  To sustain such a claim, holds the court, defendant’s conduct must be deceptive.  Plaintiff failed to meet this burden because defendant’s site does indeed offer plaintiff’s products for sale, and thus, its use of plaintiff’s mark in the site’s meta tags is not deceptive, but rather accurately describes the contents of defendant’s site.  This was true, held the Court, notwithstanding the fact that S & L offered plaintiff’s competitors products for sale on its site as well.

The Court also dismissed trademark dilution claims arising out of defendant’s use of plaintiff’s marks.  The Court held that, under the circumstances, defendant’s use of plaintiff’s marks in the meta tags of its site, and as search engine key words, constituted a permissible nominative fair use of those marks.  To establish that a use of a trademark qualifies as a permissible nominative fair use, the defendant must ‘do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.’  Notably, the Court reached this result because plaintiff failed to submit adequate evidence as to the impact this use of its marks had on the listing of defendant’s site in search results for plaintiff’s mark.  The Court left open the possibility that such a use of plaintiff’s mark may not qualify as a nominative fair use if in fact it caused defendant’s site to appear at or near the top of search engine results for plaintiff’s mark, and thereby suggested that plaintiff sponsored or endorsed defendant’s site. 

The Court denied so much of defendant’s motion for summary judgment which sought dismissal of copyright infringement claims arising out of its use of electronic renderings of plaintiff’s products to promote the sale of such products on its web site.  Issues of facts as to whether defendant copied such images from plaintiff’s web site, or created its own, precluded an award of summary judgment.  In allowing this claim to proceed to trial, the Court rejected defendant’s argument that its alleged use of plaintiff’s images was protected as a fair use.  Notwithstanding the fact that defendant’s use did not effect the potential market for plaintiff’s images – which plaintiff does not offer for sale – the Court rejected defendant’s fair use argument, pointing to the fact that its use was commercial, and copied plaintiff’s image, which was a creative work, in its entirety.

Finally, the Court rejected plaintiff’s claim for intentional interference with contractual relations, which arose out of prohibitions contained in contracts with plaintiff’s distributors precluding their resale of plaintiff’s products to Internet resellers such as defendant.  Defendant obtained plaintiff’s products from tanning salons, to whom the distributors were permitted to sell such products.  Because there was no evidence either that such tanning salons were acting as defendant’s agent in purchasing goods from plaintiff’s distributors, or that defendant directly purchased such goods from the distributors in breach of the prohibitions contained in their agreements, this claim failed.

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

2004 U.S. Dist. Lexis 227788 (D.N.H., October 21, 2004)

Court holds that the FTC is likely to prevail on its claims that defendants violated the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 45(a)(1).  Defendants were charged with downloading to consumers' computers, without their knowledge or consent, both spyware and adware that delivered pop-up advertisements for anti-spyware software, as well as "exploit code" which altered consumers' home pages, and redirected their browsers to websites selected by defendants.  Apparently, this occurred when consumers visited defendants' websites.  The Court found that this conduct likely ran afoul of the FTCA's prohibition against the use of "unfair or deceptive acts or practices" in commerce.  The Court accordingly issued 'temporary injunctive relief' requiring defendants to remove from their websites the software script that allowed defendants to download this software to consumers' computers without their knowledge.

Case No. 2:06-cv-327 (S.D. Ohio, June 19, 2007)

Court holds that defendants, individual officers of co-defendant Search Cactus LLC (“Search Cactus”) can be held personally liable for violations of the Ohio Consumer Sales Practices Act (“OCSPA”) arising out of the transmission by Search Cactus of allegedly misleading and deceptive promotional emails, if “the officer took part in the act, specifically directed the act, or participated or cooperated in the act.”  Because the complaint alleged that the individual defendants approved the content of the promotional emails in question, the Court denied the individual defendants’ motion to dismiss, and allowed plaintiff, a recipient of such emails, to pursue his OCSPA claim against them.

Case No. C03-05340-F (N.D. Cal., March 30, 2005)

Court denies Google's motion to dismiss trademark infringement and dilution claims asserted by American Blind, which claims arose out of Google's alleged use of American Blind's trademarks to trigger the display of third party advertisements in search engine results for those marks.  The Court declined, on this motion, to hold that use of American Blind's trademarks in this fashion was insufficient to give rise to trademark infringement or dilution claims because it did not constitute a use of the marks to identify the source of goods or services supplied by Google.  The Court did dismiss the tortious interference with prospective business advantage claim asserted by American Blind, holding that American Blind had failed to allege the interference with sufficiently certain economic relationships necessary to proceed with such a claim.

Case No. 03-5340 JF (RS) (N.D. Cal., April 18, 2007)

District Court holds that Google’s use of defendant American Blind & Window Factory’s (“ABWF”) trademarks to trigger the display of competitors’ ads as part of Google’s “Ad Words” program is a use of those marks in commerce within the meaning the Lanham Act.  These competitors’ ads are displayed by Google as ‘sponsored links’ and do not contain defendant’s trademarks.  The Court accordingly allows ABWF to proceed with trademark infringement claims arising from such use of its marks, finding that ABWF had presented sufficient evidence of consumer confusion to survive Google’s motion for summary judgment.  This evidence included the results of a survey that reported that 29% of consumers believed that such “sponsored links” were affiliated with the company that owned the trademark the consumer used to initiate his search.  The Court held as a result that whether consumers were in fact confused by “sponsored links” that do not contain defendant’s mark was an issue of fact requiring resolution at trial.

The Court did dismiss so much of defendant’s claims that were premised on its “American Blind” and “American Blinds” marks, which the Court held were descriptive.  Because ABWF did not submit sufficient evidence to establish that these (then) common law marks had developed sufficient secondary meaning to be entitled to protection from Google’s conduct at the time Google began its allegedly infringing activity, the Court dismissed so much of ABWF’s claims as were grounded on the alleged use of its American Blind and American Blinds marks.

Finally, the Court dismissed ABWF’s Federal and California dilution claims, finding that ABWF had failed to submit sufficient evidence that its marks were “famous,” a prerequisite to such dilution claims.  It should be noted that the court designated its decision as “not for citation.”

Civ. Action No. 1:04cv507 (E.D., Va., December 15, 2004)

In a bench ruling, Court holds that the display by search engine giant Google of third party advertisements denominated "sponsored links", which ads are triggered by the entry of a trademark as a search term, does not run afoul of the Lanham Act provided the "sponsored links" do not contain the searched-for trademark.  However, the display of "sponsored links" which do contain the searched-for trademark are likely to confuse consumers and thus was held to run afoul of the Lanham Act.

The Court did not resolve the issue of Google's potential liability for the display of such third party ads, noting that Google had a policy prohibiting its advertisers from displaying "sponsored links" containing trademarks of third parties when such marks are used as the triggering search term.  It should also be noted that the Court's finding that consumers would not be confused by "sponsored links" that did not contain a trademark was based, in large part, on its rejection of survey evidence presented by the mark holder.  The Court rejected this evidence, despite its showing of consumer confusion, because the consumers were simultaneously shown both ads that did and did not contain the trademarked term.

1:04cv507 (LMB/TCB) (E.D. Va. August 25, 2004)

Court denies motion to dismiss brought by search giants Google and Overture, and allows plaintiff GEICO to proceed with trademark infringement and unfair competition claims arising out of defendants' alleged practice of selling advertising triggered by the entry of plaintiff's trademarks as search terms, which advertisements are displayed in the search results generated by such searches.

2007 WL 530156, Civ. Act. No. 06-319-JJF (D. Del. February 20, 2007)

The Court held that the First Amendment, and the guaranties afforded Google and Yahoo thereunder, barred claims seeking redress as a result of Google and Yahoo's refusal to run advertisements on their search engines they did not wish to run.  In reaching this result, the Court followed decisions that afforded newspapers similar First Amendment protections when challenges arose concerning their refusal to run advertisements they deemed objectionable.  As a result, the Court dismissed claims advanced by plaintiff arising out of the defendants' refusal to run his advertisements, including claims that the defendants defrauded him and engaged in deceptive business practices, violated his First Amendment rights, and failed to meet the duties imposed on those, like inn keepers, engaged in a public calling.

The Court also held that Google and Yahoo were immunized from such claims by the Communications Decency Act, 27 U.S.C. Section 230, which "bars 'lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions - such as deciding whether to publish, withdraw, alter or postpone content.'" It should be noted that plaintiff was proceeding pro se.

425 F.Supp.2d 402 (S.D.N.Y., March 30, 2006)

In six related lawsuits arising out of the sale by online Canadian-based pharmacies of both branded and generic versions of plaintiff's popular anticholesterol medication "Zocor," the Court granted motions to dismiss trademark infringement claims challenging defendants' purchase of the keyword "Zocor" from search engines to trigger the display of "sponsored links" to defendants' websites.  Such purchases do not constitute the requisite 'use in commerce' of plaintiff's mark necessary to sustain such claims.  The Court also granted defendant CrossBorder's motion to dismiss trademark infringement claims arising out of its use of plaintiff's trademark "Zocor" on its website, at which CrossBorder sold both plaintiff's own product, as well as a generic version described as "generic simvastatin."  "Simvastatin" is the active ingredient in "Zocor."  Because it sold branded Zocor at its website, this was a permitted fair use of plaintiff's mark.

The Court declined at this early stage of the proceedings to dismiss the trademark infringement and dilution claims advanced against the remaining defendants.  Defendants link the "Zocor" mark to web pages at which they sold both branded Zocor and generic products described alternatively as "generic Zocor," "Zocor generic" or "Zocor-generic."  The Court was unwilling on this motion to determine whether such uses were likely to confuse consumers as to the source and sponsorship of these generic products, and hence unwilling to declare them permitted fair uses of plaintiff's trademarks.

Finally, the Court granted the motion to dismiss for want of personal jurisdiction of defendant CanadaDrug's CEO.  This individual, a Canadian resident, was neither alleged to have personally undertaken any actions in the United States in furtherance of the infringing activities at issue, nor been a "primary actor" therein.

WIPO Case No. D2007-1141 (November 30, 2007)

In this domain name dispute decided in accordance with the Uniform Domain Name Dispute Resolution Policy (“UDRP”), the Panel holds that respondent Navigation Catalyst Systems Inc. (“NCS”) violated the UDRP by registering 35 domain names that contained complainant’s “myxer tones” mark, or variations thereof, which NCS used as pay-per-click landing pages, featuring advertisements of complainant’s competitors.  In reaching this result, the Panel held that respondent’s use of another’s mark in the domain names of pay-per-click landing pages was not a legitimate use of the domain sufficient to defeat complainant’s claim under the UDRP.  The Panel further held that respondent had acted with the requisite bad faith because it had used complainant’s mark to attract users to  advertisements for its competitors.  This finding was supported by the fact that respondent continued to register offending domain names even after the commencement of the instant UDRP proceeding.  Finally, the Panel rejected respondent’s contention that it did not act in bad faith because it was unaware of complainant’s mark.  The Panel held it was reasonable to conclude that respondent was in fact aware of complainant’s prior use of its mark at the time it registered the domains in question because a trademark and even an internet search would have revealed both a pending trademark application for complainant’s mark, and its use thereof.

06 Civ. 1923 (JGK) (S.D.N.Y., March 12, 2007)

Court allows plaintiff to proceed with ‘click-fraud’ claim against defendant Findwhat.com, a search engine operator.  The complaint alleged that to increase its revenues from pay-per-click advertisements posted on its site by plaintiff, defendant Findwhat.com directed defendant Advertising.com to engage ‘bots’ and individuals to click on plaintiff’s advertisements.  This had the effect of increasing defendant Findwhat.com’s revenues, as plaintiff paid it on a pay-per-click basis.  The complaint alleged that defendant Findwhat also bid on pay-per-click search terms, thereby improperly increasing the price plaintiff had to bid therefore to obtain higher placement for such terms.  The Court held that such misconduct could run afoul of the implied covenant of good faith and fair dealing in the parties’ contract, and accordingly allowed plaintiff to proceed with a breach of contract claim against defendant Findwhat.com.

Findwhat.com changed its name to Miva, Inc. in June 2005.

The Court did dismiss the balance of the claims plaintiff asserted.  Its unjust enrichment claims failed because there was a valid contract governing the subject matter of plaintiff’s claim.  Plaintiff’s negligence claims failed because of the absence of any independent duty on the part of defendant Findwhat.com to monitor the source of the ‘clicks’ plaintiff received.  Such an obligation would be governed by the terms of the parties’ contract. 

Finally, plaintiff’s fraudulent concealment claim failed because of plaintiff’s failure to plead such claim with the requisite particularity.  Plaintiff was granted leave to replead this claim, premised on defendant Findwhat.com’s alleged duty to disclose that it was improperly causing a third party to click on plaintiff’s ads so as to increase Findwhat.com’s revenues.  Such a claim, if properly alleged, would serve to support a civil conspiracy claim against defendant Advertising.com, which was the party that allegedly arranged to have a ‘bot’ click on plaintiff’s ads.

354 F.3d 1020 (9th Cir., Jan. 14, 2004)

Reversing the decision of the court below, the Ninth Circuit Court of Appeals denied the motion of defendants Netscape Communications Corp. ("Netscape") and Excite, Inc. ("Excite")  for summary judgment, and allowed plaintiff Playboy Enterprises Inc. ("Playboy") to proceed with trademark infringement and dilution claims brought as a result of defendants' practice of keying banner ads for 'adult' products to plaintiff's trademarks.  Keying is a practice used by the operators of search engines to generate revenue via the sale of banner ads.  For a fee, the search engine operator will display an advertiser's ad along with, and on, a search results page, when a consumer types one of a series of designated terms into the operator's search engine.  In this fashion, defendants keyed the display of their clients' adult-oriented ads to plaintiff's marks.  The Ninth Circuit held that when the advertiser's banner ad is not labeled so as to identify its source, this practice could result in trademark infringement by application of the 'initial interest confusion' doctrine.  The Ninth Circuit accordingly refused to dismiss plaintiff's trademark infringement claims.  The Ninth Circuit further held that issues of fact also precluded the dismissal of plaintiff's dilution claims.

Judge Berzon wrote a concurring opinion, in which he sharply criticized Brookfield Communications, the Ninth Circuit decision from which the 'initial interest confusion' doctrine springs, and the overbroad interpretation he believes it has been given by other jurists. Specifically, Judge Berzon believes that keying clearly labeled ads to plaintiff's marks should not give rise to a trademark infringement claim because the consumer is not confused when he elects to visit the clearly labeled web site of the mark holder's competitor, in lieu of that of the mark holder.

456 F.Supp.2d 393 (N.D.N.Y., September 28, 2006)

Federal District Court holds that Google's use of plaintiff's trademark "Rescuecom" as a keyword in Google's "Ad words" program to trigger the display of "sponsored link" advertisements from third party competitors for a fee is not a "trademark use" of plaintiff's mark, as the mark is not being used to identify the source of any goods or services.  The same holds true of Google's use of plaintiff's trademark in its "Keyword Suggestion Tool," in which Google recommends to potential advertisers, including plaintiff's competitors, keywords they may be interested in using, for a fee, as a trigger for the display of their advertising.  Notably the advertisements themselves, which appear along with search results for plaintiff's mark, were not alleged to display plaintiff's Rescuecom mark. 

As a result, the Court grants Google's motion to dismiss trademark infringement, unfair competition and dilution claims brought by plaintiff under the Lanham Act, as such claims require a showing of actionable "trademark use" which, the Court holds, Rescuecom cannot make.  Having dismissed plaintiff's federal claims, the Court declined to exercise pendant jurisdiction over plaintiff's state law claims, including a claim for tortuous interference.

In reaching this result, the District Court elected not to follow decisions reached by the courts in Geico v. Google, 330 F.Supp. 2d 700 (E.D. Va. 2004) and Edina Realty v. MLS Online.com, 2006 WL 737064 (D.Minn., March 20, 2006) which had denied motions to dismiss trademark infringement claims arising out of similar activity.  The Court, instead, followed the path taken by the court in Merck & Co. Inc. v. Mediplan Health Consulting, Inc., 425 F.Supp. 2d 402 (S.D.N.Y. 2006), which dismissed similar claims on the ground, inter alia, that there was no "trademark use."

497 F.3d 144 (2d Cir., August 9, 2007)

Second Circuit holds plaintiff Time Warner Cable Inc. (“Time Warner”) likely to prevail on false advertising claims advanced under Section 43 of the Lanham Act as a result television advertisements defendant Directv ran, which were found to be literally false.  Affirming the decision of the District Court, the Second Circuit held that, when seen in context, these advertisements falsely claim that the quality of the picture a user of an HD TV receives from Directv is better than the picture received from Time Warner cable.  Irreparable injury was presumed because, even though the advertisements at issue did not directly refer to Time Warner, the viewing audience would see the advertisement as targeted at plaintiff.  As a result, the Second Circuit affirmed so much of the District Court’s decision that enjoined Directv from further publication of these offending advertisements in markets where Time Warner operates.

In reaching this result, the Second Circuit held that an “advertisement can be literally false even though it does not explicitly make a false assertion, if the words or images, considered in context, necessarily and unambiguously imply a false message.”

The Second Circuit held, however, that internet banner advertisements that promoted Directv’s products, while literally false, constituted non-actionable puffery, because they made claims so exaggerated that no consumer could rely on them.  The banner advertisements at issue depicted a split screen.  One side of the screen presented a clear, crisp picture that was represented to be the picture a user would view if receiving his signal from Directv.  The other side of the screen contained a picture that was blurry and pixilated, which was represented as the picture the consumer would see if receiving a signal from “other tv”, or “basic cable.”  The ads urged consumers to “find out why Directv’s picture beats cable.”  While this depiction was literally and demonstrably false, because the pictures from both sources were equivalent, the Second Circuit held it was so exaggerated as to constitute non-actionable puffery on which no consumer could rely.  As a result, the Second Circuit reversed so much of the District Court’s decision which enjoined Directv from continuing to run these banner advertisements. 

Said the Court: “[T]he category of non-actionable puffery encompasses visual depictions that, while factually inaccurate, are so grossly exaggerated that no reasonable consumer would rely on them in navigating the marketplace.”

279 F. Supp.2d 723 (E.D. Va., September 5, 2003)

Court grants defendants' motion for summary judgment, and dismisses trademark infringement, copyright infringement and unfair competition claims brought by website owner against distributor of pop-up ads.  Defendants distribute a software program, which causes pop-up ads to be displayed on a user's computer screen in a window that covers all or part of plaintiff's website.  The court held that such conduct does not constitute a use of plaintiff's trademark, a prerequisite to a trademark infringement claim.  Quite the contrary, the display results from the computer user's consensual download of defendants' software, and his ability to control, via the multitasking capabilities of window's operating environment, what appears on his own computer screen.  Similarly, defendants' acts do not infringe plaintiff's copyright in the material that appears on plaintiff's website, because defendants neither display plaintiff's copyrighted materials nor make a derivative work thereof.  Defendants' ads instead appear in a separate window on a user's computer screen, which operates independently of plaintiff's website, and leaves the content appearing thereon untouched.

CV-05-457-TUC-DCB (D. Az., Mar. 2, 2007)

Denying cross-motions for summary judgment, the Court allows the Government to pursue civil claims against defendant Cyberheat Inc. ("Cyberheat") for violation of the CAN-SPAM Act arising out of the transmission of sexually explicit emails by its affiliates that did not meet the strictures of the Act.  While Cyberheat did not directly pay its affiliates to transmit such emails, it paid them "finder's fees" for subscribers their promotional activities produced - including subscribers produced by email - and provided affiliates with promotional materials that could be used - via links - in promotional emails.  The court held that questions of fact as to defendant's knowledge of its affiliates' activities, and the steps defendant could or did take to prevent violations of the Act after it became aware of consumer complaints, prevented the court from determining whether Cyberheat should be held either vicariously liable for the acts of its affiliates, or to have initiated or procured the transmission of the offending emails within the meaning of the CAN-SPAM Act.   The court reached this result notwithstanding the fact that Cyberheat's contracts with its affiliates contained explicit prohibitions against the transmission of emails that violate CAN-SPAM.

The court held that because it was in the business of sending sexually explicit materials over the Internet, defendant owed a duty to the public to exercise reasonable care to prevent those who did not wish to see such materials from being involuntarily exposed to such uninvited intrusions.  The question of whether defendant Cyberheat met this duty was left for another day.

C.A. No. 02-909-A (E.D. Va., July 12, 2002)

Court issues a preliminary injunction, enjoining defendant Gator Corporation ("Gator") from causing pop-up ads to appear on a user's computer screen at the same time the user is viewing any of the 16 web sites operated by the plaintiff news organizations.  Such ads appear as a result of the operation of Gator's software, which a user has installed on his computer.  Gator's software apparently tracks the user's Internet usage, and delivers ads to his computer that defendant believes will interest the user based on his prior Internet usage  When these ads appear on a user's screen, they partially cover up the web site that also appears there.  Gator did not have plaintiffs' permission to cause ads to appear in this fashion.  The court held that plaintiffs were likely to prevail on their claim that causing pop-up ads to appear in this manner is an infringement of plaintiffs' trademarks, which are found on the web pages the pop-up ads partially cover up.   The court accordingly issued a preliminary injunction enjoining defendant from continuing this activity "on" plaintiffs' sites.

293 F.Supp.2d 734 (E.D. Mich., November 19, 2003)

Court denies website operators' application for a preliminary injunction, and refuses to enjoin defendant WhenU.com, Inc. from delivering advertisements, triggered by a computer user's visit to plaintiffs' sites, that either pop-up or under those sites.  Defendant WhenU delivers such ads via its software applications Save and Save Now!  These applications are typically consensually downloaded by the user to his or her computer as the quid pro quo of his free receipt of another software application.

The Court held that WhenU's delivery of these ads neither infringes the trademarks found on plaintiffs' sites, nor their copyrights in the material thereon.  WhenU's activities - including the use of plaintiffs' marks in a directory which determines the ads a user receives, and the display of ads in windows that partially obscure plaintiffs' websites but do not contain plaintiffs' marks - do not constitute a use of plaintiffs' marks in commerce, a prerequisite to a trademark infringement claim.  Plaintiffs' trademark infringements claims also failed because plaintiffs did not present evidence sufficient to establish that users would likely be confused by WhenU's activities, and conclude that plaintiffs sponsored WhenU's ads.  Rather, the Court held, users with Save and Save Now! installed on their computers are likely to conclude that WhenU is the sponsor of the ads in question, both because the ads so inform the user, and because of their familiarity with such displays.

The Court held that plaintiffs' copyright infringement claims failed because the appearance of WhenU's ads in a window that partially obscures plaintiffs' sites does not constitute the creation of an unauthorized derivative work in violation of plaintiffs' exclusive right to create the same.  Rather, plaintiffs' copyrighted works - the content of their websites - remain unaltered on the servers on which they are hosted, and simply appear simultaneously with WhenU's advertisements in separate windows opened by and with the consent of the user on whose computer screen they appear.  Plaintiffs' copyright infringement claims also failed because any images appearing on a user's screen are simply too transitory to constitute the creation of a work.  As such, WhenU and the users cannot be held to have created a derivative work, and thus cannot be held to have infringed plaintiffs' copyrights.

No. 040907578 (Utah Dist. Ct., June 22, 2004)

Court issues preliminary injunction, enjoining enforcement of Utah's Spyware Control Act, which, inter alia, prohibits the delivery of 'pop-up' ads that obscure any portion of an Internet website, and bars advertisers from downloading programs that deliver ads to a consumer's computer unless the consumer's consent to such download is obtained in the manner specified by the Act.  The Court issued such relief because it found that plaintiff was likely to prevail on its claim that those portions of the Act run afoul of the Commerce Clause of the United States Constitution.

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Boston Duck Tours, L.P. v. Super Duck Tours, LLC, et al.
Civ. Act. No. 07-11222-NMG (D. Mass., December 5, 2007).

Court holds that competitor’s purchase of sponsored links from Google that are triggered by the entry of plaintiff’s “Boston Duck Tours” mark constitute a trademark use of plaintiff’s mark actionable under the Lanham Act.  Recognizing that the courts have reached conflicting answers to this question, the Court stated:

In short, the emerging view outside of the Second Circuit is in accord with the plain language of the statute.  Because sponsored linking necessarily entails the ‘use’ of the plaintiff’s mark as part of a mechanism of advertising, it is ‘use’ for Lanham Act purposes.

The Court further holds that the display of such sponsored link advertisements by defendant in the case at bar does not violate either the Lanham Act, or a prior preliminary injunction issued by the Court, because the ads market defendant as “Super Duck Excursions” and ‘serve[] to distinguish the defendant from the plaintiff.”  The preliminary injunction previously issued by the Court had enjoined defendant from continuing to use the phrase “duck tours” as a trademark or service mark in the greater Boston area, as such use was likely to infringe plaintiff’s ‘Boston Duck Tours’ mark.  As a result, defendant had changed its name from “Super Duck Tours” to “Super Duck Excursions.”

Buying for the Home, LLC v. Humble Abode LLC
Civ. Act. No. 03-cv-2783 (JAP) (D.N.J., Oct. 19, 2006)

Court holds that alleged purchase and use of a competitor’s trade marks as key words to trigger the display of sponsored ads in a search engine is a use of that mark in commerce subject to the strictures of the Lanham Act.  The ads in question did not feature the searched-for mark.  Said the District Court of New Jersey:

The Court is mindful of the challenges that sometime arise in applying existing legal principles in the context of newer technologies.  As expressed by the Edina Realty court, supra, Defendants’ alleged use of Plaintiff’s mark is certainly not a traditional ‘use I commerce.’  Nonetheless, the Court finds Plaintiff has satisfied the ‘use’ requirement of the Lanham Act in that Defendants’ alleged use was ‘in commerce’ and was ‘in connection with any goods or services.’15 U.S.C. Section 1125(a)(1).  First, the alleged purchase of the keyword was a commercial transaction that occurred “in commerce,’ trading on the value of Plaintiff’s mark.  Second, Defendants’ alleged use was both “in commerce” and “in connection with any goods or services” in that Plaintiff’s mark was allegedly used to trigger commercial advertising which included a link to Defendants’ furniture retailing website.  Therefore, not only was the alleged use of Plaintiff’s mark tied to the promotion of Defendants’ goods and retail services, but the mark was used to provide a computer user with direct access (i.e. a link) to Defendants’ website through which the user could make furniture purchases.  The court finds that these allegations clearly satisfy the Lanham Act’s “use” requirements.

FragranceNet.com, Inc. v. FragranceX.com, et al.
No. 06-CV-2225 (JFB)(ART)(E.D.N.Y., June 12, 2007)

Following the lead of the Second Circuit in 1-800 Contacts, Inc. v. WhenU.com, 414 F.3rd 400 (2d Cir. 2005) and of other district courts in the Second Circuit, the Court holds that the use of plaintiff’s mark either as a keyword to prompt the appearance of sponsored links advertising defendant’s site in Google’s search engine, or in the metatags of defendant’s site to trigger higher search engine placement, does not constitute a use in commerce of plaintiff’s mark sufficient to give rise to trademark infringement or dilution claims, either under the Lanham Act or New York state law.  Such use of plaintiff’s mark, reasoned the court, is the equivalent to store product placement, where the store places its own generic products on store shelves adjacent to more well-known brands to take advantage of the consumer’s attraction thereto.  As such a use is permissible, so to is the use of plaintiff’s mark in keyword advertising. 

The Court relied on decisions in Merck & Co., 425 F.Supp.2d 402, Rescuecom Corp. v. Google, Inc., 456 F.Supp.2d 393 (N.D.N.Y., 2006) , and Site Pro-1 Inc. v. Better Metal LLC, No. 06-CV-6508 (ILG)(RER)(EDNY, May 9, 2007), each of which “held that the purchase of a trademark as a ‘Sponsored Link’ is not ‘use’ within the meaning of the Lanham Act.” 

Said the Court:

It would be inconsistent with the reasoning set forth in 1-800 Contacts to conclude that the use of trademarks in keywords and metatags constitutes Lanham Act ‘use’ where, as here, defendant does not place the trademark on any product, good or service nor is it used in any way that would indicate source or origin.  Here, the use of plaintiff’s trademark is strictly internal, and, because such use is not communicated to the public, the use does not indicate source or origin of the mark.

As a result, the Court denied plaintiff’s motion to amend its complaint to assert, inter alia, claims of trademark infringement and dilution arising out of the use of its mark in keyword advertising and metatags.  The Court held that such amendment would be futile, as the proposed claims could not withstand a motion to dismiss.

In should be noted that, according to the court, ‘courts in other circuits have generally sustained such claim.’  However, the Court elected to follow the precedent cited above and deny plaintiff’s motion to amend.

Affiliates - Updated April 12, 2007

447 F. Supp. 2d 941 (W.D. Wis., September 1, 2006)

Court denies summary judgment motion by Lands' End "affiliates," seeking dismissal of claims arising out of affiliates' undisclosed use of typo domains to redirect traffic to Lands' End's website, and to profit on the sales made to consumers delivered to Lands' End's site in this fashion.  As affiliates, defendants received a percentage of sales made by Lands' End to consumers they brought to Lands' End's website.  The Court accordingly allowed plaintiff to proceed with claims that defendants' conduct violated the Anticybersquatting Consumer Protection Act ("ACPA") and breached the parties' affiliate agreements.  The Court also allowed plaintiff to pursue fraud claims arising out of defendants' concealment of this use of Lands' End typo domains.  The Court did grant so much of the defendants' summary judgment motion which sought dismissal of false advertising claims plaintiff advanced under both the Lanham Act and Wisconsin state law, holding that defendants did not mislead consumers by their conduct.  Consumers were unaware of the redirection, and received exactly what they expected to receive - Lands' End merchandise from Lands' End.

CV-05-457-TUC-DCB (D. Az., Mar. 2, 2007)

Denying cross-motions for summary judgment, the Court allows the Government to pursue civil claims against defendant Cyberheat Inc. ("Cyberheat") for violation of the CAN-SPAM Act arising out of the transmission of sexually explicit emails by its affiliates that did not meet the strictures of the Act.  While Cyberheat did not directly pay its affiliates to transmit such emails, it paid them "finder's fees" for subscribers their promotional activities produced - including subscribers produced by email - and provided affiliates with promotional materials that could be used - via links - in promotional emails.  The court held that questions of fact as to defendant's knowledge of its affiliates' activities, and the steps defendant could or did take to prevent violations of the Act after it became aware of consumer complaints, prevented the court from determining whether Cyberheat should be held either vicariously liable for the acts of its affiliates, or to have initiated or procured the transmission of the offending emails within the meaning of the CAN-SPAM Act.   The court reached this result notwithstanding the fact that Cyberheat's contracts with its affiliates contained explicit prohibitions against the transmission of emails that violate CAN-SPAM.

The court held that because it was in the business of sending sexually explicit materials over the Internet, defendant owed a duty to the public to exercise reasonable care to prevent those who did not wish to see such materials from being involuntarily exposed to such uninvited intrusions.  The question of whether defendant Cyberheat met this duty was left for another day.

Alcohol - Updated May 11, 2002

3:00CV258-MU (W.D.N.C., April 5, 2002) aff'd. in part, vacated in part, remanded 325 F.3d 506 (4th Cir., 2003)

Court holds that those provisions of North Carolina's Alcoholic Beverage Control law which prohibit out-of-state retailers from selling liquor directly to North Carolina consumers, while allowing in-state wineries to make such sales, are unconstitutional violations of the Commerce Clause of the United States Constitution.  The dormant Commerce Clause prohibits states from enacting regulations, such as those at bar, which directly discriminate against interstate commerce.  The court held that the legislation at issue was not saved by operation of the Twenty First Amendment, which grants the States the power to regulate in-State liquor sales.  The Twenty First Amendment does not trump the Commerce Clause; rather, when faced with a conflict between their competing concerns, courts engage in a balancing test, asking "whether the interests implicated by [the] state regulation are so closely related to the powers preserved by the Twenty First Amendment that the regulation may prevail …".  Here, North Carolina did not identify the state interests served by the challenged regulation.  As a result, the District Court assumed the purpose of the legislation was to protect local wineries from out-of-state competitors.  The Court held that such an improper purpose mandates a finding that the statute is an unconstitutional violation of the Commerce Clause.  The Court accordingly enjoined North Carolina from enforcing the statutes at issue, including those laws "that prohibit … out-of state wine dealers from directly shipping wines to … North Carolina residents."

00 Civ. 0778 (S.D.N.Y., September 5, 2000)

Court denies motion brought by defendants to dismiss claim that N.Y. Alcohol and Beverage Control Law ("ABC Law") Sections 102 (1)(a), (c) and (d) is unconstitutional because it violates the Commerce Clause, the Privileges and Immunity Clause and the First Amendment.

CA No. 97-12804-JLT, 1998 U.S. Dist. Lexis 12043, 10 F. Supp. 2d 84 (D. Mass., July 23, 1998)

(Court dismissed plaintiff's claim that defendant, by allegedly selling alcoholic beverages over the Internet to Massachusetts residents without the license required under Massachusetts law, had tortiously interfered with plaintiff's business relationships with consumers. The Court held that the licensing statute, Mass. M.G.L. Chapter 138, did not create a private right of action in liquor wholesalers to enforce it. Instead, enforcement was within the purview of the state's Alcoholic Beverage Control Commission.)

Americans With Disabilities Act - Updated September 26, 2006

227 F.Supp.2d 1312, Case No. 02-21734-CIV-Seitz/Bandstra (S.D.Fla., October 18, 2002)

Court holds that defendant Southwest Airlines Co.'s web site is not a "place of public accommodation" under Title III of the Americans with Disabilities Act, ("ADA") and accordingly that Southwest has no obligation under Title III to make its web site accessible to the visually impaired.  Title III of the ADA prohibits those who operate "places of public accommodation" from discriminating against individuals with disabilities.  The Court held that under the plain and unambiguous language of the ADA a "public accommodation must be a physical, concrete structure."  Because defendant's website was not such a structure, the Court dismissed plaintiffs' claims for relief under Title III of the ADA.

No. C 06-01802 MHP (N.D. Ca., Sept. 5, 2006)

Denying, in part, a motion to dismiss, the Court allowed plaintiffs to proceed with claims that allege that the failure of defendant Target Corporation ("Target") to make its Target.com website accessible to the blind violates various statutes that prohibit discrimination against the disabled, including the Americans with Disabilities Act ("ADA"), 42 U.S.C. 12182.  The Court did, however, dismiss so much of plaintiffs' claims that sought to challenge the accessibility of those portions of the Target.com site that "offer information and services unconnected to Target stores."  At this time, plaintiffs were only allowed to proceed with claims that challenged the accessibility of portions of the Target.com site that, if inaccessible, would "impede the full and equal enjoyment of goods and services offered in Target stores."  The Court noted that it may, in the future, permit plaintiffs to pursue broader claims if it was established that Target's site and stores are part of an integrated merchandising effort.

The Court denied plaintiffs' motion for mandatory injunctive relief, seeking to compel Target to make its site accessible to the blind.  Issues of fact as to whether the site, as presently constructed, was accessible to blind internet users using 'screen reader' programs precluded a finding at this time that plaintiffs were likely to prevail on the merits of their claims, and mandated denial of their request for injunctive relief.

Anticybersquatting Consumer Protection Act - Updated October 08, 2008

This section of the Internet Law Library contains a host of court decisions that address whether a party's use of another's trademark in a domain name runs afoul of the Anticybersquatting Consumer Protection Act.  Analyzed court decisions address both commercial uses of the mark - in a domain operated by a competitor, by an affiliate of the mark holder, by a cybersquatter looking to profit thereon, or by a party itself holding rights in the mark in question - as well as noncommercial uses of the mark - such as in the domain of a complaint or gripe site.  Cases also address a number of issues that arise under the Anticybersquatting Consumer Protection Act, including whether the domain owner acted with a bad faith intent to profit from his use of another's mark in his domain name, and the applicability of the Anticybersquatting Consumer Protection Act to 'typo' domains.

469 F.3d 534, No. 05-2359 (6th Cir., November 27, 2006)

The Sixth Circuit affirms the District Court's award of summary judgment to plaintiffs, and holds that defendant Bob D'Amato infringed and diluted plaintiffs' famous "Audi," "Quatro," and Audi Four Ring Logo marks, and violated the Anticybersquating Consumer Protection Act.  Defendant was held to have infringed plaintiffs' marks by operating a website at the domain www.audisport.com, at which both goods such as hats and shirts bearing the "Audi Sport" logo, and advertising space, were offered for sale.  The Sixth Circuit accordingly affirmed the District Court's decision, which permanently enjoined defendant from making continued infringing use of Audi's trademarks, directed D'Amato to transfer the audisport.com domain to plaintiffs, and awarded plaintiffs Audi AG ("Audi") and Volkswagen of America Inc. ("Volkswagen") attorneys' fees as the prevailing party.  The Court reached this result notwithstanding both defendant's claim that his use of Audi's marks on his website in connection with the sale of goods was orally authorized by an Audi dealer, and his placement of a disclaimer on defendant's site after receipt of a cease and desist letter.  A written agreement between Audi and the dealer made clear that the dealer lacked authority to so authorize defendant's use of Audi's trademarks.

403 F.3d 672 (9th Cir., April 4, 2005)

In this domain name dispute, the Ninth Circuit holds that the use of another’s trademark as the domain name for a non-commercial gripe site does not constitute trademark infringement or dilution in violation of the Lanham Act.  To run afoul of the Lanham Act, a mark must be used in connection with the sale of goods or services.  A web site which is merely critical of another’s goods or services does not fit this bill.  The Ninth Circuit accordingly affirmed the District Court’s grant of summary judgment, dismissing plaintiff’s trademark infringement and dilution claims.

The Ninth Circuit reversed, however, so much of the District Court’s decision which dismissed plaintiff’s Anticybersquatting Consumer Protection Act (“ACPA”) claim.  The ACPA does not have a commercial use requirement, and, accordingly, establishing that the mark was used as the domain for a non-commercial gripe site does not absolve the griper from potential liability under the ACPA.  Because that was the basis on which the lower court dismissed plaintiff’s ACPA claim, its dismissal was reversed.  The matter was remanded to the District Court to determine whether defendant used the mark with a bad faith intent to profit therefrom, in violation of the ACPA.

112 F. Supp. 2d 502, Civil Action No.99-550-A (E.D.Va., March 3, 2000)

The court holds that the provisions of the Anticybersquatting Consumer Protection Act that permit a trademark holder to proceed with an in rem action against a domain name do not violate the Due Process clause of the United States Constitution.

157 F. Supp. 2d 549, Civ. Act. No. 00-1793 (E.D.Pa. August 7, 2001)

Plaintiff, holder of a federally registered trademark in the mark "Chambord" for sale of a liqueur and assorted food products, brought this action under the Anticybersquatting Consumer Protection Act, and for trademark infringement and dilution, against defendant, who holds a federally registered trademark in the mark "Chambord" for the sale of coffee makers. The action was triggered by defendant's registration of the domain name "chambord.com," at which it planned to, but had not yet offered for sale its coffee makers. The court dismissed the action, holding, inter alia, that (a) the ACPA claim failed because defendant had not acted in bad faith in continuing to utilize its federally registered mark for the sale of coffee makers; (b) the trademark infringement claim failed because the initial interest confusion doctrine (a consumer looking for company's As site finds company B's instead) was inapplicable to situations where the parties in question did not offer competing goods; and (c) the dilution act claim failed because plaintiff's mark was not famous at the time defendant commenced its use of the mark.

382 F.3d 774 (8th Cir., September 1, 2004)

Affirming the District Court, the Eighth Circuit holds that plaintiffs are likely to prevail on Anticybersquatting Consumer Protection Act ("ACPA") claims arising out of defendant's registration of numerous domain names incorporating plaintiffs' trademarks, which domains defendant linked to a website advocating a ban on abortions.  This anti-abortion website also contained links to other sites which solicited funds, via the sale of goods or donations, to aid anti-abortion causes.  In reaching this result, the Eighth Circuit rejected defendant's claim that his use of plaintiffs' trademarks in this fashion was protected by the First Amendment.

Civ. Act. No. H-00-450, 129 F. Supp.2d 1033 (S.D. Tex., January 24, 2001) aff'd., 286 F.3d 270 (5th Cir., 2002)

In this domain name dispute, Court enjoined defendants from continuing to utilize the domain name ernestandjuliogallo.com, and directed them to transfer the name to plaintiff E. and J. Gallo Winery ("Gallo"), which holds a trademark in the mark "Ernest and Julio Gallo." The court further awarded Gallo statutory damages under the Anticybersquatting Consumer Protection Act ("ACPA") in the amount of $25,000 as a result, inter alia, of defendants' registration of the domain name at issue, and their use of that domain name to operate a web site that commented on this lawsuit, and contained articles critical of alcohol consumption. Defendants had also registered some 2000 other domain names, a number of which contained the names of famous companies, cities and buildings.

2000 U.S. Dist. LEXIS 15719 (E.D. Pa., October 30, 2000)

Court issues permanent injunction under the Anticybersquatting Consumer Protection Act ("ACPA"), enjoining defendant, described by the court as a "notorious cybersquatter," from continuing to operate web sites at domains containing common misspellings of plaintiff's registered service marks. The court also awarded plaintiff $530,653.34, which included both the maximum $100,000 statutory award for each domain name improperly used, as well as plaintiff's attorney's fees and costs.

Case No. CV 04-2619AHM (MANx) (C.D. Ca., May, 2004)

Finding plaintiff likely to prevail on claims of trademark infringement and cybersquatting, Court issues preliminary injunction directing defendants, purported competitors operating a business under the same name as plaintiff, to transfer to plaintiff 74 domain names which contain plaintiff's trademarks or variations thereof, during the pendency of this suit.  The Court further directed plaintiff to remove the existing content on the sites found at those domains and replace it with an "under construction" notification, and pay all registration fees for these domains which may become due.  The Court reached this result notwithstanding the fact that defendants had registered the main domain at issue, gardenoflife.com, before plaintiff commenced its use of that mark in commerce.  On this motion, the Court rejected defendants' claim that they had been using the mark "gardenoflife" in commerce continuously since 1974.  The Court found instead that defendants' use of the mark did not commence until after plaintiff's.  As a result, and because defendants registered many of the domains at issue after plaintiff had entered into negotiations with defendants for the purchase of the gardenoflife.com name, which domains contained variations of plaintiffs marks unrelated to defendants' business, the court found plaintiff likely to prevail on claims of trademark infringement and cyberquatting.

250 F.Supp.2d 610 (E.D. Va., Feb. 5, 2003)

In this in rem action commenced under the Anticybersquatting Consumer Protection Act, the Court holds that it can direct a top level domain registry – here Verisign – located in Virginia to cancel the domain registration of a domain found to be registered in violation of the ACPA.  In this case, the Court directed that such cancellation be effected unilaterally by the domain registry, which was directed to place the domain name on ‘hold’ status, thereby rendering it inactive, until such time as it is transferred to the trademark holder.

The Court holds that such relief is appropriate here, given the fact that the Korean domain name registrar with whom the domain name at issue was registered refused to transfer the domain as directed in a prior judgment issued by the Court.  After the Court issued this order, the domain registrant obtained an injunction from a Korean court, enjoining the registrar from transferring the domain.  The Korean registrar, in the face of this subsequent order, refused to comply with the US Court’s direction to transfer the domain to plaintiff.

The Court, on default, found that the domain registrant had violated the ACPA by registering the domain name at issue – globalsantafe.com – one day after Global Marine and SantaFe announced their agreement to merge into an entity to be called GlobalSantaFe.

Civil Action No. 03-11437-GAO, 2005 U.S. Dist. Lexis 2804 (D. Mass., February 24, 2005)

Court finds that a disgruntled customer violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering a domain name containing defendant Microfinancial's trademark, at which domain plaintiff operated a website critical of defendant.  The Court determined that plaintiff had registered the domain name with a bad faith intent to profit therefrom, in large part because plaintiff had offered to transfer the domain to Microfinancial if it refunded certain lease payments plaintiff had made which were at the heart of his dispute with defendant, as well as funds plaintiff claims defendant improperly received from third parties.  The Court accordingly granted Microfinancial summary judgment on its ACPA claim.

360 F. Supp. 2d 768 (E.D. Va., August 5, 2004)

Court holds plaintiff infringed defendants' trademarks, and violated the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of his operation of a 'typo' web site at the domain Fallwell.com at which he criticized the Rev. Falwell's views on homosexuality, and expressed his own contrary views on that subject.  At one time, the site informed interested visitors of a book plaintiff considered relevant to this discussion, and provided a link to Amazon.com at which they could purchase it.  The Court reached this result notwithstanding the fact that plaintiff's site featured a prominent disclaimer, advising users that it was not defendants' official site.

447 F. Supp. 2d 941 (W.D. Wis., September 1, 2006)

Court denies summary judgment motion by Lands' End "affiliates," seeking dismissal of claims arising out of affiliates' undisclosed use of typo domains to redirect traffic to Lands' End's website, and to profit on the sales made to consumers delivered to Lands' End's site in this fashion.  As affiliates, defendants received a percentage of sales made by Lands' End to consumers they brought to Lands' End's website.  The Court accordingly allowed plaintiff to proceed with claims that defendants' conduct violated the Anticybersquatting Consumer Protection Act ("ACPA") and breached the parties' affiliate agreements.  The Court also allowed plaintiff to pursue fraud claims arising out of defendants' concealment of this use of Lands' End typo domains.  The Court did grant so much of the defendants' summary judgment motion which sought dismissal of false advertising claims plaintiff advanced under both the Lanham Act and Wisconsin state law, holding that defendants did not mislead consumers by their conduct.  Consumers were unaware of the redirection, and received exactly what they expected to receive - Lands' End merchandise from Lands' End.

2001 WL 1035140 (S.D.N.Y. September 19, 2001)

In this domain name dispute, Court grants Mattel, the holder of numerous trademarks in and including the word "Barbie," summary judgment, holding that defendant violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering the domain names "barbiesbeachwear.com" and "barbiesclothing.com," causing those who accessed such domains to view a commercial web site selling women's apparel operated by the defendant, and effectuating a single $10 sale of merchandise to an investigator hired by plaintiff who accessed one of the domains in question. The court ordered defendant to relinquish the domain names at issue, and to pay Mattel $2000 in damages. The court declined to award Mattel its attorneys' fees.

314 F. Supp. 2d 362 (D.N.J., March 30, 2004)

Court holds that defendant's use of plaintiff's service mark in the domain names of noncommercial web sites critical of plaintiff does not constitute a violation of the Anticybersquatting Consumer Protection Act ("ACPA") because this was a "bona fide noncommercial" use of the mark which defendant had reasonable grounds to believe was lawful.  In reaching this result, the Court determined that defendant was motivated not by an intent to use his critical web site to extract money from plaintiff, but instead by a desire to express his dissatisfaction with plaintiff's alleged conduct.  The Court accordingly granted defendant's motion for partial summary judgment, and dismissed plaintiff's ACPA claim.  Left for another day were libel and trade libel claims arising out of the sites' content, as well as a Federal Dilution Act claim under 15 U.S.C. § 1125(c) arising out of the defendant's use of plaintiff's service mark.

378 F. Supp.2d 715 (E.D. Va., July 14, 2005)

Court denies motion to dismiss made by foreign domain name registrant, and allows trademark owner to proceed with in rem action, seeking relief under both the Anticybersquatting Consumer Protection Act, and the Lanham Act for trademark infringement.  The ACPA gives a trademark holder the right to proceed in rem to have a domain name transferred to it, or its registration cancelled, and allows a United States court to exercise jurisdiction over a res – the domain name – where the registry or registrar for such domain name is located in the United States.  This is true notwithstanding the fact that the United States court lacks personal jurisdiction over the domain name registrant.

263 F.3d 359, No. 00-1918 (4th Cir., August 23, 2001)

The Fourth Circuit, affirming the decision of the district court below, held that defendant was guilty of service mark infringement and unfair competition, and had violated the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of his creation and operation of a web site at the domain www.peta.org, which contained plaintiff's federally registered service mark "peta." In reaching this conclusion, the Fourth Circuit rejected defendant's defense that his site, titled "People Eating Tasty Animals," was a parody of plaintiff's "People for the Ethical Treatment of Animals" organization because the domain name containing plaintiff's mark did not appear simultaneously with that aspect of the web site containing the parody of plaintiff's organization.

Docket Nos. 98-7452 (L), 98-7538 (XAP), 202 F.3d 489(2d Cir. Feb. 2, 2000)

In this domain name dispute, the Second Circuit affirmed the holding of the District Court, which enjoined plaintiff Sporty's Farm LLC ("Farm") from continuing to use a domain name containing defendant's federally registered trademark "Sporty's" and directed plaintiff to take such steps as were necessary to transfer the domain name at issue to defendant. The Second Circuit's decision was based on the newly enacted Anticybersquatting Consumer Protection Act, and not on the Federal Trademark Dilution Act, which had been relied upon by the District Court below.

368 F.3d 433 (5th Cir. 2004)

Reversing the District Court, the Fifth Circuit holds that defendant's operation of a non-commercial gripe site at a domain which varied from plaintiff's mark solely by the subtraction of the letter "s" did not violate either the Federal or Texas State Dilution Acts, nor did it run afoul of the Anticybersquatting Consumer Protection Act ("ACPA").  The Court determined that defendant's actions were not motivated by the requisite bad faith intent to profit from the use of the mark, but rather, by defendant's desire to inform the public about his dispute with plaintiff and the services it offered him.  The absence of such bad faith was fatal to plaintiff's ACPA claim.  Plaintiff's Federal Dilution Act claim failed because defendant's use was not commercial.

188 F. Supp. 2d 110 (D. Mass., Mar. 6, 2002)

Court holds that defendant violated the Anticybersquatting Consumer Protection Act by registering sixteen domain names containing misspellings of plaintiff’s trademark, at which domains defendant operated web sites that voiced his complaints about plaintiff’s business practices.  Defendant did not offer any goods or services for sale at these web sites, and there is no mention in the record of any attempts by defendant to try and sell the domain names to the plaintiff.

No. 07-4095 (10th Cir., May 29, 2008)

Affirming the decision of the district court below, the Tenth Circuit dismisses trademark infringement, unfair competition and cybersquatting claims brought by plaintiff Utah Lighthouse Ministry as a result of defendant Allen Wyatt’s operation of a non-commercial website at domains containing the names of both plaintiff and its principals, which website in turn linked to articles criticizing plaintiff’s principals found on defendant Fair’s website.  Plaintiff was created to criticize the Church of Jesus Christ of Latter-day Saints.  Fair is an organization that responds to criticisms of that Church.  Wyatt’s website was designed to look like that of the plaintiff, incorporating elements and content found thereon with slight alterations, and contained no disclaimer as to the site’s affiliation with the plaintiff. 

The Tenth Circuit affirmed the dismissal of plaintiff’s Lanham Act trademark infringement and unfair competition claims on the grounds that plaintiff had failed to establish that defendant had used its trademark in commerce.  In reaching this result, the Court held that links from Wyatt’s website to that of Fair, at which books were offered for sale, were too attenuated to constitute a commercial use because the links took the user to pages of that site containing criticism of plaintiff, and not to those pages of the site at which books were offered for sale.  The Court further held that the use of plaintiff’s trademark in the operation of a site that diverted consumers from plaintiff’s commercial site to a non-commercial site was not a commercial use sufficient to sustain a Lanham Act claim.  In reaching this result, the Court refused to follow a contrary decision of the Fourth Circuit. 

The Tenth Circuit also dismissed plaintiff’s trademark infringement claim on the ground that plaintiff failed to establish the requisite likelihood of consumer confusion arising out of defendant Wyatt’s operation of his site.  The Court relied both on its analysis of the traditional likelihood of confusion factors, as well as its determination that defendant’s site was a successful parody of that of the plaintiff.

Finally, the Tenth Circuit dismissed plaintiff’s cybersquatting claim, advanced under the Anticybersquatting Consumer Protection Act (“ACPA”), on the ground that the defendants lacked the requisite bad faith intent to profit from their use of plaintiff’s mark, given their site was non-commercial, and intended to criticize plaintiff.   The Tenth Circuit held that such claim also failed because defendant Wyatt fell within the protection of the ACPA’s safe-harbor provision, which precludes a finding of bad faith intent to profit if ‘the court determines that the [defendant] believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.’

238 F.3d 262 (4th Cir., January 22, 2001)

The Fourth Circuit, affirming the determination of the district court below, held that plaintiff violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering and offering to sell to defendant the domain name vw.net, which contains defendant Volkswagen's famous "vw" mark.

Anticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection ActAnticybersquatting Consumer Protection Act Quick Hits

America Online Inc. v. AOL.org
259 F.Supp.2d 449 (E.D. Va., April 23, 2003)

In this in rem action commenced under the Anticybersquatting Consumer Protection Act (“ACPA”), the Court modifies its previously issued judgment, and directs a Virginia based domain registry – Public Interest Registry – to unilaterally cancel the registration of the domain name AOL.org and transfer it to plaintiff America Online.  The Court had previously found that this domain had been registered in violation of the ACPA, and had issued a judgment directing it domain registrar to transfer it to America Online.  The domain registrar, a Chinese entity, refused to comply, instead permitting the domain registrant to transfer the domain to another domain registrar, this time located in Korea.  This registrar too refused to transfer the domain to America Online.  Accordingly, the Court held that under the ACPA it was empowered to unilaterally direct a domain registry to cancel a domain, and transfer it to the trademark holder.

Ballistic Products Inc. v. Precision Reloading, Inc.
2003 WL 21754816, Civil No. 03-2950 ADM/AJB (D. Minn., July 28, 2003)

Court finds plaintiff Ballistic Products Inc. likely to prevail on its claim that its competitor - defendant Precision Reloading Inc. – violated the  Anticybersquatting Consumer Protection Act as a result of its registration of two “typo” domain names, containing misspellings of plaintiff’s then common law trademark.  Defendants registered these domain names to “attract potential customers” and pointed them to their own web site, at precisionreloading.com, where they sold competing products.  Finding such actions likely to confuse consumers, the Court issued a preliminary injunction, enjoining defendants from further use of the “typo” domains, and directed their immediate transfer to the plaintiff.

The Court further held that it could assert personal jurisdiction over the non-resident defendants.  The Court held that defendant Precision Reloading Inc. had sufficient contact with Minnesota to permit the assertion of general personal jurisdiction over it.  It had over the last 18 months sold over $21,000 in product to Minnesota customers, and purchased over $32,000 of merchandise from Minnesota sellers.  It had also distributed 223 catalogues to Minnesota residents, advertising its products, advertised nationally in publications sent to Minnesota and operated a website that received numerous ‘hits’ some of which were likely to be from Minnesota residents.  Specific jurisdiction could be exercised over both Precision and the remaining defendants under the ‘effects test’ articulated by the Supreme Court in Calder v. Jones.  The Corporate defendants committed tortuous misconduct directed against the plaintiff, a Minnesota company, the effects of which would be felt by that company in Minnesota.  Said the Court:

Defendants’ registration of domain names that are slight misspellings of Ballistic’s trademark and domain name was an action directed at Minnesota such that Defendants’ should ‘reasonably anticipate being haled into court’ in Minnesota. … ‘[a]n individual injured in Minnesota need not got to Connecticut to seek redress from persons who, though remaining in Connecticut, knowingly caused the injury in Minnesota.’ 

The Court held that the individual defendants, officers of Precision, “are primary participants in an alleged wrongdoing intentionally directed at a forum state resident, and jurisdiction over them is proper on that basis.”  It was the individual defendants who came up with the idea of registering the ‘typo’ domain names at issue to attract business for the defendant Precision Reloading. 

BroadBridge Media, LLC v. Hypercd.com
106 F.Supp. 2d 505, 00 CV 2884 (RO) (S.D.N.Y. July 7, 2000)

In this in rem action brought under the Anticybersquatting Consumer Protection Act (“ACPA”), the court issues a preliminary injunction, directing Register.com to transfer the registration of the domain name at issue – Hypercd.com – to plaintiff BroadBridge Media, holder of a federally registered trademark in the mark Hypercd.  In reaching this result, the Court found plaintiff likely to establish that the current registrant of that domain name had registered the name with a bad faith intent to profit thereon.  Through inadvertence, BroadBridge had let its registration in the domain, which it used in connection with its business activities, to lapse.  Among other things, plaintiff uses the mark in connection with its business of converting analog audio files into digital files, which are, in turn, burned onto cds.  The current registrant claimed that he was brainstorming for new product names and corresponding domain names, and hit upon hypercd, which he planned to use in connection with a product the company he was then employed with was developing.   The court rested its determination that the registrant was acting in bad faith in large part on his counteroffers to sell and/or rent the domain for sums far in excess of any investment he had made therein.  These counteroffers were made in responses to offers by plaintiff and its lawyers to purchase the domain.  The court also rested its conclusion on the fact that defendant had not used the domain in commerce, and was not known, did not operate a business under, and held no intellectual property rights in the domain name.  Finally, the court denied the registrant’s motion to dismiss, which was premised on his contention that the court lacked jurisdiction because plaintiff had, prior to the commencement of this proceeding, commenced a UDRP proceeding, which was then pending.
Eurotech Inc. v. Cosmos European Travels Aktiengesellschaft
213 F. Supp.2d 612 (E.D. Va., July 24, 2002)

Court finds plaintiff guilty of trademark infringement and unfair competition in violation of the Lanham Act, and cybersquatting in violation of the Anticybersquatting Consumer Protection Act, as a result of its purchase and use in commerce of the domain name cosmos.com.  Plaintiff’s use infringed the rights of defendant in its registered trademarks Cosmos and Cosmos Tourama, which were used by affiliated companies, through licenses, to promote and market travel and vacation tours.  Plaintiff’s website featured information on travel tours provided by third parties.  Plaintiff both purchased its domain, and began this use, after Cosmos European Travels had registered its mark, and commenced its use in commerce.

In finding that plaintiff’s conduct ran afoul of the Anticybersquatting Consumer Protection Act, the court found that plaintiff had acted with a bad faith intent to profit from its use of its mark.  In reaching this result, the Court relied, in part, on the fact that plaintiff had failed to conduct a trademark search at the time it purchased the cosmos.com domain from a third party.  Such a search, held the Court, would have made plaintiff aware of defendant’s rights in its mark, and its use in the travel industry.  The Court also relied on the fact that plaintiff, after being conducted by consumers seeking defendant, offered for a fee to enter into various arrangements with defendant that would give it access to the cosmos.com domain.  Said the Court:

It is equally important … to step back and examine the larger picture to determine whether it is consistent with a finding of bad faith.  It is.  The larger picture does not reveal an ongoing business entity that, prior to purchasing a domain name, made a reasonable investigation to ensure that the name was non-infringing and then purchased a relatively obscure domain name.  to the contrary, the big picture here reflects that plaintiffs did not engage in any business until they purchased the disputed domain name and when they did so, they made no effort to ascertain whether the ‘cosmos’ name was a registered trademark, as it then had been for eleven years.  Nor did plaintiffs make any reasonable investigation to determine whether the name was used in the travel industry.  Had plaintiffs conducted the proper investigation, they not only would have easily discovered that defendant had registered the cosmos’ and ‘cosmos tourama’ marks, but they also likely would have seen evidence of the fact that defendant had spent millions of dollars promoting the ‘cosmos’ mark and had succeeded in generating a large amount of revenue in the travel business ($400 million over five years).  In the larger picture, these facts loom large, and  it is hard to see how they could have been missed by plaintiffs.  Furthermore, within three years of purchasing the cosmos.com domain name, plaintiffs, armed with the certain knowledge that many consumers thought the cosmos.com website belonged to defendant, sought to sell defendant space and access to the site for a substantial sum of money.  This is closely akin to purchasing a domain name with an intent to exploit it by selling it to the registered owner of the trademark incorporated in the domain name.  In sum, the big picture is fully consistent with a finding of bad faith.

In addition, the fact that plaintiff was now known as CosmosTravels.com, Inc., did not permit it to avoid a finding of bad faith., as this name change occurred only after the domain name at issue had been purchased.  Said the Court “If such a name change could preclude a finding of bad faith, an entity could escape the effect of the ACPA simply by registering an infringing domain name and then changing its business name to match the infringing domain name.”

As a result of its determination, the Court directed plaintiff to transfer the cosmos.com domain to defendant. 

Chris Gregerson v. Vilana Financial Inc., et al.
2007 U.S. Dist. Lexis 64960, Civ. No. 06-1164 ADM/AJB (D. Minn., August 31, 2007)

On the parties’ cross-motions for summary judgment, the Court finds the corporate defendants guilty of copyright infringement as a result of their unauthorized use of two of plaintiff’s copyrighted photographs in advertisements for their businesses. 

The Court further held that defendant Andrew Vilenchik, the sole board member and shareholder of defendant Vilana Financial, could not be held vicariously liable for defendant’s copyright infringement, because he did not have or derive a sufficiently direct financial interest from the use of plaintiff’s photographs.

The Court granted plaintiff summary judgment, dismissing defendants’ claim that his use of defendants’ trademark in the path of his site’s domain name violated the Anticybersquatting Consumer Protection Act.  Defendants’ claim failed both because they failed to submit sufficient evidence that plaintiff had a bad faith intent to profit from this use of the mark, and because use of the mark in the path of the domain name does not constitute actionable use of the mark in a domain name

The Court also dismissed trademark infringement claims brought by defendants as a result of plaintiff’s use of their trademark in a website that purportedly disparaged defendants as a result of their use of the photographs at issue, and in the meta tags of that site.  The court held defendants failed to establish the requisite likelihood of consumer confusion sufficient to sustain such a claim, given that the parties were not competitors – plaintiff was a photographer, and defendants sold real estate and mortgage services – and plaintiff’s website was highly critical of defendants.  In reaching this result the court noted that “a defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.”

Finally, the Court left for trial defendants’ remaining claims, which included deceptive trade practices, interference with contractual and business relationships, and misappropriation of name and likeness, all of which arose out of the disparaging remarks posted on plaintiff’s website about the defendants.  This site included a photograph of defendant Vilenchik.  Because issues of fact existed as to the truth of these statements, the court reserved decision on these claims until trial.

It should be noted that plaintiff ultimately prevailed at trial, was awarded approximately $20,000 on his copyright infringement claims, and that defendants’ remaining claims were dismissed.

Hartog & Co., AS v. Swix.com and Swix.net
2001 U.S. Dist Lexis 3568, Civ Act. No. 99-1788-A (E.D. Va., March 16, 2001)

In this in rem action brought under the Anticybersquatting Consumer Protection Act (“ACPA”), court holds that registrant of the domain names at issue did not register or use them with a bad faith intent to profit therefrom, and that plaintiff trademark holder is therefore not entitled to relief under the ACPA. Plaintiff holds a United States trademark registration in the mark “Swix” which it has used since 1949 to market ski waxes, in the United States and abroad. Pedram Burgin (“Burgin”) provides Internet services to the public as a sole proprietorship under the name “Swix Internet Dienste” and holds a Swiss trademark in the mark “Swix” for use in connection with that business. Burgin’s clientele is located in Switzerland – he neither does business in the United States, nor does he sell ski wax or any related products. Under these circumstances, the Court held that Burgin’s registration and use of the domains swix.com and swix.net in connection with his Internet business was not undertaken in bad faith. Among other things, Burgin has intellectual property rights in the Swix mark by virtue of his Swiss registration, the domain is part of the name by which he does business, he has made a bona fide use of the mark in the sale of internet related services, he had no intent to divert plaintiff’s customers, as his business is wholly unrelated to plaintiff’s sale of ski wax, he never offered to sell the domains at issue to plaintiffs, and he was unaware of plaintiff’s mark at the time he commenced his use. As a finding of bad faith is a prerequisite to in rem relief under the ACPA, the Court determined that plaintiff’s claim failed.  
Mattel, Inc. v. Procount Business Services, et al.
03 Civ. 7234 (RWS) (S.D.N.Y., March 10, 2004)

In an action brought by Mattel under the Anticybersquatting Consumer Protection Act, as a result of defendants’ registration of the domain names BarbieToy.com and BarbieRetro.com, the Southern District of New York held that it could exercise personal jurisdiction over a non-resident defendant because “defendants solicited sales over the Internet, accepted an order from a resident of this state, and shipped goods into this state to fill that order.”  As a result, the Court denied defendants’ motion to dismiss this action for want of personal jurisdiction.  The defendants were retailers who primarily sold vintage toy reproductions.  At some point, they expanded their product line to include licensed ‘Barbie Classic’ items.  The domain names were purchased to promote this product line, and redirected the user to defendants’ website at which such items were offered for sale.  Plaintiff arranged to purchase two Barbie items from defendants’ website, which defendants shipped to plaintiff in New York.  As stated above, this purchase was sufficient to establish personal jurisdiction over the defendants in New York.

The Court nonetheless transferred the case to Texas, where the defendants reside, pursuant to 28 U.S.C. Section 1401(a).  Said the Court:

In the interests of justice and trial efficiency, this action should be transferred to the Southern District of Texas.  The locus of operative facts is in both the Southern District of Texas and New York;  Defendants documents related to the website in question are located in Houston Texas; Mattel is a worldwide manufacturer with offices all over the United States and Defendants are a one man outfit, located only in Houston Texas, maintaining the action in New York will pose a heavy financial burden on defendants; neither party is located in the Southern District of New York and Defendants are located in Houston, Texas.

Pinehurst, Inc. v. Brian Wick, et al.
256 F. Supp. 2d 424 (M.D. N.C., 2003).

Finding that defendant cybersquatters violated both the Anticybersquatting Consumer Protection Act (“ACPA”) and the Federal Trademark Dilution Act (“FTDA”), the court directed defendants to transfer to plaintiff domain names containing plaintiff’s famous “Pinehurst” mark, enjoined defendants from further using “Pinehurst” in a domain name, and awarded plaintiff both statutory damages in the amount of $100,000 and attorneys fees.   Plaintiff is the owner of the world famous Pinehurst Golf Resort.  The court found that defendants had registered the domain names in question – pinehurstresort.com and pinehurstresorts.com - with a bad faith intent to profit therefrom because, among other things, they had registered over 8000 domain names, many of which contained the trademarks of well-known corporations, golf courses or law firms, had offered, in settlement, to transfer the domain names at issue to plaintiff in exchange for a ‘contribution’ to their legal expenses and had registered additional ‘typo’ domains after the commencement of this suit.  Such a finding also rested on defendants’ stated purpose in registering these and other domains, which was to “mess” with “corporate America,” as well as on the fact that the domains at issue had been registered by an entity named NameIsForSale.com 

In reaching this result, the court rejected defendants’ claim that their conduct was a permissible ‘parody’ of plaintiff’s mark.  Such a defense failed, in part, because the content of defendants’ site – on which was located images of a miniature golf course and a trailer park – was not seen until after the user had already made a decision to enter the site based on the domain names at issue, which did not parody plaintiff or its golf course.  Said the court “A parody must convey two simultaneous and contradictory messages, that it is the original but also that it is not the original and is instead a parody. … Looking at Defendants’ domain names alone, there is no suggestion of a parody. … The domain names convey the first message, that it is the original, but the second message, that it is ‘not the original and that it is a parody, is discovered only by accessing the website and reading through the website’s content.”

The court further held that defendant had violated the FTDA by virtue of having registered the domain names in question, and thereby having prevented plaintiff from using them in commerce.  This reduced the selling power of plaintiff’s famous
”Pinehurst” mark, thereby diluting it.  Said the court:  “Because of the unique nature of domain names in electronic commerce and the resulting economic harm when marks are registered as domain names by cyberpirates, Defendants’ use of Plaintiff’s service marks in their Pinehurst domain names constitutes dilution.”

Jay Sallen d/b/a J.D.S. Enterprises v. Corinthians Licenciamentos LTDA and Desportos Licenciamentos LTDA
273 F.3d 14 (1st Cir., December 5, 2001)

Reversing the court below, the First Circuit holds that a domain registrant who loses a UDRP proceeding and is directed to transfer his domain name to a trademark holder may pursue relief under the Anticybersquatting Consumer Protection Act.  This statute expressly provides that:

A domain name registrant whose domain name has been suspended, disabled, or transferred under a policy described under clause (ii) may, upon notice to the mark owner, file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter.  The Court may grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant.

Said the First Circuit:

Section 1114(2)(D)(v) grants domain name registrants who have lost domain names under administrative panel decisions applying the UDRP an affirmative cause of action in federal court for a declaration of nonviolation of the ACPA and for the return of the wrongfully transferred domain names.

A successful plaintiff can recover the domain lost in the UDRP proceeding.

In reaching this result, the court rejected defendants’ argument, accepted by the court below, that there was no actionable case or controversy that could be the subject of plaintiff’s action for declaratory judgment, because defendants had no intention of pursuing a claim against plaintiff for violation of the Anticybersquatting Consumer Protection Act.  Because this dispute had been brought to WIPO for resolution, and because it had resolved the dispute adversely to plaintiff, resulting in his loss of his domain name, an actual controversy did in fact exist. 

The First Circuit also rejected defendants’ argument that, by agreeing to the UDRP in his registration agreement, plaintiff contractually agreed both to be bound by any decision rendered in a UDRP proceeding by an authorized provider, and waived any rights he may have under the ACPA.

As a result, the First Circuit allowed plaintiff to pursue his claim that he was the valid owner of the domain Corinthians.com.  Plaintiff had registered this domain with NSI.  Defendants owned a Brazilian trademark in Corinthiao, the Portuguese equivalent of “Corinthians,” which is the name of a well-known soccer team in Brazil.  A WIPO panel found plaintiff to be a cybersquatter, in large part because he offered to sell the domain to defendants, and had not, according to the panel’s decision, made any use of it prior to his receipt of a cease and desist letter from defendants in response to his solicitation.  After this contact, but before the commencement of the UDRP proceeding, plaintiff posted on his website biblical quotations.  The domain was subsequently transferred to the defendants. 

The First Circuit allowed plaintiff to pursue his claim that he was not in violation of the Anticybersquatting Consumer Protection Act and seek the return of the domain name.

Additional cases can be found in the Domain Name section of the Index.

Anticybersquatting Consumer Protection Act - In Rem - Updated February 23, 2008

112 F. Supp. 2d 502, Civil Action No.99-550-A (E.D.Va., March 3, 2000)

The court holds that the provisions of the Anticybersquatting Consumer Protection Act that permit a trademark holder to proceed with an in rem action against a domain name do not violate the Due Process clause of the United States Constitution.

250 F.Supp.2d 610 (E.D. Va., Feb. 5, 2003)

In this in rem action commenced under the Anticybersquatting Consumer Protection Act, the Court holds that it can direct a top level domain registry – here Verisign – located in Virginia to cancel the domain registration of a domain found to be registered in violation of the ACPA.  In this case, the Court directed that such cancellation be effected unilaterally by the domain registry, which was directed to place the domain name on ‘hold’ status, thereby rendering it inactive, until such time as it is transferred to the trademark holder.

The Court holds that such relief is appropriate here, given the fact that the Korean domain name registrar with whom the domain name at issue was registered refused to transfer the domain as directed in a prior judgment issued by the Court.  After the Court issued this order, the domain registrant obtained an injunction from a Korean court, enjoining the registrar from transferring the domain.  The Korean registrar, in the face of this subsequent order, refused to comply with the US Court’s direction to transfer the domain to plaintiff.

The Court, on default, found that the domain registrant had violated the ACPA by registering the domain name at issue – globalsantafe.com – one day after Global Marine and SantaFe announced their agreement to merge into an entity to be called GlobalSantaFe.

378 F. Supp.2d 715 (E.D. Va., July 14, 2005)

Court denies motion to dismiss made by foreign domain name registrant, and allows trademark owner to proceed with in rem action, seeking relief under both the Anticybersquatting Consumer Protection Act, and the Lanham Act for trademark infringement.  The ACPA gives a trademark holder the right to proceed in rem to have a domain name transferred to it, or its registration cancelled, and allows a United States court to exercise jurisdiction over a res – the domain name – where the registry or registrar for such domain name is located in the United States.  This is true notwithstanding the fact that the United States court lacks personal jurisdiction over the domain name registrant.

Anticybersquatting Consumer Protection Act - In RemAnticybersquatting Consumer Protection Act - In Rem Quick Hits

America Online Inc. v. AOL.org
259 F.Supp.2d 449 (E.D. Va., April 23, 2003)

In this in rem action commenced under the Anticybersquatting Consumer Protection Act (“ACPA”), the Court modifies its previously issued judgment, and directs a Virginia based domain registry – Public Interest Registry – to unilaterally cancel the registration of the domain name AOL.org and transfer it to plaintiff America Online.  The Court had previously found that this domain had been registered in violation of the ACPA, and had issued a judgment directing it domain registrar to transfer it to America Online.  The domain registrar, a Chinese entity, refused to comply, instead permitting the domain registrant to transfer the domain to another domain registrar, this time located in Korea.  This registrar too refused to transfer the domain to America Online.  Accordingly, the Court held that under the ACPA it was empowered to unilaterally direct a domain registry to cancel a domain, and transfer it to the trademark holder.

Hartog & Co., AS v. Swix.com and Swix.net
2001 U.S. Dist Lexis 3568, Civ Act. No. 99-1788-A (E.D. Va., March 16, 2001)

In this in rem action brought under the Anticybersquatting Consumer Protection Act (“ACPA”), court holds that registrant of the domain names at issue did not register or use them with a bad faith intent to profit therefrom, and that plaintiff trademark holder is therefore not entitled to relief under the ACPA. Plaintiff holds a United States trademark registration in the mark “Swix” which it has used since 1949 to market ski waxes, in the United States and abroad. Pedram Burgin (“Burgin”) provides Internet services to the public as a sole proprietorship under the name “Swix Internet Dienste” and holds a Swiss trademark in the mark “Swix” for use in connection with that business. Burgin’s clientele is located in Switzerland – he neither does business in the United States, nor does he sell ski wax or any related products. Under these circumstances, the Court held that Burgin’s registration and use of the domains swix.com and swix.net in connection with his Internet business was not undertaken in bad faith. Among other things, Burgin has intellectual property rights in the Swix mark by virtue of his Swiss registration, the domain is part of the name by which he does business, he has made a bona fide use of the mark in the sale of internet related services, he had no intent to divert plaintiff’s customers, as his business is wholly unrelated to plaintiff’s sale of ski wax, he never offered to sell the domains at issue to plaintiffs, and he was unaware of plaintiff’s mark at the time he commenced his use. As a finding of bad faith is a prerequisite to in rem relief under the ACPA, the Court determined that plaintiff’s claim failed.  

Antitrust - Updated May 08, 2008

Case No. C 06-2057 JF (RS) (N.D. Ca., March 16, 2007)

Court dismisses action seeking redress as a result of Google’s alleged downward manipulation of the “Page Rank” it assigned plaintiff’s website.  This act allegedly reduced the ranking of plaintiff Kinderstart.com’s search engine in various Google Search results which, in turn, adversely impacted both the traffic and advertising revenue plaintiff Kinderstart.com’s site generated.  “Page Rank” is a system offered by Google for rating the usefulness of websites.  Google’s search engine utilizes the relative “Page Ranks” it assigns to websites in determining the order in which to deliver responsive search results to a user’s query. 

In its Second Amended Complaint, plaintiff claimed such acts constituted violations of the Sherman Antitrust Act, the Lanham Act and California Business and Professions Code Section 17200, as well as plaintiff’s right to free speech under both the Federal and California constitutions.  Plaintiff Kinderstart.com also alleged that it was defamed by Google’s alleged statement that the low “Page Rank” it assigned plaintiff’s site was arrived at objectively, without human manipulation.

The Court found that Kinderstart.com had failed to state a claim, and accordingly dismissed its complaint with prejudice.

202 F. 3d 573 (2d Cir., Jan. 21, 2000)

The Second Circuit held that Network Solutions Inc. ("NSI") was immune from the Sherman Antitrust claims advanced by the plaintiff because the challenged actions, NSI's refusal to take steps necessary to increase the number of generic Top Level Domains ("gTLDs"), were undertaken at the direction of agencies of the Federal Government. The Second Circuit also dismissed plaintiff's First Amendment claims, which arose out of plaintiff's inability to operate a web site at any but the existing gTLDs.

51 F. Supp. 2d 389 (S.D.N.Y., Mar. 17, 1999) aff'd. on other grds. 202 F.3d 573 (2d Cir., Jan. 21, 2000)

(Court holds that defendant Network Solutions Inc. ("NSI") is immune from liability for the Sherman Act antitrust claims advanced by plaintiff because the actions which gave rise to plaintiff's claim were performed pursuant to an agreement with a federal instrumentality.

Pursuant to a Cooperative Agreement entered into with the National Science Foundation ("NSF"), NSI is at present the exclusive domain name registry for four generic top level domains, including ".com". It also operates the "A Root Server," an essential tool for the matching of alphanumeric domain names such as www.phillipsnizer.com to the Internet Protocol numbers assigned to each web site, and for locating web sites in general.

When a user accesses an alphanumeric domain name on his browser, his computer sends out an inquiry to ascertain the IP Number associated with that alphanumeric domain name. If a corresponding IP number is found on the root servers, the user is taken to the appropriate web site. If the IP number is not found, no connection is made.

In an effort to operate a competing domain name registry, PGMedia accepted domain name registrations for approximately 530 new generic top level domains. PGMedia's complaint was that neither the "A root server" nor any of the Internet's other root servers recognize its new gTLDs. As a result, Internet users could not access these sites with the same ease that they accessed other domain names. PGMedia sought to have NSI modify the "A Root Server" so that it would recognize PGMedia's new gTLDs. On instruction from both NSF and the Department of Commerce, NSI refused this request. This refusal formed the basis of plaintiff's Sherman Act claim. In holding NSI immune from this claim because it was acting pursuant to a contract with a federal agency, the court relied on the courts' decisions in Thomas v. Network Solutions, Inc., 2 F.Supp. 2d 22 (D.D.C. 1998)("Because NSI is acting in compliance with a government cooperative agreement, therefore, it is entitled to immunity from suit under the Sherman Act.") and Beverly v. Network Solutions Inc., 1998 U.S. Dist. Lexis 8888 (N.D. Cal., June 12, 1998))

Antitrust Quick Hits

Daniel Wallace v. IBM, et al
467 F.3d 1104, No. 06-2454 (7th Cir. November 9, 2006)

Court holds that distribution of open source software under the GNU General Public License, which allows use of the software and creation of derivative works therefrom for free, provided that all derivative works are similarly distributed under the terms of the same license, does not violate the antitrust laws.  As stated by the Court "the GPL and open-source software have nothing to fear from the antitrust laws." 

Arbitration - Updated September 22, 2007

Cases No. C-02-1227 and C-02-2777 JF (N.D. Cal., August 30, 2002)

Court holds that both PayPal's User Agreement, and the arbitration clause found therein, are unconscionable under California law.  The Court accordingly denies motions by PayPal to compel users who commenced putative class action suits arising out of PayPal's allegedly inappropriate handling of customer accounts and/or complaints to resolve their claims via arbitration.  The Court held that the User Agreement and the arbitration clause therein are unconscionable because they: (1) permit PayPal to issue binding amendments to the User Agreement at any time without notice to users; (2) obligate users to arbitrate their disputes pursuant to the commercial rules of the AAA, which is cost prohibitive in light of the average size of a PayPal transaction; (3) obligate users who reside nationwide to arbitrate in Santa Clara county, California, where PayPal is located; (4) permit PayPal to freeze and maintain possession of the funds in customer accounts until any dispute is resolved; and (5) require users to pursue their claims individually, and not via a class action.  Taken together, the Court held these provisions made the User Agreement unconscionable, and appear to represent an attempt by PayPal "to insulate itself contractually from any meaningful challenge to its alleged practices."

359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

ArbitrationArbitrationArbitrationArbitration Quick Hits

Mary Defontes and Nicholas Long v. Dell Computers Corp., et al.
C.A. No. P.C. 03-2636 (R.I. Superior Crt., Jan. 29, 2004).

Court held plaintiffs, purchasers of Dell computers and related service agreements, are not bound by the Terms and Conditions Agreement that accompanied such machines on shipment.  The Court held that a browse-wrap agreement was not created upon the initial ordering of the machines, because the link to the Terms and Conditions Agreement at issue was found “inconspicuously” at the bottom of the web page of Dell’s website at which such products were ordered.  According to the Court “this was not sufficient to put plaintiffs on notice of the terms and conditions of the sale of the computer.  As a result, a browse wrap agreement found on Dell’s webpage cannot bind the parties to the arbitration agreement” found in the Terms and Conditions.

The Court further held that a shrink-wrap agreement was not formed between Dell and the plaintiff purchasers, binding plaintiffs to the Terms and Conditions, notwithstanding the fact that those Terms accompanied the computers on shipment to plaintiffs, and were also sent with acknowledgements of plaintiffs’ orders.  The Court reached this conclusion because the Terms at issue did not give plaintiffs the option to reject them by returning the computer to Dell.  Said the Court:

This Court, employing the same logic, finds that the binding effect of the Terms and Conditions Agreement also hinges on whether a reasonable person would have known that return of the product would serve as rejection of those terms.  Accordingly, this Court finds that Plaintiffs did not “knowingly consent” to the terms and conditions of the agreement because they were not given sufficient notice of the method to reject those terms.  Therefore, Plaintiffs are not bound by the arbitration clause therein. 

Because the plaintiffs were not party to the Terms and Conditions, the court denied Dell’s motion to stay this action and compel plaintiffs to arbitrate their claim that Dell improperly charged tax on both the sale of ancillary services plaintiffs purchased with their Dell computers, as well as associated transportation costs.

Applying Texas law, the Court also held that the arbitration provision found in Dell’s Terms and Conditions was in any event an unenforceable illusory contract.  Thus, the Terms and Conditions provided that “these terms and conditions are subject to change without prior written notice at any time, in Dell’s sole discretion …”.  Because Dell retained such an unfettered right to modify or terminate the contract at any time, the Court held that “the language in the Terms and Conditions Agreement fails to bind Defendants in any genuine way.  Accordingly, this Court finds that the arbitration agreement is illusory and therefore unenforceable.” 

Of note, the court held that the fact that the arbitration provision, if binding, would bar plaintiffs from pursing their claims as a class action was not, by itself, a ground to invalidate such a clause under Texas law or render it unconscionable.

Joe Douglas v. Talk America Inc.
No. 06-75424 (9th Cir., July 18, 2007)

Ninth Circuit holds that customer is not bound by contractual amendments to service contract posted by long distance company on its website of which customer had no notice.

Talk America undertook to provide phone services to customers previously serviced by AOL.  Thereafter, Talk America attempted to change the terms of its contracts with these customers by including in the parties’ contracts provisions that increased applicable service charges and compelled customers to arbitrate any disputes they may have with the company.  These new amendments also included a class action waiver, and a New York choice of law provision.  These changes were posted on defendant Talk America’s website.  However, according to plaintiff, a former AOL customer who continued to use Talk America’s services after the changeover, he was given no notice of these contractual changes.  He alleged that he had no need to visit Talk America’s site as he had set-up his account so that applicable charges were automatically billed to, and paid by, his credit card.

In these circumstances, the Ninth Circuit held that plaintiff could not be compelled to arbitrate his disputes with Talk America arising out of these contractual revisions, and particularly the rate increases they mandated.  The Ninth Circuit accordingly granted plaintiff’s writ of mandamus, holding that the District Court clearly erred in granting Talk America’s motion to compel arbitration.

Michael Motise v. America Online, Inc.
04 Civ. 2121 (SCR) (S.D.N.Y., Nov. 30, 2004).

Court holds that an individual who access America Online’s (“AOL”) services via the account of another is not bound by its Terms of Service merely as a result of such use, absent notice that the Terms provide that by such use, he is agreeing to be bound thereby.  The Court stated that “the Second Circuit seems to require that the license terms appear on the screen, in view of the user, for the user to be on notice of them.”  In this case, the user claims that he was able to access AOL’s services via his step-father’s account without either being presented with AOL’s Terms of Service, or being asked to accept them.
 
The Court further held, however, that by accessing AOL’s service via the account of another, plaintiff became a sublicensee, with no greater rights to use AOL’s service than the actual account holder himself.  As that account holder himself had agreed to be bound to AOL’s Terms of Service when he signed up for its service, plaintiff too was bound by those Terms of Service.

As a result, the Court held that plaintiff was bound by the Forum selection clause contained in AOL’s Terms of Service, and accordingly transferred the case to Virginia, where the clause mandated all disputes be litigated.

In re RealNetworks Inc. Privacy Litigation
2000 WL 631341, No. 00 C 1366 (N. D. Ill., May 8, 2000)

Court holds that a License Agreement that appears on-screen in a pop-up window is a writing within the meaning of the Federal Arbitration Act (“FAA”).  As such, the Court directs plaintiffs, in accordance with the terms of their License Agreement with RealNetworks, to arbitrate their claims that RealNetworks was impermissibly invading their privacy and trespassing on their property by secretly monitoring the listening and internet usage habits of users of its products.

To be enforceable under the FAA, an arbitration agreement must be contained in a writing.  Popular dictionaries at the time of the statute’s enactment defined a writing as “1.  the act or art of forming letters or characters on paper, wood, stone, or other material, for the purpose of recording the ideas which characters and words express, or of communicating them to others by visible signs. 2.  Anything written or printed; anything expressed in characters or letters.”  Relying on this definition, the Court held that a license agreement that appeared on screen was such a writing, because it constituted letters or characters formed on screen to record or communicate ideas, and could be easily printed and/or saved.  Notably, the court reached this latter conclusion despite the absence of a print or save button on the pop-up window in which the License terms appeared.  It was sufficient, held the court, that the user’s computer allowed him to right click his mouse over the terms of the License agreement, and copy and paste them into a word processing program.  The Court also noted that, once accepted by the user, the License Terms were downloaded to his computer, and stored in a file titled either  “RealPlayer License Agreement” or “RealJukebox License Agreement” depending on the product used.  As such, held the Court, the agreement between the parties qualified as a written arbitration agreement, which could be enforced in accordance with the FAA.

Finally, the court rejected the intervenor’s challenge to the Arbitration agreement on the grounds of procedural and substantive unconscionability.  As a result, the Court affirmed its earlier decision, and directed plaintiffs to arbitrate their disputes with RealNetworks.

Attorney Client Privilege - Updated February 17, 2008

322 B.R. 247 (Bankr. S.D.N.Y., March 21, 2005)

Court holds that the use of a company's e-mail system by an employee to send personal e-mails to the employee's personal counsel does not, without more, waive any attorney client privilege in such communications.  Whether a waiver had occurred must instead be resolved by examining the employee's subjective and objective expectations that the communications would be confidential.  In analyzing this question, Courts should look for guidance to cases that address an employee's privacy rights in e-mail sent over company e-mail systems, which hinge on the resolution of a similar question -- the reasonableness of an employee's expectation of privacy in such e-mails.  Issues of fact as to the existence and application of company computer usage policies, and whether employees were warned that the Company could inspect e-mails sent over the company's system, prevented the Court from resolving the issue at this time.

The Court further held that any privileges attendant to certain additional e-mails between company employees and their personal counsel had been waived by their voluntary transmission of such e-mails both to counsel representing the company, and to a consultant rendering services to the company.

2006 U.S.Dist. Lexis 29387, 03cv6327 (DRH)(MLO)(E.D.N.Y. May 15, 2006)

Affirming the decision of the Magistrate Judge, the District Court holds that an employee did not waive any attorney client or work product privileges that may exist in various email communications with her personal counsel transmitted to and from the employee's personal AOL email account by using a company laptop to send them from her home.  Plaintiff's employer had obtained these emails by "restoring" deleted files stored on the hard drives of these company laptops.  The Court reached this result notwithstanding the fact that the Company had a computer usage policy, of which the employee was aware, that warned employees that they had no right of privacy in Company computer equipment, the contents of which could be inspected by the Company.

2006 WL 2998671 (S.D.N.Y., October 19, 2006)

Court holds that employees waived both the attorney client and work products privileges by using a company computer system to transmit otherwise privileged communications to their counsel.  These communications were sent from private password protected email accounts, and not from the company's own email system.   Importantly, however, copies of these emails were retained by the company's system in "temporary internet files."  As the company could and did obtain these emails by reviewing its own system, the court held that plaintiffs had waived applicable privileges by failing to maintain the confidentiality of these communications in light of the company's electronic communications policy.  That policy advised the employees not to use the company system for personal purposes, and warned them that they had no right of privacy in any materials sent over the system.  The court reached this result notwithstanding its determination that the employees had no knowledge that copies of their email communications were so retained in the company's computer system.

17 Misc. 3d 934 (Sup. Crt. NY Co., October 17, 2007)

Court holds that communications between plaintiff and his counsel, sent from and to  plaintiff over his employer’s email system, were not protected from disclosure by the attorney client privilege because these communications were not made in confidence.  In reaching this result, the Court relied, in large part, on the email policy that governed the use of this company email system.  This policy advised all employees that the company email system should not be used for personal purposes, and that employees had no personal privacy right in email sent over the company email system, which the employer could access and disclose at any time. 

Notably, the Court reached this result notwithstanding the fact that New York’s Civil Practice Law and Rules (“CPLR”) section 4548 provides that “no communication privileged under this article shall lose its privileged character for the sole reason that it is communicated by electronic means, or because persons necessary for the delivery or facilitation of such electronic communication may have access to the content of the communication.”  (Emphasis added).  The Court held that it is the presence of the employer’s computer use policy, and not the fact that the material was transmitted over the company’s email system, that rendered the communication non-privileged.

The Court further held that plaintiff waived any work product privilege attendant to his communications with counsel by transmitting them over a company email system, as they were subject to the email policy recited above, which permitted the company to examine and disclose such communications at any time.  By such actions, the court held that plaintiff was so careless with these materials that he waived any work product privilege attendant thereto and could not claim their disclosure was inadvertent.

As a result, the Court denied plaintiff’s motion for a protective order, which sought to compel his employer to return these communications with counsel to plaintiff.

Case No. C06-1412RSM (W.D. Wash., September 20, 2007)

The Court granted in part and denied in part an employer’s motion to compel production and inspection of the hard drive of a laptop the company furnished to an employee.  The Court held that the company could inspect the contents of the laptop, and any emails sent by the employee over the company email system, because the company had in place a policy that advised its employees that they had no expectations of privacy therein.  However, the Court held that the attorney client and marital communications privilege protected from disclosure “any web-based generated emails, or materials created by Sims[,] to communicate with his counsel or his wife.”  Said the Court:

[T]o the extent that the laptop contains web-based emails sent and received by plaintiff Sims and any other material prepared by plaintiff Sims to communicate with his counsel, the Court agrees with plaintiff that such information is protected under the attorney-client privilege and the marital communications privilege.  Notwithstanding defendant Lakeside’s policy in its employee manual, public policy dictates that such communications shall be protected to preserve the sanctity of communications made in confidence.

Attorneys Fees - Updated October 03, 2007

469 F.3d 534, No. 05-2359 (6th Cir., November 27, 2006)

The Sixth Circuit affirms the District Court's award of summary judgment to plaintiffs, and holds that defendant Bob D'Amato infringed and diluted plaintiffs' famous "Audi," "Quatro," and Audi Four Ring Logo marks, and violated the Anticybersquating Consumer Protection Act.  Defendant was held to have infringed plaintiffs' marks by operating a website at the domain www.audisport.com, at which both goods such as hats and shirts bearing the "Audi Sport" logo, and advertising space, were offered for sale.  The Sixth Circuit accordingly affirmed the District Court's decision, which permanently enjoined defendant from making continued infringing use of Audi's trademarks, directed D'Amato to transfer the audisport.com domain to plaintiffs, and awarded plaintiffs Audi AG ("Audi") and Volkswagen of America Inc. ("Volkswagen") attorneys' fees as the prevailing party.  The Court reached this result notwithstanding both defendant's claim that his use of Audi's marks on his website in connection with the sale of goods was orally authorized by an Audi dealer, and his placement of a disclaimer on defendant's site after receipt of a cease and desist letter.  A written agreement between Audi and the dealer made clear that the dealer lacked authority to so authorize defendant's use of Audi's trademarks.

950 F. Supp. 737 (E.D. Va. 1997)

In this domain name dispute, Court issued permanent injunction enjoining use of "cardservice" in domain name because such use infringed trademark in "cardservice international."  The court further awarded plaintiff attorneys fees under the Lanham Act to compensate plaintiff for its efforts in stopping defendant from continuing this conduct.

950 F. Supp. 737 (E.D.Va. Jan. 16, 1997)

In this domain name dispute, Court issued permanent injunction enjoining use of "cardservice" in domain name because such use infringed trademark in "cardservice international."  The court further awarded plaintiff attorneys fees under the Lanham Act to compensate plaintiff for its efforts in stopping defendant from continuing this conduct.

2000 U.S. Dist. LEXIS 15719 (E.D. Pa., October 30, 2000)

Court issues permanent injunction under the Anticybersquatting Consumer Protection Act ("ACPA"), enjoining defendant, described by the court as a "notorious cybersquatter," from continuing to operate web sites at domains containing common misspellings of plaintiff's registered service marks. The court also awarded plaintiff $530,653.34, which included both the maximum $100,000 statutory award for each domain name improperly used, as well as plaintiff's attorney's fees and costs.

2007 WL 1300065 (Cal. Crt. App., 2d Dist., My 4, 2007)

Granting defendant’s motion pursuant to California’s anti-SLAPP statute, Cal. Code Civ. Pro. Section 425.16, the court affirms the dismissal of plaintiff GTX Global Corp.’s (“GTX”) complaint, and awards defendant Andrew Left (“Left”) attorneys fees expended both in defending this suit and plaintiff’s appeal from the decision of the court below.  SLAPP is an acronym that stands for “Strategic Lawsuits Against Public Participation.”  GTX had sued Left, who runs the stocklemon.com website, for publishing statements critical of GTX.  GTX charged that these statements were defamatory, and asserted claims of trade libel, interference with prospective economic advantage, and securities fraud against Left arising out of their publication.

The court found that Left’s statements were subject to the protections afforded by the anti-SLAPP statutes, because they addressed matter of public interest.  Finding that GTX had failed to submit any evidence that defendant’s challenged statements were false or defamatory, the court accordingly dismissed the suit.

328 F.3d 1108 (9th Cir. May 9, 2003), amended and superseded by Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036, 67 U.S.P.Q.2d 1532, 3 Cal. Daily Op. Serv. 6649, 2003 Daily Journal D.A.R. 8380 (9th Cir.(Cal.) Jul 29, 2003) (NO. 01-56733, 02-55142) , Petition for Certiorari Filed, 72 USLW 3393 (Nov 20, 2003)(NO. 03-773)

The Ninth Circuit affirmed so much of the District Court's decision which held that defendant infringed plaintiff's trademark by his "pervasive" use of plaintiff's mark in both the metatags and text of his websites, on which he sold a competing product.  The Ninth Circuit also affirmed so much of the District Court's decision which awarded plaintiff substantial attorneys' fees for this infringement, agreeing with the lower court's determination that this was an "exceptional" case justifying such an award in light of defendant's willful use of the mark.

The Ninth Circuit reversed and remanded so much of the District Court's decision that held that defendant's conduct diluted plaintiff's mark, in light of the Supreme Court's recent decision in Moseley v. V. Secret Catalogue, Inc, which mandated proof of actual dilution to sustain a trademark dilution claim.

2000 U.S. Dist. Lexis 4891, 94 F.Supp.2d 457 (S.D.N.Y., April 18, 2000)

Court refuses to hold defendants in contempt for violating an order and judgment which "enjoined defendants, in the United States, from 'advertising or promoting' apparel bearing Jeri-Jo's registered trademark ENERGIE ...". While plaintiffs held a valid US trademark in the ENERGIE mark, defendants held trademarks in the ENERGIE mark in Italy, France and Germany, as well as the right to market products bearing the mark in a number of other foreign countries as well. As a result, the court refused to hold defendants in contempt as a result of their operation of a web site at the domain "www.energie.it" at which United States users could view but apparently not buy clothing bearing the "ENERGIE" mark, nor did the court require defendants to delist the "energie.it" url from search engines. The court did, however, require defendants to remove hyperlinks to the "energie.it" site containing the word "ENERGIE" from two other web sites defendants operated at www.missixty.com and www.sixty.net, at which sites defendants apparently sold non-infringing apparel. The court also awarded plaintiffs the attorneys' fees expended in bringing on the instant application.

00 Civ. 7274 (LAP)(S.D.N.Y. June , 2001)

Court holds that Section 1399-11 of New York's Public Health Law runs afoul of the Commerce Clause of the United States Constitution, and accordingly permanently enjoins its enforcement. Section 1399-11 prohibits the shipments of cigarettes to consumers in New York. The statute's prohibitions apply to both retailers and common carriers, and effectively preclude the use of the Internet and mail order catalogues as a means of selling cigarettes to New Yorkers. "The statute … thus restrict[s] retail sales of cigarettes in New York to face-to-face transactions at in state retail locations." The Court held that the statute was unconstitutional because it violated the "dormant" aspects of the Commerce Clause, which prohibit States from passing legislation which discriminates against, or unduly burdens, interstate commerce.

79 F.Supp. 2d 331 (S.D.N.Y., Dec. 2, 1999)

The court awarded $46,000 to compensate for the attorney's fees expended in stopping defendant's infringement of plaintiff's common law trademark, which defendant used in both its domain name and meta tags.

488 F.3d 352, No. 06-2080 (6th Cir., June 14, 2007)

Reversing the court below, the Sixth Circuit awards plaintiff Thoroughbred Software International (“Thoroughbred Software”) $183,794.25 in “actual” damages it sustained as a result of defendant Dice Corporation’s (“Dice”) distribution of unauthorized copies of plaintiff’s software to its customers, which software was never used.  Such ‘actual’ damages were held to be the license fees plaintiff would have charged Dice for its use and/or distribution of the software in question.  These actual damages were awarded pursuant to 17 U.S.C. section 504(b) of the Copyright Act.  In reaching this result, the Sixth Circuit rejected defendant’s argument that Thoroughbred Software was not entitled to such relief because it could not prove that defendant’s infringing acts caused Thoroughbred Software any actual injury, as the software in question was never used.  The requisite ‘causal connection’ between defendant’s infringement and plaintiff’s loss of anticipated revenue was satisfied by the parties’ contract, which obligated defendant to pay a license fee for each copy it made and distributed of plaintiff’s software.

The Sixth Circuit also vacated the District Court’s denial of attorney’s fees to Thoroughbred Software as the prevailing party in a copyright infringement action, and remanded the matter for further consideration in light of the Court’s decision on appeal.

Attorneys FeesAttorneys FeesAttorneys Fees Quick Hits

ComputerXpress, Inc. v. Lee Jackson, et al.
93 Cal.App.4th 993, 113 Cal.Rptr.2d 625, E027841 (Cal. Court App., 4th District, Nov. 15, 2001).

Court dismisses trade libel and other claims brought by plaintiff ComputerXpress Inc. arising out of defendants’ publication of statements critical of plaintiff, its products, and its management on Internet message boards under California’s SLAPP (“strategic lawsuit against public participation”) statute, Cal. Code of Civil Procedure section 425.16.  This statute obligates a plaintiff that commences a suit arising out of “an act in furtherance of [defendant’s] right of petition or free speech … in connection with a public issue …” to demonstrate a prima facie case before being permitted to proceed with suit.  If the plaintiff fails to meet this burden, his claim will be subject to dismissal on a special motion to strike.  “Acts in furtherance of a person’s right of petition or free speech” under the Statute include “any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest.”

The Court held that statements published on Internet message boards such as that at issue – Raging Bull – are statements published in a public forum within the meaning of California’s SLAPP statute.  The Court further held that statements concerning a public company and its business, which may affect numerous investors, are statements in connection with an issue of public interest.  As such, held the Court, the defendants were entitled to the protections of the SLAPP statute.

Finding that ComputerXpress failed to present sufficient evidence to establish a prima facie claim, the Court dismissed so much of its complaint that rested on the Internet postings at issue.  The Court rested its determination, in part, on its conclusion that the challenged statements were non-actionable statements of opinion.  “[W]hile the postings certainly could be considered disparaging, their tone and content identified them as statements of opinion and not fact.  …. [T]hey were hyperbolic, informal, and lacked the characteristics of typical fact-based documents.  Moreover, they were replete with explicit statements of opinion such as “IMO (in my opinion) “what I think is fraud” “I firmly believe” “is that fraud?” and “my guess is.”

The Court did allow plaintiff to proceed with fraud and interference with contractual relations claims arising out of independent acts unconnected with the challenged Internet postings at issue.  These claims arose out of disparaging statements made by defendants to a particular customer of ComputerXpress, as well as out of purported misrepresentations defendants made concerning their own business at a time plaintiff was considering its acquisition.  As to these claims, defendants’ motion to strike was denied.

Finally, the Court held that defendants were entitled to recover under California’s SLAPP statute those attorneys fees they had expended in moving to dismiss the claims on which they prevailed, but not those fees expended in moving to dismiss the remainder of the complaint.  Such an award was rendered pursuant to section 425.16(c) which provides that “a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.”  Said the Court: “Defendants consequently are entitled to recover attorney fees and costs incurred in moving to strike the claims on which they prevailed, but not fees and costs incurred in moving to strike the remaining claims.”

Getaped.com Inc. v. Cangemi
188 F. Supp. 2d 398 (S.D.N.Y. 2002)

District Court awards Getaped.com $46,015 in statutory damages, attorney’s fees and court costs as a result of the copying of its website’s source code by a direct competitor, who utilized the same to operate a competing website. Of import, the court determined that a Web site's source code is considered "published" when the site goes live on the Internet. As Getaped registered its website within three months of this date, it was entitled to statutory damages under the Copyright Act, 17 USC 505, as a result of defendants’ copying of its site, which occurred after plaintiff’s site went live, but before a copyright therein was registered. As noted by the court “both statutory damages and attorney’s fee and costs are unavailable if “(1) an infringement of copyright in a unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” 17 USC section 412.  
 
The court determined that $30,000 in statutory damages was appropriate given that defendants’ conduct was “willful” within the meaning of 17 USC Section 504. In reaching this result, the court relied on the fact that defendants copied the source code of Getaped’s site, which featured a prominent copyright notice, and continued to use this content after receipt of notice of infringement from Getaped. The Court also awarded plaintiff the actual attorneys fees it incurred in prosecuting the suit under 17 USC section 505.
Pinehurst, Inc. v. Brian Wick, et al.
256 F. Supp. 2d 424 (M.D. N.C., 2003).

Finding that defendant cybersquatters violated both the Anticybersquatting Consumer Protection Act (“ACPA”) and the Federal Trademark Dilution Act (“FTDA”), the court directed defendants to transfer to plaintiff domain names containing plaintiff’s famous “Pinehurst” mark, enjoined defendants from further using “Pinehurst” in a domain name, and awarded plaintiff both statutory damages in the amount of $100,000 and attorneys fees.   Plaintiff is the owner of the world famous Pinehurst Golf Resort.  The court found that defendants had registered the domain names in question – pinehurstresort.com and pinehurstresorts.com - with a bad faith intent to profit therefrom because, among other things, they had registered over 8000 domain names, many of which contained the trademarks of well-known corporations, golf courses or law firms, had offered, in settlement, to transfer the domain names at issue to plaintiff in exchange for a ‘contribution’ to their legal expenses and had registered additional ‘typo’ domains after the commencement of this suit.  Such a finding also rested on defendants’ stated purpose in registering these and other domains, which was to “mess” with “corporate America,” as well as on the fact that the domains at issue had been registered by an entity named NameIsForSale.com 

In reaching this result, the court rejected defendants’ claim that their conduct was a permissible ‘parody’ of plaintiff’s mark.  Such a defense failed, in part, because the content of defendants’ site – on which was located images of a miniature golf course and a trailer park – was not seen until after the user had already made a decision to enter the site based on the domain names at issue, which did not parody plaintiff or its golf course.  Said the court “A parody must convey two simultaneous and contradictory messages, that it is the original but also that it is not the original and is instead a parody. … Looking at Defendants’ domain names alone, there is no suggestion of a parody. … The domain names convey the first message, that it is the original, but the second message, that it is ‘not the original and that it is a parody, is discovered only by accessing the website and reading through the website’s content.”

The court further held that defendant had violated the FTDA by virtue of having registered the domain names in question, and thereby having prevented plaintiff from using them in commerce.  This reduced the selling power of plaintiff’s famous
”Pinehurst” mark, thereby diluting it.  Said the court:  “Because of the unique nature of domain names in electronic commerce and the resulting economic harm when marks are registered as domain names by cyberpirates, Defendants’ use of Plaintiff’s service marks in their Pinehurst domain names constitutes dilution.”

Auctions - Updated October 09, 2002

Case B151987 (Cal. Crt. App., 2d Dist., June 24, 2002)

Reversing the decision of the court below, an intermediate California appellate court holds that plaintiff had adequately plead a breach of contract claim arising out of defendant's failure to deliver a domain name put up for auction on the Internet.  The court accordingly allows plaintiff to proceed with his claim, and seek redress as a result of defendant The.TV corporation's failure to register plaintiff as the owner of the domain name golf.tv.

Audio File - Updated January 21, 2000

29 F.Supp.2d 624 (C.D. Cal. October 26, 1998) aff'd. on other grounds, _F.3d_ (9th Cir., June 15, 1999)

(Plaintiffs, various trade organizations representing creators, manufacturers and distributors of sound recordings, sought to enjoin defendant from marketing a product called the Rio in alleged violation of the Audio Home Recording Act of 1992, 17 U.S.C. §§ 1001 et seq. ("AHRA"). The Rio is a portable handheld device capable of receiving, storing and re-playing digital audio files. Digital audio files can be downloaded from personal computers, stored on the Rio's hard drive, and played back. The Rio's hard drive memory card can be removed and reinstalled in other Rios, permitting downloaded audio files to be exchanged among Rio owners. The Rio does not posses any digital audio output capability, however, and therefore cannot be used to create additional copies of downloaded files.

The court determined that the Rio was a digital audio recording device subject to the strictures of the AHRA. However, the court determined that injunctive relief was unwarranted, and denied plaintiffs' motion. Any harm caused by the sale of the Rio (such as its use in copying music illegally posted to the Internet) could be redressed by the statute's royalty payment scheme.)

180 F. 3d 1072 (9th Cir., June 15, 1999)

The Ninth Circuit denied plaintiffs' application for a preliminary injunction prohibiting defendant from marketing the Rio PMP 300 ("Rio"). The Rio is a portable handheld device capable of receiving, storing and replaying digital audio files. To operate the Rio, a user downloads digital audio files from a personal computer to the Rio's hard drive. These files can then be "played back" and heard through headphones connected to the Rio. The hard drive's memory card can be removed and reinstalled in other Rios, permitting downloaded audio files to be exchanged among Rio owners. The Rio does not possess any digital audio output capability, however, and therefore cannot be used to create additional copies of downloaded files.

Plaintiffs claimed that defendant's marketing of the Rio violated the Audio Home Recording Act of 1992, 17 U.S.C. Sections 1001 et seq. ("AHRA"), which requires all "digital audio recording devices" to be equipped with technology designed to prevent the device's use in mass copying of copyrighted sound recordings. The Ninth Circuit disagreed, holding that the Rio was not a "digital audio recording device" subject to the strictures of the AHRA. Instead, it was a device that merely facilitated an individual's non-commercial, personal use of copyrighted recordings. Said the Ninth Circuit: "The Rio merely makes copies in order to render portable, or "space shift", those files that already reside on a user's hard drive. ... Such copying is paradigmatic non-commercial personal use entirely consistent with the purposes of the Act."

The Ninth Circuit accordingly denied plaintiffs' application for injunctive relief.

Automobile - Updated January 21, 2001

106 F. Supp.2d 905 (W.D. Texas, July 21, 2000), affirmed, 264 F.3d 493 (5th Cir., August 27, 2001)

Court rejects Ford Motor Company's ("Ford's") claims that enforcement proceedings undertaken by the Texas Department of Transportation ("Texas DOT") to prevent Ford, through a web site, from acting as an automobile dealer and selling used cars to Texas consumers, violates the Commerce Clause of the United States Constitution, or deprives Ford of its rights under either the First Amendment or the Due Process or Equal Protection clauses.

Billing - Updated January 21, 2001

2000 U.S. Dist. Lexis 17946 (S.D.N.Y. December 14, 2000)

Court holds that the FTC is likely to succeed on its claim that defendants' practice of billing telephone line subscribers for international telephone calls made from their telephone lines for the purpose of viewing pornographic web sites violates Section 5(a) of the Federal Trade Commission Act ("FTC Act"). Such violation occurs because the line subscribers are billed even if they neither visited the websites in question nor authorized anyone to do so. The court enjoined defendants from continuing to utilize such billing practices to collect for visits to pornographic web sites unless either (i) the line subscriber receiving the bill has entered into a verifiable agreement authorizing such billing, or (ii) the bill expressly states that the line subscriber is not obligated to pay the bill unless he has personally agreed or authorized another to agree to pay for the services in question and provides the line subscriber with a convenient method to cancel the bill if such is not the case.

Blogs - Updated April 21, 2008

Case No. 1-04-CV-032178 (Superior Ct., Ca., March 11, 2005), writ of mandamus granted, court directed to quash subpoena and issue protective order, 139 Cal. App. 4th 1423, 2006 WL 142685 (Cal. App., 6th Dist., May 26, 2006)

Court denies bloggers' motion for a protective order, which sought to quash a subpoena served by plaintiff Apple Computer, Inc. ("Apple") on Nfox, the e-mail service provider for the blog PowerPage.  The subpoena sought materials, including e-mails, that would permit Apple to identify the individual(s) who transmitted trade secret information about an Apple product to PowerPage, which information PowerPage subsequently published on its blog/website.  The Court held that the bloggers were not entitled to such relief under California's 'Shield Law,' as that statute only protects journalists from being found in contempt for failing to produce information, and does not support a motion to quash.  Similarly, such relief could not be grounded on the privilege afforded journalists under the First Amendment, as this privilege cannot be used to prevent the disclosure of information related to criminal activity such as that at issue here, the disclosure of trade secrets.  Because Apple had made a prima facie case that a crime had occurred, it was entitled to the requested discovery.

C.A. No. 6:06-109-HMH (D.S.C. October 22, 2007)

Granting defendant’s motion for summary judgment, the District Court dismisses defamation, trademark infringement, and invasion of privacy claims brought by plaintiffs against a blogger.  The claims arose out of defendant’s publication of articles on his blog, featuring plaintiff’s trademark, that were critical of plaintiffs’ eBay auction listing business. 

The Court held plaintiff’s trademark dilution claims failed because defendant used the mark in connection with “news reporting and news commentary,” a non-actionable use under the Federal dilution statute.  The Court held plaintiffs’ defamation claims failed because the statements at issue – which purportedly accused plaintiff Schmidt of being a “yes man” ‘who overpromised and underdelivered’ were non-actionable statements of opinion.  Finally, the Court held plaintiffs’ invasion of privacy claims – which were premised on a link on defendant’s blog to another site which contained a picture of plaintiffs – failed.  The Curt rested this holding on its determination both that South Carolina does not recognize a claim for false light invasion of privacy, and that, in any event, the link and article in question did not cast plaintiffs in a false light.  The Court also grounded its rejection of this claim on its holding that the link and corresponding use of the photo did not constitute a viable ‘wrongful appropriation of personalty’ invasion of privacy claim, given that plaintiffs had consented to the use of their photo on the internet site on which it was contained.

2007 WL 1300065 (Cal. Crt. App., 2d Dist., My 4, 2007)

Granting defendant’s motion pursuant to California’s anti-SLAPP statute, Cal. Code Civ. Pro. Section 425.16, the court affirms the dismissal of plaintiff GTX Global Corp.’s (“GTX”) complaint, and awards defendant Andrew Left (“Left”) attorneys fees expended both in defending this suit and plaintiff’s appeal from the decision of the court below.  SLAPP is an acronym that stands for “Strategic Lawsuits Against Public Participation.”  GTX had sued Left, who runs the stocklemon.com website, for publishing statements critical of GTX.  GTX charged that these statements were defamatory, and asserted claims of trade libel, interference with prospective economic advantage, and securities fraud against Left arising out of their publication.

The court found that Left’s statements were subject to the protections afforded by the anti-SLAPP statutes, because they addressed matter of public interest.  Finding that GTX had failed to submit any evidence that defendant’s challenged statements were false or defamatory, the court accordingly dismissed the suit.

No. 06-07-00123-CV (Texas Crt. of Appeals, December 12, 2007)

Following the decision of the Delaware Supreme Court in John Doe No. 1 v. Cahill, the Texas Court of Appeals holds that to obtain the identity of an anonymous individual who allegedly posted defamatory statements online, a plaintiff must submit evidence of the validity of his defamation claim sufficient to survive a motion for summary judgment.  This, held the Court, requires the plaintiff to submit sufficient evidence of each element of his claim that is within his control – he is not required, however, before discovery of the speaker’s identity, to demonstrate that the speaker acted with ‘actual malice’, if such is an element of the defamation claim at issue.

Because the trial court directed the disclosure of the anonymous speaker’s identity without first requiring such a showing, the Court of Appeals conditionally granted the defendant’s application for a writ of mandamus, and remanded the case for further consideration in light of the Court’s opinion.

The Court further held that the Cable Communications Policy Act, 47 U.S.C.A. Section 551(2)(B), does not provide an independent basis for obtaining such disclosure.  While the statute does apply to requests in civil actions brought by private parties seeking to pursue defamation claims, the Court held it only permitted such disclosure pursuant to a properly issued ‘court order.’  This, in Texas, required submission of evidence sufficient to establish a prima facie case, as stated above.

Case No. MS-07-6236-EJL-MHW (D. Idaho, November, 16, 2007)

Magistrate Judge grants in part and denies in part a motion to quash a subpoena issued pursuant to the Digital Millennium Copyright Act (“DMCA”).  The Magistrate Judge denied so much of the motion to quash which sought to prevent disclosure of the identity of the anonymous individual who posted a copy of a letter sent by a lawyer, for which the lawyer had obtained copyright registration, demanding the removal of other anonymous posts from a blog. 

The Court recommended granting so much of the motion to quash which sought to prevent disclosure of the identity of the anonymous individual who made the allegedly offensive posts that counsel sought to have removed in the demand letter in question.

139 Cal. App. 4th 1423, 2006 WL 1452685 (Cal. App. , 6th Dist., May 26, 2006)

Reversing the court below, the California Court of Appeals holds that the Stored Communications Act prohibits an ISP that hosted a blog's email account from disclosing e-mails sent to the blog in response to a subpoena issued in a civil litigation.  The subpoena sought production of e-mails that would permit Apple Computer ("Apple") to identify the individual(s) who transmitted trade secret information about an as yet unreleased Apple product to the blog/website Power Page, which information was the source of articles Power Page subsequently published on its blog/website.

The Court further held that petitioners, who acted as publishers of, and/or editors or reporters for, the news blogs that published the stories at issue about this Apple product, were entitled to a protective order against their disclosure of the confidential sources of their stories.  Notwithstanding Apple's claim that the information petitioners received from these services constituted trade secrets disclosed in violation of confidentiality agreements each of its employees had signed, the Court held such disclosure barred by both California's Reporter's Shield Law and the First Amendment.  The Court held that the Shield Law, which prohibits a court from holding in contempt a publisher, editor or reporter of "a newspaper, magazines or other periodical publication" for failing to disclose the source of a published story, protected petitioners, publishers and/or reporters of news blogs, from having to disclose the sources of the stories at issue.  The First Amendment similarly provided protection, given Apple's failure to fully exhaust other avenues of disclosure before pursuing discovery from petitioners.

Browse-Wrap Agreements - Updated April 02, 2008

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

Case No. 3D05-144 (Florida Dist. Crt. App., August 31, 2005)

Plaintiff held bound by Amendment to telephone services contract which obligated plaintiff to arbitrate disputes with the telephone service company, the terms of which Amendment were posted online.  Plaintiff was held bound as a result of her receipt of an invoice that gave her both notice of the Amendment and a location on the Internet at which its terms could be viewed, as well as the opportunity to cancel her contract if she did not wish to be bound thereby.  Plaintiff was held bound despite the fact that she neither read the terms of the Amendment, nor in any way affirmatively indicated her assent to be bound thereby.  Because the Amendment obligated plaintiff to arbitrate her dispute with defendant Sprint, the Florida District Court of Appeals affirmed the lower court's grant of defendant's motion to compel arbitration.

No. C04-04825 (JW) (N.D. Ca., April 1, 2005)

Court holds Terms of Use on defendant's websites constitute binding agreements between website operator and website user, where notices on the sites provide that the Terms  will create such an agreement if a user continues to utilize the site, and plaintiff used the sites with both actual knowledge of the Terms, and with imputed knowledge arising out of repeated use of the sites via a "robot."  Court accordingly dismisses plaintiff's declaratory judgment action for improper venue, as the Terms of Use mandated suit be brought in Illinois, and plaintiff commenced suit in California.

359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

505 F.Supp.2d 755, Civ. No. 06-cv-01726-LTB-CBS (D. Colo., Feb. 13, 2007)

Court allows pro se litigant to proceed with breach of contract claims against the Internet Archive, operator of the Way Back Machine, arising out of the Internet Archive's reproduction and display of historical versions of defendant's website without her consent.  Defendant alleged that such copying of her site constituted an acceptance of the site's terms of use, which require the payment of exorbitant fees for such copying, and even greater amounts as liquidated damages should the copier fail to pay the required copying fees.  The court denied plaintiff's motion to dismiss this claim, holding the counterclaims stated a viable cause of action for breach of contract.  In reaching this result, the court noted it could not determine if the Internet Archive knew at the time it copied defendant's site that that act constituted an acceptance of the site's terms of use.  The court could not resolve that question on the instant motion because the record before it was unclear both as to the manner in which such terms of use were displayed on defendant's site, as well as to whether Internet Archive received any notice thereof, given  its claim to only have accessed the site via a web crawler, and not via an individual.

The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities.  The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.

The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.

109 Cal. App. 4th 583 (Cal. Crt. App., June 9, 2003)

In this mandamus proceeding, California's Court of Appeals, by a two to one vote, holds a party suing as a private Attorney General subject to the same forum selection clause as the consumers it is seeking to protect.  As such consumers would be bound as a result of their use of Net2Phone's website to the provisions of its Terms of Use, so too is their private advocate.  The Court of Appeals accordingly directed that the action Consumer Cause commenced on the consumers' behalf in California be stayed because the Terms of Use contained a forum selection clause which mandated suit in New Jersey.  The Court upheld the forum selection clause notwithstanding the fact that New Jersey, unlike California, does not permit private advocates such as plaintiff to pursue claims on behalf of injured consumers.

356 F.3d 393 (2d Cir. 2004)

Affirming the court below, the Second Circuit holds that Register.com is likely to prevail on breach of contract claims arising out of Verio Inc.'s use of data obtained from Register.com's Whois database in violation of the database's Terms of Use, which prohibit use of that information for unsolicited advertising.  In reaching this conclusion, the Second Circuit held that Register.com's Terms of Use are likely to create a contract between Register.com and Verio, because Verio repeatedly used Register.com's Whois database with actual knowledge that the Terms provided that such use would constitute assent to be bound by the data use restrictions contained in the Terms.  Notably, the Second Circuit reached this result notwithstanding the fact that Verio did not click an "I Agree" icon indicating its agreement to be so bound.  More importantly, the Court found Register.com likely to prevail despite the fact that Verio did not see these Terms until after it had already completed the act - using the Whois database - which purportedly indicated its assent to be bound thereby. 

The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.

As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.

126 F. Supp. 2d 238 (S.D.N.Y., December 12, 2000) (Jones, J.) aff'd. 356 F.3d 393 (2d Cir. 2004)

Court issues a preliminary injunction enjoining Verio, Inc. from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information derived from that database for mass unsolicited advertising by telephone, direct mail or electronic mail. Court holds that Verio's actions will likely constitute a breach of plaintiff's Terms of Use, as well as a violation of both the Computer Fraud and Abuse Act and the Lanham Act and a trespass to chattels. In reaching this conclusion, the court holds that Register.com's Terms of Use are likely to create a contract between Register.com and the users of its Whois database, notwithstanding the fact that these users are not required to click an "I Agree" button indicating their agreement to be so bound.

Civ. Act. No. 3:06-CV-0891-B (N.D. Texas, September 12, 2007)

Finding defendant Boardfirst violated the terms of a browsewrap agreement entered into by its use of plaintiff Southwest Airlines’ website, the Court issued a permanent injunction, enjoining Boardfirst from accessing Southwest Airlines’ website on behalf of its customers to obtain boarding passes.  Southwest Airlines’ passengers engaged Boardfirst to obtain such boarding passes in the hopes of getting better seat assignments on Southwest Airlines flights.  Southwest Airlines has no assigned seating.  Those passengers who are the first to seek boarding passes within the designated time period are awarded “A” boarding passes, which, in turn, allow them to board the plane, and select their seat, first.  In reaching this result, the Court held that Boardfirst had the requisite knowledge that its use of plaintiff’s site would form a valid browsewrap contract by virtue, inter alia, of its receipt of cease and desist letters from Southwest Airlines apprising it of that fact.

The Court denied so much of Southwest Airline’s motion for summary judgment which sought to hold Boardfirst liable for violating of the Computer Fraud and Abuse Act, 18 U.S.C. Section 1030.  The Court held that issues of fact as to whether Southwest Airlines sustained the injury needed to sustain such a claim precluded an award of summary judgment.  The Court further held that it could not, at this time, determine whether Boardfirst accessed Southwest Airline’s site “without authorization” or in excess of authorization, an additional prerequisite to a CFAA claim.

Finally, the Court found that Boardfirst’s conduct violated Section 33.02 of the Texas Penal code, which makes it an offense to “knowingly access a computer network, or computer system without the effective consent of the owner.”  The Court reserved for trial the issue of whether such violation caused Southwest Airlines recoverable damages.

2000 U.S. Dist. Lexis 4553 (C.D. Ca., March 27, 2000)

The court, in granting defendant's motion to dismiss plaintiffs' breach of contract claim, held that a contract is not created simply by use of a web site on which is posted at the bottom of the site's home page terms and conditions that provide that such use constitutes the user's assent to be bound by the site's Terms and Conditions. The court left open the possibility, however, that use of a web site, coupled with knowledge of Terms and Conditions which declare such use evidence of assent to be bound thereby, could create a binding contract, and granted plaintiffs leave to replead their claim.

The court further held that "hyperlinking [without framing] does not itself involve a violation of the Copyright Act ... since no copying is involved." In addition, the court held that "deep linking by itself (i.e. without confusion of source) does not necessarily involve unfair competition."

The court refused at the outset of a litigation, however, to dismiss plaintiffs' claim that defendant, by deep linking, was tortuously interfering with plaintiffs' prospective business advantage, by depriving them of advertising revenue that might otherwise be achieved if the user were forced first to go to the site's home page (with the necessary increase in traffic that would generate) before he could proceed to an event page.

Lastly, the court held that defendant did not infringe plaintiffs' copyright in their site by extracting data concerning concert and other entertainment events from plaintiffs' web site (such as location, date and time of the event) and presenting it on defendant's web site in its own format. The court further held that plaintiffs could not attempt to recast such a claim into either state law misappropriation, trespass, unfair business practice or unjust enrichment claims, as those claims, to the extent they prohibited conduct permitted under the copyright act, were preempted thereby.

2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

507 F.Supp.2d 1096 (C.D. Ca., October 16, 2007)

This case arises out of the use of automated devices by ticket brokers and others to purchase tickets from plaintiff Ticketmaster, and thereby prevent the public from purchasing those tickets themselves. 

In this case, the Court holds that plaintiff Ticketmaster LLC (“Ticketmaster”) is likely to prevail on claims of direct and contributory copyright infringement as a result of defendant RMG Technologies Inc. (“RMG”) distribution of a software application that permits its clients to circumvent Ticketmaster.com’s CAPTCHA access controls, and use Ticketmaster’s  copyrighted website in manners prohibited by the site’s Terms of Use.  Among other things, Ticketmaster prohibits the use of automated devices such as the software application at issue to access Ticketmaster’s site and search for and purchase tickets to events.  Because defendant was likely to be held to have exceeded its license to use Ticketmaster’s copyrighted site, the Court held it was likely to be found guilty of direct copyright infringement, having made unauthorized copies of plaintiff’s site in its computer’s RAM when it viewed the site to create and test its product.

By distributing its software application to third parties, and encouraging them to use it in violation of Ticketmaster’s Terms of Use, the Court held plaintiff was also likely to prevail on claims of contributory copyright infringement.

The Court further held that Ticketmaster was likely to prevail on claims that defendant RMG breached its contract with Ticketmaster by using the site in a manner prohibited by the site’s Terms of Use, which, among other things, prohibited use of the site for commercial purposes, and use of automated devices on the site.  These Terms of Use were likely to be binding on defendant RMG, because it used the site with notice of the Terms, which advised that such use would constitute assent to be bound thereby.

Finally, the Court held that plaintiff Ticketmaster was likely to prevail on claims that defendant, by distributing its software application, violated the Digital Millennium Copyright Act, because it trafficked in a device designed both to circumvent technological measures that control access to, and protect, a copyrighted work – namely plaintiff’s website.

The Court held that defendant’s conduct was likely to cause plaintiff irreparable injury.  Because it constituted infringement of plaintiff’s copyright, such irreparable harm was presumed.  In addition, plaintiff submitted evidence that the use of automated devices on its site by ticket brokers and others was injuring its reputation and good will with the public, who attributed their inability to obtain tickets to events to misdeeds in which plaintiff and its employees were involved.

As a result, the Court issued a preliminary injunction, enjoined defendant from further trafficking in or using its software application.

Browse-Wrap AgreementsBrowse-Wrap AgreementsBrowse-Wrap AgreementsBrowse-Wrap AgreementsBrowse-Wrap Agreements Quick Hits

American Airlines, Inc. v. Farechase, Inc.
Cause No. 067-194022-02 (Texas, 67th Dist., Mar. 8, 2003)

Court holds American Airlines likely to succeed on claims that defendant Farechase breached the terms of use governing AA.com by scrapping the site for data, including discount “web fares” and flight schedules, and using the data for unauthorized commercial purposes. While the Court’s decision does not so state, it has been reported elsewhere that the contract between the parties arose out of Farechase’s use of AA.com, who’s Terms of Use provide that such use constitutes a consent to be bound by the site’s Terms of Use. These Terms, among other things, prohibit the commercial use of the site or data thereon without American Airline’s consent. The Court further finds American Airlines likely to succeed on claims that this unauthorized use, combined with that of licensees of “Web Automation” software distributed by Farechase that allowed such licensees to also access and obtain the same data from AA.com, constituted a trespass to chattels – namely American Airlines computer system. This finding was premised on the damage caused AA.com, both in terms of lost capacity of its computer system arising from existing uses of its site by Farechase and its current licensees, as well as by projected use by prospective future licensees to whom Farechase planned to distribute its software.  It was also grounded on the damage American Airlines sustained in undertaking to block Farechase and its licensees from accessing its site. Farechase knew this use was unauthorized because of its receipt of cease and desist notices from American Airlines. As a result, the court enjoined FareChase from accessing, using, or scraping AA.com, via its “Web Automation” software or otherwise, or from distributing its “Web Automation” software to third parties.
Mary Defontes and Nicholas Long v. Dell Computers Corp., et al.
C.A. No. P.C. 03-2636 (R.I. Superior Crt., Jan. 29, 2004).

Court held plaintiffs, purchasers of Dell computers and related service agreements, are not bound by the Terms and Conditions Agreement that accompanied such machines on shipment.  The Court held that a browse-wrap agreement was not created upon the initial ordering of the machines, because the link to the Terms and Conditions Agreement at issue was found “inconspicuously” at the bottom of the web page of Dell’s website at which such products were ordered.  According to the Court “this was not sufficient to put plaintiffs on notice of the terms and conditions of the sale of the computer.  As a result, a browse wrap agreement found on Dell’s webpage cannot bind the parties to the arbitration agreement” found in the Terms and Conditions.

The Court further held that a shrink-wrap agreement was not formed between Dell and the plaintiff purchasers, binding plaintiffs to the Terms and Conditions, notwithstanding the fact that those Terms accompanied the computers on shipment to plaintiffs, and were also sent with acknowledgements of plaintiffs’ orders.  The Court reached this conclusion because the Terms at issue did not give plaintiffs the option to reject them by returning the computer to Dell.  Said the Court:

This Court, employing the same logic, finds that the binding effect of the Terms and Conditions Agreement also hinges on whether a reasonable person would have known that return of the product would serve as rejection of those terms.  Accordingly, this Court finds that Plaintiffs did not “knowingly consent” to the terms and conditions of the agreement because they were not given sufficient notice of the method to reject those terms.  Therefore, Plaintiffs are not bound by the arbitration clause therein. 

Because the plaintiffs were not party to the Terms and Conditions, the court denied Dell’s motion to stay this action and compel plaintiffs to arbitrate their claim that Dell improperly charged tax on both the sale of ancillary services plaintiffs purchased with their Dell computers, as well as associated transportation costs.

Applying Texas law, the Court also held that the arbitration provision found in Dell’s Terms and Conditions was in any event an unenforceable illusory contract.  Thus, the Terms and Conditions provided that “these terms and conditions are subject to change without prior written notice at any time, in Dell’s sole discretion …”.  Because Dell retained such an unfettered right to modify or terminate the contract at any time, the Court held that “the language in the Terms and Conditions Agreement fails to bind Defendants in any genuine way.  Accordingly, this Court finds that the arbitration agreement is illusory and therefore unenforceable.” 

Of note, the court held that the fact that the arbitration provision, if binding, would bar plaintiffs from pursing their claims as a class action was not, by itself, a ground to invalidate such a clause under Texas law or render it unconscionable.

Joe Douglas v. Talk America Inc.
No. 06-75424 (9th Cir., July 18, 2007)

Ninth Circuit holds that customer is not bound by contractual amendments to service contract posted by long distance company on its website of which customer had no notice.

Talk America undertook to provide phone services to customers previously serviced by AOL.  Thereafter, Talk America attempted to change the terms of its contracts with these customers by including in the parties’ contracts provisions that increased applicable service charges and compelled customers to arbitrate any disputes they may have with the company.  These new amendments also included a class action waiver, and a New York choice of law provision.  These changes were posted on defendant Talk America’s website.  However, according to plaintiff, a former AOL customer who continued to use Talk America’s services after the changeover, he was given no notice of these contractual changes.  He alleged that he had no need to visit Talk America’s site as he had set-up his account so that applicable charges were automatically billed to, and paid by, his credit card.

In these circumstances, the Ninth Circuit held that plaintiff could not be compelled to arbitrate his disputes with Talk America arising out of these contractual revisions, and particularly the rate increases they mandated.  The Ninth Circuit accordingly granted plaintiff’s writ of mandamus, holding that the District Court clearly erred in granting Talk America’s motion to compel arbitration.

Michael Motise v. America Online, Inc.
04 Civ. 2121 (SCR) (S.D.N.Y., Nov. 30, 2004).

Court holds that an individual who access America Online’s (“AOL”) services via the account of another is not bound by its Terms of Service merely as a result of such use, absent notice that the Terms provide that by such use, he is agreeing to be bound thereby.  The Court stated that “the Second Circuit seems to require that the license terms appear on the screen, in view of the user, for the user to be on notice of them.”  In this case, the user claims that he was able to access AOL’s services via his step-father’s account without either being presented with AOL’s Terms of Service, or being asked to accept them.
 
The Court further held, however, that by accessing AOL’s service via the account of another, plaintiff became a sublicensee, with no greater rights to use AOL’s service than the actual account holder himself.  As that account holder himself had agreed to be bound to AOL’s Terms of Service when he signed up for its service, plaintiff too was bound by those Terms of Service.

As a result, the Court held that plaintiff was bound by the Forum selection clause contained in AOL’s Terms of Service, and accordingly transferred the case to Virginia, where the clause mandated all disputes be litigated.

Pollstar v. Gigmania Ltd.
170 F. Supp. 2d 974 (E.D. Cal. 2000)

Court denies motion to dismiss, and allows Pollstar to proceed with common law misappropriation and unfair competition claims arising out of Gigmania's alleged copying and reposting on its own website of factual concert listings found on Pollstar's site.  The complaint alleged that this information was "hot news" which is protected against misappropriation if plaintiff can show that it "(i) generates or collects information at some cost or expense (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of information constitutes free-riding on the plaintiff's costly efforts to generate or collect it' (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of the other party to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."

The Court also allowed Pollstar to proceed with claims the Gigmania's conduct breached a browse-wrap license agreement between the parties, which prohibits the acts complained of.  The Contract provides that use of the information found on the site constitutes acceptance of the contract's terms.  Notably, the court allowed this claim to proceed despite the fact that notice of such terms were given "in small gray text on a gray background" which, in turn, contained a link to the actual contract terms, without the usual "underlining" signifying such a link.

CAN-SPAM Act - Updated November 22, 2008

This section of the Internet Law Library contains a host of court decisions addressing the Federal CAN-SPAM Act, 15 U.S.C. Section 7701, et seq., the ability of Internet Service Providers and others to use it to prevent the transmission of unwanted spam and unsolicited commercial email, the type of communications it covers and the obligations CAN-SPAM imposes on those who transmit unsolicited commercial email.

496 F.Supp.2d 653 (E.D. Va., July 12, 2007)

Court denied motion to dismiss complaint charging the defendant Union and two of its organizers with violating the CAN-SPAM Act by sending email solicitations promoting union membership to Verizon employees which purported to come from Verizon managers who did not authorize their transmission.  The Virginia District Court held that it could exercise personal jurisdiction over the non-resident Union organizers because both the corporate servers used to transmit these emails, as well as some of the employees who received them, were located in Virginia. 

The Court further held that plaintiff Verizon had stated valid CAN-SPAM claims against the defendants.  In reaching this result, the Court rejected defendants’ contentions that their solicitations constituted non-commercial speech promoting union membership exempt from the strictures of CAN-SPAM.  Because the Union rendered a service – representation of employees – for a fee – union dues – the emails constituted commercial speech.  As such, held the Court, the failure of these emails to accurately describe their source, or to appropriately advise that they were, in fact, advertisements, as well as their failure to provide mandated opt-out instructions, rendered their senders potentially liable for violations of CAN-SPAM.

Civil No. 05-040-S-EJL, 2005 WL 1244961 (D. Idaho, May 25, 2005)

The Court holds that the inclusion of allegedly false information in the body of an e-mail does not constitute a violation of either Sections 7704(a)(i) or (b)(A)(ii) of the CAN-SPAM Act, 15 U.S.C. §7701 et seq. and accordingly dismisses a complaint asserting claims alleging their violation.

1 CA-CV 02-0701 (Arz. Crt. App., September 20, 2005)

Court holds defendant's unauthorized transmission of commercial e-mails automatically converted by recipient's cell phone carrier into text messages runs afoul of the Federal Telephone Consumer Protection Act, 47 U.S.C. §227 ("TCPA").  Such conduct constitutes a prohibited use of an "automatic dialing system" to make a "call" to a "telephone number assigned to a cellular telephone service." 47 U.S.C. §227 (b)(1)(A)(iii).  The Court further held that the TCPA was neither preempted by the CAN-SPAM Act's regulation of such conduct, nor an unconstitutional regulation of speech that violated the First Amendment.

498 F.Supp.2d 1293, 2:07-cv-01929-ABC-AGR (C.D. Ca., July 2, 2007).

Finding plaintiff MySpace likely to prevail on its claims that defendant Sanford Wallace violated the CAN-SPAM Act, 15 U.S.C. Section 7704, as a result of his transmission of unsolicited commercial emails to MySpace users, the Court issued a preliminary injunction, enjoining defendant, inter alia, from further use of MySpace or its internet messaging service, from establishing or maintaining MySpace accounts, or from using MySpace for commercial purposes.

Defendant sent email messages to MySpace users that redirected them to a website containing a MySpace logo at which defendant solicited their user name and passwords.  Defendant used this information to hijack and log onto those users’ profiles, from which he then sent messages to the users’ MySpace ‘friends’ inviting them to visit defendant’s websites.  These email messages did not comply with CAN-SPAM.  Among other things, they did not contain a valid physical address for defendant, did not provide opt out instructions, or provide a valid return email address at which defendant could be contacted to request that no further emails be sent.  Moreover, they did not, in their header information, identify defendant as their source.  As such, held the Court, plaintiff was likely to establish a number of violations of CAN-SPAM, and was accordingly entitled to injunctive relief. 

In reaching this result, the Court found that CAN-SPAM applied to emails sent from one MySpace user to another, over the MySpace network.  The Court also noted that CAN-SPAM applied to instant messages.

CV 06-3391-RGK (JCx) (C.D. Cal., February 28, 2007)

Court holds that defendant’s creation and use of 95 MySpace accounts to transmit unsolicited commercial email promoting its communications products runs afoul of both the CAN-SPAM Act, and California Business and Professions Code Section 17529.5, and violates MySpace’s Terms of Service.  Defendant created these accounts without identifying itself as the account holder.  The emails violated CAN-SPAM because they failed to contain either a valid physical address for defendant the Globe.com, or instructions on how to avoid receiving further email solicitations.  In addition, they were impermissibly sent to MySpace user email addresses generated by use of a script software program, another violation of CAN-SPAM.  They were also sent from email accounts obtained through false or fraudulent pretenses, as a result of defendant’s failure to accurately identify itself as the account holder.   

The Court found that these emails also violated California B & P Code Section 17529.5, both because they contained false header information that failed to identify the Globe.com as their source, and because they contained misleading subject lines that failed to accurately describe the emails’ contents.

Finally, the Court found defendant’s conduct violated MySpace’s Terms of Service, which prohibited the use of MySpace accounts both for commercial purposes and to transmit spam, and prohibited the use of scripts to generate email addresses for the transmission of commercial email to MySpace account holders.  As such, the Court held defendant liable for liquidated damages of $50 for each email sent as mandated by the Terms of Service.  In reaching this result, the Court rejected defendant’s challenge to such clause on the ground that it was an unenforceable penalty provision.

469 F.3d 348, No. 05-2080 (4th Cir., November 17, 2006)

The Fourth Circuit affirms the dismissal of claims brought by defendants under CAN-SPAM and Oklahoma statutory and common law arising out of defendants’ receipt of 11 unsolicited commercial emails from plaintiff Cruise.com.  Defendants’ claims were premised both on their assertion that the email at issue contained inaccurate contact information, and that plaintiffs continued to send them commercial email after receipt of a complaint from defendants concerning the emails.

The Court dismissed the claims defendants advanced under an Oklahoma state statute that sought to regulate the transmission of commercial email that contained any false information as to its source, holding that state statute preempted by the Federal CAN-SPAM Act.  The Court dismissed the trespass to chattels claim asserted by defendants on the grounds that defendants did not establish that they sustained more than nominal damages as a result of their receipt of the commercial emails in question.  The Fourth Circuit held this failing fatal to defendants’ trespass to chattel claim.  Finally, the Fourth Circuit dismissed defendants’ CAN-SPAM Act claim, holding the immaterial errors in the header/source information of commercial emails was not actionable under CAN-SPAM.  Defendants could readily identify and contact the sender of the emails in question from the information contained therein.  Defendants’ claims that plaintiffs violated CAN-SPAM’s provisions concerning the removal of a recipient from future emails upon request failed because defendants did not show plaintiffs engaged in “a pattern or practice” of failing to honor such requests, a prerequisite to such a claim under CAN-SPAM.

CAN-SPAM ActCAN-SPAM ActCAN-SPAM Act Quick Hits

Asis Internet Services v. Optin Global, Inc., et al.
No. C 05-5124 (N.D. Ca., September 27, 2006)

Denying in large part defendants’ motion to dismiss, the Court held that plaintiff, an internet service provider, stated claims under both CAN-SPAM and California Business and Professions Code Section 17529 et seq., as a result of the transmission of allegedly deceptive and unsolicited commercial email to plaintiff’s servers.  These emails were allegedly sent to generate leads for defendants mortgage brokers’ businesses.  The complaint alleged that the emails in question were sent by ‘spammer defendants’ at the request of ‘lead generators’ who, in turn, had contracts with the defendant mortgage brokers to provide leads of prospective customers.  The Complaint alleged that the mortgage brokers “knew or consciously avoid knowing” that the lead generators and spammer defendants were violating CAN-SPAM, and of the injury being cause plaintiff thereby.  The Complaint further alleged that the emails at issue violated CAN-SPAM both because they contained false and misleading headers, indicating that they were purportedly sent from domains that were registered to unknown or false entities, and because they contained misleading subject lines that did not accurately describe the content of the emails, and instead implied that the user’s loan was approved or pre-approved.

A party can be guilty of violating CAN-SPAM even if it did not transmit the email at issue.  As explained by the Court, “to state a claim against the Mortgage Defendants under the CAN-SPAM Act, plaintiff must ‘prove that they paid or induced the Spammer defendants to initiate commercial email messages and that the Mortgage Defendants acted either with actual knowledge, or by consciously avoiding knowing, that the Spammer Defendants’ acts were illegal.”  Because the plaintiff’s complaint did just that, the Court denied, in large part, defendants’ motion to dismiss.

e360Insight, LLC v. Comcast Corp.
No. 08-340, 2008 U.S. Dist. LEXIS 29287 (N.D. Ill. Apr. 10, 2008).

Court holds that the ‘Good Samaritan’ provisions of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(2), immunize Internet Service Providers such as defendant Comcast from ‘good faith’ actions taken to block email marketers from sending email solicitations to users of the ISP’s services.  Plaintiff e360Insight brought this action in response to actions taken by Comcast to block it from sending email solicitations to Comcast customers.  Under the CDA, Comcast is entitled to immunity for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be … objectionable, whether or not such material is constitutionally protected …”.  230(c)(2)(A).  Thus, to be entitled to immunity, the ISP must show both that the materials it blocked are 'objectionable' and that it acted in good faith in blocking them.  The Court applied a subjective standard in determining whether the emails in question were objectionable and hence subject to blocking under the statute – i.e. the materials are objectionable if Comcast believes them to be objectionable.  Importantly, it did not matter if the emails complied with CAN-SPAM.  Said the Court:

compliance with CAN-SPAM, Congress decreed, does not evict the right of the provider to make its own good faith judgment to block mailings. …  Under the law, a mistaken choice to block, if made in good faith, cannot be the basis for liability under federal or state law.  To force a provider like Comcast to litigate the question of whether what it blocked was or was not spam would render Section 230(c)(2) nearly meaningless. 

Because Comcast believed the emails at issue were objectionable, and because plaintiff failed to adequately plead that Comcast did not act in good faith when it made its decision to block plaintiff’s emails, Comcast was entitled to immunity, and the Court dismissed the claims plaintiff asserted against it for violation of the Computer Fraud and Abuse Act and of plaintiff’s rights under the First Amendment, as well as for tortuous interference with prospective economic advantage and violation of the Illinois Consumer Fraud Act.

White Buffalo Ventures, LLC v. University of Texas at Austin
420 F.3d 366 (5th Cir., August 2, 2005) cert. denied, 126 S.Ct. 1039 (January 9, 2006)

Affirming the Court below, the Fifth Circuit holds that the University of Texas at Austin (“UT”) can block unsolicited commercial email sent by plaintiff White Buffalo Ventures (“White Buffalo”) to UT students that promote plaintiff’s online dating services.  Importantly, UT can take such action notwithstanding the fact that White Buffalo’s commercial emails comply with CAN-SPAM.

In reaching this result, the Fifth Circuit rejected White Buffalo’s arguments that UT’s conduct constituted state action preempted by CAN-SPAM.  The Court held that UT was a state actor, and that its determination to block unsolicited commercial email was a state regulation that fell within the ambit of CAN-SPAM’s preemption clause, found in section 7707(b)(1).  This section provides that CAN-SPAM preempts state regulation of email unless such regulation ‘prohibits falsity or deception’ in the email.

However, the statute further provides that ‘nothing in this chapter shall be construed to have any effect on the lawfulness or unlawfulness … of the adoption, implementation or enforcement by a provider of Internet access service of a policy of declining to transmit, route, relay , handle or store certain types of electronic mail messages.’  Section 7707(c).   As the provider of Internet access service – students are enabled by UT to access the internet via its wireless network, and to use email addresses UT provides – this section expressly permitted UT to adopt a policy blocking those who send spam to its network.

The Fifth Circuit held that Section 7707(c) conflicts with Section 7707(b)(1), and thus draws into question the limits of the preemptive effect of CAN-SPAM.   Given these conflicting provisions, held the Court, the presumption against preemption counseled against finding UT’s regulations invalidated by CAN-SPAM.  As such, the Court rejected White Buffalo’s argument that CAN-SPAM mandated that UT’s policies be invalidated on the ground that they ran afoul of CAN-SPAM, or were preempted thereby.

The Court similarly rejected White Buffalo’s claim that UT’s bar on the transmission of its commercial emails ran afoul of the First Amendment.  The Court held that the regulation was reasonably calculated to protect a substantial governmental interest – protecting users of its email network from the hassle associated with unwanted spam – and was no more extensive than necessary to protect that interest. 

The Fifth Circuit did hold that an absolute ban on the transmission of White Buffalo’s emails may be an overly broad restriction – from a First Amendment prospective – if the only interest protected was the capacity of UT’s system to handle the needs of its user community.  Summary judgment was inappropriate, on the record then before the Court, to sustain such a contention.  

Additional cases can be found in the Spam/Junk Email section of the Internet Library.

The full text of both the CAN-SPAM Act, and the FTC's Rules Implementing the CAN-SPAM Act of 2003, 16 C.F.R. Part 316, can be found in the Statute section of the Internet Library.

Choice of Law - Updated December 15, 2007

466 F.3d 558, No. 06-1506 (7th Cir., October 16, 2006)

Court holds Bahamian law governs Illinois resident's negligence action arising out of personal injuries sustained in a jet ski accident at a Bahamian resort, notwithstanding fact that plaintiff booked his trip by accessing resort's website via a computer in Illinois.  This result is mandated by Illinois' conflict of law principles, which require a dispute to be governed by the law of the jurisdiction that has the "most significant relationship" to the events out of which the suit arose.

Case No. 2:06-cv-327 (S.D. Ohio, June 19, 2007)

Court holds that defendants, individual officers of co-defendant Search Cactus LLC (“Search Cactus”) can be held personally liable for violations of the Ohio Consumer Sales Practices Act (“OCSPA”) arising out of the transmission by Search Cactus of allegedly misleading and deceptive promotional emails, if “the officer took part in the act, specifically directed the act, or participated or cooperated in the act.”  Because the complaint alleged that the individual defendants approved the content of the promotional emails in question, the Court denied the individual defendants’ motion to dismiss, and allowed plaintiff, a recipient of such emails, to pursue his OCSPA claim against them.

No. 07-956-PHX-FJM (D.Az. October 10, 2007)

Court dismisses defamation claims advanced against defendant, operator of the website ripoffreport.com, arising out of defendants’ publication of statements authored by a third party that were critical of plaintiffs.  The Court held such claims barred by application of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230.  Notably, the court refused to issue plaintiff relief notwithstanding the fact that the author of the statements at issue allegedly requested without success that defendants remove them from ripoffreport.com.

The Court also declined to enforce a preliminary injunction issued on default by a Canadian court, directing defendants to remove the statements at issue from their website, on the ground that United States courts will not enforce injunctions issued by foreign courts.

145 F. Supp. 2d 1168, Case No. C-00-21275JF (N.D. Ca., September 24, 2001)

United States District Court issues a declaratory judgment declaring unenforceable in the United States an order of a French Court which, inter alia, directs that Yahoo Inc., under threat of continuing penalties, prevent French citizens from accessing Nazi items offered for sale by third parties on Yahoo.com's auction site, and "to take all necessary measures to dissuade and render impossible any access via Yahoo.com to the Nazi artifact auction service and to any other site or service that may be construed as constituting an apology for Nazism or a contesting of Nazi crimes." Court issues such relief because of its determination that enforcement of this order would violate Yahoo's First Amendment rights.

Court holds that the prerequisite for the issuance of declaratory relief, the existence of an actual case or controversy, have been met as a result of the threat of enforcement of the French Court's order, and the ongoing penalties associates therewith. The Court also rejects defendants' contention that appropriate application of the abstention doctrine obligated the Court to refrain from resolving the instant litigation. Because the action seeks to litigate a question most properly decided by a United States court - namely the enforceability of the French Court's order in the United States - and not to relitigate the issue before the French court (whether Yahoo's site runs afoul of French law) the court declined to abstain from resolving it. Nor did principles of comity require the enforcement of the French Court's order, because to do so would run afoul of the United States' policies embodied in the First Amendment of the United States Constitution.

Cigarette - Updated January 01, 2002

00 Civ. 7274 (LAP)(S.D.N.Y. June , 2001)

Court holds that Section 1399-11 of New York's Public Health Law runs afoul of the Commerce Clause of the United States Constitution, and accordingly permanently enjoins its enforcement. Section 1399-11 prohibits the shipments of cigarettes to consumers in New York. The statute's prohibitions apply to both retailers and common carriers, and effectively preclude the use of the Internet and mail order catalogues as a means of selling cigarettes to New Yorkers. "The statute … thus restrict[s] retail sales of cigarettes in New York to face-to-face transactions at in state retail locations." The Court held that the statute was unconstitutional because it violated the "dormant" aspects of the Commerce Clause, which prohibit States from passing legislation which discriminates against, or unduly burdens, interstate commerce.

Click Fraud - Updated January 08, 2008

06 Civ. 1923 (JGK) (S.D.N.Y., March 12, 2007)

Court allows plaintiff to proceed with ‘click-fraud’ claim against defendant Findwhat.com, a search engine operator.  The complaint alleged that to increase its revenues from pay-per-click advertisements posted on its site by plaintiff, defendant Findwhat.com directed defendant Advertising.com to engage ‘bots’ and individuals to click on plaintiff’s advertisements.  This had the effect of increasing defendant Findwhat.com’s revenues, as plaintiff paid it on a pay-per-click basis.  The complaint alleged that defendant Findwhat also bid on pay-per-click search terms, thereby improperly increasing the price plaintiff had to bid therefore to obtain higher placement for such terms.  The Court held that such misconduct could run afoul of the implied covenant of good faith and fair dealing in the parties’ contract, and accordingly allowed plaintiff to proceed with a breach of contract claim against defendant Findwhat.com.

Findwhat.com changed its name to Miva, Inc. in June 2005.

The Court did dismiss the balance of the claims plaintiff asserted.  Its unjust enrichment claims failed because there was a valid contract governing the subject matter of plaintiff’s claim.  Plaintiff’s negligence claims failed because of the absence of any independent duty on the part of defendant Findwhat.com to monitor the source of the ‘clicks’ plaintiff received.  Such an obligation would be governed by the terms of the parties’ contract. 

Finally, plaintiff’s fraudulent concealment claim failed because of plaintiff’s failure to plead such claim with the requisite particularity.  Plaintiff was granted leave to replead this claim, premised on defendant Findwhat.com’s alleged duty to disclose that it was improperly causing a third party to click on plaintiff’s ads so as to increase Findwhat.com’s revenues.  Such a claim, if properly alleged, would serve to support a civil conspiracy claim against defendant Advertising.com, which was the party that allegedly arranged to have a ‘bot’ click on plaintiff’s ads.

Click-Wrap Agreement - Updated April 02, 2008

This section of the Internet Law Library contains court decisions analyzing how to enter into binding contracts online.

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

No. C04-04825 (JW) (N.D. Ca., April 1, 2005)

Court holds Terms of Use on defendant's websites constitute binding agreements between website operator and website user, where notices on the sites provide that the Terms  will create such an agreement if a user continues to utilize the site, and plaintiff used the sites with both actual knowledge of the Terms, and with imputed knowledge arising out of repeated use of the sites via a "robot."  Court accordingly dismisses plaintiff's declaratory judgment action for improper venue, as the Terms of Use mandated suit be brought in Illinois, and plaintiff commenced suit in California.

1999 WL 462175, 323 N.J. Super. 118, 732 A.2d 528 (N.J. App. Div., July 2, 1999)

On this appeal, the Appellate Division affirmed the determination of the Superior Court of New Jersey that the plaintiffs had entered into a binding contract by agreeing on-line via the click of a mouse to be bound by the terms of the Microsoft Network's subscriber agreement. The terms of this agreement appear in a scrollable window next to blocks containing the words "I agree" or "I disagree." The user cannot commence use of the Microsoft Network unless she clicks the "I agree" button. Each of the plaintiffs clicked the "I agree" button, thereby indicating their assent to be bound by the terms of the subscriber agreement. Both the trial and appellate courts held this created an enforceable contract between the defendants and their subscribers.

The Appellate Division went on to uphold the validity of the forum selection clause contained in these subscriber agreements, which clause mandates that all suits arising out of or related to the subscriber agreement be brought in courts located in Kings County, Washington.

245 F.Supp. 2d 913 (C.D. Ill. 2003)

Court holds that plaintiff entered into a binding online click-wrap agreement by clicking an 'I Agree' icon, which indicated he had read, understood and agreed to the terms of the parties' contract.  The contract's terms were available for review online by clicking on a link which appeared on the Register.com website just above the 'I Agree' icon.  As a result, the Court dismissed the claims advanced by plaintiff, because plaintiff commenced suit in a forum other than the exclusive jurisdiction specified in the forum selection clause contained in the parties' contract; asserted state law claims under the laws of a state which were rendered inapplicable by the contract's choice of law provisions, and asserted claims that failed in light of the contract's terms.

805 A.2d 1007 (Dist. of Columbia Court of Appeals, August 29, 2002 )

Affirming the court below, the District of Columbia Court of Appeals holds that plaintiff entered into a binding contract online with Verizon Internet Services ("VIS") by clicking an "Accept" icon, indicating his assent to be bound by the contract.  This icon appeared directly below a "scroll box" on VIS's website which contained the terms of the contract.  The terms were not all visible online when the user initially viewed the web page on which the "scroll box" was found.  Rather, to review all of the contract's terms, the user was required to use the "scroll box" to scroll through them. 

The Court of Appeals also affirmed the dismissal of a putative class action commenced by plaintiff arising out of his dissatisfaction with VIS's DSL service, because the suit was not commenced in Virginia, the jurisdiction specified in the contract's forum selection clause as the exclusive jurisdiction in which disputes could be heard.

File No. C.A. No. PC 97-0331, 1998 W L 307001 (R.I. Superior Ct., May 27, 1998)

In the course of dismissing plaintiff's suit for improper venue, the court affirmed the validity of a click-wrap agreement entered into by AOL and one of its customers. AOL moved to dismiss this suit on the ground that a forum selection clause in the parties' contract mandated that the suit be brought in Virginia, where defendant's base of operations was located. The court agreed, and dismissed the suit.

In reaching this conclusion, the court held that the parties' contract, entered into online by the click of an "I agree" button, was enforceable. According to AOL, before a user can access AOL's system, he must first click on an "I agree" button indicating his assent to be bound by AOL's Terms of Service. This button first appears on a screen in which the user is offered a choice to either read, or agree to be bound by, AOL's Terms of Service. It also appears at the foot of the Terms of Service, where the user is offered the choice of clicking either an "I agree" or "I disagree" button, by which he accepts or rejects the Terms of Service.

Said the court:

Our Court ... stated the general rule that a party who signs an instrument manifests his assent to it and cannot later complain that he did not read the instrument or that he did not understand its contents. Here, plaintiff effectively "signed" the agreement by clicking "I agree" not once but twice. Under these circumstances, he should not be heard to complain that he did not see, read, etc. and is bound to the terms of his agreement.
Civil Act. No. 05-40170-FDS (D. Mass., September 28, 2007)

Court holds plaintiff bound by a click-wrap agreement entered into by her travel companion with defendant Expedia Inc. (“Expedia”) when she purchased tickets and hotel accommodations on plaintiff’s behalf.  The travel companion was acting as plaintiff’s agent, and by her acceptance of the agreement, bound plaintiff to its terms.  As such, the Court dismissed plaintiff’s claims against Expedia for personal injuries sustained at the hotel she visited when her sandal broke, causing her to fall down stairs and into an ornamental pond, holding them barred by the liability disclaimer contained in the parties’ agreement.  The Court further held that plaintiff’s claims against Expedia failed because it owed her no duty to warn of dangerous conditions that allegedly existed at the resort in question.

The Court did deny defendant Gap Inc.’s (“Gap”) motion for summary judgment, and allowed plaintiff to proceed with her claims that a defective sandal she purchased from Old Navy, owned by the Gap, failed, causing her to fall and sustain the injuries at issue.  The Court rejected the Gap’s motion that such claims should be barred by application of the spoliation doctrine, as plaintiff had not preserved the sandal in question.  The Court held plaintiff could not be held responsible for the absence of the sandal, as she had left it at the resort at the time of the injury, while she was rushed to the hospital, and was unable to locate it subsequently.  Issues of fact as to whether the Gap actually manufactured the sandal in question would await trial for resolution.

C98-20064, 1998 WL 388389 (N.D. Ca., April 20, 1998)

(Court enjoined defendants both from sending spam which falsely stated it came from plaintiff's e-mail service, and from using Hotmail accounts as mailboxes for "spam" reply. Court held that such conduct violated plaintiff's Term's of Service, which prohibited the use of Hotmail accounts to facilitate the transmission of spam. To use plaintiff's service defendants, after being afforded the opportunity to view the Terms of Service, clicked on a box indicating their assent to be bound thereby. As such, the Court's holding reflects its willingness to uphold the validity of a click-wrap agreement between the parties. The Court also held that defendants' conduct constituted trademark infringement and dilution, as well as trespass to chattels and a violation of the Computer Fraud and Abuse Act.)

359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

183 F.Supp.2d 328, Civ. Act. No. 00-11489-WGY, 2002 US Dist. Lexis 209 (D. Mass., January 2, 2002)

Court holds that plaintiff is bound by the terms of a license agreement that appeared on its computer screen when it loaded defendant's software, because plaintiff indicated its assent to be bound thereby by clicking on an "I agree" icon at the foot of the license agreement. Court reached this conclusion despite the fact that the plaintiff had ordered the software in a purchase order it sent to defendant before clicking on the "I agree" icon, which purchase order did not contain the limitation of damage clause found in the license agreement. The court held such a result was appropriate under UCC Section 2-204, which states that "a contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." (Emphasis added). The court further held that such a result was appropriate under UCC Section 2-207, which permits the addition of additional terms to a contract, here the purchase order, either on explicit or implicit consent. The court found the requisite explicit consent present in plaintiff's act of clicking on the "I agree" icon. The necessary implicit consent was also present because the additional terms in the license agreement came as no surprise to, and caused no hardship for, the plaintiff.

No. 03-2582-GTV-DJW (WHW) (D. Kan., August 23, 2004)

Court holds that plaintiff entered into a valid agreement by clicking on an icon indicating its assent to be bound to displayed software license terms, and thereafter using defendant's software and services.  As a result, the Court, honoring a forum selection clause found in the parties' agreement, transferred the case before it from Kansas to California, the venue for suit designated in the forum selection clause.  In reaching this result, the Court rejected plaintiff's claim that it was not bound to the agreement because its assent had been given by an individual who lacked the authority to bind it to such an agreement.  The Court found that plaintiff had failed to establish this contention due to its failure to identify the individual(s) who give their assent.  In any event, plaintiff was bound because it had ratified its agent's acts by using the software and associated services for a period of six years.

109 Cal. App. 4th 583 (Cal. Crt. App., June 9, 2003)

In this mandamus proceeding, California's Court of Appeals, by a two to one vote, holds a party suing as a private Attorney General subject to the same forum selection clause as the consumers it is seeking to protect.  As such consumers would be bound as a result of their use of Net2Phone's website to the provisions of its Terms of Use, so too is their private advocate.  The Court of Appeals accordingly directed that the action Consumer Cause commenced on the consumers' behalf in California be stayed because the Terms of Use contained a forum selection clause which mandated suit in New Jersey.  The Court upheld the forum selection clause notwithstanding the fact that New Jersey, unlike California, does not permit private advocates such as plaintiff to pursue claims on behalf of injured consumers.

309 F.Supp.2d 446, Civ. 02-5164 (DRH) (WDW) (E.D.N.Y., Mar. 25, 2004)

Court holds that plaintiff, by clicking an "I accept" icon agreeing online to be bound by the Terms of Service governing use of an online discussion group set forth in a scrollable window, viewable ten lines at a time, was bound by the forum selection contained therein.  Finding such a clause enforceable, the Court dismissed a claim brought by plaintiff asserting that defendant Google breached this agreement, because this claim was not brought in the designated forum.

The Court also held that Section 230 of the Communications Decency Act ("CDA") immunized an ISP hosting an online discussion group from claims that its failure to remove objectionable content posted on the discussion group's web page gave rise to claims of tortious interference with contractual relations. 

Finally, the Court denied the motions of two additional defendants to dismiss the claims asserted against them for want of personal jurisdiction.  The Court held that the first defendant was subject to specific jurisdiction in New York because of its operation of a commercial website via which it sold $6000 of products a year to New York residents.  The second defendant was similarly subject to suit because he had entered into a contract with a New York company, which contract allegedly gave rise to the claims asserted against him.

356 F.3d 393 (2d Cir. 2004)

Affirming the court below, the Second Circuit holds that Register.com is likely to prevail on breach of contract claims arising out of Verio Inc.'s use of data obtained from Register.com's Whois database in violation of the database's Terms of Use, which prohibit use of that information for unsolicited advertising.  In reaching this conclusion, the Second Circuit held that Register.com's Terms of Use are likely to create a contract between Register.com and Verio, because Verio repeatedly used Register.com's Whois database with actual knowledge that the Terms provided that such use would constitute assent to be bound by the data use restrictions contained in the Terms.  Notably, the Second Circuit reached this result notwithstanding the fact that Verio did not click an "I Agree" icon indicating its agreement to be so bound.  More importantly, the Court found Register.com likely to prevail despite the fact that Verio did not see these Terms until after it had already completed the act - using the Whois database - which purportedly indicated its assent to be bound thereby. 

The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.

As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.

126 F. Supp. 2d 238 (S.D.N.Y., December 12, 2000) (Jones, J.) aff'd. 356 F.3d 393 (2d Cir. 2004)

Court issues a preliminary injunction enjoining Verio, Inc. from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information derived from that database for mass unsolicited advertising by telephone, direct mail or electronic mail. Court holds that Verio's actions will likely constitute a breach of plaintiff's Terms of Use, as well as a violation of both the Computer Fraud and Abuse Act and the Lanham Act and a trespass to chattels. In reaching this conclusion, the court holds that Register.com's Terms of Use are likely to create a contract between Register.com and the users of its Whois database, notwithstanding the fact that these users are not required to click an "I Agree" button indicating their agreement to be so bound.

No. 01-7860 (L) (2d Cir., October 1, 2002)

Affirming the decision of the court below, the Second Circuit Court of Appeals holds that plaintiffs are not bound by the terms of a license agreement purporting to govern the use of a software product they downloaded because plaintiffs neither had reasonable notice thereof, nor adequately manifested their assent to be bound thereby.  The software in question could be downloaded from a page on defendant Netscape's web site by clicking on a button which said "download".  The terms of the license agreement in question were not contained on this web page, however, and the only notice the user received of the license agreement was found on a portion of the web page below the download button.  Typically, this notice appeared "below the fold" and was not on that portion of the page which first appeared on the user's screen when he went to download the program.  This notice informed the user that his use of the software would be governed by the terms of a license agreement, which terms could be seen by clicking on a link provided on the web page.  Once the program was downloaded, the user received no further notice of either the license agreement or its terms.  The Court held that this procedure did not create a binding contract between the parties.

The Second Circuit further held that the terms of a license agreement plaintiffs did agree to, governing their use of Netscape's browser, did not obligate them to arbitrate the claims they raised in this litigation.  These included claims that Netscape violated both the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act by causing Netscape's Smart Download software, a Netscape browser 'plug in', to send information to Netscape about plaintiffs' downloading activities.

2001 WL 755396, 150 F. Supp. 2d 585 (S.D.N.Y., July 5, 2001), aff'd. -- F.3d -- (2d Cir., Oct. 1, 2002)

Court holds that act of downloading software does not indicate assent to be bound by terms of license agreement, where a link to such terms appears on, but below that portion of the web page that appears on the user's screen when such downloading is accomplished. As a result, the Court holds that under California law, plaintiffs are not bound by the terms of such license agreement, or the arbitration clause contained therein, despite language in the license agreement which provides that by installing or using the software, the user consents to be bound by the terms of the license agreement.

2000 U.S. Dist. Lexis 4553 (C.D. Ca., March 27, 2000)

The court, in granting defendant's motion to dismiss plaintiffs' breach of contract claim, held that a contract is not created simply by use of a web site on which is posted at the bottom of the site's home page terms and conditions that provide that such use constitutes the user's assent to be bound by the site's Terms and Conditions. The court left open the possibility, however, that use of a web site, coupled with knowledge of Terms and Conditions which declare such use evidence of assent to be bound thereby, could create a binding contract, and granted plaintiffs leave to replead their claim.

The court further held that "hyperlinking [without framing] does not itself involve a violation of the Copyright Act ... since no copying is involved." In addition, the court held that "deep linking by itself (i.e. without confusion of source) does not necessarily involve unfair competition."

The court refused at the outset of a litigation, however, to dismiss plaintiffs' claim that defendant, by deep linking, was tortuously interfering with plaintiffs' prospective business advantage, by depriving them of advertising revenue that might otherwise be achieved if the user were forced first to go to the site's home page (with the necessary increase in traffic that would generate) before he could proceed to an event page.

Lastly, the court held that defendant did not infringe plaintiffs' copyright in their site by extracting data concerning concert and other entertainment events from plaintiffs' web site (such as location, date and time of the event) and presenting it on defendant's web site in its own format. The court further held that plaintiffs could not attempt to recast such a claim into either state law misappropriation, trespass, unfair business practice or unjust enrichment claims, as those claims, to the extent they prohibited conduct permitted under the copyright act, were preempted thereby.

2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

No. 05-13404 (11th Cir. April 14, 2006)

Affirming the court below, the Eleventh Circuit holds plaintiff bound by online amendments to its agreement with defendant posted to defendant's website.  As those amendments raised the rates due for defendant's services, which increased rates plaintiff refused to pay, the Eleventh Circuit affirmed the District Court's grant of summary judgment to defendant on its breach of contract claim.  The Court found support for its decision in the parties' agreement, which bound plaintiff to tariffs "as the same may exist or be modified in the future [by defendant] . . . and/or as the same may appear on [defendant's] website."

Click-Wrap AgreementClick-Wrap Agreement Quick Hits

Michael Cohn v. Truebeginnings, LLC, et al.
B190423 (Cal. Crt. App., July 31, 2007)

Court held that plaintiff, by clicking a “continue” icon in the course of completing a user profile for an online dating service, was bound by the site’s Terms of Use, available via a hyperlink on the webpage he was viewing.  The “continue” icon appeared at the foot of the initial webpage the user saw in the course of completing his profile, and just to the right of a sentence that read “I am 18 years old and I have read and agree to the True Terms of Use and Code of Ethics.”  The phrase ‘Terms of Use’ were linked to the site’s Terms of Use, which appeared in a pop-up window when a user clicked on this link.  The Terms of Use advised the user that “once you click on the ‘continue’ button at the end of this sign-up form, you are agreeing to be bound by the Terms of this Agreement.”

Importantly, the Court found plaintiff bound despite his claim that he was not asked to agree to be bound by the Terms of Use as part of the sign-up process.  This evidence was effectively refuted by that supplied by the defendant, which demonstrated that all users, to obtain a profile, must click the ‘continue’ icon.

Similarly, the fact that the Terms were available via a hyperlink did not prevent plaintiff from being bound thereby.  Said the Court:

Respondents presented substantial evidence that appellant had to click on the ‘continue’ button in order to register for his trial membership on the Web site, and that doing so constituted an agreement to the ‘Terms of Use’ on the Web site.  Appellant may not have read the ‘Terms of Use’ but they were readily available to him on the True.com Web site if he clicked on the ‘Terms of Use’ link near the ‘Continue’ button.  Under these circumstances, where appellant obviously had access to the Internet and was entering into a contract on the Internet, there was nothing inherently unfair in requiring him to access contractual terms via hyperlink, which is a common practice in Internet businesses.  The trial court did not abuse its discretion in finding that appellant agreed to the forum selection clause contained in the ‘Terms of Use.’

The Appellate Court nonetheless reversed the lower court’s decision, which had dismissed plaintiff’s claims because of the forum selection clause contained in True’s Terms of Use.  The clause in question, held the Appellate Court, only provided that disputes arising out of a party’s use True.com’s online dating service may be brought in the Texas.  Because this clause did not mandate that such suits must brought in Texas, the lower court needed to analyze, under traditional forum non conveniens analysis, whether California or Texas was the appropriate forum in which the suit should proceed.  The forum selection clause at issue provided “you agree to personal jurisdiction by and venue in the State of Texas and the U.S. District Court for the Northern District of Texas.”  The case was remanded to the lower court for the performance of this analysis.

Mary Defontes and Nicholas Long v. Dell Computers Corp., et al.
C.A. No. P.C. 03-2636 (R.I. Superior Crt., Jan. 29, 2004).

Court held plaintiffs, purchasers of Dell computers and related service agreements, are not bound by the Terms and Conditions Agreement that accompanied such machines on shipment.  The Court held that a browse-wrap agreement was not created upon the initial ordering of the machines, because the link to the Terms and Conditions Agreement at issue was found “inconspicuously” at the bottom of the web page of Dell’s website at which such products were ordered.  According to the Court “this was not sufficient to put plaintiffs on notice of the terms and conditions of the sale of the computer.  As a result, a browse wrap agreement found on Dell’s webpage cannot bind the parties to the arbitration agreement” found in the Terms and Conditions.

The Court further held that a shrink-wrap agreement was not formed between Dell and the plaintiff purchasers, binding plaintiffs to the Terms and Conditions, notwithstanding the fact that those Terms accompanied the computers on shipment to plaintiffs, and were also sent with acknowledgements of plaintiffs’ orders.  The Court reached this conclusion because the Terms at issue did not give plaintiffs the option to reject them by returning the computer to Dell.  Said the Court:

This Court, employing the same logic, finds that the binding effect of the Terms and Conditions Agreement also hinges on whether a reasonable person would have known that return of the product would serve as rejection of those terms.  Accordingly, this Court finds that Plaintiffs did not “knowingly consent” to the terms and conditions of the agreement because they were not given sufficient notice of the method to reject those terms.  Therefore, Plaintiffs are not bound by the arbitration clause therein. 

Because the plaintiffs were not party to the Terms and Conditions, the court denied Dell’s motion to stay this action and compel plaintiffs to arbitrate their claim that Dell improperly charged tax on both the sale of ancillary services plaintiffs purchased with their Dell computers, as well as associated transportation costs.

Applying Texas law, the Court also held that the arbitration provision found in Dell’s Terms and Conditions was in any event an unenforceable illusory contract.  Thus, the Terms and Conditions provided that “these terms and conditions are subject to change without prior written notice at any time, in Dell’s sole discretion …”.  Because Dell retained such an unfettered right to modify or terminate the contract at any time, the Court held that “the language in the Terms and Conditions Agreement fails to bind Defendants in any genuine way.  Accordingly, this Court finds that the arbitration agreement is illusory and therefore unenforceable.” 

Of note, the court held that the fact that the arbitration provision, if binding, would bar plaintiffs from pursing their claims as a class action was not, by itself, a ground to invalidate such a clause under Texas law or render it unconscionable.

For additional cases, see Contract.

Clip-Art - Updated January 01, 2000

983 F. Supp. 1167 (N.D. Ill., Nov. 13, 1997)

(Defendant NAFED was guilty of direct copyright infringement because, without plaintiff's permission or authorization, NAFED obtained copies of plaintiff's copyrighted clip art and uploaded it onto computers hosting NAFED's website accesible to those using the web. Defendant Northwest, however, which hosted NAFED's site on its computers and made it available to those using the Internet, was neither liable for direct nor vicarious copyright infringement. Northwest only provided the means to copy plaintiff's work, much like the owner of a public copying machine used by a third party to copy protected material. It did not actually engage in the copying itself and accordingly, was not guilty of direct infringement. And because Northwest only received a flat fee from NAFED for its hosting activities that did not vary based on the use of NAFED's site, it did not profit from defendant NAFED's infringing activities, and hence was not guilty of vicarious infringement.)

Co-Branding Agreement - Updated May 17, 2006

Docket No. C-96-04 (Superior Ct. N.J., March 1, 2006)

After a lengthy trial, the Court found that defendant Amazon.com had breached an agreement it had entered into with plaintiff ToysRUs.com LLC ("Toys R Us"), by permitting third parties to sell toys on Amazon's web site.  Finding that this breach went to the substance of the parties' agreement - which as interpreted by the Court provided that Toys R Us was to be the sole third party toy retailer on Amazon's web site - the Court granted Toys R Us's request that the agreement be terminated.  Notwithstanding its finding that such a breach had occurred, the Court did not award Toys R Us damages.  The Court also rejected counterclaims asserted by Amazon, arising out of Toys R Us's alleged failure to maintain levels of inventory sufficient to meet customer demand.

Communications Decency Act - Updated November 22, 2008

This section of the Internet Law Library contains a host of court decisions that address the extent of the immunity afforded by the Communications Decency Act, 47 U.S.C. Section 230, to Internet Service Providers, commercial websites, search engines, message boards, web hosting companies, gripe site operators and others for making available to the public content authored by third parties.

26 Med. L. Rptr. 1032 (Cal. Superior Crt., San Francisco City and County, Sept. 23, 1997)

Communications Decency Act preempts state law claims against ISP for negligence, breach of contract, intentional infliction of emotional distress, alter ego liability, injunctive relief and violation of civil rights arising from IPS's distribution of material written by another that contained derogatory comments about plaintiffs, including that they were the "ring leaders" of an "international conspiracy" to further "Satanic Ritual Abuse" of children.

1 CA-CV 04-0823, 125 P.3d 389 (Arz. Crt. App., 2006)

Court holds that the Communications Decency Act, 47 U.S.C. § 230 ("CDA") immunizes web hosting company from liability arising out of its hosting of a third party's website that allegedly contained defamatory statements about plaintiff.  Following the Fourth Circuit's decision in Zeran v. AOL, the Court holds that such immunity exists notwithstanding any notice the web hosting company received concerning the defamatory nature of the content it was hosting.  The Court also dismisses plaintiff's defamation claims against the originator of the content at issue, holding it lacks personal jurisdiction over him.  The Court reached this result notwithstanding the fact that this defendant had contracted with an Arizona web hosting company to host the website which contained the defamatory statements at issue.  The Court held the exercise of jurisdiction over the defendant would be unreasonable given the fact he was a non-resident, the parties each operated Bali-related travel services, and the dispute was governed by Bali law.

2005 WL 3005602, Civ. No. 05-926-AA (D. Or., November 8, 2005)

Court holds that the Communications  Decency Act, 47 U.S.C. § 230 ("CDA"), immunizes defendant Yahoo, Inc. ("Yahoo") from tort claims arising out of its alleged failure to timely honor promises to remove from Yahoo's web site objectionable content about plaintiff posted by a third party.  The content consisted of "profiles" contained both nude photos of plaintiff, and accurate contact information.

S122953, 40 Cal.4th 33 (Cal. Sup. Ct., November 20, 2006)

Reversing the Court of Appeals, the California Supreme Court holds that Section 230 of the Communications Decency Act ("CDA") immunizes defendant Ilena Rosenthal ("Rosenthal") from defamation claims arising out of her republication in two online newsgroups of an allegedly defamatory article authored by a third party.  In reaching this result, the California Supreme Court rejected the Court of Appeals' attempts to limit the immunity afforded by Section 230(c)(1) of the CDA to publishers, while leaving exposed to defamation claims "distributors" of defamatory statements who have notice of the defamatory nature of the statements they distribute.  The Supreme Court held that such "distributors," commonly know as "secondary publishers," are entitled to the same broad immunity afforded publishers under the CDA.  As explained by the Fourth Circuit in Zeran v. AOL, cited with approval by the California Supreme Court, the CDA "creates a federal immunity to any cause of action that would make service providers liable for information originating with a third party user of the service" except claims such as those arising under the Intellectual Property laws, specifically exempted by the statute.

The Supreme Court also held that the broad immunity afforded under the statute to the providers of interactive computer services extended by operation of the statute's express language to "users" of such services.  "Users" protected by the CDA included those who use an interactive computer service to access the Internet and thereby to post or republish on the Internet a defamatory statement authored by a third party.  As stated by the Court, "by declaring that no 'user' may be treated as a 'publisher' of third party content, Congress has comprehensively immunized republication by individual Internet users."

9 Cal.Rpt.3d 142, A096451 (Cal. App. Crt., 1st App. Dist., October 15, 2003) reversed 40 Cal.4th 33, S 122953 (Cal. Sup. Ct., November 20, 2006)

Rejecting Zeran v. America Online, (4th Cir. 1997) and its progeny, an intermediate California Appellate court holds that the Communications Decency Act ("CDA") does not immunize a user of interactive computer services from a defamation claim arising out of her republication of statements authored by a third party, when the user knew or had reason to know of the falsity of those statements.  As a result, the Appellate Court reversed to much of the decision of the trial court below which had dismissed a defamation claim brought against defendant Ilena Rosenthal as a result of her republication in Usenet postings of a statement authored by a third party (defendant Timothy Bolen) which accused plaintiff Polevoy of criminal conduct.

The trial court had also rested its dismissal under California's Anti-SLAPP statute of plaintiffs' defamation claims on its determination that Polevoy lacked the requisite probability of success because, as a public figure, he could not prove that defendant Rosenthal acted with 'malice' when republishing Bolen's statements.  The Appellate court rejected this determination, holding that plaintiff may be able to establish that Rosenthal acted with the required malice, and therefore could proceed, notwithstanding Rosenthal's allegation that she had checked the veracity of the statements she was republishing with the alleged victim.  The Appellate Court held that such was insufficient to require dismissal of plaintiff's complaint, because of the alleged bias of both the victim and the original author of the posting against the plaintiff.

The Appellate Court did affirm the lower court's dismissal of defamation claims advanced by plaintiff Barrett, because the statements at issue were non-actionable opinion, as well as the trial court's decision to award Rosenthal attorney's fees expended in pursuing her Anti-SLAPP motion to dismiss (though reducing the recoverable amounts to reflect the reversal of that court's decision as to the claims asserted by Polevoy).

This decision, if followed, could have important ramifications for internet service providers and others who regularly repost publications authored by third parties without reviewing their content.  Under the court's ruling, service providers can be liable for defamation as a result of their republication of such statements if they know or have reason to know of the falsity of those statements.  According to the court "distributor liability would [generally] not require a service provider to review communications in advance of posting them but only to act reasonably after being put on notice that the communication is defamatory."  As a result, once the service provider receives notice (from the allegedly defamed individual) of falsity, it must either undertake adequate steps to ascertain the veracity of the statement, remove it, or face potential liability.  This creates tremendous uncertainty as the court did not specify what such adequate steps would be.  Indeed, as noted above, in the case at bar, where plaintiff alleged he was defamed by a statement that he had engaged in criminal conduct, the court held that contacting the victim was not sufficient as a matter of law to warrant dismissal of plaintiff's suit because of the victim's purported bias against plaintiff Polevoy.  Subsequent developments in this case should be watched closely by those interested in this field.

333 F.3d 1018, No. 01-56380 (9th Cir., June 24, 2003) petition rehearing and rehearing en banc, denied, 351 F.3d 904 (9th Cir., December 3, 2003)

In this defamation suit, the Ninth Circuit Court of Appeals holds that the operator of a listserv and website is a user of interactive computer services entitled to the protections of the Communications Decency Act ("CDA") against liability arising out of his publication of information provided by another information provider.  Because, however, the author of the information at issue claimed he did not mean for the defendant operator of the listserv to publish it, the Ninth Circuit remanded the case to the District Court for a determination as to whether the listserv operator was entitled to immunity under the CDA in this particular case.  Such immunity should be granted, held the Ninth Circuit, if the information in question was provided to the listserv operator by a third party under circumstances in which a reasonable person would conclude that the third party provided the information for publication on the Internet.  The Ninth Circuit accordingly vacated so much of the District Court's decision which denied defendant's motion to dismiss this defamation action under California's Anti-SLAPP statute, which motion was to be reconsidered on remand.  The Ninth Circuit also affirmed the District Court's rejection of plaintiff's defamation claims against Mosler, which were predicated solely on its placement of ads on the website at issue.

No. CV-06-1537-PHX-DGC (D. Az., September 5, 2008)

Court in large part grants defendants’ motion for summary judgment, and dismisses claims arising out of defendants’ operation of a website on which third parties, and defendants themselves, posted a number of statements critical of plaintiff Best Western International Inc.  Left unresolved by the Court’s motion were plaintiff’s claims that a number of additional posts authored by defendants were in fact defamatory.

Best Western is a non-profit member corporation, which assists its members in running their hotels.  Defendants are members of Best Western who operate hotels, their spouses, and an individual who assisted in the creation of the website at issue.  The member defendants are bound by the terms of membership agreements with plaintiff. 

The Court held that the immunity granted defendants under the Communications Decency Act barred plaintiff from seeking to hold them liable for defamatory posts authored by third parties that appeared on defendants’ website.  Defamation claims arising out of 50 posts defendants themselves authored failed because plaintiff did not present sufficient evidence to establish that defendants acted with the requisite degree of fault necessary to sustain a defamation claim.  Thus, plaintiff failed to establish that defendants acted with either actual malice or negligence in making these statements, or with knowledge of their alleged falsity.   In reaching this result the Court noted that possessing ill will toward plaintiff was insufficient to establish ether that defendants acted with the requisite degree of fault, or that they were guilty of defaming plaintiff. 

The Court also rejected tortuous interference with contract or prospective advantage claims arising out of the posting on defendants’ site of statements urging plaintiff’s members to switch to a competitor’s organization.  The Court held that plaintiff failed to prove either that such statements caused it any injury, or that defendants or the competitor acted improperly in making these posts.  In reaching this result, the Court noted that plaintiff’s competitor is free to make posts that promote itself and its own economic interests.

Finally, the Court rejected various breach of contract claims advanced by plaintiff, asserting that defendants breached the parties’ membership agreement by making public confidential information, or failing to meet the membership agreement’s requirement to use their best efforts to maintain positive relationships with customers.  As to the former, the Court held there were no such prohibitions in the parties’ agreement that bound defendants.  As to the later, the Court held that the prohibitions applied to other aspects of defendants’ business, with which obligations defendants complied.

The Court did allow plaintiff Best Western to pursue breach of contract claims arising out of the use by the member defendants of Best Western’s trademark on the website at issue, which use purportedly violated the parties’ membership agreement.

992 F. Supp. 44 (D.D.C. April 22, 1998)

Court holds defamation claim against AOL as a result of its making available a gossip column written by a third-party content provider titled the"Drudge Report" was barred by the Communications Decency Act. Court reached this conclusion notwithstanding the fact that AOL had reserved the right to exercise control over the Report's editorial content, and further, had promoted the report as a gossip column, thereby acknowledging the nature of the report's general content and the risks inherent therein.

The court denied defendant Drudge's motion to dismiss for want of personal jurisdiction. Drudge's maintenance of an interactive website, on which his Report appeared, which permitted users to subscribe to the Drudge report via e-mail, and solicited contributions from forum residents to defray publication costs, combined with other contacts with Washington D.C., including a visit to D.C. to promote the report, and mail and phone contacts to obtain gossip, made the exercise of jurisdiction over him appropriate.

207 F. Supp. 2d 1055 (C.D. Cal., March 11, 2002), aff'd. on other grds., 339 F.3d 1119, No. 02-55658 (9th Cir., August 13, 2003)

Court grants motion of defendants Metrosplash.com and Lycos for summary judgment, and dismisses claims of invasion of privacy, defamation, misappropriation of right of publicity and negligence brought against them by plaintiff Carafano, an actress.  These claims arose out of the posting of a dating profile by a third party on the defendants' Matchmaker website, which profile allegedly contained fictious information about plaintiff, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendants to which site members had to respond.

The court rejected defendants' argument that plaintiff's claims were barred by application of Section 230 of the Communications Decency Act.  While the defendants were "interactive service providers" within the meaning of the statute by virtue of their operation of the Matchmaker website, defendants were not entitled to the statute's protection because of the role they played in originating the content in question.  Such protections are available only as to claims arising out of information provided by an information content provider other than the defendant.  The court barred defendants from using the CDA as a shield because the information in question was posted in response to a questionnaire prepared by defendants.

Nonetheless, the court dismissed each of the claims raised by plaintiff against defendants.  Plaintiff's invasion of privacy claim failed because the information in question, her address, was "newsworthy," making its publication non-actionable.  The defamation claim was dismissed because, given plaintiff's status as a public figure, she could not show that defendants acted with actual malice in publishing the statements in question, a prerequisite to such a claim.  Such malice was absent because defendants were unaware of the information contained in "plaintiff's" profile at the time it was posted to defendants' site by a third party, and thus did not entertain any serious doubt as to its truth at the time it was published.  Plaintiff's misappropriation of right of publicity and negligence claims failed for the same reason, plaintiff's inability to establish that defendants acted with the requisite actual malice.

339 F.3d 1119 (9th Cir., August 13, 2003)

Ninth Circuit holds that operator of online dating service is immunized by the Communications Decency Act ("CDA") from defamation, invasion of privacy, misappropriation of right of publicity and negligence claims arising out of the unauthorized posting on defendant's website by a third party of a fictitious dating profile.  This profile contained fictitious information about plaintiff, an actress, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendant to which all users of its service had to respond.

461 F.Supp.2d 681, Case No. 06 C 0657 (N.D. Ill., November 14, 2006) aff'd -- F.3d -- (7th Cir. Mar. 14, 2008)

Court holds that the Communications Decency Act ("CDA") immunizes defendant Craigslist, Inc. ("Craigslist") from liability for publishing housing ads authored by third parties that allegedly violate the Fair Housing Act, 42 U.S.C. § 3604(c) ("FHA").  In reaching this result, the Court held that the immunity afforded internet service providers under section 230(c)(1) of the CDA only extends to claims seeking to hold an ISP liable as a publisher for content authored by third parties, and not to all claims arising out of the ISP's role in giving the public access to such content.  Because the FHA claims at issue were premised on Craigslist's publication of offensive ads authored by third parties, the Court held they were barred by the immunity granted under Section 230(c)(1).

No. 07-1101 (7th Cir., March 14, 2008)

Affirming the District Court below, the Seventh Circuit holds that Craigslist cannot be held liable for violating the Fair Housing Act as a result of its online publication of discriminatory housing ads authored by third parties. To hold Craigslist liable for such conduct would require it to be treated as a ‘publisher’ of these advertisements, which is prohibited by Section 230(c)(1) of the Communications Decency Act.  As a result, the Seventh Circuit affirms the District Court’s grant of summary judgment, dismissing plaintiff’s Fair Housing Act claims against Craigslist.

CV 2007-003720 (D. Ariz., October 24, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(1), mandates dismissal of so much of plaintiff’s defamation claim that arises from the publication by third parties of comments critical of plaintiff on a website defendants operate known as the “ripoffreport.com.”  The CDA further mandates dismissal of claims arising out of defendants’ promotion of its site and the allegedly objectionable content thereon, making the site more accessible to search engines and users, or soliciting contributions to assist in making the information on the site available.  The Court did , however, allow plaintiff to pursue defamation claims arising out of the headlines for third party content authored by the defendants, which themselves purportedly contained defamatory content.

351 F.Supp. 2d 1090 (W.D. Wash., December 21, 2004)

Court holds that the Digital Millennium Copyright Act ("DMCA") immunizes Amazon.com, Inc. ("Amazon") from copyright infringement claims arising out of the sale by nonaffiliated third party vendors on Amazon.com of photographs in which plaintiff claims a copyright.  In reaching this result, the Court held that Amazon had met both the DMCA's threshold requirements, as well as the requirements necessary to qualify for the protection of the safe harbor provisions of 17 U.S.C. § 512(c).  512(c) protects service providers from liability for copyright infringement by reason of their storage of infringing materials at the direction of a third party.

The Court dismissed plaintiff's Lanham Act claim, finding that it was the Copyright Act, and not the Lanham Act, that provided any remedy for the alleged wrongs at issue.  The Court also dismissed plaintiff's Washington State law Consumer Protection Act and tortious interference with business relations claims, finding Amazon immunized therefrom by operation of the Communications Decency Act.

Finally, the Court held that issues of fact precluded dismissal of copyright infringement claims plaintiff asserted arising out of the alleged use of one of its copyrighted images in an advertisement on a separate website owned by Amazon.

52 Cal.Rptr. 3d 376 (Cal. Crt. App., December 14, 2006)

A California intermediate appellate court holds that the Communications Decency Act ("CDA"), 47 U.S.C. Section 230(c), immunizes an employer from claims arising out of the transmission by a then employee of threatening emails to, and posts about, plaintiffs from his office computer.  As a result, the Court of Appeals affirmed the dismissal of intentional infliction of emotional distress claims advanced by plaintiffs against Agilent Technologies.  Plaintiffs had sought to hold Agilent Technologies responsible for its employee's threatening conduct on theories of respondeat superior, negligent supervision/retention, and ratification. 

The Court further held defendant entitled to summary judgment dismissing such claims on the facts before it.  The respondeat superior claim failed because the evidence established that the employee was acting outside the scope of his employment when he transmitted the threatening emails in question.  The negligent supervision/retention claim similarly failed because there was no evidence that Agilent Technologies was aware of its employee's activities when he was transmitting the emails at issue from his office computer.  Agilent only learned of this misconduct after the fact, at which time it terminated the employee.  Finally, there was no evidence that the defendant employer ratified its employee's misconduct.

433 F. Supp. 2d 523 (E. D. Pa., May 26, 2006), aff'd., No. 06-3171 (3rd Cir., September 19, 2007).

Communications Decency Act immunizes operator of message board from defamation claims arising out of posts appearing thereon that were authored by others.  Such immunity extends to the defendant operator notwithstanding plaintiff’s claim that the defendant edits posts that appear on his boards, and selects posts that will either be published thereon, or removed therefrom.  The Court accordingly dismissed with prejudice defamation claims asserted by plaintiff Anthony DiMeo III arising out of offensive postings that appeared on defendant’s message boards. 

The Court also dismissed plaintiff’s claim that defendant violated the criminal statute 47 U.S.C. § 223 (a)(1)(C), which prohibits use of a telecommunications device anonymously to harass another.  Defendant neither acted anonymously – his name appeared both in the domain name and title of the message boards found on his website – nor did he use a telecommunications device, within meaning of the statute, in operating his web site.

Analysis of the Third Circuit's decision can be found below in the Quick Hits section of this page.

Case No. 97-2587, 718 So. 2d 385 (Fourth District Court of Appeal, Fla, October 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Relying heavily on Zeran v. AOL, 129 F.2d 327 (4th Cir. 1997) cert. denied, 118 S.Ct. 2341 (1998), the Florida District Court of Appeal affirmed the lower court's holding that the Communications Decency Act preempts state law claims advanced against an information service provider arising out of the ISP's allegedly improper participation in the sale or distribution of obscene material due to its alleged notice that a third party was using the ISP's chat rooms to market pornographic materials. The Court also affirmed that lower court's holding that the CDA preempts state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Case No. CL 97-631AE (Cir. Ct. Palm Beach Co. Fla, June 26, 1997), aff'd. 718 So. 2d 385 (Fl. Ct. App., Oct. 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Communications Decency Act preempts state law claim of improper participation in sale or distribution of obscene material asserted against information service provider as a result of its alleged notice that third party was using ISP's chat rooms to market pornographic materials. Court further held that CDA applies retroactively to preempt state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

No. 07-50345 (5th Cir., May 16, 2008)

Affirming the decision of the District Court below, the Fifth Circuit holds that section 230(c)(1) of the Communications Decency Act immunizes the social networking site Myspace Inc. from claims of negligence and gross negligence arising out of the alleged sexual assault of a minor made possible by her posting of a ‘user profile’ on Myspace.com.  As a result of this posting, a male, age 19, made contact with the minor, who falsely represented she was 18, and sexually assaulted her.  The Fifth Circuit held Myspace was immunized from plaintiff’s negligence and gross negligence claims, because they sought to hold Myspace liable for its role in making content authored by a third party – the minor’s user profile and personal information contained therein – available to third parties. 

In reaching this result, the Fifth Circuit rejected plaintiff’s attempt to avoid the bar of the CDA by arguing that they sought to hold Myspace liable for its alleged failure to institute adequate safety measures to protect minors, particularly from sexual predators.

Because the Fifth Circuit held that Section 230(c)(1) of the CDA barred plaintiffs’ claims, the Court did not review so much of the District Court’s decision that held that those claims were also barred by both Section 230(c)(2) of the Communications Decency Act, as well as applicable principles of Texas common law.

2000 U.S. Dist. Lexis 8845 (N.D. Ill., June 21, 2000)

Court holds that those engaging in web site hosting activities are immunized by the Communications Decency Act, 47 U.S.C. 230(c) from liability arising out of their involvement, via those activities, in the dissemination or publication of information originating from third parties. Section 230(c)(1) provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." The court held that those who provide web hosting services are service providers within the meaning of the CDA, and hence entitled to the immunity it provides. Said the court: "by offering web hosting services which enable someone to create a web page, [defendants] are not magically rendered the creators of those web pages. See 47 U.S.C. 230(c)(1). As such, plaintiffs' new characterization of [defendants] as web hosts neither prevents these defendants from being deemed service providers protected by immunity under the CDA nor makes them content providers unprotected by the CDA's immunity."

27 Med. L. Reptr. 1794(D.N.M., Mar. 1, 1999), aff'd. 206 F.3d 980 (10th Cir.,Mar. 14, 2000), cert. denied, 531 U.S. 824 (Oct. 2, 2000)

Court dismissed claims of defamation and negligence asserted by plaintiff company against America Online ("AOL") arising out of AOL's posting of allegedly inaccurate stock quotes concerning plaintiff on its website, which quotes had been supplied to AOL by third-party content providers. Court held that such claims were barred by 47 U.S.C. §230, and the immunity granted thereunder to providers of "interactive computer services" such as AOL, for publication of content prepared by third-party information content providers. This dismissal was mandated even though AOL attempted to have its vendors correct the errors at issue.

489 F.3d 921, CV-03-09386-PA (9th Cir., May 15, 2007) aff'd en banc 2008 WL 879293 (9th Cir., April 3, 2008).

A divided three judge panel of the Ninth Circuit limited the immunity afforded by the Communications Decency Act (“CDA”), 47 U.S.C. section 230, for website operators involved in the publication and distribution of the responses to questionnaires completed by third parties concerning their roommate preferences. 
The Panel unanimously held that the CDA did not immunize defendant Roommates.com from potential liability for drafting and posting questionnaires that sought information from those using the site about their roommate preferences.  These questionnaires, among other things, sought information about the preferred sexual orientation of the prospective roommate, and were used to create member profiles.  The Panel held that the CDA did not immunize Roommates.com from potential liability under the Fair Housing Act (“FHA”) for requiring members to answer questions that potentially enabled other members to discriminate for or against them.

By a vote of 2 to 1, the Panel further held that the CDA did not immunize Roommates.com from potential liability under the FHA for publishing and distributing member profiles created in response to Roommates.com’s questionnaires.  Roommates.com used the content of a user’s responses to its questionnaires to determine who among its members should receive notice that they were seeking a roommate, and/or be permitted to view that user’s profile.  For example, an individual with children was not shown a listing for an apartment occupied by an individual seeking a roommate without children.  The court held that by categorizing, channeling and limiting the distribution of user profiles, Roommates.com was sufficiently involved in the creation of the distributed information to lose the immunity afforded by the CDA to interactive service providers who make available content drawn by third parties. As a result, the Ninth Circuit allowed plaintiffs to proceed with claims that by such conduct, Roommates.com violated the FHA.

Finally, by a vote of 2 to 1, the Court held that the CDA did immunize Roommates.com from potential FHA liability arising out of its publication of users’ responses to Roommates.com’s requests for “Additional comments” concerning their roommate preferences.  In this section of its questionnaire, Roommates.com “strongly recommend[ed the user] tak[e] a moment to personalize your profile by writing a paragraph or two describing yourself and what you are looking for in a roommate.”  This question produced the most provocative – and potentially discriminatory - responses found in user profiles.  The court held that the responses to this question constituted content created by third parties within the meaning of the CDA.  As a result, held the Court, by application of the CDA, Roommates.com could not be held liable for publishing these responses on its website.

Case No. 06-CV-105-D (D. Wy., September 28, 2007)

Court finds defendants guilty of engaging in unfair business practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. Section 45(a), by obtaining and selling confidential customer phone records without the affected customers’ authorization.  The Court found that defendant Abika.com arranged for the purchase of these phone records from third party vendors, which they subsequently resold via their website to third parties.  Illegal means were used by these vendors to obtain the confidential phone records, a fact of which, the Court found, defendant was aware.

In reaching this result, the Court rejected defendants’ claim that they were immunized from suit by application of Section 230 of the Communications Decency Act (“CDA”).  Defendants attempted to come within the ambit of the CDA by casting themselves as a search engine that put those seeking to purchase phone records in touch with ‘researchers’ seeking to sell them.  This characterization of their conduct was rejected by the Court.   The Court held that CDA immunity was not available to defendants because the claims at issue did not seek to treat them as the publisher of information, a prerequisite to such immunity.  Rather, they arose out of defendants’ purchase and resale of confidential information to third parties that was obtained through illegal means.  The Court further held that CDA immunity was not available because of defendants’ role in causing the information at issue to be obtained.  As such, defendants were held to have ‘participated in the creation or development of the information, and thus do not qualify for Section 230 immunity.’

Finally, the Court rejected defendants’ claim that the FTC was equitably estopped by its prior failure to prosecute phone record brokers from doing so here.  Such alleged inactivity was insufficient to estop the government from enforcing the laws of the land.

99 Cal. App. 4th 816, Super Ct. No. GIC746980 (Cal. Crt. App., June 26, 2002)

California intermediate appellate court affirms the decision of the trial court, and dismisses claims brought by plaintiffs against eBay under both California's Autographed Sports Memorabilia statute and California's Unfair Competition law, as well as for negligence, arising out of plaintiffs' purchase of allegedly non-authentic autographed sports memorabilia offered for sale by third parties on eBay's web site. Plaintiffs sought to hold eBay liable under California's Autographed Sports Memorabilia statute as a result of eBay's alleged failure to supply certificates warranting the authenticity of the goods purchased.  The court held that eBay was not obligated to supply the certificates because it was not a "dealer" of sports memorabilia within the meaning of the statute, as the goods in question were sold by third parties.  The court further held that section 230 of the Communications Decency Act ("CDA") immunized eBay from any liability arising out of its failure to supply these certificates.  The court held that, however couched, plaintiffs' claim sought to hold eBay liable for the allegedly false descriptions of the goods supplied by third parties.  As the CDA creates "federal immunity to any cause of action that would make interactive service providers liable for information originating with a third party use of the service" (excepting intellectual property claims) plaintiffs' Autographed Sports Memorabilia claims had to be dismissed.

The court held that plaintiffs' negligence and Unfair Competition claims were also barred by the CDA as each of these claims was also premised on content supplied by third parties.  These claims attacked eBay for giving the sellers of the goods at issue positive ratings concerning their past sales history, and urging purchasers to rely thereon in making their decision to purchase goods from those sellers.  These positive ratings were, however, simply an accurate reporting of customer feed back supplied by third parties concerning their alleged transactions with the sellers.  As such, eBay could not be held liable for the inaccuracy of such positive ratings because to do so would be to hold eBay liable for content originated by third parties, which is barred by the CDA.

No. 07-956-PHX-FJM (D.Az. October 10, 2007)

Court dismisses defamation claims advanced against defendant, operator of the website ripoffreport.com, arising out of defendants’ publication of statements authored by a third party that were critical of plaintiffs.  The Court held such claims barred by application of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230.  Notably, the court refused to issue plaintiff relief notwithstanding the fact that the author of the statements at issue allegedly requested without success that defendants remove them from ripoffreport.com.

The Court also declined to enforce a preliminary injunction issued on default by a Canadian court, directing defendants to remove the statements at issue from their website, on the ground that United States courts will not enforce injunctions issued by foreign courts.

318 F.3d 465, No. 01-1120 (3rd Cir., January 16, 2003)

Affirming the decision of the court below, the Third Circuit holds that the Communications Decency Act ("CDA") immunizes America Online ("AOL") from claims arising out of the transmission by unrelated third parties in an AOL chat room of (i) a "punter program", which disrupts the operation of the recipient's computer, and (ii) defamatory messages concerning the plaintiff.  The Third Circuit further holds that AOL's allegedly negligent failure to prevent such events from occurring did not breach its Member Agreement, in which it expressly disclaimed liability for the transmissions of others.

135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

474 F. Supp. 2d 843, Case No. A-06-CA-983-SS (W.D. Texas, February 13, 2007) aff'd., No. 07-50345 (5th Cir., May 16, 2008).

Court dismisses negligence and gross negligence claims asserted against defendant Myspace, Inc. (“Myspace”) arising out of the alleged sexual assault of a minor made possible by her posting of a “user profile” on Myspace.com.  As a result of this posting, a male, age 19, made contact with the minor who falsely represented she was 18, obtained her telephone number and arranged a meeting at which she was allegedly sexually assaulted.  The Court held Myspace immunized from such claims by application of the Communications Decency Act, 47 U.S.C. Section 230, because, at bottom, plaintiffs’ claims sought to hold Myspace liable as a result of its role in the publication of the minor’s user profile.  The Court also held plaintiffs’ claims barred by Section 230(c)(2)(A), as they sought to hold Myspace liable for its purported negligence in failing to verify the minor’s age.  The minor was 13 at the time she posted a user profile in which she falsely claimed to be 18.  Myspace does not permit those below 14 to use its services.

The Court also dismissed plaintiffs’ negligence claims, which sought to hold Myspace liable for its purported negligent failure to institute measures designed to protect minors from sexual predators and to take appropriate steps to verify their age.  The Court held that, like Federal Express and other common carriers, Myspace owed no duty to the minor which could form the basis of such a claim.

Finally, the Court dismissed plaintiffs’ fraud and negligent misrepresentation claims as a result of plaintiffs’ failure to plead such claims with the requisite particularity.

502 F.Supp. 2d 719, Case No. 3:07 CV 604 (N.D. Ohio, August 22, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230, immunizes operator of online adult dating service from claims arising out of a user’s false statement in her user-profile that she was over 18.  Relying on this profile, plaintiff met and had consensual sexual relations with a minor, for which he was subsequently arrested.  Plaintiff brought this suit, seeking redress.  Importantly, the contract between the parties expressly provided that SexSearch.com does not “assume any responsibility for verifying the accuracy of the information provided by other users of the Service.”  Because plaintiff sought to hold SexSearch.com, a provider of Interactive Computer Services, liable for its publication of content authored by another, his claims, whether couched as breach of contract, fraud or negligent misrepresentation, were barred by application of the CDA.  Plaintiff’s breach of contract claim similarly failed because SexSearch did not assume responsibility for verifying the age of users.

2007 WL 530156, Civ. Act. No. 06-319-JJF (D. Del. February 20, 2007)

The Court held that the First Amendment, and the guaranties afforded Google and Yahoo thereunder, barred claims seeking redress as a result of Google and Yahoo's refusal to run advertisements on their search engines they did not wish to run.  In reaching this result, the Court followed decisions that afforded newspapers similar First Amendment protections when challenges arose concerning their refusal to run advertisements they deemed objectionable.  As a result, the Court dismissed claims advanced by plaintiff arising out of the defendants' refusal to run his advertisements, including claims that the defendants defrauded him and engaged in deceptive business practices, violated his First Amendment rights, and failed to meet the duties imposed on those, like inn keepers, engaged in a public calling.

The Court also held that Google and Yahoo were immunized from such claims by the Communications Decency Act, 27 U.S.C. Section 230, which "bars 'lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions - such as deciding whether to publish, withdraw, alter or postpone content.'" It should be noted that plaintiff was proceeding pro se.

2008 WL 618988, No. C 07-03967 MHP (N.D. Ca., March 4, 2008)

Court holds that the purported dispute resolution provisions contained in auction company’s online Terms and Conditions are unconscionable, and unenforceable against an individual dissatisfied with an auction in which she participated.  The dispute resolution provision mandated that the parties’ dispute be resolved in a binding proceeding before a representative of ‘In House Attorneys, P.C.’ in which each side was permitted only one hour to present their case, and could not call fact or expert witnesses nor be represented by counsel. 

As a result, the Court allowed plaintiff to proceed with claims against the defendant Hot Jewelry Auctions.com - who ran the auction - grounded on claims that defendant engaged in ‘shill bidding.’ 

Plaintiff was also allowed to proceed with claims against eBay as a result of her participation in this auction, via eBay’s Live Auction service.  In promoting this service, eBay claimed that “bidding on eBay Live Auctions is very safe.  All live auctions are run by reputable international auction houses, which are carefully screened by eBay before being authorized to sell to you.”  Notwithstanding the fact that eBay was responsible for this content, and derived a profit by promoting use of its Live Auction service, the Court held that it was immunized by application of the Communications Decency Act (“CDA”) from fraud and other claims arising out of so much of its promotional materials that advised consumers that eBay ‘carefully screened’ the auction houses allowed to participate in Live Auction.  The Court reasoned that to allow plaintiff to pursue such claims would expose eBay to “liabil[ity] for its exercise of a publisher’s traditional editorial functions” which is barred by the CDA.  As such, the Court barred plaintiff from pursuing claims that this representation was false because eBay allegedly did not ‘screen’ auction houses before permitting them to participate in such Live Auctions or because it knew that the auction house was engaged in illegal conduct – such as shill bidding – and failed to take appropriate steps in light thereof.   

The Court did permit plaintiff to proceed with claims arising out of eBay’s representation that such auctions were ‘safe,’ holding the same were not barred by application of the CDA because ‘eBay’s statements regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion.’  Nor were such claims barred by application of eBay’s Live Auction User agreement, which immunized eBay from any disputes a consumer might have with the auction house itself, as this dispute arose out of eBay’s own purported misconduct – namely misrepresenting that the auction was ‘safe.’  Because plaintiff had failed to plead with the requisite particularity that she relied on this statement in deciding to participate in the auction in question, however, her fraud claim was dismissed with leave to replead.

309 F.Supp.2d 446, Civ. 02-5164 (DRH) (WDW) (E.D.N.Y., Mar. 25, 2004)

Court holds that plaintiff, by clicking an "I accept" icon agreeing online to be bound by the Terms of Service governing use of an online discussion group set forth in a scrollable window, viewable ten lines at a time, was bound by the forum selection contained therein.  Finding such a clause enforceable, the Court dismissed a claim brought by plaintiff asserting that defendant Google breached this agreement, because this claim was not brought in the designated forum.

The Court also held that Section 230 of the Communications Decency Act ("CDA") immunized an ISP hosting an online discussion group from claims that its failure to remove objectionable content posted on the discussion group's web page gave rise to claims of tortious interference with contractual relations. 

Finally, the Court denied the motions of two additional defendants to dismiss the claims asserted against them for want of personal jurisdiction.  The Court held that the first defendant was subject to specific jurisdiction in New York because of its operation of a commercial website via which it sold $6000 of products a year to New York residents.  The second defendant was similarly subject to suit because he had entered into a contract with a New York company, which contract allegedly gave rise to the claims asserted against him.

Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006), affirmed -- F.3d – (3rd Cir., July 10, 2007).

District Court dismisses claims charging Google with direct copyright infringement as a result both of its archiving Usenet postings that contain excerpts of plaintiff’s copyrighted works, and its display of excerpts of plaintiff’s copyrighted website in search results.  The District Court holds that Google has not engaged in the requisite volitional conduct necessary to be held guilty of direct copyright infringement because such copying is a by-product of the automated operation of Google’s search engine and related technologies.  As such, Google’s acts are akin to a user’s use of its ISP to transmit infringing material to a third party, which do not give rise to direct infringement claims against the ISP.  On appeal, the Third Circuit affirmed the dismissal of Parker’s direct infringement claims, on the grounds that Google’s archiving of infringing Usenet postings lacked the requisite “volitional conduct.”

Relying on Field v. Google, (D. Nevada 2006), the District Court also dismisses direct copyright infringement claims arising out of Google’s presentation to users of “archival” copies of plaintiff’s website in search results denominated “cache.”  The District Court holds that Section 512(b) of the Digital Millennium Copyright Act (“DMCA”), applicable to copyright infringement claims arising out of “system caching,” bars such claims here.

The District Court also dismissed vicarious and contributory copyright infringement claims arising out of Google’s archiving of Usenet posts created by third parties that themselves allegedly infringe plaintiff’s copyright, both because Google lacks the requisite knowledge of such inadequately identified infringing activity, and because it does not derive sufficient direct financial benefit therefrom.  This decision too was affirmed by the Third Circuit on appeal.

The District Court further dismissed defamation, invasion of privacy and negligence claims advanced by plaintiff arising both out of Google’s archiving of Usenet posts authored by third parties that allegedly defamed plaintiff, as well as out of Google’s storage and display in its “cache” of a website that purportedly defamed plaintiff.  Such claims are barred by the immunity afforded Google by Section 230 of the Communications Decency Act (“CDA”), a decision affirmed on appeal.

Finally, the District Court dismissed Lanham Act claims brought against Google as a result of its alleged republication of a website operated by a third party titled “the Official Roy Gordon FAQ.”  The District Court held that the third party was not violating the Lanham Act both because it was not using a mark in commerce as it was not selling anything on its site, and because consumers were not likely to be confused as to the origin of the site, given the criticism of plaintiff found thereon.  The Lanham Act claims against Google also failed because it was not a “moving force” or “active participant” in the creation of this site, or the alleged use thereon of plaintiff’s ‘mark.’  The Third Circuit affirmed the dismissal of the Lanham Act claims because of the absence of a likelihood of consumer confusion.  The Court also affirmed the dismissal of plaintiff’s trade disparagement claims because the statements at issue on the third party website were not made in the context of commercial advertising.

It should be noted that the plaintiff appeared pro se.  In addition, the Third Circuit’s opinion was denoted “Not Precedential.”

163 F. Supp. 2d 1069 (D.S.D., September 27, 2001)

Court holds that Section 230 of the Communications Decency Act ("CDA") bars plaintiffs from pursuing claims against Kinko's arising out of allegedly defamatory statements an unaffiliated third party made in an Internet chat room from a computer rented to him by Kinko's.  The CDA prevented plaintiffs from pursuing claims that Kinko's aided and abetted both the third party's defamation of, and interference with plaintiffs' prospective business relationships by making the offending statements, as well as claims that Kinko's negligently failed to keep appropriate records of the use of its rented computers, and destroyed evidence of the same.

488 F.3d 1102, No. 04-57143 (9th Cir., March 29, 2007) cert. denied, 128 S.Ct. 709 (2007)

The Ninth Circuit allows Perfect 10 to pursue copyright infringement claims against defendants, who provide web hosting and credit card billing services, arising out of the unauthorized posting on the web by their third party customers of “adult” images in which Perfect 10 holds copyrights.  Questions of fact precluded a determination of whether defendants were immunized from monetary liability for such claims by the Digital Millennium Copyright Act (“DMCA”).  Such immunity extends only to service providers who “reasonably implement” a policy for terminating those of their customers that repeatedly infringe copyrights.  In considering this question, the Ninth Circuit held  courts should consider not only the manner in which the defendants responded to “take down” infringement notices sent by the plaintiff copyright holder, here Perfect 10, but also the manner in which they responded to similar notices from third party copyright holders.  Because the District Court failed to consider whether defendants terminated customers identified in such third party “take down” infringement notices, the Ninth Circuit could not determine whether defendants “reasonably implemented” a compliant DMCA policy, and thus whether they were entitled to DMCA immunity.  The case was accordingly remanded to the District Court for further consideration.

The Ninth Circuit held that defendants had no obligation to respond to the “take down” notices provided by Perfect 10, or take steps to prevent the infringing conduct alleged therein, due to Perfect 10’s failure to provide such notices under penalty of perjury.  Absent the sworn acknowledgement required under the DMCA that the complainant is both an authorized representative of the copyright owner, and has a good faith belief that the material at issue is unlicensed, the service provider has no obligation to act upon the notice. 

Nor, held the Ninth Circuit, were defendants obligated to take action against purported “red flag” sites defendants serviced, which included sites that purported without authorization to provide users with passwords to access plaintiff’s materials, or other websites bearing names such as “stolencelebritypics.com” or “illegal.net.”   The DMCA does not impose on service providers the obligation to conduct an affirmative investigation into the bona fides of such sites.  To qualify as a “red flag” site that imposes an obligation on a service provider to act, held the Ninth Circuit “it … need[s] to be apparent that the website instructed or enabled users to infringe another’s copyright.”

The Ninth Circuit allowed Perfect 10 to pursue direct copyright infringement claims against the defendants as a result of the posting of infringing images on hornybees.com.  The court held that sufficient evidence of defendants’ direct involvement in the operation of that site was presented to survive a motion for summary judgment.

Finally, the Ninth Circuit held that the Communications Decency Act immunized defendants from the unfair competition, false advertising and right of publicity claims advanced by Perfect 10.

Case No. 46791-3-I, 31 P.3d 37 (Wash. Ct. App., September 17, 2001)

Court holds that Section 230 of the Communications Decency Act ("CDA") immunizes Amazon.com from claims of breach of contract, negligent misrepresentation and tortious interference brought by plaintiff as a result of negative statements posted by third parties on Amazon.com's web site, and Amazon's failure to remove them in alleged violation of Amazon's guidelines governing such postings.  Section 230 provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  The Court held that Amazon satisfied each of the elements necessary for protection under this statute.  First, Amazon was a provider of "interactive computer services" entitled to avail itself of the protections afforded by the statute because it operated a web site on which third parties could post comments, which Amazon made available to others.  Second, the content in question was provided by third parties, and not Amazon, despite Amazon's right to edit or remove the same.  And lastly, Amazon was immunized from the claims in question because each premised Amazon's liability on its failure to remove offending content originated by others, an editorial function for which the statute was intended to provide protection.

2000 WL 1705637, Civ. No. 305666 (Sup. Ct. Ca., November 7, 2000)

Court holds that Section 230 of the Communications Decency Act ("CDA") renders Ebay immune from a suit charging that the use by third parties of Ebay's web site to sell "bootleg" musical recordings violates Cal. Bus. and Professions Code Section 17200.

478 F.3d 413, No. 06-1826 (1st Cir., February 23, 2007)

Court dismisses cyberstalking and security law claims advanced by plaintiffs under Florida state law against defendant Lycos, holding such claims barred by the immunity afforded Lycos under Section 230 of the Communications Decency Act (“CDA”).  Such claims arose out of statements critical of plaintiff Universal Communication Systems (“UCS”) and its CEO, Michael Zwebner, that were posted by third parties on a message board found on a website operated by Lycos at the domain Raging Bull.com  Plaintiffs claimed that defendants, including Lycos, were involved in a scheme to manipulate plaintiff’s stock price.  Plaintiffs claimed that defendants shorted UCS stock, and then posted derogatory comments on RagingBull.com in an attempt to drive the stock price down.  Such a claim, held the court, sought to hold Lycos liable for its role in the publication of these statements, which were authored by third parties, and as such was barred by operation of the CDA.  The cyberstalking claim was similarly barred because the act on which such claim rested was the publication of derogatory statements on the RagingBull.com message board authored by third parties.  As such, this claim too, sought to hold Lycos liable for its role in the publication of such statements, and was barred by application of the CDA. 

The court also dismissed federal cyberstalking claims asserted by plaintiffs against Lycos under 47 USC Section 223, holding that this statute did not create a private right of action for a civil suit.

Finally, the Court dismissed trademark dilution claims advanced by plaintiffs under Florida state law.  These claims were premised on the use of UCS’ trademark as the name for a message board on Raging Bull.com at which third parties posted statements critical of plaintiffs.  The Court held that, despite the fact that the message boards contained advertising, such a use did not constitute the requisite use in commerce of plaintiffs’ mark.  In addition, such use of plaintiffs’ mark to describe a message board that contained statements about plaintiffs was not actionable under the dilution act.

Case No. 2:04-cv-47-FtM-34SPC (M.D. Fla., February 15, 2008)

In the latest chapter of this long running dispute, the District Court holds that the Communications Decency Act, 47 USC Section 230, immunizes defendants from defamation claims arising out of the posting on their site – The Rip-Off Report - of allegedly defamatory statements about plaintiff that were allegedly authored by third parties.  In reaching this result, the Court rejected plaintiff’s contention that defendants were sufficiently involved in the creation of the posts at issue to be denied CDA immunity because they offered such third party posters the opportunity to categorize their reports in categories such as ‘con artists’, ‘corrupt companies’ and ‘false TV advertisements.’  The Court further held that plaintiff had failed to submit evidence sufficient to establish that defendants were involved in authoring the particular defamatory statements at issue so as to lose the immunity offered by the CDA.

No. 06-11888 (11th Circuit, August 1, 2006)

Eleventh Circuit holds that plaintiff's defamation claims against operators of consumer complaint sites arising out of the posting on those sites of allegedly defamatory complaints purportedly authored by third parties is sufficient to survive a motion to dismiss predicated on the immunity afforded the operators of interactive computer services under the Communications Decency Act ("CDA").  The complaint alleged that defendants edited consumer complaints to include words such as "ripoff" and "scam", and fabricated others.  The ultimate resolution of defendants' entitlement to immunity for their involvement in the publication of the posts at issue will have to await the trial of this matter.

As a result of this determination, the Eleventh Circuit reversed the decision of the District Court, which had dismissed the action for want of personal jurisdiction.  The lower court's decision was grounded on its determination that no tort was committed by defendants in Florida, due to the application of the CDA.   The Eleventh Circuit rejected this determination, and remanded the matter to the District Court to determine whether the Court could appropriately exercise personal jurisdiction over the defendants consistent with the strictures of the Due Process clause of the United States Constitution.

Case No. C07-0807-JCC (W.D. Wash., August 28, 2007)

Court holds that Section 230 of the Communications Decency Act (“CDA”) immunizes distributor of anti-virus and security software from claims of tortuous interference with contract, trade libel and unjust enrichment arising out of its distribution of software that labels plaintiff Zango’s software as malware, and enables a user to block or disable it.  Zango provides consumers free access to online videos, games and music in exchange for their agreement to the display of sponsors’ advertisements.  Notably, the Court holds defendant entitled to such immunity notwithstanding claims that it acted in bad faith when it so labeled plaintiff’s software.  According to the Court, ‘good faith’ is not a prerequisite to immunity under section 230(c)(2)(b) of the CDA.  All that is required is that a provider of an “interactive computer service” take “action  … to enable or make available to … others the technical means to restrict access to” material  “the provider or user considers … objectionable,” a standard defendant met.

The Court also held that it could exercise personal jurisdiction over the non-resident defendant in Washington as a result of its sale of software products to Washington residents which allegedly caused plaintiff injury in the forum.

958 F. Supp. 1124 (E.D. Va. March 21, 1997)(Ellis, J.) aff'd. 129 F. 3d 327 (4th Cir. Nov. 12, 1997), cert. denied, 524 US 937 (1998)

The CDA preempts a state common law distributor liability cause of action against an interactive computer service provider arising from that provider's allegedy negligent distribution of defamatory material provided via its electronic bulletin board. Under CDA section 230 (c)(i), information service providers are granted imunity from such claims. This immunity is retroactive, and applicable to plaintiff's claim, brought after the enactment of the CDA, even though the events giving rise to his claim were completed before the CDA became effective.

Communications Decency ActCommunications Decency ActCommunications Decency ActCommunications Decency ActCommunications Decency ActCommunications Decency Act Quick Hits

Thais Cardoso Almeida v. Amazon.com, Inc.
456 F.3d 1316, No. 04-15341 (11th Cir., July 18, 2006).

Eleventh Circuit holds that Amazon.com’s display of a book cover that contains an unauthorized photograph of plaintiff on a product detail webpage used to promote Amazon.com’s sale of the book is not a commercial use of plaintiff’s image under Florida’s right of publicity statute – Fla. Stat. 540.08 - and hence is not actionable thereunder.   As such, the Eleventh Circuit affirmed, on different grounds, the District Court’s grant of summary judgment to Amazon.com, and dismissed plaintiff’s statutory right of publicity claim arising out of such unauthorized display.  The Court’s decision was grounded on its determination that, to be actionable under Section 540.08, plaintiff’s image must be used to ‘directly promote’ the sale of a product.  Because Amazon.com’s use of the book cover containing plaintiff’s image was ‘merely incidental to, and customary for, the business of internet book sales’ it was not an actionable commercial use of that image within the meaning of the statute.   Said the Court:

Amazon provides its online customers with a searchable book database with links to product detail pages for each book in its database.  Each product detail page provides the book’s cover image, the publisher’s description of the book, and in many instances editorial and customer content.  From the product detail page, customers may link to an order placement page, where they may complete their purchase and specify the shipping method.  In this manner, Amazon’s role as an internet bookseller closely parallels that of a traditional bookseller.  Because internet customers are unable to browse through shelves of books and observe the actual book cover photos and publisher content, Amazon replicates the bookstore experience by providing its customers with online cover images and publisher book descriptions. …

*                                         *                                                       *

[W]e find that, as a matter of business practice, Amazon’s use of book cover images closely simulates a customer’s experience browsing book covers in a traditional book store.  Thus, it is clear that Amazon’s use of book cover images is not an endorsement or promotion of any product or service, but is merely incidental to, and customary for, the business of internet book sales. …

*                                          *                                                       *

Under the allegations of Almeida’s complaint, we discern no set of facts by which an internet retailer such as Amazon, which functions as the internet equivalent to a traditional bookseller, would be liable for displaying content that is incidental to book sales, such as providing customers with access to a book’s cover image and publisher’s description of the book’s content.  Accordingly, we affirm the district court’s grant of summary judgment as to Amazon’s right of publicity claim, but we do so on the ground that Amazon did not use Almeida’s image for the purpose of directly promoting a product or service in violation of section 540.08

The Court spent much of its opinion discussing, without deciding, whether the Communications Decency Act barred plaintiff from pursuing the instant right of publicity claim against Amazon.  More particularly, the Court grappled with the question of whether the statute’s ‘intellectual property law’ exception, found in Section 230(e)(2), permitted plaintiff to pursue a right of publicity claim on the ground that such was in fact an intellectual property claim within the meaning of the statute.  This section provides that “nothing in [section 230 of the CDA] shall be construed to limit or expand any law pertaining to intellectual property.”  Because the Court ultimately found that plaintiff could not sustain her right of publicity claim on the merits, it did not reach this question.

Finally, the Eleventh Circuit affirmed the dismissal of plaintiff’s civil theft claim, finding that plaintiff had failed to submit evidence sufficient to establish that Amazon acted with the requisite ‘felonious intent’ when it purportedly misappropriate plaintiff’s property – namely her image – for its own use to promote its sale of books.  The Court held that there was no evidence that Amazon was aware when it posted the book cover in question on its website that the publisher was not authorized to use plaintiff’s image on the book’s cover.  When plaintiff contacted Amazon and so informed it, Amazon promptly removed the book cover from its site.

Robert Anthony v. Yahoo! Inc.
421 F.Supp.2d 1257 (N.D. Ca. March 17, 2006)

Court holds that Communications Decency Act does not bar fraud and negligent misrepresentation claims advanced against Yahoo as a result of its alleged creation of false user profiles.  These false user profiles were allegedly included in online dating services Yahoo operates to cause users such as plaintiff to sign-up for, or renew their subscriptions to, the service.   The Court further held that the Communications Decency Act did not bar claims that asserted that Yahoo falsely represented to subscribers that various expired user profiles were in fact still current in an effort to cause them to continue their subscriptions.  Said the Court:

Anthony alleges that Yahoo creates false profiles, not merely fails to delete them. ... In addition, Anthony claims that Yahoo sends users false profiles for the purpose of luring them into renewing their subscriptions. ... No case of which this court is aware has immunized a defendant from allegations that it created tortious content. ... If, as Anthony claims, Yahoo manufactured false profiles, then it is an 'information content provider' itself and the CDA does not shield it from tort liability.  In addition, the CDA does not defeat Anthony's allegations that Yahoo sent 'profiles of actual legitimate former subscribers whose subscriptions had expired and who were no longer members of the service, to current members of the service.  Admittedly, third parties created there profiles.  Nevertheless, the CDA only entitles Yahoo not to be 'the publisher or speaker' of the profiles.  It does not absolve Yahoo from liability for any accompanying misrepresentations.  Because Anthony posits that Yahoo's manner of presenting the profiles - not the underlying profiles themselves - constitute fraud, the CDA does not apply.

Anthony DiMeo III v. Tucker Max
No. 06-3171 (3rd Cir., September 19, 2007).

Affirming the decision of the court below, the Third Circuit holds that plaintiff’s claim for defamation, arising out of the posting of derogatory comments authored by third parties about plaintiff on a message board operated by the defendant, were barred by application of the Communications Decency Act, 47 U.S.C. Section 230.

To qualify for the statute’s protections, the defendant must be a “provider or user of an interactive computer service” and the claim must seek to treat him as “the publisher or speaker” of content “provided by another information content provider.”  Such, held the Third Circuit, was the case here.  By making available message boards on his website, Max was a provider of an interactive computer service.  Said the Court: “Max’s website is an interactive computer service because it enables computer access by multiple users to a computer server.”  Similarly, because the complaint did not allege that Max himself was the author of the offending posts at issue, they were content provided by another information content provider.  And finally, by asserting a defamation claim against Max, plaintiff sought to hold him liable as the publisher of this content.  Having made the showing necessary for immunity under Section 230 of the CDA, the Third Circuit affirmed the dismissal of plaintiff’s defamation claim.

The Third Circuit also affirmed the district court’s denial of plaintiff’s motion for leave to amend his complaint to assert claims for intentional infliction of emotional distress, and RICO violations, on the grounds of futility.  The former failed because the CDA afforded Max immunity from such claims, which, like the defamation claims, arose out of the posting by third party of offensive comments on a message board operated by Max.  The later failed as a result of plaintiff’s failure to allege the commission of any of the requisite criminal predicate acts.

It should be noted that the Third Circuit denoted its opinion non-precedential.

Johnny Doe v. Mark Bates and Yahoo, Inc.
No. 5:05-CV-91-DF-CMC (E.D. Tex., December 27, 2006).

Court holds CDA Section 230 immunizes Yahoo from civil liability arising out of its hosting of an online ‘e-group’ named ‘Candyman’ on which illegal images depicting child pornography were exchanged.  The co-defendant, Mark Bates, was convicted for his involvement as the moderator of this online forum.  Plaintiff brought claims under 18 U.S.C. Section 2252A, which creates a private right of action for those aggrieved by a violation of 18 U.S.C. Section 2252, a criminal statute that prohibits the dissemination of child pornography.  The Court, in a case of first impression, held that the CDA immunized Yahoo from such civil claims, as well as claims of negligence, negligence per se, intentional infliction of emotional distress, invasion of privacy and civil conspiracy, arising out of its hosting of this forum.  The Court reached this result notwithstanding the fact that 47 U.S.C. Section 230(e)(1), titled “no effect on criminal law,” provides “nothing in this section shall be construed to impair the enforcement of  … Chapter … 110 (relating to sexual exploitation of children) of Title 18, or any other Federal Criminal Statute.”  Said the Court:

while the facts of a child pornography case such as this one may be highly offensive, Congress has decided that the parties to be punished and deterred are not the internet service providers but rather those who created and posted the illegal material, such as defendant Mark Bates, the moderator of the ‘Candyman’ e-group.

e360Insight, LLC v. Comcast Corp.
No. 08-340, 2008 U.S. Dist. LEXIS 29287 (N.D. Ill. Apr. 10, 2008).

Court holds that the ‘Good Samaritan’ provisions of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(2), immunize Internet Service Providers such as defendant Comcast from ‘good faith’ actions taken to block email marketers from sending email solicitations to users of the ISP’s services.  Plaintiff e360Insight brought this action in response to actions taken by Comcast to block it from sending email solicitations to Comcast customers.  Under the CDA, Comcast is entitled to immunity for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be … objectionable, whether or not such material is constitutionally protected …”.  230(c)(2)(A).  Thus, to be entitled to immunity, the ISP must show both that the materials it blocked are 'objectionable' and that it acted in good faith in blocking them.  The Court applied a subjective standard in determining whether the emails in question were objectionable and hence subject to blocking under the statute – i.e. the materials are objectionable if Comcast believes them to be objectionable.  Importantly, it did not matter if the emails complied with CAN-SPAM.  Said the Court:

compliance with CAN-SPAM, Congress decreed, does not evict the right of the provider to make its own good faith judgment to block mailings. …  Under the law, a mistaken choice to block, if made in good faith, cannot be the basis for liability under federal or state law.  To force a provider like Comcast to litigate the question of whether what it blocked was or was not spam would render Section 230(c)(2) nearly meaningless. 

Because Comcast believed the emails at issue were objectionable, and because plaintiff failed to adequately plead that Comcast did not act in good faith when it made its decision to block plaintiff’s emails, Comcast was entitled to immunity, and the Court dismissed the claims plaintiff asserted against it for violation of the Computer Fraud and Abuse Act and of plaintiff’s rights under the First Amendment, as well as for tortuous interference with prospective economic advantage and violation of the Illinois Consumer Fraud Act.

David Prickett, et al. v. InfoUSA, Inc., et al.
2006 WL 887431, Case No. 4:05-CV-10 (E.D. Texas, March 29, 2006).

Court holds that the Communications Decency Act immunizes InfoUSA, a provider of proprietary databases providing information concerning individuals and businesses, from suit seeking to hold it liable for false listings about plaintiffs provided to it by third parties, which InfoUSA included in a database it subsequently licensed for use to others.  The Court reached this result notwithstanding InfoUSA's representation that it provides "the utmost quality information" and "call[s] every business to verify the information, so you can be assured of the most current and accurate listings."  Plaintiffs could not pursue a claim based on the alleged falsity of this representation, because to do so would necessarily treat InfoUSA as a publisher of this information, which is prohibited by the Communications Decency Act.  Said the Court:

Additionally, the Plaintiffs argue that the Defendant operated as an information content provider because the defendant assures the accuracy of its listings via its verification process.  The Plaintiffs are presumably alleging that they were harmed by third party content and that the Defendant is liable for failing to verify the accuracy of the content.  'Any such claim by [the plaintiffs] necessarily treats the [defendant] as 'publisher' of the content and is therefore barred by Section 230.'  The plaintiffs' argument that they seek to hold the Defendant liable for its alleged failure to verify the accuracy of the listing does not remove this case from the immunity provided by Section 230.'

In this suit, plaintiffs claimed they were harassed by third parties who found the false information contained about them in defendant InfoUSA's database offensive.

Communications Decency Act - Immunity Denied - Updated November 21, 2008

9 Cal.Rpt.3d 142, A096451 (Cal. App. Crt., 1st App. Dist., October 15, 2003) reversed 40 Cal.4th 33, S 122953 (Cal. Sup. Ct., November 20, 2006)

Rejecting Zeran v. America Online, (4th Cir. 1997) and its progeny, an intermediate California Appellate court holds that the Communications Decency Act ("CDA") does not immunize a user of interactive computer services from a defamation claim arising out of her republication of statements authored by a third party, when the user knew or had reason to know of the falsity of those statements.  As a result, the Appellate Court reversed to much of the decision of the trial court below which had dismissed a defamation claim brought against defendant Ilena Rosenthal as a result of her republication in Usenet postings of a statement authored by a third party (defendant Timothy Bolen) which accused plaintiff Polevoy of criminal conduct.

The trial court had also rested its dismissal under California's Anti-SLAPP statute of plaintiffs' defamation claims on its determination that Polevoy lacked the requisite probability of success because, as a public figure, he could not prove that defendant Rosenthal acted with 'malice' when republishing Bolen's statements.  The Appellate court rejected this determination, holding that plaintiff may be able to establish that Rosenthal acted with the required malice, and therefore could proceed, notwithstanding Rosenthal's allegation that she had checked the veracity of the statements she was republishing with the alleged victim.  The Appellate Court held that such was insufficient to require dismissal of plaintiff's complaint, because of the alleged bias of both the victim and the original author of the posting against the plaintiff.

The Appellate Court did affirm the lower court's dismissal of defamation claims advanced by plaintiff Barrett, because the statements at issue were non-actionable opinion, as well as the trial court's decision to award Rosenthal attorney's fees expended in pursuing her Anti-SLAPP motion to dismiss (though reducing the recoverable amounts to reflect the reversal of that court's decision as to the claims asserted by Polevoy).

This decision, if followed, could have important ramifications for internet service providers and others who regularly repost publications authored by third parties without reviewing their content.  Under the court's ruling, service providers can be liable for defamation as a result of their republication of such statements if they know or have reason to know of the falsity of those statements.  According to the court "distributor liability would [generally] not require a service provider to review communications in advance of posting them but only to act reasonably after being put on notice that the communication is defamatory."  As a result, once the service provider receives notice (from the allegedly defamed individual) of falsity, it must either undertake adequate steps to ascertain the veracity of the statement, remove it, or face potential liability.  This creates tremendous uncertainty as the court did not specify what such adequate steps would be.  Indeed, as noted above, in the case at bar, where plaintiff alleged he was defamed by a statement that he had engaged in criminal conduct, the court held that contacting the victim was not sufficient as a matter of law to warrant dismissal of plaintiff's suit because of the victim's purported bias against plaintiff Polevoy.  Subsequent developments in this case should be watched closely by those interested in this field.

333 F.3d 1018, No. 01-56380 (9th Cir., June 24, 2003) petition rehearing and rehearing en banc, denied, 351 F.3d 904 (9th Cir., December 3, 2003)

In this defamation suit, the Ninth Circuit Court of Appeals holds that the operator of a listserv and website is a user of interactive computer services entitled to the protections of the Communications Decency Act ("CDA") against liability arising out of his publication of information provided by another information provider.  Because, however, the author of the information at issue claimed he did not mean for the defendant operator of the listserv to publish it, the Ninth Circuit remanded the case to the District Court for a determination as to whether the listserv operator was entitled to immunity under the CDA in this particular case.  Such immunity should be granted, held the Ninth Circuit, if the information in question was provided to the listserv operator by a third party under circumstances in which a reasonable person would conclude that the third party provided the information for publication on the Internet.  The Ninth Circuit accordingly vacated so much of the District Court's decision which denied defendant's motion to dismiss this defamation action under California's Anti-SLAPP statute, which motion was to be reconsidered on remand.  The Ninth Circuit also affirmed the District Court's rejection of plaintiff's defamation claims against Mosler, which were predicated solely on its placement of ads on the website at issue.

No. CV-06-1537-PHX-DGC (D. Az., September 5, 2008)

Court in large part grants defendants’ motion for summary judgment, and dismisses claims arising out of defendants’ operation of a website on which third parties, and defendants themselves, posted a number of statements critical of plaintiff Best Western International Inc.  Left unresolved by the Court’s motion were plaintiff’s claims that a number of additional posts authored by defendants were in fact defamatory.

Best Western is a non-profit member corporation, which assists its members in running their hotels.  Defendants are members of Best Western who operate hotels, their spouses, and an individual who assisted in the creation of the website at issue.  The member defendants are bound by the terms of membership agreements with plaintiff. 

The Court held that the immunity granted defendants under the Communications Decency Act barred plaintiff from seeking to hold them liable for defamatory posts authored by third parties that appeared on defendants’ website.  Defamation claims arising out of 50 posts defendants themselves authored failed because plaintiff did not present sufficient evidence to establish that defendants acted with the requisite degree of fault necessary to sustain a defamation claim.  Thus, plaintiff failed to establish that defendants acted with either actual malice or negligence in making these statements, or with knowledge of their alleged falsity.   In reaching this result the Court noted that possessing ill will toward plaintiff was insufficient to establish ether that defendants acted with the requisite degree of fault, or that they were guilty of defaming plaintiff. 

The Court also rejected tortuous interference with contract or prospective advantage claims arising out of the posting on defendants’ site of statements urging plaintiff’s members to switch to a competitor’s organization.  The Court held that plaintiff failed to prove either that such statements caused it any injury, or that defendants or the competitor acted improperly in making these posts.  In reaching this result, the Court noted that plaintiff’s competitor is free to make posts that promote itself and its own economic interests.

Finally, the Court rejected various breach of contract claims advanced by plaintiff, asserting that defendants breached the parties’ membership agreement by making public confidential information, or failing to meet the membership agreement’s requirement to use their best efforts to maintain positive relationships with customers.  As to the former, the Court held there were no such prohibitions in the parties’ agreement that bound defendants.  As to the later, the Court held that the prohibitions applied to other aspects of defendants’ business, with which obligations defendants complied.

The Court did allow plaintiff Best Western to pursue breach of contract claims arising out of the use by the member defendants of Best Western’s trademark on the website at issue, which use purportedly violated the parties’ membership agreement.

207 F. Supp. 2d 1055 (C.D. Cal., March 11, 2002), aff'd. on other grds., 339 F.3d 1119, No. 02-55658 (9th Cir., August 13, 2003)

Court grants motion of defendants Metrosplash.com and Lycos for summary judgment, and dismisses claims of invasion of privacy, defamation, misappropriation of right of publicity and negligence brought against them by plaintiff Carafano, an actress.  These claims arose out of the posting of a dating profile by a third party on the defendants' Matchmaker website, which profile allegedly contained fictious information about plaintiff, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendants to which site members had to respond.

The court rejected defendants' argument that plaintiff's claims were barred by application of Section 230 of the Communications Decency Act.  While the defendants were "interactive service providers" within the meaning of the statute by virtue of their operation of the Matchmaker website, defendants were not entitled to the statute's protection because of the role they played in originating the content in question.  Such protections are available only as to claims arising out of information provided by an information content provider other than the defendant.  The court barred defendants from using the CDA as a shield because the information in question was posted in response to a questionnaire prepared by defendants.

Nonetheless, the court dismissed each of the claims raised by plaintiff against defendants.  Plaintiff's invasion of privacy claim failed because the information in question, her address, was "newsworthy," making its publication non-actionable.  The defamation claim was dismissed because, given plaintiff's status as a public figure, she could not show that defendants acted with actual malice in publishing the statements in question, a prerequisite to such a claim.  Such malice was absent because defendants were unaware of the information contained in "plaintiff's" profile at the time it was posted to defendants' site by a third party, and thus did not entertain any serious doubt as to its truth at the time it was published.  Plaintiff's misappropriation of right of publicity and negligence claims failed for the same reason, plaintiff's inability to establish that defendants acted with the requisite actual malice.

CV 2007-003720 (D. Ariz., October 24, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(1), mandates dismissal of so much of plaintiff’s defamation claim that arises from the publication by third parties of comments critical of plaintiff on a website defendants operate known as the “ripoffreport.com.”  The CDA further mandates dismissal of claims arising out of defendants’ promotion of its site and the allegedly objectionable content thereon, making the site more accessible to search engines and users, or soliciting contributions to assist in making the information on the site available.  The Court did , however, allow plaintiff to pursue defamation claims arising out of the headlines for third party content authored by the defendants, which themselves purportedly contained defamatory content.

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

489 F.3d 921, CV-03-09386-PA (9th Cir., May 15, 2007) aff'd en banc 2008 WL 879293 (9th Cir., April 3, 2008).

A divided three judge panel of the Ninth Circuit limited the immunity afforded by the Communications Decency Act (“CDA”), 47 U.S.C. section 230, for website operators involved in the publication and distribution of the responses to questionnaires completed by third parties concerning their roommate preferences. 
The Panel unanimously held that the CDA did not immunize defendant Roommates.com from potential liability for drafting and posting questionnaires that sought information from those using the site about their roommate preferences.  These questionnaires, among other things, sought information about the preferred sexual orientation of the prospective roommate, and were used to create member profiles.  The Panel held that the CDA did not immunize Roommates.com from potential liability under the Fair Housing Act (“FHA”) for requiring members to answer questions that potentially enabled other members to discriminate for or against them.

By a vote of 2 to 1, the Panel further held that the CDA did not immunize Roommates.com from potential liability under the FHA for publishing and distributing member profiles created in response to Roommates.com’s questionnaires.  Roommates.com used the content of a user’s responses to its questionnaires to determine who among its members should receive notice that they were seeking a roommate, and/or be permitted to view that user’s profile.  For example, an individual with children was not shown a listing for an apartment occupied by an individual seeking a roommate without children.  The court held that by categorizing, channeling and limiting the distribution of user profiles, Roommates.com was sufficiently involved in the creation of the distributed information to lose the immunity afforded by the CDA to interactive service providers who make available content drawn by third parties. As a result, the Ninth Circuit allowed plaintiffs to proceed with claims that by such conduct, Roommates.com violated the FHA.

Finally, by a vote of 2 to 1, the Court held that the CDA did immunize Roommates.com from potential FHA liability arising out of its publication of users’ responses to Roommates.com’s requests for “Additional comments” concerning their roommate preferences.  In this section of its questionnaire, Roommates.com “strongly recommend[ed the user] tak[e] a moment to personalize your profile by writing a paragraph or two describing yourself and what you are looking for in a roommate.”  This question produced the most provocative – and potentially discriminatory - responses found in user profiles.  The court held that the responses to this question constituted content created by third parties within the meaning of the CDA.  As a result, held the Court, by application of the CDA, Roommates.com could not be held liable for publishing these responses on its website.

Case No. 06-CV-105-D (D. Wy., September 28, 2007)

Court finds defendants guilty of engaging in unfair business practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. Section 45(a), by obtaining and selling confidential customer phone records without the affected customers’ authorization.  The Court found that defendant Abika.com arranged for the purchase of these phone records from third party vendors, which they subsequently resold via their website to third parties.  Illegal means were used by these vendors to obtain the confidential phone records, a fact of which, the Court found, defendant was aware.

In reaching this result, the Court rejected defendants’ claim that they were immunized from suit by application of Section 230 of the Communications Decency Act (“CDA”).  Defendants attempted to come within the ambit of the CDA by casting themselves as a search engine that put those seeking to purchase phone records in touch with ‘researchers’ seeking to sell them.  This characterization of their conduct was rejected by the Court.   The Court held that CDA immunity was not available to defendants because the claims at issue did not seek to treat them as the publisher of information, a prerequisite to such immunity.  Rather, they arose out of defendants’ purchase and resale of confidential information to third parties that was obtained through illegal means.  The Court further held that CDA immunity was not available because of defendants’ role in causing the information at issue to be obtained.  As such, defendants were held to have ‘participated in the creation or development of the information, and thus do not qualify for Section 230 immunity.’

Finally, the Court rejected defendants’ claim that the FTC was equitably estopped by its prior failure to prosecute phone record brokers from doing so here.  Such alleged inactivity was insufficient to estop the government from enforcing the laws of the land.

135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

2008 WL 618988, No. C 07-03967 MHP (N.D. Ca., March 4, 2008)

Court holds that the purported dispute resolution provisions contained in auction company’s online Terms and Conditions are unconscionable, and unenforceable against an individual dissatisfied with an auction in which she participated.  The dispute resolution provision mandated that the parties’ dispute be resolved in a binding proceeding before a representative of ‘In House Attorneys, P.C.’ in which each side was permitted only one hour to present their case, and could not call fact or expert witnesses nor be represented by counsel. 

As a result, the Court allowed plaintiff to proceed with claims against the defendant Hot Jewelry Auctions.com - who ran the auction - grounded on claims that defendant engaged in ‘shill bidding.’ 

Plaintiff was also allowed to proceed with claims against eBay as a result of her participation in this auction, via eBay’s Live Auction service.  In promoting this service, eBay claimed that “bidding on eBay Live Auctions is very safe.  All live auctions are run by reputable international auction houses, which are carefully screened by eBay before being authorized to sell to you.”  Notwithstanding the fact that eBay was responsible for this content, and derived a profit by promoting use of its Live Auction service, the Court held that it was immunized by application of the Communications Decency Act (“CDA”) from fraud and other claims arising out of so much of its promotional materials that advised consumers that eBay ‘carefully screened’ the auction houses allowed to participate in Live Auction.  The Court reasoned that to allow plaintiff to pursue such claims would expose eBay to “liabil[ity] for its exercise of a publisher’s traditional editorial functions” which is barred by the CDA.  As such, the Court barred plaintiff from pursuing claims that this representation was false because eBay allegedly did not ‘screen’ auction houses before permitting them to participate in such Live Auctions or because it knew that the auction house was engaged in illegal conduct – such as shill bidding – and failed to take appropriate steps in light thereof.   

The Court did permit plaintiff to proceed with claims arising out of eBay’s representation that such auctions were ‘safe,’ holding the same were not barred by application of the CDA because ‘eBay’s statements regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion.’  Nor were such claims barred by application of eBay’s Live Auction User agreement, which immunized eBay from any disputes a consumer might have with the auction house itself, as this dispute arose out of eBay’s own purported misconduct – namely misrepresenting that the auction was ‘safe.’  Because plaintiff had failed to plead with the requisite particularity that she relied on this statement in deciding to participate in the auction in question, however, her fraud claim was dismissed with leave to replead.

No. 06-11888 (11th Circuit, August 1, 2006)

Eleventh Circuit holds that plaintiff's defamation claims against operators of consumer complaint sites arising out of the posting on those sites of allegedly defamatory complaints purportedly authored by third parties is sufficient to survive a motion to dismiss predicated on the immunity afforded the operators of interactive computer services under the Communications Decency Act ("CDA").  The complaint alleged that defendants edited consumer complaints to include words such as "ripoff" and "scam", and fabricated others.  The ultimate resolution of defendants' entitlement to immunity for their involvement in the publication of the posts at issue will have to await the trial of this matter.

As a result of this determination, the Eleventh Circuit reversed the decision of the District Court, which had dismissed the action for want of personal jurisdiction.  The lower court's decision was grounded on its determination that no tort was committed by defendants in Florida, due to the application of the CDA.   The Eleventh Circuit rejected this determination, and remanded the matter to the District Court to determine whether the Court could appropriately exercise personal jurisdiction over the defendants consistent with the strictures of the Due Process clause of the United States Constitution.

Communications Decency Act - Immunity Denied Quick Hits

Robert Anthony v. Yahoo! Inc.
421 F.Supp.2d 1257 (N.D. Ca. March 17, 2006)

Court holds that Communications Decency Act does not bar fraud and negligent misrepresentation claims advanced against Yahoo as a result of its alleged creation of false user profiles.  These false user profiles were allegedly included in online dating services Yahoo operates to cause users such as plaintiff to sign-up for, or renew their subscriptions to, the service.   The Court further held that the Communications Decency Act did not bar claims that asserted that Yahoo falsely represented to subscribers that various expired user profiles were in fact still current in an effort to cause them to continue their subscriptions.  Said the Court:

Anthony alleges that Yahoo creates false profiles, not merely fails to delete them. ... In addition, Anthony claims that Yahoo sends users false profiles for the purpose of luring them into renewing their subscriptions. ... No case of which this court is aware has immunized a defendant from allegations that it created tortious content. ... If, as Anthony claims, Yahoo manufactured false profiles, then it is an 'information content provider' itself and the CDA does not shield it from tort liability.  In addition, the CDA does not defeat Anthony's allegations that Yahoo sent 'profiles of actual legitimate former subscribers whose subscriptions had expired and who were no longer members of the service, to current members of the service.  Admittedly, third parties created there profiles.  Nevertheless, the CDA only entitles Yahoo not to be 'the publisher or speaker' of the profiles.  It does not absolve Yahoo from liability for any accompanying misrepresentations.  Because Anthony posits that Yahoo's manner of presenting the profiles - not the underlying profiles themselves - constitute fraud, the CDA does not apply.

Communications Decency Act - Immunity Granted - Updated November 22, 2008

26 Med. L. Rptr. 1032 (Cal. Superior Crt., San Francisco City and County, Sept. 23, 1997)

Communications Decency Act preempts state law claims against ISP for negligence, breach of contract, intentional infliction of emotional distress, alter ego liability, injunctive relief and violation of civil rights arising from IPS's distribution of material written by another that contained derogatory comments about plaintiffs, including that they were the "ring leaders" of an "international conspiracy" to further "Satanic Ritual Abuse" of children.

1 CA-CV 04-0823, 125 P.3d 389 (Arz. Crt. App., 2006)

Court holds that the Communications Decency Act, 47 U.S.C. § 230 ("CDA") immunizes web hosting company from liability arising out of its hosting of a third party's website that allegedly contained defamatory statements about plaintiff.  Following the Fourth Circuit's decision in Zeran v. AOL, the Court holds that such immunity exists notwithstanding any notice the web hosting company received concerning the defamatory nature of the content it was hosting.  The Court also dismisses plaintiff's defamation claims against the originator of the content at issue, holding it lacks personal jurisdiction over him.  The Court reached this result notwithstanding the fact that this defendant had contracted with an Arizona web hosting company to host the website which contained the defamatory statements at issue.  The Court held the exercise of jurisdiction over the defendant would be unreasonable given the fact he was a non-resident, the parties each operated Bali-related travel services, and the dispute was governed by Bali law.

2005 WL 3005602, Civ. No. 05-926-AA (D. Or., November 8, 2005)

Court holds that the Communications  Decency Act, 47 U.S.C. § 230 ("CDA"), immunizes defendant Yahoo, Inc. ("Yahoo") from tort claims arising out of its alleged failure to timely honor promises to remove from Yahoo's web site objectionable content about plaintiff posted by a third party.  The content consisted of "profiles" contained both nude photos of plaintiff, and accurate contact information.

S122953, 40 Cal.4th 33 (Cal. Sup. Ct., November 20, 2006)

Reversing the Court of Appeals, the California Supreme Court holds that Section 230 of the Communications Decency Act ("CDA") immunizes defendant Ilena Rosenthal ("Rosenthal") from defamation claims arising out of her republication in two online newsgroups of an allegedly defamatory article authored by a third party.  In reaching this result, the California Supreme Court rejected the Court of Appeals' attempts to limit the immunity afforded by Section 230(c)(1) of the CDA to publishers, while leaving exposed to defamation claims "distributors" of defamatory statements who have notice of the defamatory nature of the statements they distribute.  The Supreme Court held that such "distributors," commonly know as "secondary publishers," are entitled to the same broad immunity afforded publishers under the CDA.  As explained by the Fourth Circuit in Zeran v. AOL, cited with approval by the California Supreme Court, the CDA "creates a federal immunity to any cause of action that would make service providers liable for information originating with a third party user of the service" except claims such as those arising under the Intellectual Property laws, specifically exempted by the statute.

The Supreme Court also held that the broad immunity afforded under the statute to the providers of interactive computer services extended by operation of the statute's express language to "users" of such services.  "Users" protected by the CDA included those who use an interactive computer service to access the Internet and thereby to post or republish on the Internet a defamatory statement authored by a third party.  As stated by the Court, "by declaring that no 'user' may be treated as a 'publisher' of third party content, Congress has comprehensively immunized republication by individual Internet users."

No. CV-06-1537-PHX-DGC (D. Az., September 5, 2008)

Court in large part grants defendants’ motion for summary judgment, and dismisses claims arising out of defendants’ operation of a website on which third parties, and defendants themselves, posted a number of statements critical of plaintiff Best Western International Inc.  Left unresolved by the Court’s motion were plaintiff’s claims that a number of additional posts authored by defendants were in fact defamatory.

Best Western is a non-profit member corporation, which assists its members in running their hotels.  Defendants are members of Best Western who operate hotels, their spouses, and an individual who assisted in the creation of the website at issue.  The member defendants are bound by the terms of membership agreements with plaintiff. 

The Court held that the immunity granted defendants under the Communications Decency Act barred plaintiff from seeking to hold them liable for defamatory posts authored by third parties that appeared on defendants’ website.  Defamation claims arising out of 50 posts defendants themselves authored failed because plaintiff did not present sufficient evidence to establish that defendants acted with the requisite degree of fault necessary to sustain a defamation claim.  Thus, plaintiff failed to establish that defendants acted with either actual malice or negligence in making these statements, or with knowledge of their alleged falsity.   In reaching this result the Court noted that possessing ill will toward plaintiff was insufficient to establish ether that defendants acted with the requisite degree of fault, or that they were guilty of defaming plaintiff. 

The Court also rejected tortuous interference with contract or prospective advantage claims arising out of the posting on defendants’ site of statements urging plaintiff’s members to switch to a competitor’s organization.  The Court held that plaintiff failed to prove either that such statements caused it any injury, or that defendants or the competitor acted improperly in making these posts.  In reaching this result, the Court noted that plaintiff’s competitor is free to make posts that promote itself and its own economic interests.

Finally, the Court rejected various breach of contract claims advanced by plaintiff, asserting that defendants breached the parties’ membership agreement by making public confidential information, or failing to meet the membership agreement’s requirement to use their best efforts to maintain positive relationships with customers.  As to the former, the Court held there were no such prohibitions in the parties’ agreement that bound defendants.  As to the later, the Court held that the prohibitions applied to other aspects of defendants’ business, with which obligations defendants complied.

The Court did allow plaintiff Best Western to pursue breach of contract claims arising out of the use by the member defendants of Best Western’s trademark on the website at issue, which use purportedly violated the parties’ membership agreement.

992 F. Supp. 44 (D.D.C. April 22, 1998)

Court holds defamation claim against AOL as a result of its making available a gossip column written by a third-party content provider titled the"Drudge Report" was barred by the Communications Decency Act. Court reached this conclusion notwithstanding the fact that AOL had reserved the right to exercise control over the Report's editorial content, and further, had promoted the report as a gossip column, thereby acknowledging the nature of the report's general content and the risks inherent therein.

The court denied defendant Drudge's motion to dismiss for want of personal jurisdiction. Drudge's maintenance of an interactive website, on which his Report appeared, which permitted users to subscribe to the Drudge report via e-mail, and solicited contributions from forum residents to defray publication costs, combined with other contacts with Washington D.C., including a visit to D.C. to promote the report, and mail and phone contacts to obtain gossip, made the exercise of jurisdiction over him appropriate.

339 F.3d 1119 (9th Cir., August 13, 2003)

Ninth Circuit holds that operator of online dating service is immunized by the Communications Decency Act ("CDA") from defamation, invasion of privacy, misappropriation of right of publicity and negligence claims arising out of the unauthorized posting on defendant's website by a third party of a fictitious dating profile.  This profile contained fictitious information about plaintiff, an actress, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendant to which all users of its service had to respond.

461 F.Supp.2d 681, Case No. 06 C 0657 (N.D. Ill., November 14, 2006) aff'd -- F.3d -- (7th Cir. Mar. 14, 2008)

Court holds that the Communications Decency Act ("CDA") immunizes defendant Craigslist, Inc. ("Craigslist") from liability for publishing housing ads authored by third parties that allegedly violate the Fair Housing Act, 42 U.S.C. § 3604(c) ("FHA").  In reaching this result, the Court held that the immunity afforded internet service providers under section 230(c)(1) of the CDA only extends to claims seeking to hold an ISP liable as a publisher for content authored by third parties, and not to all claims arising out of the ISP's role in giving the public access to such content.  Because the FHA claims at issue were premised on Craigslist's publication of offensive ads authored by third parties, the Court held they were barred by the immunity granted under Section 230(c)(1).

No. 07-1101 (7th Cir., March 14, 2008)

Affirming the District Court below, the Seventh Circuit holds that Craigslist cannot be held liable for violating the Fair Housing Act as a result of its online publication of discriminatory housing ads authored by third parties. To hold Craigslist liable for such conduct would require it to be treated as a ‘publisher’ of these advertisements, which is prohibited by Section 230(c)(1) of the Communications Decency Act.  As a result, the Seventh Circuit affirms the District Court’s grant of summary judgment, dismissing plaintiff’s Fair Housing Act claims against Craigslist.

CV 2007-003720 (D. Ariz., October 24, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(1), mandates dismissal of so much of plaintiff’s defamation claim that arises from the publication by third parties of comments critical of plaintiff on a website defendants operate known as the “ripoffreport.com.”  The CDA further mandates dismissal of claims arising out of defendants’ promotion of its site and the allegedly objectionable content thereon, making the site more accessible to search engines and users, or soliciting contributions to assist in making the information on the site available.  The Court did , however, allow plaintiff to pursue defamation claims arising out of the headlines for third party content authored by the defendants, which themselves purportedly contained defamatory content.

351 F.Supp. 2d 1090 (W.D. Wash., December 21, 2004)

Court holds that the Digital Millennium Copyright Act ("DMCA") immunizes Amazon.com, Inc. ("Amazon") from copyright infringement claims arising out of the sale by nonaffiliated third party vendors on Amazon.com of photographs in which plaintiff claims a copyright.  In reaching this result, the Court held that Amazon had met both the DMCA's threshold requirements, as well as the requirements necessary to qualify for the protection of the safe harbor provisions of 17 U.S.C. § 512(c).  512(c) protects service providers from liability for copyright infringement by reason of their storage of infringing materials at the direction of a third party.

The Court dismissed plaintiff's Lanham Act claim, finding that it was the Copyright Act, and not the Lanham Act, that provided any remedy for the alleged wrongs at issue.  The Court also dismissed plaintiff's Washington State law Consumer Protection Act and tortious interference with business relations claims, finding Amazon immunized therefrom by operation of the Communications Decency Act.

Finally, the Court held that issues of fact precluded dismissal of copyright infringement claims plaintiff asserted arising out of the alleged use of one of its copyrighted images in an advertisement on a separate website owned by Amazon.

52 Cal.Rptr. 3d 376 (Cal. Crt. App., December 14, 2006)

A California intermediate appellate court holds that the Communications Decency Act ("CDA"), 47 U.S.C. Section 230(c), immunizes an employer from claims arising out of the transmission by a then employee of threatening emails to, and posts about, plaintiffs from his office computer.  As a result, the Court of Appeals affirmed the dismissal of intentional infliction of emotional distress claims advanced by plaintiffs against Agilent Technologies.  Plaintiffs had sought to hold Agilent Technologies responsible for its employee's threatening conduct on theories of respondeat superior, negligent supervision/retention, and ratification. 

The Court further held defendant entitled to summary judgment dismissing such claims on the facts before it.  The respondeat superior claim failed because the evidence established that the employee was acting outside the scope of his employment when he transmitted the threatening emails in question.  The negligent supervision/retention claim similarly failed because there was no evidence that Agilent Technologies was aware of its employee's activities when he was transmitting the emails at issue from his office computer.  Agilent only learned of this misconduct after the fact, at which time it terminated the employee.  Finally, there was no evidence that the defendant employer ratified its employee's misconduct.

433 F. Supp. 2d 523 (E. D. Pa., May 26, 2006), aff'd., No. 06-3171 (3rd Cir., September 19, 2007).

Communications Decency Act immunizes operator of message board from defamation claims arising out of posts appearing thereon that were authored by others.  Such immunity extends to the defendant operator notwithstanding plaintiff’s claim that the defendant edits posts that appear on his boards, and selects posts that will either be published thereon, or removed therefrom.  The Court accordingly dismissed with prejudice defamation claims asserted by plaintiff Anthony DiMeo III arising out of offensive postings that appeared on defendant’s message boards. 

The Court also dismissed plaintiff’s claim that defendant violated the criminal statute 47 U.S.C. § 223 (a)(1)(C), which prohibits use of a telecommunications device anonymously to harass another.  Defendant neither acted anonymously – his name appeared both in the domain name and title of the message boards found on his website – nor did he use a telecommunications device, within meaning of the statute, in operating his web site.

Analysis of the Third Circuit's decision can be found below in the Quick Hits section of this page.

Case No. CL 97-631AE (Cir. Ct. Palm Beach Co. Fla, June 26, 1997), aff'd. 718 So. 2d 385 (Fl. Ct. App., Oct. 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Communications Decency Act preempts state law claim of improper participation in sale or distribution of obscene material asserted against information service provider as a result of its alleged notice that third party was using ISP's chat rooms to market pornographic materials. Court further held that CDA applies retroactively to preempt state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Case No. 97-2587, 718 So. 2d 385 (Fourth District Court of Appeal, Fla, October 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Relying heavily on Zeran v. AOL, 129 F.2d 327 (4th Cir. 1997) cert. denied, 118 S.Ct. 2341 (1998), the Florida District Court of Appeal affirmed the lower court's holding that the Communications Decency Act preempts state law claims advanced against an information service provider arising out of the ISP's allegedly improper participation in the sale or distribution of obscene material due to its alleged notice that a third party was using the ISP's chat rooms to market pornographic materials. The Court also affirmed that lower court's holding that the CDA preempts state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

No. 07-50345 (5th Cir., May 16, 2008)

Affirming the decision of the District Court below, the Fifth Circuit holds that section 230(c)(1) of the Communications Decency Act immunizes the social networking site Myspace Inc. from claims of negligence and gross negligence arising out of the alleged sexual assault of a minor made possible by her posting of a ‘user profile’ on Myspace.com.  As a result of this posting, a male, age 19, made contact with the minor, who falsely represented she was 18, and sexually assaulted her.  The Fifth Circuit held Myspace was immunized from plaintiff’s negligence and gross negligence claims, because they sought to hold Myspace liable for its role in making content authored by a third party – the minor’s user profile and personal information contained therein – available to third parties. 

In reaching this result, the Fifth Circuit rejected plaintiff’s attempt to avoid the bar of the CDA by arguing that they sought to hold Myspace liable for its alleged failure to institute adequate safety measures to protect minors, particularly from sexual predators.

Because the Fifth Circuit held that Section 230(c)(1) of the CDA barred plaintiffs’ claims, the Court did not review so much of the District Court’s decision that held that those claims were also barred by both Section 230(c)(2) of the Communications Decency Act, as well as applicable principles of Texas common law.

2000 U.S. Dist. Lexis 8845 (N.D. Ill., June 21, 2000)

Court holds that those engaging in web site hosting activities are immunized by the Communications Decency Act, 47 U.S.C. 230(c) from liability arising out of their involvement, via those activities, in the dissemination or publication of information originating from third parties. Section 230(c)(1) provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." The court held that those who provide web hosting services are service providers within the meaning of the CDA, and hence entitled to the immunity it provides. Said the court: "by offering web hosting services which enable someone to create a web page, [defendants] are not magically rendered the creators of those web pages. See 47 U.S.C. 230(c)(1). As such, plaintiffs' new characterization of [defendants] as web hosts neither prevents these defendants from being deemed service providers protected by immunity under the CDA nor makes them content providers unprotected by the CDA's immunity."

27 Med. L. Reptr. 1794(D.N.M., Mar. 1, 1999), aff'd. 206 F.3d 980 (10th Cir.,Mar. 14, 2000), cert. denied, 531 U.S. 824 (Oct. 2, 2000)

Court dismissed claims of defamation and negligence asserted by plaintiff company against America Online ("AOL") arising out of AOL's posting of allegedly inaccurate stock quotes concerning plaintiff on its website, which quotes had been supplied to AOL by third-party content providers. Court held that such claims were barred by 47 U.S.C. §230, and the immunity granted thereunder to providers of "interactive computer services" such as AOL, for publication of content prepared by third-party information content providers. This dismissal was mandated even though AOL attempted to have its vendors correct the errors at issue.

489 F.3d 921, CV-03-09386-PA (9th Cir., May 15, 2007) aff'd en banc 2008 WL 879293 (9th Cir., April 3, 2008).

A divided three judge panel of the Ninth Circuit limited the immunity afforded by the Communications Decency Act (“CDA”), 47 U.S.C. section 230, for website operators involved in the publication and distribution of the responses to questionnaires completed by third parties concerning their roommate preferences. 
The Panel unanimously held that the CDA did not immunize defendant Roommates.com from potential liability for drafting and posting questionnaires that sought information from those using the site about their roommate preferences.  These questionnaires, among other things, sought information about the preferred sexual orientation of the prospective roommate, and were used to create member profiles.  The Panel held that the CDA did not immunize Roommates.com from potential liability under the Fair Housing Act (“FHA”) for requiring members to answer questions that potentially enabled other members to discriminate for or against them.

By a vote of 2 to 1, the Panel further held that the CDA did not immunize Roommates.com from potential liability under the FHA for publishing and distributing member profiles created in response to Roommates.com’s questionnaires.  Roommates.com used the content of a user’s responses to its questionnaires to determine who among its members should receive notice that they were seeking a roommate, and/or be permitted to view that user’s profile.  For example, an individual with children was not shown a listing for an apartment occupied by an individual seeking a roommate without children.  The court held that by categorizing, channeling and limiting the distribution of user profiles, Roommates.com was sufficiently involved in the creation of the distributed information to lose the immunity afforded by the CDA to interactive service providers who make available content drawn by third parties. As a result, the Ninth Circuit allowed plaintiffs to proceed with claims that by such conduct, Roommates.com violated the FHA.

Finally, by a vote of 2 to 1, the Court held that the CDA did immunize Roommates.com from potential FHA liability arising out of its publication of users’ responses to Roommates.com’s requests for “Additional comments” concerning their roommate preferences.  In this section of its questionnaire, Roommates.com “strongly recommend[ed the user] tak[e] a moment to personalize your profile by writing a paragraph or two describing yourself and what you are looking for in a roommate.”  This question produced the most provocative – and potentially discriminatory - responses found in user profiles.  The court held that the responses to this question constituted content created by third parties within the meaning of the CDA.  As a result, held the Court, by application of the CDA, Roommates.com could not be held liable for publishing these responses on its website.

99 Cal. App. 4th 816, Super Ct. No. GIC746980 (Cal. Crt. App., June 26, 2002)

California intermediate appellate court affirms the decision of the trial court, and dismisses claims brought by plaintiffs against eBay under both California's Autographed Sports Memorabilia statute and California's Unfair Competition law, as well as for negligence, arising out of plaintiffs' purchase of allegedly non-authentic autographed sports memorabilia offered for sale by third parties on eBay's web site. Plaintiffs sought to hold eBay liable under California's Autographed Sports Memorabilia statute as a result of eBay's alleged failure to supply certificates warranting the authenticity of the goods purchased.  The court held that eBay was not obligated to supply the certificates because it was not a "dealer" of sports memorabilia within the meaning of the statute, as the goods in question were sold by third parties.  The court further held that section 230 of the Communications Decency Act ("CDA") immunized eBay from any liability arising out of its failure to supply these certificates.  The court held that, however couched, plaintiffs' claim sought to hold eBay liable for the allegedly false descriptions of the goods supplied by third parties.  As the CDA creates "federal immunity to any cause of action that would make interactive service providers liable for information originating with a third party use of the service" (excepting intellectual property claims) plaintiffs' Autographed Sports Memorabilia claims had to be dismissed.

The court held that plaintiffs' negligence and Unfair Competition claims were also barred by the CDA as each of these claims was also premised on content supplied by third parties.  These claims attacked eBay for giving the sellers of the goods at issue positive ratings concerning their past sales history, and urging purchasers to rely thereon in making their decision to purchase goods from those sellers.  These positive ratings were, however, simply an accurate reporting of customer feed back supplied by third parties concerning their alleged transactions with the sellers.  As such, eBay could not be held liable for the inaccuracy of such positive ratings because to do so would be to hold eBay liable for content originated by third parties, which is barred by the CDA.

No. 07-956-PHX-FJM (D.Az. October 10, 2007)

Court dismisses defamation claims advanced against defendant, operator of the website ripoffreport.com, arising out of defendants’ publication of statements authored by a third party that were critical of plaintiffs.  The Court held such claims barred by application of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230.  Notably, the court refused to issue plaintiff relief notwithstanding the fact that the author of the statements at issue allegedly requested without success that defendants remove them from ripoffreport.com.

The Court also declined to enforce a preliminary injunction issued on default by a Canadian court, directing defendants to remove the statements at issue from their website, on the ground that United States courts will not enforce injunctions issued by foreign courts.

318 F.3d 465, No. 01-1120 (3rd Cir., January 16, 2003)

Affirming the decision of the court below, the Third Circuit holds that the Communications Decency Act ("CDA") immunizes America Online ("AOL") from claims arising out of the transmission by unrelated third parties in an AOL chat room of (i) a "punter program", which disrupts the operation of the recipient's computer, and (ii) defamatory messages concerning the plaintiff.  The Third Circuit further holds that AOL's allegedly negligent failure to prevent such events from occurring did not breach its Member Agreement, in which it expressly disclaimed liability for the transmissions of others.

474 F. Supp. 2d 843, Case No. A-06-CA-983-SS (W.D. Texas, February 13, 2007) aff'd., No. 07-50345 (5th Cir., May 16, 2008).

Court dismisses negligence and gross negligence claims asserted against defendant Myspace, Inc. (“Myspace”) arising out of the alleged sexual assault of a minor made possible by her posting of a “user profile” on Myspace.com.  As a result of this posting, a male, age 19, made contact with the minor who falsely represented she was 18, obtained her telephone number and arranged a meeting at which she was allegedly sexually assaulted.  The Court held Myspace immunized from such claims by application of the Communications Decency Act, 47 U.S.C. Section 230, because, at bottom, plaintiffs’ claims sought to hold Myspace liable as a result of its role in the publication of the minor’s user profile.  The Court also held plaintiffs’ claims barred by Section 230(c)(2)(A), as they sought to hold Myspace liable for its purported negligence in failing to verify the minor’s age.  The minor was 13 at the time she posted a user profile in which she falsely claimed to be 18.  Myspace does not permit those below 14 to use its services.

The Court also dismissed plaintiffs’ negligence claims, which sought to hold Myspace liable for its purported negligent failure to institute measures designed to protect minors from sexual predators and to take appropriate steps to verify their age.  The Court held that, like Federal Express and other common carriers, Myspace owed no duty to the minor which could form the basis of such a claim.

Finally, the Court dismissed plaintiffs’ fraud and negligent misrepresentation claims as a result of plaintiffs’ failure to plead such claims with the requisite particularity.

502 F.Supp. 2d 719, Case No. 3:07 CV 604 (N.D. Ohio, August 22, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230, immunizes operator of online adult dating service from claims arising out of a user’s false statement in her user-profile that she was over 18.  Relying on this profile, plaintiff met and had consensual sexual relations with a minor, for which he was subsequently arrested.  Plaintiff brought this suit, seeking redress.  Importantly, the contract between the parties expressly provided that SexSearch.com does not “assume any responsibility for verifying the accuracy of the information provided by other users of the Service.”  Because plaintiff sought to hold SexSearch.com, a provider of Interactive Computer Services, liable for its publication of content authored by another, his claims, whether couched as breach of contract, fraud or negligent misrepresentation, were barred by application of the CDA.  Plaintiff’s breach of contract claim similarly failed because SexSearch did not assume responsibility for verifying the age of users.

2007 WL 530156, Civ. Act. No. 06-319-JJF (D. Del. February 20, 2007)

The Court held that the First Amendment, and the guaranties afforded Google and Yahoo thereunder, barred claims seeking redress as a result of Google and Yahoo's refusal to run advertisements on their search engines they did not wish to run.  In reaching this result, the Court followed decisions that afforded newspapers similar First Amendment protections when challenges arose concerning their refusal to run advertisements they deemed objectionable.  As a result, the Court dismissed claims advanced by plaintiff arising out of the defendants' refusal to run his advertisements, including claims that the defendants defrauded him and engaged in deceptive business practices, violated his First Amendment rights, and failed to meet the duties imposed on those, like inn keepers, engaged in a public calling.

The Court also held that Google and Yahoo were immunized from such claims by the Communications Decency Act, 27 U.S.C. Section 230, which "bars 'lawsuits seeking to hold a service provider liable for its exercise of a publisher's traditional editorial functions - such as deciding whether to publish, withdraw, alter or postpone content.'" It should be noted that plaintiff was proceeding pro se.

2008 WL 618988, No. C 07-03967 MHP (N.D. Ca., March 4, 2008)

Court holds that the purported dispute resolution provisions contained in auction company’s online Terms and Conditions are unconscionable, and unenforceable against an individual dissatisfied with an auction in which she participated.  The dispute resolution provision mandated that the parties’ dispute be resolved in a binding proceeding before a representative of ‘In House Attorneys, P.C.’ in which each side was permitted only one hour to present their case, and could not call fact or expert witnesses nor be represented by counsel. 

As a result, the Court allowed plaintiff to proceed with claims against the defendant Hot Jewelry Auctions.com - who ran the auction - grounded on claims that defendant engaged in ‘shill bidding.’ 

Plaintiff was also allowed to proceed with claims against eBay as a result of her participation in this auction, via eBay’s Live Auction service.  In promoting this service, eBay claimed that “bidding on eBay Live Auctions is very safe.  All live auctions are run by reputable international auction houses, which are carefully screened by eBay before being authorized to sell to you.”  Notwithstanding the fact that eBay was responsible for this content, and derived a profit by promoting use of its Live Auction service, the Court held that it was immunized by application of the Communications Decency Act (“CDA”) from fraud and other claims arising out of so much of its promotional materials that advised consumers that eBay ‘carefully screened’ the auction houses allowed to participate in Live Auction.  The Court reasoned that to allow plaintiff to pursue such claims would expose eBay to “liabil[ity] for its exercise of a publisher’s traditional editorial functions” which is barred by the CDA.  As such, the Court barred plaintiff from pursuing claims that this representation was false because eBay allegedly did not ‘screen’ auction houses before permitting them to participate in such Live Auctions or because it knew that the auction house was engaged in illegal conduct – such as shill bidding – and failed to take appropriate steps in light thereof.   

The Court did permit plaintiff to proceed with claims arising out of eBay’s representation that such auctions were ‘safe,’ holding the same were not barred by application of the CDA because ‘eBay’s statements regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion.’  Nor were such claims barred by application of eBay’s Live Auction User agreement, which immunized eBay from any disputes a consumer might have with the auction house itself, as this dispute arose out of eBay’s own purported misconduct – namely misrepresenting that the auction was ‘safe.’  Because plaintiff had failed to plead with the requisite particularity that she relied on this statement in deciding to participate in the auction in question, however, her fraud claim was dismissed with leave to replead.

309 F.Supp.2d 446, Civ. 02-5164 (DRH) (WDW) (E.D.N.Y., Mar. 25, 2004)

Court holds that plaintiff, by clicking an "I accept" icon agreeing online to be bound by the Terms of Service governing use of an online discussion group set forth in a scrollable window, viewable ten lines at a time, was bound by the forum selection contained therein.  Finding such a clause enforceable, the Court dismissed a claim brought by plaintiff asserting that defendant Google breached this agreement, because this claim was not brought in the designated forum.

The Court also held that Section 230 of the Communications Decency Act ("CDA") immunized an ISP hosting an online discussion group from claims that its failure to remove objectionable content posted on the discussion group's web page gave rise to claims of tortious interference with contractual relations. 

Finally, the Court denied the motions of two additional defendants to dismiss the claims asserted against them for want of personal jurisdiction.  The Court held that the first defendant was subject to specific jurisdiction in New York because of its operation of a commercial website via which it sold $6000 of products a year to New York residents.  The second defendant was similarly subject to suit because he had entered into a contract with a New York company, which contract allegedly gave rise to the claims asserted against him.

Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006), affirmed -- F.3d – (3rd Cir., July 10, 2007).

District Court dismisses claims charging Google with direct copyright infringement as a result both of its archiving Usenet postings that contain excerpts of plaintiff’s copyrighted works, and its display of excerpts of plaintiff’s copyrighted website in search results.  The District Court holds that Google has not engaged in the requisite volitional conduct necessary to be held guilty of direct copyright infringement because such copying is a by-product of the automated operation of Google’s search engine and related technologies.  As such, Google’s acts are akin to a user’s use of its ISP to transmit infringing material to a third party, which do not give rise to direct infringement claims against the ISP.  On appeal, the Third Circuit affirmed the dismissal of Parker’s direct infringement claims, on the grounds that Google’s archiving of infringing Usenet postings lacked the requisite “volitional conduct.”

Relying on Field v. Google, (D. Nevada 2006), the District Court also dismisses direct copyright infringement claims arising out of Google’s presentation to users of “archival” copies of plaintiff’s website in search results denominated “cache.”  The District Court holds that Section 512(b) of the Digital Millennium Copyright Act (“DMCA”), applicable to copyright infringement claims arising out of “system caching,” bars such claims here.

The District Court also dismissed vicarious and contributory copyright infringement claims arising out of Google’s archiving of Usenet posts created by third parties that themselves allegedly infringe plaintiff’s copyright, both because Google lacks the requisite knowledge of such inadequately identified infringing activity, and because it does not derive sufficient direct financial benefit therefrom.  This decision too was affirmed by the Third Circuit on appeal.

The District Court further dismissed defamation, invasion of privacy and negligence claims advanced by plaintiff arising both out of Google’s archiving of Usenet posts authored by third parties that allegedly defamed plaintiff, as well as out of Google’s storage and display in its “cache” of a website that purportedly defamed plaintiff.  Such claims are barred by the immunity afforded Google by Section 230 of the Communications Decency Act (“CDA”), a decision affirmed on appeal.

Finally, the District Court dismissed Lanham Act claims brought against Google as a result of its alleged republication of a website operated by a third party titled “the Official Roy Gordon FAQ.”  The District Court held that the third party was not violating the Lanham Act both because it was not using a mark in commerce as it was not selling anything on its site, and because consumers were not likely to be confused as to the origin of the site, given the criticism of plaintiff found thereon.  The Lanham Act claims against Google also failed because it was not a “moving force” or “active participant” in the creation of this site, or the alleged use thereon of plaintiff’s ‘mark.’  The Third Circuit affirmed the dismissal of the Lanham Act claims because of the absence of a likelihood of consumer confusion.  The Court also affirmed the dismissal of plaintiff’s trade disparagement claims because the statements at issue on the third party website were not made in the context of commercial advertising.

It should be noted that the plaintiff appeared pro se.  In addition, the Third Circuit’s opinion was denoted “Not Precedential.”

163 F. Supp. 2d 1069 (D.S.D., September 27, 2001)

Court holds that Section 230 of the Communications Decency Act ("CDA") bars plaintiffs from pursuing claims against Kinko's arising out of allegedly defamatory statements an unaffiliated third party made in an Internet chat room from a computer rented to him by Kinko's.  The CDA prevented plaintiffs from pursuing claims that Kinko's aided and abetted both the third party's defamation of, and interference with plaintiffs' prospective business relationships by making the offending statements, as well as claims that Kinko's negligently failed to keep appropriate records of the use of its rented computers, and destroyed evidence of the same.

488 F.3d 1102, No. 04-57143 (9th Cir., March 29, 2007) cert. denied, 128 S.Ct. 709 (2007)

The Ninth Circuit allows Perfect 10 to pursue copyright infringement claims against defendants, who provide web hosting and credit card billing services, arising out of the unauthorized posting on the web by their third party customers of “adult” images in which Perfect 10 holds copyrights.  Questions of fact precluded a determination of whether defendants were immunized from monetary liability for such claims by the Digital Millennium Copyright Act (“DMCA”).  Such immunity extends only to service providers who “reasonably implement” a policy for terminating those of their customers that repeatedly infringe copyrights.  In considering this question, the Ninth Circuit held  courts should consider not only the manner in which the defendants responded to “take down” infringement notices sent by the plaintiff copyright holder, here Perfect 10, but also the manner in which they responded to similar notices from third party copyright holders.  Because the District Court failed to consider whether defendants terminated customers identified in such third party “take down” infringement notices, the Ninth Circuit could not determine whether defendants “reasonably implemented” a compliant DMCA policy, and thus whether they were entitled to DMCA immunity.  The case was accordingly remanded to the District Court for further consideration.

The Ninth Circuit held that defendants had no obligation to respond to the “take down” notices provided by Perfect 10, or take steps to prevent the infringing conduct alleged therein, due to Perfect 10’s failure to provide such notices under penalty of perjury.  Absent the sworn acknowledgement required under the DMCA that the complainant is both an authorized representative of the copyright owner, and has a good faith belief that the material at issue is unlicensed, the service provider has no obligation to act upon the notice. 

Nor, held the Ninth Circuit, were defendants obligated to take action against purported “red flag” sites defendants serviced, which included sites that purported without authorization to provide users with passwords to access plaintiff’s materials, or other websites bearing names such as “stolencelebritypics.com” or “illegal.net.”   The DMCA does not impose on service providers the obligation to conduct an affirmative investigation into the bona fides of such sites.  To qualify as a “red flag” site that imposes an obligation on a service provider to act, held the Ninth Circuit “it … need[s] to be apparent that the website instructed or enabled users to infringe another’s copyright.”

The Ninth Circuit allowed Perfect 10 to pursue direct copyright infringement claims against the defendants as a result of the posting of infringing images on hornybees.com.  The court held that sufficient evidence of defendants’ direct involvement in the operation of that site was presented to survive a motion for summary judgment.

Finally, the Ninth Circuit held that the Communications Decency Act immunized defendants from the unfair competition, false advertising and right of publicity claims advanced by Perfect 10.

Case No. 46791-3-I, 31 P.3d 37 (Wash. Ct. App., September 17, 2001)

Court holds that Section 230 of the Communications Decency Act ("CDA") immunizes Amazon.com from claims of breach of contract, negligent misrepresentation and tortious interference brought by plaintiff as a result of negative statements posted by third parties on Amazon.com's web site, and Amazon's failure to remove them in alleged violation of Amazon's guidelines governing such postings.  Section 230 provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."  The Court held that Amazon satisfied each of the elements necessary for protection under this statute.  First, Amazon was a provider of "interactive computer services" entitled to avail itself of the protections afforded by the statute because it operated a web site on which third parties could post comments, which Amazon made available to others.  Second, the content in question was provided by third parties, and not Amazon, despite Amazon's right to edit or remove the same.  And lastly, Amazon was immunized from the claims in question because each premised Amazon's liability on its failure to remove offending content originated by others, an editorial function for which the statute was intended to provide protection.

2000 WL 1705637, Civ. No. 305666 (Sup. Ct. Ca., November 7, 2000)

Court holds that Section 230 of the Communications Decency Act ("CDA") renders Ebay immune from a suit charging that the use by third parties of Ebay's web site to sell "bootleg" musical recordings violates Cal. Bus. and Professions Code Section 17200.

478 F.3d 413, No. 06-1826 (1st Cir., February 23, 2007)

Court dismisses cyberstalking and security law claims advanced by plaintiffs under Florida state law against defendant Lycos, holding such claims barred by the immunity afforded Lycos under Section 230 of the Communications Decency Act (“CDA”).  Such claims arose out of statements critical of plaintiff Universal Communication Systems (“UCS”) and its CEO, Michael Zwebner, that were posted by third parties on a message board found on a website operated by Lycos at the domain Raging Bull.com  Plaintiffs claimed that defendants, including Lycos, were involved in a scheme to manipulate plaintiff’s stock price.  Plaintiffs claimed that defendants shorted UCS stock, and then posted derogatory comments on RagingBull.com in an attempt to drive the stock price down.  Such a claim, held the court, sought to hold Lycos liable for its role in the publication of these statements, which were authored by third parties, and as such was barred by operation of the CDA.  The cyberstalking claim was similarly barred because the act on which such claim rested was the publication of derogatory statements on the RagingBull.com message board authored by third parties.  As such, this claim too, sought to hold Lycos liable for its role in the publication of such statements, and was barred by application of the CDA. 

The court also dismissed federal cyberstalking claims asserted by plaintiffs against Lycos under 47 USC Section 223, holding that this statute did not create a private right of action for a civil suit.

Finally, the Court dismissed trademark dilution claims advanced by plaintiffs under Florida state law.  These claims were premised on the use of UCS’ trademark as the name for a message board on Raging Bull.com at which third parties posted statements critical of plaintiffs.  The Court held that, despite the fact that the message boards contained advertising, such a use did not constitute the requisite use in commerce of plaintiffs’ mark.  In addition, such use of plaintiffs’ mark to describe a message board that contained statements about plaintiffs was not actionable under the dilution act.

Case No. 2:04-cv-47-FtM-34SPC (M.D. Fla., February 15, 2008)

In the latest chapter of this long running dispute, the District Court holds that the Communications Decency Act, 47 USC Section 230, immunizes defendants from defamation claims arising out of the posting on their site – The Rip-Off Report - of allegedly defamatory statements about plaintiff that were allegedly authored by third parties.  In reaching this result, the Court rejected plaintiff’s contention that defendants were sufficiently involved in the creation of the posts at issue to be denied CDA immunity because they offered such third party posters the opportunity to categorize their reports in categories such as ‘con artists’, ‘corrupt companies’ and ‘false TV advertisements.’  The Court further held that plaintiff had failed to submit evidence sufficient to establish that defendants were involved in authoring the particular defamatory statements at issue so as to lose the immunity offered by the CDA.

Case No. C07-0807-JCC (W.D. Wash., August 28, 2007)

Court holds that Section 230 of the Communications Decency Act (“CDA”) immunizes distributor of anti-virus and security software from claims of tortuous interference with contract, trade libel and unjust enrichment arising out of its distribution of software that labels plaintiff Zango’s software as malware, and enables a user to block or disable it.  Zango provides consumers free access to online videos, games and music in exchange for their agreement to the display of sponsors’ advertisements.  Notably, the Court holds defendant entitled to such immunity notwithstanding claims that it acted in bad faith when it so labeled plaintiff’s software.  According to the Court, ‘good faith’ is not a prerequisite to immunity under section 230(c)(2)(b) of the CDA.  All that is required is that a provider of an “interactive computer service” take “action  … to enable or make available to … others the technical means to restrict access to” material  “the provider or user considers … objectionable,” a standard defendant met.

The Court also held that it could exercise personal jurisdiction over the non-resident defendant in Washington as a result of its sale of software products to Washington residents which allegedly caused plaintiff injury in the forum.

958 F. Supp. 1124 (E.D. Va. March 21, 1997)(Ellis, J.) aff'd. 129 F. 3d 327 (4th Cir. Nov. 12, 1997), cert. denied, 524 US 937 (1998)

The CDA preempts a state common law distributor liability cause of action against an interactive computer service provider arising from that provider's allegedy negligent distribution of defamatory material provided via its electronic bulletin board. Under CDA section 230 (c)(i), information service providers are granted imunity from such claims. This immunity is retroactive, and applicable to plaintiff's claim, brought after the enactment of the CDA, even though the events giving rise to his claim were completed before the CDA became effective.

Communications Decency Act - Immunity GrantedCommunications Decency Act - Immunity GrantedCommunications Decency Act - Immunity GrantedCommunications Decency Act - Immunity Granted Quick Hits

Anthony DiMeo III v. Tucker Max
No. 06-3171 (3rd Cir., September 19, 2007).

Affirming the decision of the court below, the Third Circuit holds that plaintiff’s claim for defamation, arising out of the posting of derogatory comments authored by third parties about plaintiff on a message board operated by the defendant, were barred by application of the Communications Decency Act, 47 U.S.C. Section 230.

To qualify for the statute’s protections, the defendant must be a “provider or user of an interactive computer service” and the claim must seek to treat him as “the publisher or speaker” of content “provided by another information content provider.”  Such, held the Third Circuit, was the case here.  By making available message boards on his website, Max was a provider of an interactive computer service.  Said the Court: “Max’s website is an interactive computer service because it enables computer access by multiple users to a computer server.”  Similarly, because the complaint did not allege that Max himself was the author of the offending posts at issue, they were content provided by another information content provider.  And finally, by asserting a defamation claim against Max, plaintiff sought to hold him liable as the publisher of this content.  Having made the showing necessary for immunity under Section 230 of the CDA, the Third Circuit affirmed the dismissal of plaintiff’s defamation claim.

The Third Circuit also affirmed the district court’s denial of plaintiff’s motion for leave to amend his complaint to assert claims for intentional infliction of emotional distress, and RICO violations, on the grounds of futility.  The former failed because the CDA afforded Max immunity from such claims, which, like the defamation claims, arose out of the posting by third party of offensive comments on a message board operated by Max.  The later failed as a result of plaintiff’s failure to allege the commission of any of the requisite criminal predicate acts.

It should be noted that the Third Circuit denoted its opinion non-precedential.

Johnny Doe v. Mark Bates and Yahoo, Inc.
No. 5:05-CV-91-DF-CMC (E.D. Tex., December 27, 2006).

Court holds CDA Section 230 immunizes Yahoo from civil liability arising out of its hosting of an online ‘e-group’ named ‘Candyman’ on which illegal images depicting child pornography were exchanged.  The co-defendant, Mark Bates, was convicted for his involvement as the moderator of this online forum.  Plaintiff brought claims under 18 U.S.C. Section 2252A, which creates a private right of action for those aggrieved by a violation of 18 U.S.C. Section 2252, a criminal statute that prohibits the dissemination of child pornography.  The Court, in a case of first impression, held that the CDA immunized Yahoo from such civil claims, as well as claims of negligence, negligence per se, intentional infliction of emotional distress, invasion of privacy and civil conspiracy, arising out of its hosting of this forum.  The Court reached this result notwithstanding the fact that 47 U.S.C. Section 230(e)(1), titled “no effect on criminal law,” provides “nothing in this section shall be construed to impair the enforcement of  … Chapter … 110 (relating to sexual exploitation of children) of Title 18, or any other Federal Criminal Statute.”  Said the Court:

while the facts of a child pornography case such as this one may be highly offensive, Congress has decided that the parties to be punished and deterred are not the internet service providers but rather those who created and posted the illegal material, such as defendant Mark Bates, the moderator of the ‘Candyman’ e-group.

e360Insight, LLC v. Comcast Corp.
No. 08-340, 2008 U.S. Dist. LEXIS 29287 (N.D. Ill. Apr. 10, 2008).

Court holds that the ‘Good Samaritan’ provisions of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(2), immunize Internet Service Providers such as defendant Comcast from ‘good faith’ actions taken to block email marketers from sending email solicitations to users of the ISP’s services.  Plaintiff e360Insight brought this action in response to actions taken by Comcast to block it from sending email solicitations to Comcast customers.  Under the CDA, Comcast is entitled to immunity for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be … objectionable, whether or not such material is constitutionally protected …”.  230(c)(2)(A).  Thus, to be entitled to immunity, the ISP must show both that the materials it blocked are 'objectionable' and that it acted in good faith in blocking them.  The Court applied a subjective standard in determining whether the emails in question were objectionable and hence subject to blocking under the statute – i.e. the materials are objectionable if Comcast believes them to be objectionable.  Importantly, it did not matter if the emails complied with CAN-SPAM.  Said the Court:

compliance with CAN-SPAM, Congress decreed, does not evict the right of the provider to make its own good faith judgment to block mailings. …  Under the law, a mistaken choice to block, if made in good faith, cannot be the basis for liability under federal or state law.  To force a provider like Comcast to litigate the question of whether what it blocked was or was not spam would render Section 230(c)(2) nearly meaningless. 

Because Comcast believed the emails at issue were objectionable, and because plaintiff failed to adequately plead that Comcast did not act in good faith when it made its decision to block plaintiff’s emails, Comcast was entitled to immunity, and the Court dismissed the claims plaintiff asserted against it for violation of the Computer Fraud and Abuse Act and of plaintiff’s rights under the First Amendment, as well as for tortuous interference with prospective economic advantage and violation of the Illinois Consumer Fraud Act.

David Prickett, et al. v. InfoUSA, Inc., et al.
2006 WL 887431, Case No. 4:05-CV-10 (E.D. Texas, March 29, 2006).

Court holds that the Communications Decency Act immunizes InfoUSA, a provider of proprietary databases providing information concerning individuals and businesses, from suit seeking to hold it liable for false listings about plaintiffs provided to it by third parties, which InfoUSA included in a database it subsequently licensed for use to others.  The Court reached this result notwithstanding InfoUSA's representation that it provides "the utmost quality information" and "call[s] every business to verify the information, so you can be assured of the most current and accurate listings."  Plaintiffs could not pursue a claim based on the alleged falsity of this representation, because to do so would necessarily treat InfoUSA as a publisher of this information, which is prohibited by the Communications Decency Act.  Said the Court:

Additionally, the Plaintiffs argue that the Defendant operated as an information content provider because the defendant assures the accuracy of its listings via its verification process.  The Plaintiffs are presumably alleging that they were harmed by third party content and that the Defendant is liable for failing to verify the accuracy of the content.  'Any such claim by [the plaintiffs] necessarily treats the [defendant] as 'publisher' of the content and is therefore barred by Section 230.'  The plaintiffs' argument that they seek to hold the Defendant liable for its alleged failure to verify the accuracy of the listing does not remove this case from the immunity provided by Section 230.'

In this suit, plaintiffs claimed they were harassed by third parties who found the false information contained about them in defendant InfoUSA's database offensive.

Communications Decency Act - Intellectual Property Law Exception - Updated May 29, 2008

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

135 F.Supp.2d 409, 00 Civ. 549 (S.D.N.Y., March 19, 2001)

Court holds that neither the Communications Decency Act or the First Amendment immunize an Internet hosting company from potential liability under the Lanham Act for hosting the website of a third party which allegedly infringed plaintiff's trademark. As a result, the court denied defendant Mindspring's motion to dismiss, and allowed Gucci to proceed with its claim that, by hosting a third parties' site containing allegedly infringing materials, despite notice of the same, Mindspring was guilty of direct or contributory trademark infringement and false designation of origin in violation of the Lanham Act, as well as violations of state trademark and unfair competition statutes.

488 F.3d 1102, No. 04-57143 (9th Cir., March 29, 2007) cert. denied, 128 S.Ct. 709 (2007)

The Ninth Circuit allows Perfect 10 to pursue copyright infringement claims against defendants, who provide web hosting and credit card billing services, arising out of the unauthorized posting on the web by their third party customers of “adult” images in which Perfect 10 holds copyrights.  Questions of fact precluded a determination of whether defendants were immunized from monetary liability for such claims by the Digital Millennium Copyright Act (“DMCA”).  Such immunity extends only to service providers who “reasonably implement” a policy for terminating those of their customers that repeatedly infringe copyrights.  In considering this question, the Ninth Circuit held  courts should consider not only the manner in which the defendants responded to “take down” infringement notices sent by the plaintiff copyright holder, here Perfect 10, but also the manner in which they responded to similar notices from third party copyright holders.  Because the District Court failed to consider whether defendants terminated customers identified in such third party “take down” infringement notices, the Ninth Circuit could not determine whether defendants “reasonably implemented” a compliant DMCA policy, and thus whether they were entitled to DMCA immunity.  The case was accordingly remanded to the District Court for further consideration.

The Ninth Circuit held that defendants had no obligation to respond to the “take down” notices provided by Perfect 10, or take steps to prevent the infringing conduct alleged therein, due to Perfect 10’s failure to provide such notices under penalty of perjury.  Absent the sworn acknowledgement required under the DMCA that the complainant is both an authorized representative of the copyright owner, and has a good faith belief that the material at issue is unlicensed, the service provider has no obligation to act upon the notice. 

Nor, held the Ninth Circuit, were defendants obligated to take action against purported “red flag” sites defendants serviced, which included sites that purported without authorization to provide users with passwords to access plaintiff’s materials, or other websites bearing names such as “stolencelebritypics.com” or “illegal.net.”   The DMCA does not impose on service providers the obligation to conduct an affirmative investigation into the bona fides of such sites.  To qualify as a “red flag” site that imposes an obligation on a service provider to act, held the Ninth Circuit “it … need[s] to be apparent that the website instructed or enabled users to infringe another’s copyright.”

The Ninth Circuit allowed Perfect 10 to pursue direct copyright infringement claims against the defendants as a result of the posting of infringing images on hornybees.com.  The court held that sufficient evidence of defendants’ direct involvement in the operation of that site was presented to survive a motion for summary judgment.

Finally, the Ninth Circuit held that the Communications Decency Act immunized defendants from the unfair competition, false advertising and right of publicity claims advanced by Perfect 10.

Communications Decency Act - Intellectual Property Law Exception Quick Hits

Thais Cardoso Almeida v. Amazon.com, Inc.
456 F.3d 1316, No. 04-15341 (11th Cir., July 18, 2006).

Eleventh Circuit holds that Amazon.com’s display of a book cover that contains an unauthorized photograph of plaintiff on a product detail webpage used to promote Amazon.com’s sale of the book is not a commercial use of plaintiff’s image under Florida’s right of publicity statute – Fla. Stat. 540.08 - and hence is not actionable thereunder.   As such, the Eleventh Circuit affirmed, on different grounds, the District Court’s grant of summary judgment to Amazon.com, and dismissed plaintiff’s statutory right of publicity claim arising out of such unauthorized display.  The Court’s decision was grounded on its determination that, to be actionable under Section 540.08, plaintiff’s image must be used to ‘directly promote’ the sale of a product.  Because Amazon.com’s use of the book cover containing plaintiff’s image was ‘merely incidental to, and customary for, the business of internet book sales’ it was not an actionable commercial use of that image within the meaning of the statute.   Said the Court:

Amazon provides its online customers with a searchable book database with links to product detail pages for each book in its database.  Each product detail page provides the book’s cover image, the publisher’s description of the book, and in many instances editorial and customer content.  From the product detail page, customers may link to an order placement page, where they may complete their purchase and specify the shipping method.  In this manner, Amazon’s role as an internet bookseller closely parallels that of a traditional bookseller.  Because internet customers are unable to browse through shelves of books and observe the actual book cover photos and publisher content, Amazon replicates the bookstore experience by providing its customers with online cover images and publisher book descriptions. …

*                                         *                                                       *

[W]e find that, as a matter of business practice, Amazon’s use of book cover images closely simulates a customer’s experience browsing book covers in a traditional book store.  Thus, it is clear that Amazon’s use of book cover images is not an endorsement or promotion of any product or service, but is merely incidental to, and customary for, the business of internet book sales. …

*                                          *                                                       *

Under the allegations of Almeida’s complaint, we discern no set of facts by which an internet retailer such as Amazon, which functions as the internet equivalent to a traditional bookseller, would be liable for displaying content that is incidental to book sales, such as providing customers with access to a book’s cover image and publisher’s description of the book’s content.  Accordingly, we affirm the district court’s grant of summary judgment as to Amazon’s right of publicity claim, but we do so on the ground that Amazon did not use Almeida’s image for the purpose of directly promoting a product or service in violation of section 540.08

The Court spent much of its opinion discussing, without deciding, whether the Communications Decency Act barred plaintiff from pursuing the instant right of publicity claim against Amazon.  More particularly, the Court grappled with the question of whether the statute’s ‘intellectual property law’ exception, found in Section 230(e)(2), permitted plaintiff to pursue a right of publicity claim on the ground that such was in fact an intellectual property claim within the meaning of the statute.  This section provides that “nothing in [section 230 of the CDA] shall be construed to limit or expand any law pertaining to intellectual property.”  Because the Court ultimately found that plaintiff could not sustain her right of publicity claim on the merits, it did not reach this question.

Finally, the Eleventh Circuit affirmed the dismissal of plaintiff’s civil theft claim, finding that plaintiff had failed to submit evidence sufficient to establish that Amazon acted with the requisite ‘felonious intent’ when it purportedly misappropriate plaintiff’s property – namely her image – for its own use to promote its sale of books.  The Court held that there was no evidence that Amazon was aware when it posted the book cover in question on its website that the publisher was not authorized to use plaintiff’s image on the book’s cover.  When plaintiff contacted Amazon and so informed it, Amazon promptly removed the book cover from its site.

Complaint and Gripe Sites - Updated November 21, 2008

This section of the Internet Law Library contains court decisions which analyze the legality of consumer complaint web sites which are highly critical of a business entity.

Read my latest article, Pruning the Gripe Vine, published in the January 2005 edition of Corporate Counsel.

29 F. Supp. 2d 1161 (C.D.Cal., Nov. 23, 1998)

In Bally, the court awarded defendant summary judgment, dismissing claims of trademark infringement and dilution brought by plaintiff as a result of defendant's operation of a web site titled "Bally sucks", at which defendant airs criticism of plaintiff's health club operations. The site opens with the image of plaintiff's federally registered trademark "Bally", across which appears the word "sucks." The site states it is unauthorized, and no products are sold or offered for sale on the site. Plaintiff's trademark infringement claims failed because plaintiff could not establish that consumers were likely to be confused by this use of the "Bally" mark as to the source of the "Bally sucks" website. Quite the contrary, the court concluded that the average consumer would assume that plaintiff Bally neither approved nor sponsored the site. Plaintiff's dilution claim failed, in part, because defendant's use of the mark was not commercial, an essential element of a dilution claim. The court also held that a dilution by tarnishment claim could not be sustained as a result of the placement of a link on a website that, without authorization, contains a parties' trademark, which link took the user to another site which allegedly contained offensive materials, but not the trademark at issue. Of note, the court determined that a party has the right to use an entity's trademark in meta tags to promote a non-commercial site critical of the entity that owns the mark.

Index No. (Sup. Ct. N.Y. Co., December 14, 2001)

Plaintiff bank brought defamation claims against defendant Mario Menendez-Rodriguez, a Mexican resident and journalist, defendant Narco News, a web site, and defendant Al Giordano, its publisher, arising, in part, out of statements defendants made concerning Roberto Hernandez-Ramirez, plaintiff's largest shareholder, general director and chairman of its board of directors, and the bank itself. In these statements, defendants accused Hernandez-Ramirez of being a "drug trafficker", and of having used gains from illegal endeavors to acquire the plaintiff bank. The Narco News also allegedly claimed that "bank officials have been arrested for drug-money laundering …". Defendants allegedly made the statements in question in a newspaper published in Mexico, Por Esto! with which defendant Menendez-Rodriguez is affiliated, in an interview given to The Village Voice, a New York publication, during a panel discussion at Columbia University in New York, and/or in articles published on the Narco News web site.

The court, on defendants' motions, dismissed the complaint. The claims advanced against defendant Menendez-Rodriguez were dismissed on the ground that the court lacked personal jurisdiction over him given the plaintiff's failure to allege facts sufficient to show that Menendez-Rodriguez, a non-resident, "transacted purposeful business activity bearing a substantial relationship to the subject matter of the lawsuit in [New York]." The defamation claims against the remaining defendants were dismissed as a result of plaintiff's failure to allege facts sufficient to state a claim against them. The court determined that these defendants were media defendants entitled to heightened protection under the First Amendment. Given that they were reporting on matters of public concern plaintiff, to state a claim against them, had to allege facts sufficient to show both that the statements they allegedly made were false, and that they were made with "actual malice," that is with knowledge that the statements were false or made with reckless disregard for the truth. The court held that plaintiff had not alleged facts sufficient to establish that the remaining defendants had acted with actual malice, given, inter alia, their reliance on articles appearing in Por Esto! for the statements they made, and accordingly dismissed the complaint against them.

No. CV-06-1537-PHX-DGC (D. Az., September 5, 2008)

Court in large part grants defendants’ motion for summary judgment, and dismisses claims arising out of defendants’ operation of a website on which third parties, and defendants themselves, posted a number of statements critical of plaintiff Best Western International Inc.  Left unresolved by the Court’s motion were plaintiff’s claims that a number of additional posts authored by defendants were in fact defamatory.

Best Western is a non-profit member corporation, which assists its members in running their hotels.  Defendants are members of Best Western who operate hotels, their spouses, and an individual who assisted in the creation of the website at issue.  The member defendants are bound by the terms of membership agreements with plaintiff. 

The Court held that the immunity granted defendants under the Communications Decency Act barred plaintiff from seeking to hold them liable for defamatory posts authored by third parties that appeared on defendants’ website.  Defamation claims arising out of 50 posts defendants themselves authored failed because plaintiff did not present sufficient evidence to establish that defendants acted with the requisite degree of fault necessary to sustain a defamation claim.  Thus, plaintiff failed to establish that defendants acted with either actual malice or negligence in making these statements, or with knowledge of their alleged falsity.   In reaching this result the Court noted that possessing ill will toward plaintiff was insufficient to establish ether that defendants acted with the requisite degree of fault, or that they were guilty of defaming plaintiff. 

The Court also rejected tortuous interference with contract or prospective advantage claims arising out of the posting on defendants’ site of statements urging plaintiff’s members to switch to a competitor’s organization.  The Court held that plaintiff failed to prove either that such statements caused it any injury, or that defendants or the competitor acted improperly in making these posts.  In reaching this result, the Court noted that plaintiff’s competitor is free to make posts that promote itself and its own economic interests.

Finally, the Court rejected various breach of contract claims advanced by plaintiff, asserting that defendants breached the parties’ membership agreement by making public confidential information, or failing to meet the membership agreement’s requirement to use their best efforts to maintain positive relationships with customers.  As to the former, the Court held there were no such prohibitions in the parties’ agreement that bound defendants.  As to the later, the Court held that the prohibitions applied to other aspects of defendants’ business, with which obligations defendants complied.

The Court did allow plaintiff Best Western to pursue breach of contract claims arising out of the use by the member defendants of Best Western’s trademark on the website at issue, which use purportedly violated the parties’ membership agreement.

2000 U.S. Dist. Lexis 14180, 119 F. Supp. 2d 309 (S.D.N.Y., September 28, 2000)

Court refuses to enjoin defendants from operating web sites critical of plaintiffs' business, or from utilizing plaintiffs' common-law service mark in meta tags on those sites to attract visitors seeking information about plaintiffs. The court also refused to enjoin defendants from continuing to publish allegedly libelous statements about plaintiffs on their web sites.

No. 04-3690 (3rd Cir., May 2, 2005)

In this domain name dispute, the Third Circuit affirms District Court's decision, enjoining defendant from continuing to use plaintiff's mark in the domain name of a gripe site he operated at that domain, and directing defendant to cancel his registration of that domain.  The courts' rulings were premised on their determinations that plaintiff, the Board of Directors of the Sapphire Bay Condominiums West, was likely to prevail on its claims that defendant's conduct infringed and diluted plaintiff's mark in violation of the Lanham Act.  Notably, defendant's gripe site initially proclaimed itself the "Official Web Site of Sapphire Bay Condominiums West."  The Third Circuit noted that its decision was "not precedential."

403 F.3d 672 (9th Cir., April 4, 2005)

In this domain name dispute, the Ninth Circuit holds that the use of another’s trademark as the domain name for a non-commercial gripe site does not constitute trademark infringement or dilution in violation of the Lanham Act.  To run afoul of the Lanham Act, a mark must be used in connection with the sale of goods or services.  A web site which is merely critical of another’s goods or services does not fit this bill.  The Ninth Circuit accordingly affirmed the District Court’s grant of summary judgment, dismissing plaintiff’s trademark infringement and dilution claims.

The Ninth Circuit reversed, however, so much of the District Court’s decision which dismissed plaintiff’s Anticybersquatting Consumer Protection Act (“ACPA”) claim.  The ACPA does not have a commercial use requirement, and, accordingly, establishing that the mark was used as the domain for a non-commercial gripe site does not absolve the griper from potential liability under the ACPA.  Because that was the basis on which the lower court dismissed plaintiff’s ACPA claim, its dismissal was reversed.  The matter was remanded to the District Court to determine whether defendant used the mark with a bad faith intent to profit therefrom, in violation of the ACPA.

CV 2007-003720 (D. Ariz., October 24, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(1), mandates dismissal of so much of plaintiff’s defamation claim that arises from the publication by third parties of comments critical of plaintiff on a website defendants operate known as the “ripoffreport.com.”  The CDA further mandates dismissal of claims arising out of defendants’ promotion of its site and the allegedly objectionable content thereon, making the site more accessible to search engines and users, or soliciting contributions to assist in making the information on the site available.  The Court did , however, allow plaintiff to pursue defamation claims arising out of the headlines for third party content authored by the defendants, which themselves purportedly contained defamatory content.

382 F.3d 774 (8th Cir., September 1, 2004)

Affirming the District Court, the Eighth Circuit holds that plaintiffs are likely to prevail on Anticybersquatting Consumer Protection Act ("ACPA") claims arising out of defendant's registration of numerous domain names incorporating plaintiffs' trademarks, which domains defendant linked to a website advocating a ban on abortions.  This anti-abortion website also contained links to other sites which solicited funds, via the sale of goods or donations, to aid anti-abortion causes.  In reaching this result, the Eighth Circuit rejected defendant's claim that his use of plaintiffs' trademarks in this fashion was protected by the First Amendment.

214 F.3d 456, No.99-2318 (4th Cir., June 2, 2000)

The Fourth Circuit vacated an injunction issued by the District Court which directed defendants to remove content from their web site critical of the plaintiff. The court held such relief warranted because the injunction failed to properly specify the reasons for its issuance as required by Fed. R. Civ. P. 65(a). The court further held such relief warranted because the district court's injunction raised serious First Amendment concerns due to the injunction's apparent failure to "burden no more speech than necessary to serve a significant government interest." In reaching this conclusion, the Fourth Circuit stated: "[J]ust because speech is critical of a corporation and its business practices is not a sufficient reason to enjoin the speech. As the First Circuit stated, if a trademark owner could 'enjoin the use of his mark in a noncommercial context found to be negative or offensive, then a corporation could shield itself from criticism by forbidding the use of its name in commentaries critical of its conduct." The case was remanded to the District Court for further consideration.

489 F.3d 921, CV-03-09386-PA (9th Cir., May 15, 2007) aff'd en banc 2008 WL 879293 (9th Cir., April 3, 2008).

A divided three judge panel of the Ninth Circuit limited the immunity afforded by the Communications Decency Act (“CDA”), 47 U.S.C. section 230, for website operators involved in the publication and distribution of the responses to questionnaires completed by third parties concerning their roommate preferences. 
The Panel unanimously held that the CDA did not immunize defendant Roommates.com from potential liability for drafting and posting questionnaires that sought information from those using the site about their roommate preferences.  These questionnaires, among other things, sought information about the preferred sexual orientation of the prospective roommate, and were used to create member profiles.  The Panel held that the CDA did not immunize Roommates.com from potential liability under the Fair Housing Act (“FHA”) for requiring members to answer questions that potentially enabled other members to discriminate for or against them.

By a vote of 2 to 1, the Panel further held that the CDA did not immunize Roommates.com from potential liability under the FHA for publishing and distributing member profiles created in response to Roommates.com’s questionnaires.  Roommates.com used the content of a user’s responses to its questionnaires to determine who among its members should receive notice that they were seeking a roommate, and/or be permitted to view that user’s profile.  For example, an individual with children was not shown a listing for an apartment occupied by an individual seeking a roommate without children.  The court held that by categorizing, channeling and limiting the distribution of user profiles, Roommates.com was sufficiently involved in the creation of the distributed information to lose the immunity afforded by the CDA to interactive service providers who make available content drawn by third parties. As a result, the Ninth Circuit allowed plaintiffs to proceed with claims that by such conduct, Roommates.com violated the FHA.

Finally, by a vote of 2 to 1, the Court held that the CDA did immunize Roommates.com from potential FHA liability arising out of its publication of users’ responses to Roommates.com’s requests for “Additional comments” concerning their roommate preferences.  In this section of its questionnaire, Roommates.com “strongly recommend[ed the user] tak[e] a moment to personalize your profile by writing a paragraph or two describing yourself and what you are looking for in a roommate.”  This question produced the most provocative – and potentially discriminatory - responses found in user profiles.  The court held that the responses to this question constituted content created by third parties within the meaning of the CDA.  As a result, held the Court, by application of the CDA, Roommates.com could not be held liable for publishing these responses on its website.

177 F. Supp. 2d 661, 2001 U.S. Dist. Lexis 21302 (E.D. Michigan, December 20, 2001)

Court denies Ford Motor Company's motion for a preliminary injunction seeking to enjoin defendants from continuing to automatically redirect users from a web site defendants operate at www.fuckgeneralmotors.com to the web site operated by Ford at www.ford.com. Defendants achieve this redirection via a link embedded in the programming code of defendants' web site, which link utilizes Ford's mark. The court held that Ford could not succeed on the merits of its federal trademark dilution claim, because defendants were not using plaintiff's mark in commerce. The court further held that Ford could not succeed on its trademark infringement and unfair competition claims, because defendants were not using plaintiff's mark in connection with the sale, or advertising for sale, of any goods or services. Finding that plaintiff would not succeed on the merits of its claims, the court denied plaintiff's motion.

No. 07-956-PHX-FJM (D.Az. October 10, 2007)

Court dismisses defamation claims advanced against defendant, operator of the website ripoffreport.com, arising out of defendants’ publication of statements authored by a third party that were critical of plaintiffs.  The Court held such claims barred by application of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230.  Notably, the court refused to issue plaintiff relief notwithstanding the fact that the author of the statements at issue allegedly requested without success that defendants remove them from ripoffreport.com.

The Court also declined to enforce a preliminary injunction issued on default by a Canadian court, directing defendants to remove the statements at issue from their website, on the ground that United States courts will not enforce injunctions issued by foreign courts.

Civil Action No. 03-11437-GAO, 2005 U.S. Dist. Lexis 2804 (D. Mass., February 24, 2005)

Court finds that a disgruntled customer violated the Anticybersquatting Consumer Protection Act ("ACPA") by registering a domain name containing defendant Microfinancial's trademark, at which domain plaintiff operated a website critical of defendant.  The Court determined that plaintiff had registered the domain name with a bad faith intent to profit therefrom, in large part because plaintiff had offered to transfer the domain to Microfinancial if it refunded certain lease payments plaintiff had made which were at the heart of his dispute with defendant, as well as funds plaintiff claims defendant improperly received from third parties.  The Court accordingly granted Microfinancial summary judgment on its ACPA claim.

253 F.Supp.2d 1120, Civ. No. 02-0400 CW (N.D.Ca., Mar. 28, 2003)

Court denies plaintiff's request for a preliminary injunction, and refuses to enjoin defendant, a direct competitor, from repeatedly using plaintiff's trade name on a web site containing information critical of plaintiff.  The challenged uses were designed to and did dramatically increase the site's ranking on search engines in response to queries for plaintiff's name.  The Court held that such use was a permitted nominative fair use of plaintiff's trade name. 

The Court rendered this decision on defendants' motion for reconsideration.  In reaching this result, the Court vacated its prior order, enjoining defendants from using plaintiff's mark in ways designed to dramatically increase the site's ranking on search engines.  In this vacated order, the court had enjoined defendants from "using 'J.K. Harris' or any permutation thereof as a keyword for the taxes.com website more often than is necessary to identify the content of the website," from using header tags and underline tags around sentences containing plaintiff's trade name, or from increasing the prominence and font size of sentences which include plaintiff's trade name.  In this vacated order, the court denied plaintiff's request to enjoin defendants from making any use of plaintiff's trade name on the site however, holding that defendants could use the trade name in links to other sources of information about plaintiff on the web, as well as in disseminating truthful factual information about plaintiff, provided such use was "reasonably necessary" and not excessive.

The court also enjoined defendants from continuing to post on its website several identified negative statements about plaintiff, derived from third parties, which plaintiff claimed were false and/or misleading.

Civ. No. 02-0400 CW (N.D.Ca., Mar. 22, 2002) vacated and amended (N.D.Ca., Mar. 28, 2003)

Court issues preliminary injunction, enjoining defendants, direct competitors of plaintiffs who operate a commercial website containing information critical of plaintiff, from continuing certain uses of plaintiff's trade name on that site.  The injunction enjoined defendants from using plaintiff's mark in ways designed to dramatically increase the site's ranking on search engines in response to queries for plaintiff's trade name.  The court enjoined defendants from "using 'J.K. Harris' or any permutation thereof as a keyword for the taxes.com website more often than is necessary to identify the content of the website," from using header tags and underline tags around sentences containing plaintiff's trade name, or from increasing the prominence and font size of sentences which include plaintiff's trade name.  The court denied plaintiff's request to enjoin defendants from making any use of plaintiff's trade name on the site however, holding that defendants could use the trade name in links to other sources of information about plaintiff on the web, as well as in disseminating truthful factual information about plaintiff, provided such use, as noted above, was "reasonably necessary" and not excessive.

The court also enjoined defendants from continuing to post on its website several identified negative statements about plaintiff, derived from third parties, which plaintiff claimed were false and/or misleading.

993 F. Supp. 282 (D.N.J. Mar. 6, 1998) aff'd. 159 F. 3d 1351 (3d Cir. 1998)

In this domain name dispute, the court enjoined defendant's unauthorized operation of a website at "jewsforjesus.org" which site was highly critical of the plaintiff organization "Jews for Jesus." Plaintiff owned a federally registered trademark in the phrase "jews for jesus" with the "o" depicted as a Jewish Star, and a common law service mark in the phrase "jews for jesus." Defendant's conduct constituted violations of the Lanham Act's prohibitions against trademark infringement, dilution and unfair competition, as well as various New Jersey state statutes. Neither the fact that defendant did not use an identical replica of plaintiff's mark in its domain name nor the disclaimer that appeared on defendant's site pronouncing its nonaffilation with plaintiff's organization were sufficient to alter the court's view. Moreover, defendant's conduct was found to be "in commerce" and "in connection with goods or services", essential prerequisites to plaintiff's federal Lanham Act claims, even though defendant did not offer anything for sale on his site, nor solicit funding for his activities. The fact that defendant's site was intended to harm and disparage plaintiff, and contained a link to an unaffiliated site which sold merchandise made such conduct commercial.)

360 F. Supp. 2d 768 (E.D. Va., August 5, 2004)

Court holds plaintiff infringed defendants' trademarks, and violated the Anticybersquatting Consumer Protection Act ("ACPA"), as a result of his operation of a 'typo' web site at the domain Fallwell.com at which he criticized the Rev. Falwell's views on homosexuality, and expressed his own contrary views on that subject.  At one time, the site informed interested visitors of a book plaintiff considered relevant to this discussion, and provided a link to Amazon.com at which they could purchase it.  The Court reached this result notwithstanding the fact that plaintiff's site featured a prominent disclaimer, advising users that it was not defendants' official site.

314 F. Supp. 2d 362 (D.N.J., March 30, 2004)

Court holds that defendant's use of plaintiff's service mark in the domain names of noncommercial web sites critical of plaintiff does not constitute a violation of the Anticybersquatting Consumer Protection Act ("ACPA") because this was a "bona fide noncommercial" use of the mark which defendant had reasonable grounds to believe was lawful.  In reaching this result, the Court determined that defendant was motivated not by an intent to use his critical web site to extract money from plaintiff, but instead by a desire to express his dissatisfaction with plaintiff's alleged conduct.  The Court accordingly granted defendant's motion for partial summary judgment, and dismissed plaintiff's ACPA claim.  Left for another day were libel and trade libel claims arising out of the sites' content, as well as a Federal Dilution Act claim under 15 U.S.C. § 1125(c) arising out of the defendant's use of plaintiff's service mark.

378 F.3d 1002 (9th Cir., 2004), cert. denied (2005)

Applying the "initial interest confusion" doctrine, the Ninth Circuit holds that defendant Nissan Computer's display of advertisements promoting the sale of automobiles on its Nissan.com website infringes the trademark held by plaintiff Nissan Motors in its federally registered "Nissan" trademark, and accordingly affirms the District Court's decision enjoining defendants from continuing such activity. 

The Court further holds, however, that Nissan Computer's display of links on its site to a web site operated by a company owned by Uzi Nissan, the owner of Nissan Computer, which web site purports to describe the instant litigation and contains disparaging remarks about Nissan Motors, is non-commercial speech that neither infringes plaintiffs' mark nor runs afoul of the Federal Trademark Dilution Act despite its potentially negative impact on plaintiffs' commercial activities.  The Ninth Circuit holds such speech protected by operation of the First Amendment, and accordingly reverses so much of the District Court's decision that enjoined defendant Nissan Computer from placing such links on its Nissan.com site. 

Finally the Court held that issues of fact prevented a determination at this time as to whether defendants' use of plaintiffs' Nissan mark violated the FTDA.  To establish such a dilution claim, held the Court, the plaintiff must establish that its mark was famous when defendant first commenced a potentially diluting use thereof.  Disagreeing with the court below, the Ninth Circuit held that such use commenced when defendant began to call its business 'Nissan Computer,' and not when it subsequently registered the Nissan.com domain name for use in that business.  As there was an issue of fact as to whether the Nissan mark was famous as of 1991, when Nissan Computer commenced its operations, the court denied plaintiffs' motion for summary judgment, and remanded the question of defendants' violation of the Federal Trademark Dilution Act to the District Court.

115 F. Supp.2d 1108, Civ. No. 00-308 (DSD/JMM) (D. Minn. September 25, 2000)

Court denies plaintiff's application for a preliminary injunction, enjoining defendant from operating a web site critical of plaintiff and its business practices at the domain www.northlandinsurance.com

97 Civ. 0629 (KNW)(S.D.N.Y. March 26, 1997), aff'd. 152 F. 3d 920 (2d Cir., Feb. 9, 1998), cert. denied, 525 U.S. 834 (1998)

Defendant enjoined from continuing to utilize plaintiff's service mark, Planned Parenthood, in its domain name, at which is found a web site featuring references to a book espousing anti-abortion positions. Such use held to violate Lanham Act and not to be protected by First Amendment

No. 99-55106, 236 F.3d 1035 (9th Cir., January 8, 2001), withdrawn, 262 F.3d 972 (9th Cir., August 28, 2001)

Ninth Circuit holds that the unauthorized access and review of the contents of a password protected web site can constitute violations of both the Wiretap Act, 18 USC §§ 2510-2520, and the Stored Communications Act, 18 USC §§ 2701-2710. The court further holds that an employer's accessing without authorization of such a web site created by one of its employees, which site is critical of officers of the employer and urges company employees to consider alternative union representation, can constitute impermissible surveillance of union organizing activities in violation of the Railway Labor Act, 45 USC § 152. The Ninth Circuit accordingly reversed the decision of the District Court below, denied defendant's motion for summary judgment, and reinstated plaintiff's claims.

319 F.3d 770 (6th Cir., February 7, 2003)

Reversing the court below, the Sixth Circuit dissolves an injunction which enjoined defendants from using plaintiff's trademarks in conjunction with the word "sucks" in the domain name of several "complaint" sites, as well as in the domain name of a non-commercial "fan" site.  The Sixth Circuit held that defendants' use of plaintiff's mark in a 'fan' site did not run afoul of Section 1114 of the Lanham Act because of the presence of both a prominent disclaimer on the site disavowing any affiliation with plaintiff, and a link to plaintiff's official web site.  Defendant's use of plaintiff's marks in conjunction with the word "sucks" in the domain names of non-commercial complaint sites did not violate Section 1114 of the Lanham Act because there was no likelihood of consumer confusion arising therefrom, and because such speech is protected by the First Amendment.

Case No. 1:04cv510 (S.D. Ohio June 15, 2007)

Court allows plaintiff Taylor Building Corporation of America (“Taylor Building”) to proceed with libel claims arising out of the publication of a gripe site critical of plaintiff’s work by a relative of a disgruntled customer.  The Court denies so much of defendant’s motion for summary judgment which sought to dismiss these claims holding, inter alia, that issues of fact as to whether publication of the statements on this website were sufficiently limited to ‘proper parties’ so that their publication was protected by the qualified privilege applicable to statements made to protect the public interest precluded such an award.

The Court did grant so much of defendant’s motion for summary judgment which sought to dismiss “initial interest confusion” Lanham Act claims plaintiff asserted arising out of defendant’s use on his gripe site of a service mark and trade dress allegedly similar to those of the plaintiff.  The Court held such claims failed because consumers were not likely to be confused as to the source of defendant’s site, or attribute it to the plaintiff, as the site was critical of plaintiff, was found at the domain Taylor Homes – Ripoff.com, and bore a “header” that stated “Taylor Homes Ripoff.  Badly Fingering Your Dreams.  Taylor Sold Us A Quality Home and Gave Us Garbage.”

Finally, the Court dismissed plaintiff’s tortuous interference with contractual and business relations claims.  The Court held that plaintiff had failed to demonstrate that defendant had sufficient knowledge of the actual contracts or relationships allegedly interfered with by the operation of his gripe site to sustain such claims.

368 F.3d 433 (5th Cir. 2004)

Reversing the District Court, the Fifth Circuit holds that defendant's operation of a non-commercial gripe site at a domain which varied from plaintiff's mark solely by the subtraction of the letter "s" did not violate either the Federal or Texas State Dilution Acts, nor did it run afoul of the Anticybersquatting Consumer Protection Act ("ACPA").  The Court determined that defendant's actions were not motivated by the requisite bad faith intent to profit from the use of the mark, but rather, by defendant's desire to inform the public about his dispute with plaintiff and the services it offered him.  The absence of such bad faith was fatal to plaintiff's ACPA claim.  Plaintiff's Federal Dilution Act claim failed because defendant's use was not commercial.

188 F. Supp. 2d 110 (D. Mass., Mar. 6, 2002)

Court holds that defendant violated the Anticybersquatting Consumer Protection Act by registering sixteen domain names containing misspellings of plaintiff’s trademark, at which domains defendant operated web sites that voiced his complaints about plaintiff’s business practices.  Defendant did not offer any goods or services for sale at these web sites, and there is no mention in the record of any attempts by defendant to try and sell the domain names to the plaintiff.

No. 82S04-0008-CV-477 (Sup. Crt. Ind., October 1, 2001)

The Supreme Court of Indiana affirmed in part and reversed in part the decisions of the courts below. The Indiana Supreme Court affirmed those portions of the lower courts' decisions that held that Dr. Felsher had violated the privacy rights of three University of Evansville employees by, inter alia, creating e-mail accounts and web sites containing their last name, first initial, and the letters UE (an abbreviation for University of Evansville), sending e-mail from such accounts nominating the employees for various positions at other institutions, and referring the reader of such e-mail to the web sites defendant created which contained materials critical of the three employees. The Supreme Court affirmed that portion of the decisions below which held that such conduct violated the individual defendants' privacy rights, and enjoined defendant from engaging in such conduct in the future. The Supreme Court reversed those portions of the decisions below which held that Felsher, by his acts, had also violated the privacy rights of the University of Evansville on the grounds that a corporation does not possess a right to privacy. The court held that the University may be able to obtain redress for any misuse of its name by asserting claims under other theories, such as unfair competition, which had not yet been plead.

Case No. D2005-0130 (WIPO, April 10, 2005)

In this domain name dispute brought under the Uniform Domain Name Dispute Resolution Policy ("UDRP"), the presiding Panelist directed Jeff Milchen ("Milchen") to transfer to Wal Mart the domain name walmartfacts.biz Milchen had registered. In reaching this result, the Panelist held that a professed intention to use a domain name in the future to operate a gripe site critical of Wal-Mart was insufficient to establish the legitimate interest in that domain necessary to defeat complainant's claim under the UDRP, when such an intention had not yet been acted upon.

Case No. 2:04-cv-47-FtM-34SPC (M.D. Fla., February 15, 2008)

In the latest chapter of this long running dispute, the District Court holds that the Communications Decency Act, 47 USC Section 230, immunizes defendants from defamation claims arising out of the posting on their site – The Rip-Off Report - of allegedly defamatory statements about plaintiff that were allegedly authored by third parties.  In reaching this result, the Court rejected plaintiff’s contention that defendants were sufficiently involved in the creation of the posts at issue to be denied CDA immunity because they offered such third party posters the opportunity to categorize their reports in categories such as ‘con artists’, ‘corrupt companies’ and ‘false TV advertisements.’  The Court further held that plaintiff had failed to submit evidence sufficient to establish that defendants were involved in authoring the particular defamatory statements at issue so as to lose the immunity offered by the CDA.

No. 06-11888 (11th Circuit, August 1, 2006)

Eleventh Circuit holds that plaintiff's defamation claims against operators of consumer complaint sites arising out of the posting on those sites of allegedly defamatory complaints purportedly authored by third parties is sufficient to survive a motion to dismiss predicated on the immunity afforded the operators of interactive computer services under the Communications Decency Act ("CDA").  The complaint alleged that defendants edited consumer complaints to include words such as "ripoff" and "scam", and fabricated others.  The ultimate resolution of defendants' entitlement to immunity for their involvement in the publication of the posts at issue will have to await the trial of this matter.

As a result of this determination, the Eleventh Circuit reversed the decision of the District Court, which had dismissed the action for want of personal jurisdiction.  The lower court's decision was grounded on its determination that no tort was committed by defendants in Florida, due to the application of the CDA.   The Eleventh Circuit rejected this determination, and remanded the matter to the District Court to determine whether the Court could appropriately exercise personal jurisdiction over the defendants consistent with the strictures of the Due Process clause of the United States Constitution.

Complaint and Gripe SitesComplaint and Gripe SitesComplaint and Gripe Sites Quick Hits

Emory M. Davis, et al. v. Frank Mitan
Civil Action No. 06-88-C (W.D. Ky., August 14, 2006).

Court holds that adding additional allegedly defamatory material to a preexisting website constituted republication of the website that started anew the running of the statute of limitations for libel claims arising out of the statements contained therein.  The Court accordingly affirmed so much of the lower court’s decision which denied the Davises’ motion to dismiss Frank Mitan’s defamation claim on the ground that it was barred by the applicable one-year statute of limitations, as the instant lawsuit was commenced within one year from such republication.  In reaching this result, the court held that the single publication rule is applicable to internet publications – in this case a website critical of the Mitans.  In its decision the Court cogently stated the applicable rules of both single publication and republication.  Said the Court:

The single publication rule holds that any form of mass communication or aggregate publication – such as the publication of an edition of a book or a periodical, or the broadcast of a single radio or television program – is a single communication and can give rise to only one action for libel.  The rule applies only to those cases where communication is simultaneously available to multiple persons.  Its purposes are to prevent a multiplicity of actions, to protect the defendant from excessive liability based on a single publication run; to allow the plaintiff to recover all of his damages at once; and to reduce the chilling effect that the common law rule might have on the mass communications of ideas.  Under the single publication rule, the statute of limitations runs as soon as the communication enters the stream of commerce. 

An exception to the single publication rule is the doctrine of republication.  Republishing material – including publishing a second edition or a book or periodical, editing and republishing defamatory material, or placing it in a new form – resets the statute of limitations.  This exception provides the plaintiff with a remedy where the defendant edits and retransmits the defamatory material, or distributes the defamatory material for a second time with the goal of reaching a new audience.  The narrow question in this case is whether posting new information to a defamatory website resets the statute of limitations under the republication doctrine.  As the Supreme Court of Kentucky has not spoken on this issue, the court relies on persuasive authority from other jurisdictions.

The mere act of editing a website to add unrelated content does not constitute republication of unrelated defamatory material that is posted on the same website.  Similarly, mere technical changes to a website such as changing the way an item of information is accessed is not republication.  …  In contrast, where substantive material is added to a website, and that material is related to defamatory material that is already posted, a republication has occurred.  To hold otherwise would give a publisher carte blance to continue to publish defamatory material on the Internet after the statute of limitations has run in the first instance.

In this case the Bankruptcy Court found that the new material on the
Davises’ website contained substantive information related to Kenneth, and by reference the Mitan family.  Having found these necessary facts, the Bankruptcy Court correctly analyzed Mitan, Firth and Churchill and held that a republication had occurred which restated the statute of limitations.  As the adversary proceeding was filed within one year of the updates to the Davises’ website it was timely filed.


Finally, the Court remanded the case to the Bankruptcy court to reconsider the scope of the injunctive relief awarded.  The Davises’ website addressed not only Frank Mitan, but other Mitans as well.  The Bankruptcy court enjoined the Davises from further publication of their website in toto – including references both to Frank Mitan, which were found to be defamatory, as well as the other Mitans.  In light of the foregoing, the court remanded the case to the Bankruptcy Court for further consideration of the appropriate scope of relief.

Chris Gregerson v. Vilana Financial Inc., et al.
2007 U.S. Dist. Lexis 64960, Civ. No. 06-1164 ADM/AJB (D. Minn., August 31, 2007)

On the parties’ cross-motions for summary judgment, the Court finds the corporate defendants guilty of copyright infringement as a result of their unauthorized use of two of plaintiff’s copyrighted photographs in advertisements for their businesses. 

The Court further held that defendant Andrew Vilenchik, the sole board member and shareholder of defendant Vilana Financial, could not be held vicariously liable for defendant’s copyright infringement, because he did not have or derive a sufficiently direct financial interest from the use of plaintiff’s photographs.

The Court granted plaintiff summary judgment, dismissing defendants’ claim that his use of defendants’ trademark in the path of his site’s domain name violated the Anticybersquatting Consumer Protection Act.  Defendants’ claim failed both because they failed to submit sufficient evidence that plaintiff had a bad faith intent to profit from this use of the mark, and because use of the mark in the path of the domain name does not constitute actionable use of the mark in a domain name

The Court also dismissed trademark infringement claims brought by defendants as a result of plaintiff’s use of their trademark in a website that purportedly disparaged defendants as a result of their use of the photographs at issue, and in the meta tags of that site.  The court held defendants failed to establish the requisite likelihood of consumer confusion sufficient to sustain such a claim, given that the parties were not competitors – plaintiff was a photographer, and defendants sold real estate and mortgage services – and plaintiff’s website was highly critical of defendants.  In reaching this result the court noted that “a defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.”

Finally, the Court left for trial defendants’ remaining claims, which included deceptive trade practices, interference with contractual and business relationships, and misappropriation of name and likeness, all of which arose out of the disparaging remarks posted on plaintiff’s website about the defendants.  This site included a photograph of defendant Vilenchik.  Because issues of fact existed as to the truth of these statements, the court reserved decision on these claims until trial.

It should be noted that plaintiff ultimately prevailed at trial, was awarded approximately $20,000 on his copyright infringement claims, and that defendants’ remaining claims were dismissed.

Chris Gregerson v. Vilana Financial Inc., et al.
2006 WL 3227762, Civil No. 06-1164 ADM/AJB (D. Minn., Nov. 7, 2006)

Court denies defendants’ motion for a preliminary injunction, which sought to enjoin plaintiff from using defendants’ registered service and trademarks in the meta tags and “subject lines” of his website.  Plaintiff is a photographer who claimed that defendants, without authorization or payment, used a photograph in which he held copyright in an advertisement.  Plaintiff commenced suit against defendants for copyright infringement.  Plaintiff’s website described his view of defendants’ conduct, in a manner which disparaged, and according to defendants, defamed them.  As the site existed at the time of the hearing, it contained a prominent disclaimer, announcing it “is a criticism of” defendants.  Defendants’ counterclaim asserted claims of defamation and trademark infringement, and relied, in part, on the initial interest confusion created by plaintiff’s use of defendants’ marks.

The Court denied defendants’ motion for injunctive relief, holding defendants had not sufficiently established a likelihood of success on the merits.  Said the Court:

In the instant case, Defendants’ motion must be denied because they are unable to establish the first prong of the analysis, likelihood of success on the merits.  ‘A defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.’

Computer Fraud and Abuse Act - Updated November 27, 2008

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

2000 U.S. Dist. Lexis 17055, 121 F. Supp. 2d 1255 (N.D. Iowa, September 29, 2000)

The court denied plaintiff AOL's motion for summary judgment seeking to hold defendant liable for violations, inter alia, of the Computer Fraud and Abuse Act, the Virginia Computer Crimes Act, and common law trespass to chattels, as a result of the transmission of unsolicited bulk e-mail advertising defendant's products to AOL users. The court reached this conclusion because, based on the record before it, it could not determine whether the parties who sent the e-mail in question were defendant's agents, acting under its control, or independent contractors.

No. 04C7071 (N.D. Ill., Sept. 27, 2005)

Court holds that a principal can be held vicariously liable under the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., ("CFAA") for its agent's accessing without authorization another's computer system in violation of the CFAA at the principal's direction.  The Court accordingly denies the motion of defendants Acorn Advisory Management LLC and Acorn Advisory Capital L.P. (collectively "Acorn") to dismiss claims advanced by plaintiff Charles Schwab & Co. Inc. ("Schwab"), that sought to hold Acorn liable under the CFAA for the acts of defendant Brian Carter ("Carter").  Carter, a former employee of Schwab, had allegedly downloaded without authorization confidential information and trade secrets from Schwab's computer system at the behest of Acorn, by whom he was subsequently employed.

387 F.Supp.2d 378, 04 Civ. 8875 (SCR) (S.D.N.Y. Sept. 6, 2005)

Court holds that damages arising out of the use of data obtained via unauthorized access to another's computer system are not recoverable under the Computer Fraud and Abuse Act, 18 U.S.C. §1030 et seq. ("CFAA"),  when the data remains available to plaintiffs after such access.  As a result, the Court dismisses CFAA claims advanced by plaintiffs arising out of the alleged use of information obtained by unauthorized access to plaintiffs' confidential database by former employees to aid their new employer, one of plaintiffs' competitors.

154 F. Supp.2d 497, 00 Civ. 0641 (S.D.N.Y., March 28, 2001)

Court dismisses claims advanced by the plaintiff class under the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, and the Wiretap Act arising out of Doubleclick's use and placement of "cookies" on plaintiffs' computers. Doubleclick uses such "cookies" to gather information about the users' use of Doubleclick client web sites. Because Doubleclick's clients consented to such information gathering, the court held that Doubleclick's activities did not run afoul of either the Electronic Communications Privacy Act or the Wiretap Act. The court also dismissed the claims plaintiffs advanced under the Computer Fraud and Abuse Act because any damages caused by Doubleclick's activities did not meet the threshold required by the Computer Fraud and Abuse Act. Finally, the court, having dismissed all of plaintiffs' federal claims, declined to retain jurisdiction over plaintiffs' state law claims, and dismissed the action.

318 F.3d 58 (1st Cir., January 28, 2003)

First Circuit holds that prohibitions found in a website's Terms of Use can be used to establish that a visitor to that site exceeded his authorized use thereof for the purposes of establishing a violation of the Computer Fraud and Abuse Act ("CFAA").  While prohibitions on authorized usage can also be established by reliance on such things as password protected access, the First Circuit rejected the notion that courts should look to the "reasonable expectations" of the parties to determine if a particular usage was in fact authorized.  The court affirmed a preliminary injunction enjoining defendant Zefer Corporation ("Zefer") from utilizing a "scrapper" tool it designed to obtain pricing information from plaintiff's website on the ground that Zefer was doing so to assist defendant Explorica, Inc. ("Explorica"), which was itself enjoined from such activity by virtue of its improper use of confidential information obtained from plaintiff to aid it in gathering this information.

207 F. Supp.2d 914 (W.D. Wis., March 28, 2002)

Court allows plaintiff to proceed with claims advanced against his employer and various fellow employees under the Electronic Communications Privacy Act, the Electronic Communications Storage Act, and Wisconsin's right to privacy statute, Wis. Stat. Section 895.50, as well as a common law defamation claim, arising out of defendants' interception of a telephone call plaintiff placed from his place of employ, and defendants' review of e-mails contained in a personal e-mail account plaintiff maintained with Hot Mail, which account plaintiff accessed from his work place.  There were sharply differing versions of the content of these various communications.  Defendants alleged that during the telephone call, the participants, while masturbating, graphically described homosexual activity between two males.  Plaintiff denied this.  Defendants also alleged that e-mails read from plaintiff's email account evidenced that plaintiff was involved in homosexual activity.  Plaintiff denied that these e-mails had been sent to him.

Defendants' version of the telephone conversation was related to various third parties, which resulted in the termination of plaintiff's employment.  This lawsuit ensued.  The court determined that plaintiff should be permitted to proceed with various claims he asserted. 

The court refused to dismiss plaintiff's claim, advanced under Wisconsin's right of privacy law, section 895.50, arising out of the review of e-mail from plaintiff's personal Hot Mail account.  The court held that issues of fact existed as to whether the review of such e-mail would be highly offensive to a reasonable person, and as to whether a reasonable person could consider such an account to be private, which precluded a grant of summary judgment to defendants.  The court also refused to dismiss the claim plaintiff brought under the Electronic Communications Storage Act arising out of the review of these e-mails.  If such a review took place (as opposed to defendants' having fabricated the e-mails) it would run afoul of the Stored Communications Act.  The court did dismiss the claims plaintiff raised under the Computer Fraud and Abuse Act, holding that plaintiff had not alleged economic damages arising from the review of these e-mails sufficient to state a claim under the Act.

The court also refused to dismiss the claims plaintiff advanced under the Electronic Communications Privacy Act and Wisconsin Privacy Act arising out of the interception of the telephone call described above.  The court refused to dismiss plaintiff's ECPA claim because, depending on what actually occurred, the defendants should have stopped listening to the telephone call when they discovered it was personal in nature.  The court refused to dismiss plaintiff's privacy act claims because plaintiff may have had a reasonable expectation of privacy in the telephone call if his claim that he made the call from a place his employer designated for private personal calls was true.

Lastly, the court refused to dismiss plaintiff's defamation claim, finding that issues of fact precluded it from determining whether defendants' communication of their version of the telephone call to third parties was protected by the common interest privilege possessed by members of religious associations as to communications pertaining to the qualifications of those who work for the organization.  Such privilege may have been lost, given plaintiff's claim that the defendants were lying about what took place during the telephone call.

Civil Act. No. 05-1979 (W.D. La., August 6, 2007)

Court holds that under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. section 1030, the costs incurred by the owner of a computer system in retaining consultants to conduct forensic investigations of the use by defendants of the computer system, and the harm such use may have caused, constitute a “loss” within the meaning of the statute, which can be used to meet the CFAA’s $5000 jurisdictional threshold. 

The Court further held that, under the CFAA, once the Act’s jurisdictional threshold has been met, the plaintiff can recover “compensatory damages” caused by the defendant’s violation of the Act.  Such “compensatory damages” include lost profits and revenue caused by the defendants’ use of data improperly obtained in violation of the CFAA.  Importantly, the court held that such lost profits can be recovered even in the absence of an interruption in service caused by defendants’ conduct.

C98-20064 (N.D. Ca., April 20, 1998)

Court enjoined defendants both from sending spam which falsely stated it came from plaintiff's e-mail service, and from using Hotmail accounts as mailboxes for "spam" reply. Court held that such conduct violated plaintiff's Term's of Service, which prohibited the use of Hotmail accounts to facilitate the transmission of spam. To use plaintiff's service defendants, after being afforded the opportunity to view the Terms of Service, clicked on a box indicating their assent to be bound thereby. As such, the Court's holding reflects its willingness to uphold the validity of a click-wrap agreement between the parties. The Court also held that defendants' conduct constituted trademark infringement and dilution, as well as trespass to chattels and a violation of the Computer Fraud and Abuse Act.

Civ. Act. No. 1:00-CV-434-TWT (N.D. Ga. November 6, 2000)

Court holds that plaintiff's act of conducting an unauthorized port scan and throughput test of defendant's servers does not constitute a violation of either the Georgia Computer Systems Protection Act or the Computer Fraud and Abuse Act. The court further holds that various derogatory statements the parties made about each other do not support actions for defamation, tortious interference with contractual relations, or commercial defamation under the Lanham Act.

Civ. Act. No. 00-11672-JLT (D. Mass., August 13, 2002)

Court grants defendants' motion for summary judgment, and dismisses plaintiffs' claims under the Electronic Communications Privacy Act ("ECPA") and the Computer Fraud and Abuse Act ("CFAA") arising out defendant Pharmatrak's monitoring of plaintiffs' activities on the web sites of various pharmaceutical companies.  With the authorization of these pharmaceutical companies, who were also named as defendants in this litigation, defendant Pharmatrak placed software on their web sites which enabled Pharmatrak to gather information submitted by the plaintiffs to, and to track their activities at, these sites.  Pharmatrak's software also enabled Pharmatrak to gather information both about the web site plaintiffs visited immediately prior to their visit to defendants' sites, as well as the search plaintiffs conducted to get to defendants' sites.  According to plaintiffs, the information Pharmatrak gathered included personally identifiable information, although there was no evidence that Pharmatrak disseminated anything other than aggregated non-personally identifiable information to third parties.

The Court held that defendants did not violate Title I of the ECPA, the Wire Tap Act, because they qualified for the protection of Section 2511(2)(d) of the ECPA, which permits interception of a communication when it is authorized by one of the participants in the communication, provided the interception is not undertaken for a tortuous or criminal purpose.  Defendants were permitted to intercept the communications at issue because (a) the pharmaceutical defendants which participated in them had authorized such interception, and (b) there was no evidence that such interception was done for an improper purpose.

The Court dismissed plaintiffs' claims under Title II of the ECPA, the Stored Communications Act, both because the devices defendants accessed, plaintiffs' PCs, were not protected "facilities" under the Stored Communications Act, and because the pharmaceutical defendants consented to accessing the communications at issue.

Lastly, the Court dismissed the claims plaintiffs raised under the Computer Fraud and Abuse Act, because plaintiffs did not sustain damages sufficient to meet the damage threshold requirements of that statute.

126 F. Supp. 2d 238 (S.D.N.Y., December 12, 2000) (Jones, J.) aff'd. 356 F.3d 393 (2d Cir. 2004)

Court issues a preliminary injunction enjoining Verio, Inc. from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information derived from that database for mass unsolicited advertising by telephone, direct mail or electronic mail. Court holds that Verio's actions will likely constitute a breach of plaintiff's Terms of Use, as well as a violation of both the Computer Fraud and Abuse Act and the Lanham Act and a trespass to chattels. In reaching this conclusion, the court holds that Register.com's Terms of Use are likely to create a contract between Register.com and the users of its Whois database, notwithstanding the fact that these users are not required to click an "I Agree" button indicating their agreement to be so bound.

Civ. Act. No. 3:06-CV-0891-B (N.D. Texas, September 12, 2007)

Finding defendant Boardfirst violated the terms of a browsewrap agreement entered into by its use of plaintiff Southwest Airlines’ website, the Court issued a permanent injunction, enjoining Boardfirst from accessing Southwest Airlines’ website on behalf of its customers to obtain boarding passes.  Southwest Airlines’ passengers engaged Boardfirst to obtain such boarding passes in the hopes of getting better seat assignments on Southwest Airlines flights.  Southwest Airlines has no assigned seating.  Those passengers who are the first to seek boarding passes within the designated time period are awarded “A” boarding passes, which, in turn, allow them to board the plane, and select their seat, first.  In reaching this result, the Court held that Boardfirst had the requisite knowledge that its use of plaintiff’s site would form a valid browsewrap contract by virtue, inter alia, of its receipt of cease and desist letters from Southwest Airlines apprising it of that fact.

The Court denied so much of Southwest Airline’s motion for summary judgment which sought to hold Boardfirst liable for violating of the Computer Fraud and Abuse Act, 18 U.S.C. Section 1030.  The Court held that issues of fact as to whether Southwest Airlines sustained the injury needed to sustain such a claim precluded an award of summary judgment.  The Court further held that it could not, at this time, determine whether Boardfirst accessed Southwest Airline’s site “without authorization” or in excess of authorization, an additional prerequisite to a CFAA claim.

Finally, the Court found that Boardfirst’s conduct violated Section 33.02 of the Texas Penal code, which makes it an offense to “knowingly access a computer network, or computer system without the effective consent of the owner.”  The Court reserved for trial the issue of whether such violation caused Southwest Airlines recoverable damages.

488 F.Supp.2d 991, 2007 WL 214595 (E.D. Ca., January 25, 2007)

Court allows the operator of a subscription-based website to proceed with copyright infringement and other claims arising out of the allegedly unauthorized access by the defendants of copyrighted materials contained on plaintiff's site.  These materials consist of pharmacist prepared monographs describing the results and/or effects of various drug treatments.  The complaint alleged that defendants NBTY, Rexall Sundown and Le Naturiste improperly used passwords obtained from plaintiff to allow more users to access plaintiff's site than permitted by applicable license agreements, thereby depriving plaintiff of appropriate license fees.  The court denied in its entirety defendants' motion to dismiss plaintiff's claims that such conduct constituted copyright infringement, violations of the Computer Fraud and Abuse Act ("CFAA"), the Electronic Communications Privacy Act and California Penal code section 502, as well as common law trespass and misappropriation of trade secrets. 

The Court held that plaintiff had adequately plead a copyright infringement claim by alleging that the defendants had accessed the monographs on its website without its permission, and had cut and pasted portions thereof into emails that were transmitted to others.

The Court further held that plaintiff had alleged damages sufficient to support its CFAA claim by alleging that it lost revenue as a result of defendants' unauthorized use of its site in excess of their license rights.

Finally, the Court held that the passwords necessary to access plaintiff's site were trade secrets entitled to protection under the Uniform Trade Secrets Protection Act.

Computer Fraud and Abuse ActComputer Fraud and Abuse ActComputer Fraud and Abuse Act Quick Hits

Heath Cohen v. Gulfstream Training Academy, Inc. and Gulfstream International Airlines, Inc.
Case No. 07-60331-Civ-Cohn/Seltzer (S.D. Fla., April 9, 2008)

Court grants so much of plaintiff employee’s motion for summary judgment which sought dismissal of claims brought by his former employer under the Computer Fraud and Abuse Act (“CFAA”) arising out of plaintiff’s alleged use of company information, copied from a company computer, to solicit company customers and compete with his former employer.  The Court held that the lost profits defendant allegedly sustained as a result of such competition were not recoverable under the CFAA.  Rather, the CFAA only permits recovery of losses caused by an interruption of service, or damage sustained by ‘any impairment to the integrity or availability of data, a program, a system or information.’  Because defendant Gulfstream Training Academy did not establish that the information plaintiff copied and deleted from its laptop were unavailable to it, it could not pursue a claim for lost profits resulting from plaintiff’s use of this data in competition with defendant, as such lost profits did not constitute either a ‘loss’ or ‘damage’ recoverable under the CFAA.  Said the Court:

Upon a review of the statutory language and the competing case law, the Court concludes that while the issue is a close one, the more appropriate reading of the statutory language is that any ‘loss’ must be related to interruption of service.  In this case, the fact that Plaintiff copied files and allegedly stole clients from GTA did not cause an interruption of service as contemplated by the CFAA.  Rather, the CFAA statutory language evidences an intent to allow recovery for reasonable costs caused by interruptions in service or damage to a computer.  GTA would need to prove that the customer files were unavailable to GTA due to Plaintiff’s actions in exceeding his authority to access the computer.  There is no evidence to support such a theory.  Simply copying the files and then contacting customers in those files to take their business is not causing a loss because of interruption of service.  Similarly, GTA has not shown that Plaintiff’s deletion of any information, which could be construed as ‘damage’ under the CFAA, resulted in at least $5000 worth of damage.  Rather, it appears that the only allegations of damages are the lost business profits.

The Court recognized that other courts had reached differing conclusions on this issue, including Resdev LLC v. Lot Builders Ass’n, Inc., 2005 WL 1924743 (M.D. Fla. 2005), Nexans Wire S.A. v. Sark-USA Inc., 319 F.Supp.2d 468 (S.D.N.Y.) aff’d 166 Fed Appx. 559 (2d Cir. 2006) and Cenveo Corp v Celum Solutions Software, 504 F. Supp. 2d 574 (D. Minn. 2007) which reached conclusions similar to those reached by the Court, and Frees Inc. v. McMillian, 2007 WL 2264457 (W.D. La. 2007) which held that, once a plaintiff had met the jurisdictional damage thresholds imposed by the CFAA, it provisions permitted recovery of any compensatory damages sustained by the Act’s violation, limited only by the requirement that they be ‘economic damages.’

Creative Computing d/b/a Internet Truckstop.com v. Getloaded.com LLC, et al.
386 F.3d 930 (9th Cir., 2004)

Ninth Circuit holds that plaintiff can recover damages for loss business and business goodwill arising out of defendant’s misuse of proprietary source code and customer lists improperly obtained in violation of the Computer Fraud and Abuse Act.  Such damages were held recoverable notwithstanding the absence of an interruption of service caused by defendant’s misconduct.  Said the Court:

Both the old and new versions of the statute limit damages for loss aggregating at least $5000 in a year to ‘economic damages.’  Getloaded objects to paying damages for loss of business and business goodwill.  The objection is without force, because those are economic damages.

As a result, the Ninth Circuit affirmed the lower court’s determination, after trial, which awarded plaintiff $150,000 for each of three violations by defendant of the Computer Fraud and Abuse Act. 

In affirming the District Court’s decision, the Ninth Circuit further held that the $5000 damage threshold of the CFAA does not require the plaintiff to prove it sustained $5000 in damages as a result of a single act of unauthorized access.  Rather, held the Court:  “neither version of the statute supports a construction that would require proof of $5000 of damage or loss from a single unauthorized access.  The syntax makes it clear that in both versions [of the CFAA], the $5000 floor applies to how much damage or loss there is to the victim over a one-year period, not from a particular intrusion.  …  The damage floor in the Computer Fraud and Abuse Act contains no single act requirement.”  

This action arose out of a competitior’s use of source code improperly obtained by accessing plaintiff’s site through another password, and ‘hacking’ into the site and its code.  The competitor also hired a former employee of plaintiff, who improperly supplied it with plaintiff’s customer lists.  The parties’ respective websites are used by truckers to ascertain loads available for transport in a given area, so as to permit the trucker to prevent ‘dead heading’ and allow them, instead, to travel both to and from a location fully loaded with cargo.  In addition to an award of $450,000 under the CFAA, the Court also awarded plaintiff $60,000 for violation of the Idaho Trade Secrets Act, $342,787,35 in attorneys fees and expenses, and $120,000 in exemplary damages as a result of defendants’ improper acts, including its violation of injunctions designed to prevent the destruction of evidence.

Nexans Wires S.A. and Lacroix & Kress GMBH v. Sark-USA Inc., et al.
No. 05-3820-cv (2d. Cir., February 13, 2006)

Court holds that lost profits caused by alleged misuse of proprietary data improperly obtained in violation of the Computer Fraud and Abuse Act are not recoverable as damages in claims asserted thereunder in the absence of an interruption in service caused by defendants’ alleged misconduct.  As a result, the Second Circuit affirmed the District Court’s grant of summary judgment to the defendants, dismissing plaintiff’s Computer Fraud and Abuse Act claim.  These claims alleged that defendants improperly obtained plaintiff’s proprietary data, which they used in aid of a competitor to plaintiff’s injury.  “As the district court correctly recognized, the plain language of the statute treats lost revenue as a different concept from incurred costs, and permits recovery of the former only where connected to an ‘interruption in service.’  …  Because it is undisputed that no interruption of service occurred in this case, L & K’s asserted loss of $10 million is not a cognizable loss under the CFAA.”

Constitutionality - Updated August 19, 2004

977 F.Supp.1228 (N.D. Ga., 1997)

(Court holds that Georiga statute which, inter alia, prohibits an individual from using a pseudonym when communicating over the Internet, and prohibits the use of trademarks and logos in hyperlinks without permission, is unconstitutional because it is vague, overbroad, and not narrowly tailored to achieve the State's ends of preventing fraud and improper use of trademarks)

3:00CV258-MU (W.D.N.C., April 5, 2002) aff'd. in part, vacated in part, remanded 325 F.3d 506 (4th Cir., 2003)

Court holds that those provisions of North Carolina's Alcoholic Beverage Control law which prohibit out-of-state retailers from selling liquor directly to North Carolina consumers, while allowing in-state wineries to make such sales, are unconstitutional violations of the Commerce Clause of the United States Constitution.  The dormant Commerce Clause prohibits states from enacting regulations, such as those at bar, which directly discriminate against interstate commerce.  The court held that the legislation at issue was not saved by operation of the Twenty First Amendment, which grants the States the power to regulate in-State liquor sales.  The Twenty First Amendment does not trump the Commerce Clause; rather, when faced with a conflict between their competing concerns, courts engage in a balancing test, asking "whether the interests implicated by [the] state regulation are so closely related to the powers preserved by the Twenty First Amendment that the regulation may prevail …".  Here, North Carolina did not identify the state interests served by the challenged regulation.  As a result, the District Court assumed the purpose of the legislation was to protect local wineries from out-of-state competitors.  The Court held that such an improper purpose mandates a finding that the statute is an unconstitutional violation of the Commerce Clause.  The Court accordingly enjoined North Carolina from enforcing the statutes at issue, including those laws "that prohibit … out-of state wine dealers from directly shipping wines to … North Carolina residents."

No. A092653 (Cal. Crt. App., First Appellate Dist., January 2, 2002)

Reversing the court below, the Court of Appeals for the State of California, First Appellate District, holds that Section 17538.4 of the California Business and Professions Code, which regulates the sending of unsolicited commercial e-mail ("UCE") to California residents, does not run afoul of the Commerce Clause of the United States Constitution. The court accordingly reinstated so much of plaintiff's complaint which asserts unfair business and unlawful advertising practice claims arising out of defendants' transmission of UCE in violation of Section 17538.4. The Court also granted plaintiff leave to replead his claim that defendants' transmission of UCE constitutes an impermissible trespass to chattels -- namely plaintiff's computer -- finding his existing complaint deficient as a result of its failure to allege the injury necessary to sustain such a claim.

280 F.3d 741, No. 98 C 3187 (7th Cir., February 6, 2002)

Seventh Circuit affirms dismissal of claims brought by former employee against his employer arising out of employer's seizure of a company lap top used by plaintiff in the course of his employ, and subsequent delivery of that lap top to federal authorities in response to a search warrant. Defendant employer could not be held to have violated plaintiff's Fourth Amendment rights because plaintiff had no reasonable expectation of privacy in the lap top in light of the company's computer use policy, which permitted the company to inspect the lap top at any time. Moreover, as the defendant was neither the state or a public entity, it could not be liable for violating plaintiff's Fourth Amendment rights.

281 F.3d 1130 (10th Cir., February 22, 2002), cert. denied, 537 U.S. 845 (2002)

10th Circuit holds that a University professor has no reasonable expectation of privacy in an office computer supplied for his use by the University which employed him.  This result was mandated by the University's computer policy, which provides both that the University may inspect such computers at any time to ensure their appropriate use, and that the University is the owner of everything stored in such computers.  As a result, the court held that the seizure of these images did not violate defendant's Fourth Amendment rights, given his lack of a reasonable expectation of privacy in this computer.  The 10th Circuit accordingly affirmed the denial of defendant's motion to suppress the introduction of child pornography found in files defendant attempted to delete from his computer hard drive and upheld defendant's agreement to plead guilty to violating 18 U.S.C. §2252(a)(5)(b) based on his possession of child pornography.

24 P.3d 404 (Supreme Court State of Washington, June 7, 2001), cert. denied, 122 S.Ct. 467 (2001)

Reversing the decision of the trial court, Washington's Supreme Court holds that Washington's Antispam law, chapter  19.190 RCW, does not run afoul of the Commerce Clause of the United States Constitution.  Washington's Antispam law regulates the sending of unsolicited commercial e-mail ("UCE") either to an e-mail address held by a Washington resident, or from a computer located in Washington.  The statute mandates that such e-mail may not "misrepresent or disguise … the message's point of origin or transmission path, or use a misleading subject line."  The statute also requires the sender of UCE to include a valid e-mail address to which recipients can respond.  In holding that the statute did not violate the Commerce Clause, the Court determined that the statute did not discriminate against Interstate Commerce, because it imposed the same obligations on everyone who sent e-mail to Washington residents, whether they reside in Washington or elsewhere.  The Court further held that the statute served the important State interests of protecting local ISPs, owners of domain names and Internet users from the unwanted costs associated with UCE, while imposing, at most, minimal burdens on interstate commerce by obligating those who send UCE to provide truthful subject lines and transmission paths.

No. 040907578 (Utah Dist. Ct., June 22, 2004)

Court issues preliminary injunction, enjoining enforcement of Utah's Spyware Control Act, which, inter alia, prohibits the delivery of 'pop-up' ads that obscure any portion of an Internet website, and bars advertisers from downloading programs that deliver ads to a consumer's computer unless the consumer's consent to such download is obtained in the manner specified by the Act.  The Court issued such relief because it found that plaintiff was likely to prevail on its claim that those portions of the Act run afoul of the Commerce Clause of the United States Constitution.

For additional cases, see First Amendment.

Consultants - Updated March 24, 2004

No. 04-03-00138-CV (Texas Crt. App., Jan. 21, 2004)

Court upholds jury verdict, finding that computer consultant that agreed to create a "computer solution" for its client's needs breached the parties' agreement by recommending the purchase of clone computers which malfunctioned, and custom software from a vender who never supplied it.  As a result, the court upheld the jury's award of $120,793.02, which consisted of the costs incurred by the client to purchase both a new computer system and replacement software, together with the costs of hiring an expert to diagnose its problems, and recommend a solution.  Notably, the computer consultant and its designated software vendor were only paid approximately $45,000 for work, services and hardware provided.

Contempt - Updated January 21, 2001

2000 U.S. Dist. Lexis 4891, 94 F.Supp.2d 457 (S.D.N.Y., April 18, 2000)

Court refuses to hold defendants in contempt for violating an order and judgment which "enjoined defendants, in the United States, from 'advertising or promoting' apparel bearing Jeri-Jo's registered trademark ENERGIE ...". While plaintiffs held a valid US trademark in the ENERGIE mark, defendants held trademarks in the ENERGIE mark in Italy, France and Germany, as well as the right to market products bearing the mark in a number of other foreign countries as well. As a result, the court refused to hold defendants in contempt as a result of their operation of a web site at the domain "www.energie.it" at which United States users could view but apparently not buy clothing bearing the "ENERGIE" mark, nor did the court require defendants to delist the "energie.it" url from search engines. The court did, however, require defendants to remove hyperlinks to the "energie.it" site containing the word "ENERGIE" from two other web sites defendants operated at www.missixty.com and www.sixty.net, at which sites defendants apparently sold non-infringing apparel. The court also awarded plaintiffs the attorneys' fees expended in bringing on the instant application.

Contract - Updated May 19, 2008

No. 4D05-1193 (Fla. Dist. Ct. App. 4th Dist., March 1, 2006)

Affirming the court below, a Florida District Court of Appeals holds that the plaintiff is not bound by the terms of an online user agreement, despite the fact that the written contract between that parties expressly states that it was "subject to all of SkyNetWeb's terms, conditions, user and acceptable use policies" located at a designated website.  As a result, the District Court of Appeals affirmed the denial of defendant's motion to compel arbitration, given that the arbitration provisions on which defendant relied were only contained in the Online User Agreement held not to be part of the parties' contract.

2004 Fla. App. Lexis 764, No. 1D03-2290, (Fla. App., 1st Dist., Jan. 29, 2004)

Affirming the court below, Florida District Court of Appeal holds that America Online's ("AOL") forum selection clause, which mandates that all claims relating to the use of AOL be brought in Virginia, is unenforceable with respect to a class action lawsuit brought under two Florida consumer protection statutes - the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and the Florida Free Gift Advertising Law (FFGAL).  The Appellate court accordingly affirmed the denial of AOL's motion to dismiss for improper venue.

Civ. Act. No. 04-2593 (MLC)(D.N.J., July 23, 2007)

Court upholds validity of exculpatory clause in the parties’ contract, which bars plaintiff from recovering consequential damages as a result of defendant’s alleged breach of the agreement.  As a result, the Court granted defendant’s motion for summary judgment, and dismissed plaintiff’s claims for consequential damages.  These claims arose out of defendant’s termination of the parties’ agreement, and refusal to provide plaintiff with internet connectivity services, due to complaints received by defendant that plaintiff was engaged in ‘spamming other customers’ in violation of defendant’s acceptable use policy.

Case No. 3D05-144 (Florida Dist. Crt. App., August 31, 2005)

Plaintiff held bound by Amendment to telephone services contract which obligated plaintiff to arbitrate disputes with the telephone service company, the terms of which Amendment were posted online.  Plaintiff was held bound as a result of her receipt of an invoice that gave her both notice of the Amendment and a location on the Internet at which its terms could be viewed, as well as the opportunity to cancel her contract if she did not wish to be bound thereby.  Plaintiff was held bound despite the fact that she neither read the terms of the Amendment, nor in any way affirmatively indicated her assent to be bound thereby.  Because the Amendment obligated plaintiff to arbitrate her dispute with defendant Sprint, the Florida District Court of Appeals affirmed the lower court's grant of defendant's motion to compel arbitration.

676 N.Y.S.2d 569, 1998 N.Y. App. Div. Lexis 8872 (1st Dept. N.Y., August 13, 1998)

The court, following the decisions of the Seventh Circuit in Hill and ProCd, holds that contract terms shipped to the consumer along with computer products form the contract between the consumer and supplier, where these terms clearly state that they will be binding on the consumer if she retains the products for 30 days, and the consumer so retains the products. The court further holds that inclusion in this contract of a clause mandating arbitration in Chicago of all disputes arising out of the parties' transactions does not render the contract an unenforceable contract of adhesion. However, requiring that such disputes be arbitrated in accordance with the rules of the International Chamber of Commerce ("ICC"), which requires the payment by the consumer of a $4000 fee, of which $2000 is non-refundable even if the consumer prevails, is unconscionable. This is true because this fee exceeds the price of most of the products defendant sells, and therefor effectively denies plaintiff any forum in which to resolve disputes arising out of the purchase of the product. The court accordingly directed the parties to arbitrate their dispute before an arbitrator to be selected by the court, as opposed to the ICC, as had been designated in the parties' contract.

No. C04-04825 (JW) (N.D. Ca., April 1, 2005)

Court holds Terms of Use on defendant's websites constitute binding agreements between website operator and website user, where notices on the sites provide that the Terms  will create such an agreement if a user continues to utilize the site, and plaintiff used the sites with both actual knowledge of the Terms, and with imputed knowledge arising out of repeated use of the sites via a "robot."  Court accordingly dismisses plaintiff's declaratory judgment action for improper venue, as the Terms of Use mandated suit be brought in Illinois, and plaintiff commenced suit in California.

Cases No. C-02-1227 and C-02-2777 JF (N.D. Cal., August 30, 2002)

Court holds that both PayPal's User Agreement, and the arbitration clause found therein, are unconscionable under California law.  The Court accordingly denies motions by PayPal to compel users who commenced putative class action suits arising out of PayPal's allegedly inappropriate handling of customer accounts and/or complaints to resolve their claims via arbitration.  The Court held that the User Agreement and the arbitration clause therein are unconscionable because they: (1) permit PayPal to issue binding amendments to the User Agreement at any time without notice to users; (2) obligate users to arbitrate their disputes pursuant to the commercial rules of the AAA, which is cost prohibitive in light of the average size of a PayPal transaction; (3) obligate users who reside nationwide to arbitrate in Santa Clara county, California, where PayPal is located; (4) permit PayPal to freeze and maintain possession of the funds in customer accounts until any dispute is resolved; and (5) require users to pursue their claims individually, and not via a class action.  Taken together, the Court held these provisions made the User Agreement unconscionable, and appear to represent an attempt by PayPal "to insulate itself contractually from any meaningful challenge to its alleged practices."

245 F.Supp. 2d 913 (C.D. Ill. 2003)

Court holds that plaintiff entered into a binding online click-wrap agreement by clicking an 'I Agree' icon, which indicated he had read, understood and agreed to the terms of the parties' contract.  The contract's terms were available for review online by clicking on a link which appeared on the Register.com website just above the 'I Agree' icon.  As a result, the Court dismissed the claims advanced by plaintiff, because plaintiff commenced suit in a forum other than the exclusive jurisdiction specified in the forum selection clause contained in the parties' contract; asserted state law claims under the laws of a state which were rendered inapplicable by the contract's choice of law provisions, and asserted claims that failed in light of the contract's terms.

2004 U.S. Dist. Lexis 18010 (D. North Dakota, September 8, 2004)

Court dismisses plaintiffs' claims that Northwest Airlines violated the Electronic Communications Privacy Act ("ECPA") by disclosing personal information about plaintiff passengers to governmental authorities.  The Court grounded its decision on its determination that the ECPA did not apply because Northwest, by virtue of its operation of a web site at which consumers can purchase airline tickets, was not a provider of "electronic communication services" within the meaning of the ECPA.  The Court also dismissed plaintiffs' claims that this disclosure constituted a breach of the parties' agreement, as reflected in the privacy policy Northwest posted on its web site, not to disclose such personal information, finding that the posting of such a policy did not create an enforceable agreement between the parties.

805 A.2d 1007 (Dist. of Columbia Court of Appeals, August 29, 2002 )

Affirming the court below, the District of Columbia Court of Appeals holds that plaintiff entered into a binding contract online with Verizon Internet Services ("VIS") by clicking an "Accept" icon, indicating his assent to be bound by the contract.  This icon appeared directly below a "scroll box" on VIS's website which contained the terms of the contract.  The terms were not all visible online when the user initially viewed the web page on which the "scroll box" was found.  Rather, to review all of the contract's terms, the user was required to use the "scroll box" to scroll through them. 

The Court of Appeals also affirmed the dismissal of a putative class action commenced by plaintiff arising out of his dissatisfaction with VIS's DSL service, because the suit was not commenced in Virginia, the jurisdiction specified in the contract's forum selection clause as the exclusive jurisdiction in which disputes could be heard.

105 F. 3d 1147 (7th Cir. Jan. 6, 1997)

(Contract terms shipped along with computer to customer govern parties' relationship, where the customer receives a notice that informs her that the terms govern the parties' relationship unless the product is returned within 30 days, and the customer fails to return the product within that time period.)

Civil Act. No. 05-40170-FDS (D. Mass., September 28, 2007)

Court holds plaintiff bound by a click-wrap agreement entered into by her travel companion with defendant Expedia Inc. (“Expedia”) when she purchased tickets and hotel accommodations on plaintiff’s behalf.  The travel companion was acting as plaintiff’s agent, and by her acceptance of the agreement, bound plaintiff to its terms.  As such, the Court dismissed plaintiff’s claims against Expedia for personal injuries sustained at the hotel she visited when her sandal broke, causing her to fall down stairs and into an ornamental pond, holding them barred by the liability disclaimer contained in the parties’ agreement.  The Court further held that plaintiff’s claims against Expedia failed because it owed her no duty to warn of dangerous conditions that allegedly existed at the resort in question.

The Court did deny defendant Gap Inc.’s (“Gap”) motion for summary judgment, and allowed plaintiff to proceed with her claims that a defective sandal she purchased from Old Navy, owned by the Gap, failed, causing her to fall and sustain the injuries at issue.  The Court rejected the Gap’s motion that such claims should be barred by application of the spoliation doctrine, as plaintiff had not preserved the sandal in question.  The Court held plaintiff could not be held responsible for the absence of the sandal, as she had left it at the resort at the time of the injury, while she was rushed to the hospital, and was unable to locate it subsequently.  Issues of fact as to whether the Gap actually manufactured the sandal in question would await trial for resolution.

359 Ill. App. 3d 976, 835 N.E.2d 113 (Ill App 5 Dist., August 12, 2005) app. denied, 217 Ill. 2d 601, 844 N.E.2d 965 (Ill. 2006)

Reversing the court below, an Illinois intermediate appellate court, applying Texas law, holds purchasers of Dell computers bound by Terms and Conditions of Sale posted and available on Dell’s website at the time of purchase.  Importantly, the court held plaintiffs bound by these terms notwithstanding the fact that they were only available via hyperlink on Dell’s site, and further, that the consumer did not have to affirmatively click an “I accept” icon to indicate his assent to be bound thereby.  The Court held that by purchasing their computers online, plaintiffs entered into an online contract which included the Terms and Conditions, because they were advised on Dell’s website that their purchases were subject thereto.

As a result, the court held plaintiffs bound by the arbitration clause contained in the Terms, which mandated that they arbitrate disputes arising out of the purchase of their computers before the National Arbitration Forum.  In reaching this result, the court rejected plaintiffs’ claims that such a clause was procedurally and substantively unconscionable.

505 F.Supp.2d 755, Civ. No. 06-cv-01726-LTB-CBS (D. Colo., Feb. 13, 2007)

Court allows pro se litigant to proceed with breach of contract claims against the Internet Archive, operator of the Way Back Machine, arising out of the Internet Archive's reproduction and display of historical versions of defendant's website without her consent.  Defendant alleged that such copying of her site constituted an acceptance of the site's terms of use, which require the payment of exorbitant fees for such copying, and even greater amounts as liquidated damages should the copier fail to pay the required copying fees.  The court denied plaintiff's motion to dismiss this claim, holding the counterclaims stated a viable cause of action for breach of contract.  In reaching this result, the court noted it could not determine if the Internet Archive knew at the time it copied defendant's site that that act constituted an acceptance of the site's terms of use.  The court could not resolve that question on the instant motion because the record before it was unclear both as to the manner in which such terms of use were displayed on defendant's site, as well as to whether Internet Archive received any notice thereof, given  its claim to only have accessed the site via a web crawler, and not via an individual.

The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities.  The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.

The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.

Case B151987 (Cal. Crt. App., 2d Dist., June 24, 2002)

Reversing the decision of the court below, an intermediate California appellate court holds that plaintiff had adequately plead a breach of contract claim arising out of defendant's failure to deliver a domain name put up for auction on the Internet.  The court accordingly allows plaintiff to proceed with his claim, and seek redress as a result of defendant The.TV corporation's failure to register plaintiff as the owner of the domain name golf.tv.

2008 WL 618988, No. C 07-03967 MHP (N.D. Ca., March 4, 2008)

Court holds that the purported dispute resolution provisions contained in auction company’s online Terms and Conditions are unconscionable, and unenforceable against an individual dissatisfied with an auction in which she participated.  The dispute resolution provision mandated that the parties’ dispute be resolved in a binding proceeding before a representative of ‘In House Attorneys, P.C.’ in which each side was permitted only one hour to present their case, and could not call fact or expert witnesses nor be represented by counsel. 

As a result, the Court allowed plaintiff to proceed with claims against the defendant Hot Jewelry Auctions.com - who ran the auction - grounded on claims that defendant engaged in ‘shill bidding.’ 

Plaintiff was also allowed to proceed with claims against eBay as a result of her participation in this auction, via eBay’s Live Auction service.  In promoting this service, eBay claimed that “bidding on eBay Live Auctions is very safe.  All live auctions are run by reputable international auction houses, which are carefully screened by eBay before being authorized to sell to you.”  Notwithstanding the fact that eBay was responsible for this content, and derived a profit by promoting use of its Live Auction service, the Court held that it was immunized by application of the Communications Decency Act (“CDA”) from fraud and other claims arising out of so much of its promotional materials that advised consumers that eBay ‘carefully screened’ the auction houses allowed to participate in Live Auction.  The Court reasoned that to allow plaintiff to pursue such claims would expose eBay to “liabil[ity] for its exercise of a publisher’s traditional editorial functions” which is barred by the CDA.  As such, the Court barred plaintiff from pursuing claims that this representation was false because eBay allegedly did not ‘screen’ auction houses before permitting them to participate in such Live Auctions or because it knew that the auction house was engaged in illegal conduct – such as shill bidding – and failed to take appropriate steps in light thereof.   

The Court did permit plaintiff to proceed with claims arising out of eBay’s representation that such auctions were ‘safe,’ holding the same were not barred by application of the CDA because ‘eBay’s statements regarding safety affects and creates an expectation regarding the procedures and manner in which the auction is conducted and consequently goes beyond traditional editorial discretion.’  Nor were such claims barred by application of eBay’s Live Auction User agreement, which immunized eBay from any disputes a consumer might have with the auction house itself, as this dispute arose out of eBay’s own purported misconduct – namely misrepresenting that the auction was ‘safe.’  Because plaintiff had failed to plead with the requisite particularity that she relied on this statement in deciding to participate in the auction in question, however, her fraud claim was dismissed with leave to replead.

No. 03-2582-GTV-DJW (WHW) (D. Kan., August 23, 2004)

Court holds that plaintiff entered into a valid agreement by clicking on an icon indicating its assent to be bound to displayed software license terms, and thereafter using defendant's software and services.  As a result, the Court, honoring a forum selection clause found in the parties' agreement, transferred the case before it from Kansas to California, the venue for suit designated in the forum selection clause.  In reaching this result, the Court rejected plaintiff's claim that it was not bound to the agreement because its assent had been given by an individual who lacked the authority to bind it to such an agreement.  The Court found that plaintiff had failed to establish this contention due to its failure to identify the individual(s) who give their assent.  In any event, plaintiff was bound because it had ratified its agent's acts by using the software and associated services for a period of six years.

CV 06-3391-RGK (JCx) (C.D. Cal., February 28, 2007)

Court holds that defendant’s creation and use of 95 MySpace accounts to transmit unsolicited commercial email promoting its communications products runs afoul of both the CAN-SPAM Act, and California Business and Professions Code Section 17529.5, and violates MySpace’s Terms of Service.  Defendant created these accounts without identifying itself as the account holder.  The emails violated CAN-SPAM because they failed to contain either a valid physical address for defendant the Globe.com, or instructions on how to avoid receiving further email solicitations.  In addition, they were impermissibly sent to MySpace user email addresses generated by use of a script software program, another violation of CAN-SPAM.  They were also sent from email accounts obtained through false or fraudulent pretenses, as a result of defendant’s failure to accurately identify itself as the account holder.   

The Court found that these emails also violated California B & P Code Section 17529.5, both because they contained false header information that failed to identify the Globe.com as their source, and because they contained misleading subject lines that failed to accurately describe the emails’ contents.

Finally, the Court found defendant’s conduct violated MySpace’s Terms of Service, which prohibited the use of MySpace accounts both for commercial purposes and to transmit spam, and prohibited the use of scripts to generate email addresses for the transmission of commercial email to MySpace account holders.  As such, the Court held defendant liable for liquidated damages of $50 for each email sent as mandated by the Terms of Service.  In reaching this result, the Court rejected defendant’s challenge to such clause on the ground that it was an unenforceable penalty provision.

109 Cal. App. 4th 583 (Cal. Crt. App., June 9, 2003)

In this mandamus proceeding, California's Court of Appeals, by a two to one vote, holds a party suing as a private Attorney General subject to the same forum selection clause as the consumers it is seeking to protect.  As such consumers would be bound as a result of their use of Net2Phone's website to the provisions of its Terms of Use, so too is their private advocate.  The Court of Appeals accordingly directed that the action Consumer Cause commenced on the consumers' behalf in California be stayed because the Terms of Use contained a forum selection clause which mandated suit in New Jersey.  The Court upheld the forum selection clause notwithstanding the fact that New Jersey, unlike California, does not permit private advocates such as plaintiff to pursue claims on behalf of injured consumers.

309 F.Supp.2d 446, Civ. 02-5164 (DRH) (WDW) (E.D.N.Y., Mar. 25, 2004)

Court holds that plaintiff, by clicking an "I accept" icon agreeing online to be bound by the Terms of Service governing use of an online discussion group set forth in a scrollable window, viewable ten lines at a time, was bound by the forum selection contained therein.  Finding such a clause enforceable, the Court dismissed a claim brought by plaintiff asserting that defendant Google breached this agreement, because this claim was not brought in the designated forum.

The Court also held that Section 230 of the Communications Decency Act ("CDA") immunized an ISP hosting an online discussion group from claims that its failure to remove objectionable content posted on the discussion group's web page gave rise to claims of tortious interference with contractual relations. 

Finally, the Court denied the motions of two additional defendants to dismiss the claims asserted against them for want of personal jurisdiction.  The Court held that the first defendant was subject to specific jurisdiction in New York because of its operation of a commercial website via which it sold $6000 of products a year to New York residents.  The second defendant was similarly subject to suit because he had entered into a contract with a New York company, which contract allegedly gave rise to the claims asserted against him.

File No. 5:05-CV-102 (W.D. Mich., February 8, 2006)

Court dismisses plaintiffs' claim for $3 million in lost profits arising out of Ameritech's failure to register plaintiffs' website with search engines, holding such claims barred by the limitation of liability clauses contained in the parties' contracts.  These clauses limited recoverable damages to the $1,600 in fees paid by plaintiffs to Ameritech under the parties' agreements in this case.  In reaching this result, the Court rejected plaintiffs' claim that these limitation of liability provisions were unconscionable, and hence unenforceable.  This claim failed because the services provided by Ameritech that were the subject of the parties' agreements were available from multiple sources and hence Ameritech had the right to offer its services on such terms as it saw fit.  This claim also failed because the limitation on liability contained therein did not 'shock the conscience', particularly in light of the fact that plaintiffs themselves could have performed the very services defendants failed to provide - the registration of their website.

356 F.3d 393 (2d Cir. 2004)

Affirming the court below, the Second Circuit holds that Register.com is likely to prevail on breach of contract claims arising out of Verio Inc.'s use of data obtained from Register.com's Whois database in violation of the database's Terms of Use, which prohibit use of that information for unsolicited advertising.  In reaching this conclusion, the Second Circuit held that Register.com's Terms of Use are likely to create a contract between Register.com and Verio, because Verio repeatedly used Register.com's Whois database with actual knowledge that the Terms provided that such use would constitute assent to be bound by the data use restrictions contained in the Terms.  Notably, the Second Circuit reached this result notwithstanding the fact that Verio did not click an "I Agree" icon indicating its agreement to be so bound.  More importantly, the Court found Register.com likely to prevail despite the fact that Verio did not see these Terms until after it had already completed the act - using the Whois database - which purportedly indicated its assent to be bound thereby. 

The Second Circuit also found both that Verio's use of a search robot to gather Whois data likely constituted a trespass to chattels, and that certain of Verio's promotional activities violated the Lanham Act.

As a result, the Second Circuit affirmed the District Court's issuance of a preliminary injunction, enjoining Verio from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information obtained from that database to assist in the transmission of mass unsolicited advertising by telephone, direct mail or e-mail.

126 F. Supp. 2d 238 (S.D.N.Y., December 12, 2000) (Jones, J.) aff'd. 356 F.3d 393 (2d Cir. 2004)

Court issues a preliminary injunction enjoining Verio, Inc. from either utilizing a search robot to obtain information from Register.com's Whois database, or utilizing information derived from that database for mass unsolicited advertising by telephone, direct mail or electronic mail. Court holds that Verio's actions will likely constitute a breach of plaintiff's Terms of Use, as well as a violation of both the Computer Fraud and Abuse Act and the Lanham Act and a trespass to chattels. In reaching this conclusion, the court holds that Register.com's Terms of Use are likely to create a contract between Register.com and the users of its Whois database, notwithstanding the fact that these users are not required to click an "I Agree" button indicating their agreement to be so bound.

4 Misc.3d 193, 776 N.Y.S.2d 458 (Sup. Ct. Kings Co., NY, May 4, 2004)

Court holds that e-mail sent by defendant accepting plaintiff's offer to purchase real property, upon which defendant typed his name, satisfies the requirement of the Statute of Frauds that contracts for the transfer of an interest in real property be evidenced by a writing.  The Court nonetheless dismissed plaintiffs' claim, seeking specific performance of the parties' alleged agreement, because the e-mails the parties exchanged failed to contain all of the essential terms of a contract for the sale of real property.

Civ. Act. No. 01-1109A (Superior Ct., Mass., December 11, 2001)

The court denied defendants' motion to dismiss plaintiff's complaint, which sought to enforce a contract for the sale of real property between the parties based on e-mails they exchanged.  The court rejected defendants' claim that this contract was unenforceable by virtue of the Statute of Frauds, holding that e-mails typed and sent by defendant containing a salutation consisting of defendant's name can constitute writings sufficient to satisfy the statute of frauds.

No. 01-7860 (L) (2d Cir., October 1, 2002)

Affirming the decision of the court below, the Second Circuit Court of Appeals holds that plaintiffs are not bound by the terms of a license agreement purporting to govern the use of a software product they downloaded because plaintiffs neither had reasonable notice thereof, nor adequately manifested their assent to be bound thereby.  The software in question could be downloaded from a page on defendant Netscape's web site by clicking on a button which said "download".  The terms of the license agreement in question were not contained on this web page, however, and the only notice the user received of the license agreement was found on a portion of the web page below the download button.  Typically, this notice appeared "below the fold" and was not on that portion of the page which first appeared on the user's screen when he went to download the program.  This notice informed the user that his use of the software would be governed by the terms of a license agreement, which terms could be seen by clicking on a link provided on the web page.  Once the program was downloaded, the user received no further notice of either the license agreement or its terms.  The Court held that this procedure did not create a binding contract between the parties.

The Second Circuit further held that the terms of a license agreement plaintiffs did agree to, governing their use of Netscape's browser, did not obligate them to arbitrate the claims they raised in this litigation.  These included claims that Netscape violated both the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act by causing Netscape's Smart Download software, a Netscape browser 'plug in', to send information to Netscape about plaintiffs' downloading activities.

2001 WL 755396, 150 F. Supp. 2d 585 (S.D.N.Y., July 5, 2001), aff'd. -- F.3d -- (2d Cir., Oct. 1, 2002)

Court holds that act of downloading software does not indicate assent to be bound by terms of license agreement, where a link to such terms appears on, but below that portion of the web page that appears on the user's screen when such downloading is accomplished. As a result, the Court holds that under California law, plaintiffs are not bound by the terms of such license agreement, or the arbitration clause contained therein, despite language in the license agreement which provides that by installing or using the software, the user consents to be bound by the terms of the license agreement.

2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

Docket No. C-96-04 (Superior Ct. N.J., March 1, 2006)

After a lengthy trial, the Court found that defendant Amazon.com had breached an agreement it had entered into with plaintiff ToysRUs.com LLC ("Toys R Us"), by permitting third parties to sell toys on Amazon's web site.  Finding that this breach went to the substance of the parties' agreement - which as interpreted by the Court provided that Toys R Us was to be the sole third party toy retailer on Amazon's web site - the Court granted Toys R Us's request that the agreement be terminated.  Notwithstanding its finding that such a breach had occurred, the Court did not award Toys R Us damages.  The Court also rejected counterclaims asserted by Amazon, arising out of Toys R Us's alleged failure to maintain levels of inventory sufficient to meet customer demand.

No. 05-13404 (11th Cir. April 14, 2006)

Affirming the court below, the Eleventh Circuit holds plaintiff bound by online amendments to its agreement with defendant posted to defendant's website.  As those amendments raised the rates due for defendant's services, which increased rates plaintiff refused to pay, the Eleventh Circuit affirmed the District Court's grant of summary judgment to defendant on its breach of contract claim.  The Court found support for its decision in the parties' agreement, which bound plaintiff to tariffs "as the same may exist or be modified in the future [by defendant] . . . and/or as the same may appear on [defendant's] website."

2001 WL 135825 (Mass. Super., February 8, 2001)

Court denies defendant AOL's motion to dismiss complaint, which motion was brought on the ground that plaintiffs commenced the instant action in an improper forum in violation of a forum selection clause contained in AOL's Terms of Service. Finding, inter alia, that the injury alleged in the complaint occurred before the plaintiffs were asked to agree to be bound by AOL's Terms of Service, the court denied AOL's motion.

ContractContractContractContractContractContractContract Quick Hits

American Airlines, Inc. v. Farechase, Inc.
Cause No. 067-194022-02 (Texas, 67th Dist., Mar. 8, 2003)

Court holds American Airlines likely to succeed on claims that defendant Farechase breached the terms of use governing AA.com by scrapping the site for data, including discount “web fares” and flight schedules, and using the data for unauthorized commercial purposes. While the Court’s decision does not so state, it has been reported elsewhere that the contract between the parties arose out of Farechase’s use of AA.com, who’s Terms of Use provide that such use constitutes a consent to be bound by the site’s Terms of Use. These Terms, among other things, prohibit the commercial use of the site or data thereon without American Airline’s consent. The Court further finds American Airlines likely to succeed on claims that this unauthorized use, combined with that of licensees of “Web Automation” software distributed by Farechase that allowed such licensees to also access and obtain the same data from AA.com, constituted a trespass to chattels – namely American Airlines computer system. This finding was premised on the damage caused AA.com, both in terms of lost capacity of its computer system arising from existing uses of its site by Farechase and its current licensees, as well as by projected use by prospective future licensees to whom Farechase planned to distribute its software.  It was also grounded on the damage American Airlines sustained in undertaking to block Farechase and its licensees from accessing its site. Farechase knew this use was unauthorized because of its receipt of cease and desist notices from American Airlines. As a result, the court enjoined FareChase from accessing, using, or scraping AA.com, via its “Web Automation” software or otherwise, or from distributing its “Web Automation” software to third parties.
Victoria S. Bowen v. YouTube Inc.
2008 WL 1757578 (W.D. Wash., April 15, 2008).

Court upholds the validity of the forum selection clause in YouTube’s Terms of Use, which mandates that disputes arising out of the use of the YouTube website be litigated exclusively in courts located in San Mateo County, California.  As a result, the Court granted defendant YouTube’s motion to dismiss plaintiff’s complaint, because it was brought in Washington, rather than in a court located in San Mateo County, California.

The Court further held that it lacked personal jurisdiction over the defendant because “no conduct has been alleged [by plaintiff] to provide the ‘something more’ necessary [under the effects test] for rendering YouTube subject to jurisdiction in the Western District of Washington.”

It should be noted that plaintiff was proceeding pro se.

Michael Cohn v. Truebeginnings, LLC, et al.
B190423 (Cal. Crt. App., July 31, 2007)

Court held that plaintiff, by clicking a “continue” icon in the course of completing a user profile for an online dating service, was bound by the site’s Terms of Use, available via a hyperlink on the webpage he was viewing.  The “continue” icon appeared at the foot of the initial webpage the user saw in the course of completing his profile, and just to the right of a sentence that read “I am 18 years old and I have read and agree to the True Terms of Use and Code of Ethics.”  The phrase ‘Terms of Use’ were linked to the site’s Terms of Use, which appeared in a pop-up window when a user clicked on this link.  The Terms of Use advised the user that “once you click on the ‘continue’ button at the end of this sign-up form, you are agreeing to be bound by the Terms of this Agreement.”

Importantly, the Court found plaintiff bound despite his claim that he was not asked to agree to be bound by the Terms of Use as part of the sign-up process.  This evidence was effectively refuted by that supplied by the defendant, which demonstrated that all users, to obtain a profile, must click the ‘continue’ icon.

Similarly, the fact that the Terms were available via a hyperlink did not prevent plaintiff from being bound thereby.  Said the Court:

Respondents presented substantial evidence that appellant had to click on the ‘continue’ button in order to register for his trial membership on the Web site, and that doing so constituted an agreement to the ‘Terms of Use’ on the Web site.  Appellant may not have read the ‘Terms of Use’ but they were readily available to him on the True.com Web site if he clicked on the ‘Terms of Use’ link near the ‘Continue’ button.  Under these circumstances, where appellant obviously had access to the Internet and was entering into a contract on the Internet, there was nothing inherently unfair in requiring him to access contractual terms via hyperlink, which is a common practice in Internet businesses.  The trial court did not abuse its discretion in finding that appellant agreed to the forum selection clause contained in the ‘Terms of Use.’

The Appellate Court nonetheless reversed the lower court’s decision, which had dismissed plaintiff’s claims because of the forum selection clause contained in True’s Terms of Use.  The clause in question, held the Appellate Court, only provided that disputes arising out of a party’s use True.com’s online dating service may be brought in the Texas.  Because this clause did not mandate that such suits must brought in Texas, the lower court needed to analyze, under traditional forum non conveniens analysis, whether California or Texas was the appropriate forum in which the suit should proceed.  The forum selection clause at issue provided “you agree to personal jurisdiction by and venue in the State of Texas and the U.S. District Court for the Northern District of Texas.”  The case was remanded to the lower court for the performance of this analysis.

Joe Douglas v. Talk America Inc.
No. 06-75424 (9th Cir., July 18, 2007)

Ninth Circuit holds that customer is not bound by contractual amendments to service contract posted by long distance company on its website of which customer had no notice.

Talk America undertook to provide phone services to customers previously serviced by AOL.  Thereafter, Talk America attempted to change the terms of its contracts with these customers by including in the parties’ contracts provisions that increased applicable service charges and compelled customers to arbitrate any disputes they may have with the company.  These new amendments also included a class action waiver, and a New York choice of law provision.  These changes were posted on defendant Talk America’s website.  However, according to plaintiff, a former AOL customer who continued to use Talk America’s services after the changeover, he was given no notice of these contractual changes.  He alleged that he had no need to visit Talk America’s site as he had set-up his account so that applicable charges were automatically billed to, and paid by, his credit card.

In these circumstances, the Ninth Circuit held that plaintiff could not be compelled to arbitrate his disputes with Talk America arising out of these contractual revisions, and particularly the rate increases they mandated.  The Ninth Circuit accordingly granted plaintiff’s writ of mandamus, holding that the District Court clearly erred in granting Talk America’s motion to compel arbitration.

Michael Motise v. America Online, Inc.
04 Civ. 2121 (SCR) (S.D.N.Y., Nov. 30, 2004).

Court holds that an individual who access America Online’s (“AOL”) services via the account of another is not bound by its Terms of Service merely as a result of such use, absent notice that the Terms provide that by such use, he is agreeing to be bound thereby.  The Court stated that “the Second Circuit seems to require that the license terms appear on the screen, in view of the user, for the user to be on notice of them.”  In this case, the user claims that he was able to access AOL’s services via his step-father’s account without either being presented with AOL’s Terms of Service, or being asked to accept them.
 
The Court further held, however, that by accessing AOL’s service via the account of another, plaintiff became a sublicensee, with no greater rights to use AOL’s service than the actual account holder himself.  As that account holder himself had agreed to be bound to AOL’s Terms of Service when he signed up for its service, plaintiff too was bound by those Terms of Service.

As a result, the Court held that plaintiff was bound by the Forum selection clause contained in AOL’s Terms of Service, and accordingly transferred the case to Virginia, where the clause mandated all disputes be litigated.

Pollstar v. Gigmania Ltd.
170 F. Supp. 2d 974 (E.D. Cal. 2000)

Court denies motion to dismiss, and allows Pollstar to proceed with common law misappropriation and unfair competition claims arising out of Gigmania's alleged copying and reposting on its own website of factual concert listings found on Pollstar's site.  The complaint alleged that this information was "hot news" which is protected against misappropriation if plaintiff can show that it "(i) generates or collects information at some cost or expense (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of information constitutes free-riding on the plaintiff's costly efforts to generate or collect it' (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of the other party to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."

The Court also allowed Pollstar to proceed with claims the Gigmania's conduct breached a browse-wrap license agreement between the parties, which prohibits the acts complained of.  The Contract provides that use of the information found on the site constitutes acceptance of the contract's terms.  Notably, the court allowed this claim to proceed despite the fact that notice of such terms were given "in small gray text on a gray background" which, in turn, contained a link to the actual contract terms, without the usual "underlining" signifying such a link.

Yun v. Ubid Inc.
2003 WL 21268053, No. G030016 (Cal. App. 4 Dist. 2003)

Affirming the court below, a California intermediate appellate court holds that an auction's sites customer cannot be compelled pursuant to the terms of an online agreement to arbitrate claims seeking a "public injunction" under California state statutes prohibiting unfair competition and false advertising.  Plaintiff brought claims under Section 17200 and 17500 of California's Business and Professions Code, charging uBid with overcharging him for shipping costs by overstating the weight of the item he purchased.

For additional cases, see the Click-Wrap Agreement.

Conversion - Updated March 11, 2008

No. C 06-03504 WHA (N.D. Ca., May 10, 2007)

Court finds defendant, who claimed to have purchased plaintiffs’ Express.com domain for $150,000 from someone who purported to be, but was not, the domain’s Administrative Contact, guilty of conversion and directs defendant to return the domain to plaintiffs.  Notably, the seller was contacted at the email address set forth for the domain’s Administrative Contact in the Whois Registry.  Because plaintiffs had never voluntarily transferred the domain, the seller was a thief who could not transfer good title to defendant.  As a result, defendant was not a good faith purchaser for value, but was instead, guilty of conversion.  Finally, the Court held that defendant could not defeat plaintiffs’ claim to title by relying on the data contained in the Whois registry, as this was simply an information database maintained by private parties, and not the equivalent of a statutorily created title registration system.  This data, and particularly the Administrative Contact’s email address, had been changed without plaintiffs’ knowledge or consent.

505 F.Supp.2d 755, Civ. No. 06-cv-01726-LTB-CBS (D. Colo., Feb. 13, 2007)

Court allows pro se litigant to proceed with breach of contract claims against the Internet Archive, operator of the Way Back Machine, arising out of the Internet Archive's reproduction and display of historical versions of defendant's website without her consent.  Defendant alleged that such copying of her site constituted an acceptance of the site's terms of use, which require the payment of exorbitant fees for such copying, and even greater amounts as liquidated damages should the copier fail to pay the required copying fees.  The court denied plaintiff's motion to dismiss this claim, holding the counterclaims stated a viable cause of action for breach of contract.  In reaching this result, the court noted it could not determine if the Internet Archive knew at the time it copied defendant's site that that act constituted an acceptance of the site's terms of use.  The court could not resolve that question on the instant motion because the record before it was unclear both as to the manner in which such terms of use were displayed on defendant's site, as well as to whether Internet Archive received any notice thereof, given  its claim to only have accessed the site via a web crawler, and not via an individual.

The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities.  The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.

The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.

No. 01-15899 (9th Cir., July 25, 2003)

Reversing, in part, the court below, the Ninth Circuit Court of Appeals holds that plaintiffs have stated a valid conversion claim against defendant Network Solutions Inc. ("NSI") as a result of NSI's involvement in the improper transfer of plaintiffs' domain name to a third party.  NSI transferred the domain name to this third party as a result of its receipt of a forged "facially suspect" letter purporting to authorize such a transfer, without validating the request with plaintiffs.  In reaching this result, the Ninth Circuit held that the registrant of a domain name has an intangible property interest therein capable of being converted.

ConversionConversion Quick Hits

In re TJX Companies Retail Security Breach Litigation
Civil Act. No. 07-10162-WGY (D. Mass., December 18, 2007)

Apply Massachusetts law, a Federal District Court holds that conversion claims will not lie against defendants as a result of their mishandling of cardholder and account data maintained in electronic format.  To pursue such a claim in Massachusetts requires conversion of a tangible chattel, or intangible property rights that have merged into a document, such as a bank passbook or stock certificate.  As the electronic data in question was intangible property, a claim for conversion could not be stated, and the Court denied plaintiffs’ motion for leave to amend the complaint to assert such a claim.  Said the Court:

This Court follows the law as stated by the vast majority of courts that have addressed the issue and concludes that a claim for conversion based on the type of intangible property at issue here likely is not cognizable in Massachusetts.

In reaching this result, the Court declined to follow the holding of the New York Court of Appeals in Thyroff v. Nationwide Mutual Insurance Co., 864 N.E.2d 1272 (NY 2007), which allowed an employee to pursue conversion claims arising out of his employer’s retention of personal correspondence and business related information on company related equipment leased to him.  The New York Court of Appeals held that plaintiff could pursue conversion claims arising out of the alleged improper retention of such “electronic records.”

Louis E. Thyroff v. Nationwide Mutual Insurance Company, et al.
USCOA2 No. 41, (N.Y. Crt. App., March 22, 2007)

The New York Court of Appeals extends New York’s common law tort of conversion to “intangible electronic records.”  Prior to the High Court’s decision, in the state of New York, the common law tort of conversion was limited to the conversion  of tangible personal property, or intangible personal property that had ‘merged’ into a tangible object, such as a stock certificate.  Finding that it was time for the tort of conversion to evolve to “keep pace with contemporary realities of widespread computer use,” the Court held that it extended to intangible electronic records stored on a company computer system.  Said the Court:


Computers and digital information are ubiquitous and pervade all aspects of business, financial and personal communication activities.  … We cannot conceive of any reason in law or logic why this process of virtual creation should be treated any differently form production by pen on paper or quill on parchment.  A document stored on a computer hard drive has the same value as a paper document kept in a file cabinet. … “It would be a curious jurisprudence that turned on the existence of a paper document rather than an electronic one.  Torching a company’s file room would then be conversion while hacking into its mainframe and deleting its data would not.” … It generally is not the physical nature of a document that determines its worth, it is the information memorialized in the document that has intrinsic value. … In the absence of a significant difference in the value of information, the protections of the law should apply equally to both forms – physical and virtual.

In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use.  We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of – electronic records that were stored on a computer and were indistinguishable from printed documents – are subject to a claim of conversion in New York.

As a result of this decision, the plaintiff, formerly an insurance agent for defendant Nationwide Mutual Insurance, was allowed to pursue a conversion claim arising from defendant’s decision to deny plaintiff access to electronic personal and business records he stored on the company’s computer system.  Plaintiff used Nationwide’s computer system throughout the course of his business relationship with Nationwide.   

Cookies - Updated October 24, 2002

154 F. Supp.2d 497, 00 Civ. 0641 (S.D.N.Y., March 28, 2001)

Court dismisses claims advanced by the plaintiff class under the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, and the Wiretap Act arising out of Doubleclick's use and placement of "cookies" on plaintiffs' computers. Doubleclick uses such "cookies" to gather information about the users' use of Doubleclick client web sites. Because Doubleclick's clients consented to such information gathering, the court held that Doubleclick's activities did not run afoul of either the Electronic Communications Privacy Act or the Wiretap Act. The court also dismissed the claims plaintiffs advanced under the Computer Fraud and Abuse Act because any damages caused by Doubleclick's activities did not meet the threshold required by the Computer Fraud and Abuse Act. Finally, the court, having dismissed all of plaintiffs' federal claims, declined to retain jurisdiction over plaintiffs' state law claims, and dismissed the action.

Civ. Act. No. 00-11672-JLT (D. Mass., August 13, 2002)

Court grants defendants' motion for summary judgment, and dismisses plaintiffs' claims under the Electronic Communications Privacy Act ("ECPA") and the Computer Fraud and Abuse Act ("CFAA") arising out defendant Pharmatrak's monitoring of plaintiffs' activities on the web sites of various pharmaceutical companies.  With the authorization of these pharmaceutical companies, who were also named as defendants in this litigation, defendant Pharmatrak placed software on their web sites which enabled Pharmatrak to gather information submitted by the plaintiffs to, and to track their activities at, these sites.  Pharmatrak's software also enabled Pharmatrak to gather information both about the web site plaintiffs visited immediately prior to their visit to defendants' sites, as well as the search plaintiffs conducted to get to defendants' sites.  According to plaintiffs, the information Pharmatrak gathered included personally identifiable information, although there was no evidence that Pharmatrak disseminated anything other than aggregated non-personally identifiable information to third parties.

The Court held that defendants did not violate Title I of the ECPA, the Wire Tap Act, because they qualified for the protection of Section 2511(2)(d) of the ECPA, which permits interception of a communication when it is authorized by one of the participants in the communication, provided the interception is not undertaken for a tortuous or criminal purpose.  Defendants were permitted to intercept the communications at issue because (a) the pharmaceutical defendants which participated in them had authorized such interception, and (b) there was no evidence that such interception was done for an improper purpose.

The Court dismissed plaintiffs' claims under Title II of the ECPA, the Stored Communications Act, both because the devices defendants accessed, plaintiffs' PCs, were not protected "facilities" under the Stored Communications Act, and because the pharmaceutical defendants consented to accessing the communications at issue.

Lastly, the Court dismissed the claims plaintiffs raised under the Computer Fraud and Abuse Act, because plaintiffs did not sustain damages sufficient to meet the damage threshold requirements of that statute.

Copyright - Updated November 03, 2008

309 F.Supp.2d 467 (S.D.N.Y., Dec. 22, 2003), reversed in part and remanded, -- F.3d -- (2d. Cir., June 27, 2005)

Finding plaintiff likely to prevail on its claims of trademark infringement, the District court issued a preliminary injunction, enjoining the pop-up advertiser WhenU from delivering ads which are triggered by a consumer's entry of plaintiff's domain name in either his browser or a search engine, or from including plaintiff's domain name in defendant's proprietary directory, which is used to identify the ads to be delivered to consumers.  Defendant WhenU delivered pop-up ads of plaintiff's competitor to computer users when they typed plaintiff's domain name into either their browser or a search engine.  The court found such conduct likely to cause actionable "initial interest confusion" and to allow defendants to divert consumers seeking plaintiff's products to their own offerings, and thereby unfairly profit from plaintiff's goodwill.  Applying the eight factor Polaroid test, the court found that consumers were likely to be confused by defendants' actions, despite the branding of defendant's advertisements as "a WhenU offer."  As such, the court held that plaintiff was likely to prevail on its trademark infringement claims, and enjoined defendants from continuing to use plaintiff's domain name as a trigger for the delivery of advertisements. 

The court also held that plaintiff was unlikely to prevail on its copyright infringement claims, which arose out of the delivery of pop-up advertisements in a "window" which partially covered the 'window' in which plaintiff's site appeared on a consumer's computer screen.  The court found that this conduct neither violated plaintiff's right to display its copyrighted website, nor its right to create derivative works therefrom.  This later ruling was premised on the court's determination that defendant's ads are not sufficiently fixed to constitute an infringing derivative work.

The court's holding on plaintiff's trademark infringement claims is at odds with that reached by two other district courts - the District Court for the Eastern District of Virginia in U-Haul International, Inc. v. WhenU.com, 279 F.Supp. 2d 723 (E.D.Va. 2003), and the District Court for the Eastern District of Michigan in Wells Fargo & Co. v. WhenU., 2003 WL 22808692 (E.D. Mich. 2003), each of which refused to issue similar injunctive relief.  As the Southern District of New York court noted, "this Court disagrees with, and is not bound by these findings."

414 F.3d 400 (2d Cir., June 27, 2005)

Reversing the court below, the Second Circuit dismisses trademark infringement claims brought by a mark holder and website operator against a distributor of pop-up ads.  Such claims fail because "as a matter of law, [defendant] WhenU does not 'use' [plaintiff] 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. § 1127 when it (1) includes 1-800's website address … in an unpublished directory of terms that trigger delivery of WhenU's contextually relevant advertising to [computer] users; or (2) causes separate, branded pop-up ads to appear on a [computer] user's computer screen either above, below, or along the bottom edge of the 1-800 website window."

The absence of such a use by WhenU of plaintiff's trademarks is fatal to 1-800 Contacts' trademark infringement claims, and mandated reversal of the District Court's grant of preliminary injunctive relief.  The District Court had enjoined WhenU from including the domain name of plaintiff's website in its unpublished directory, or causing pop-up ads to be displayed when that domain name is entered into the URL bar of a web browser, or as a search term.

In reaching this result, the Second Circuit agreed with the decisions of two other district courts - the Eastern District of Virginia in U-Haul Inc. v. WhenU.com Inc., 279 F. Supp. 2d 723 (E.D.Va. 2003) and the Eastern District of Michigan in Wells Fargo & Co., et al. v. WhenU.com Inc., 293 F.Supp.2d 734 (E.D.Mich. 2003) - each of which similarly held that WhenU's activities did not infringe the respective plaintiffs' trademarks because such activities did not constitute the requisite use of the plaintiffs' respective marks.

No. C 99-05183 MHP (N.D. Cal. 2000)

The court denied Napster Inc.'s ("Napster") motion for partial summary judgment, in which motion Napster sought to limit the damages and other relief that could be awarded against it for alleged direct or contributory copyright infringement by application of the safe harbor provisions of 17 U.S.C. section 512(a) of the Digital Millennium Copyright Act ("DMCA"). Section 512(a) limits a service provider's liability for copyright infringement by reason of the service provider's "transmitting, routing or providing connections for material through a system or network controlled or operated by or for the service provider ...".

The court held that Napster's role in the transmission of MP3 files by and among the various users of its system was not entitled to protection under Section 512(a) because such transmission does not occur through Napster's system. Rather, although Napster informs the user's computer of the location of a computer on which MP3 files the user seeks are stored, and its willingness to permit the user to download such files, all files transfer directly from the computer of one Napster user through the Internet to the computer of the requesting user. Similarly, any role that Napster plays in providing or facilitating a connection between these two computers does not occur through its system. "Although the Napster server conveys address information to establish a connection between the requesting and host users, the connection itself occurs through the Internet."

The court also held that issues of fact existed as to whether Napster was entitled to any protection under the DMCA at all. To be entitled to such protection, a service provider must meet the requirements of section 512(i) of the DMCA, which, among other things, obligates the service provider to "adopt[] and reasonably implement[] and inform[] subscirbers and account holders of the service provider's system or network of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers ...". The court held that issues of fact existed as to whether Napster had appropriately adopted and informed its users of such an effective policy which precluded at this time any relief to Napster under the DMCA.

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

173 F.Supp.2d 1044, Civ. No. CV00-02963DDPAJWX (C.D.Cal., October 23, 2001)

Court denies plaintiff's motion for summary judgment, seeking to hold operator of computer fairs liable for copyright infringement as a result of the sale of allegedly infringing software by various unaffiliated vendors at fairs operated by defendants. The court held that issues of fact precluded it from determining that the fair operator was liable, on theories of vicarious and contributory infringement, for such sales. As to the former, the court held that issues of fact existed both as to whether the copyright infringement at issue provided a direct financial benefit to the fair operators, or whether the defendants had the requisite ability to control the vendor selling the allegedly infringing merchandise, both necessary to establish vicarious infringement. The court held that while defendants did not need to share in the proceeds of the goods in question to establish the requisite financial benefit, the sale of the infringing materials had to be the "draw" which attracted customers to defendants' shows, and hence produced revenue for defendants in terms of entrance and vendor fees. Issues of fact precluded the court from reaching a determination on this issue. Such issues also existed as to whether defendants had the ability to exercise the requisite control over the vendors, given, in part, the difficulty in determining whether the vendors in question had authority to sell the products in question. The court also held that issues of fact precluded it from holding defendants liable on a theory of contributory infringement, as the record did not permit the court to determine whether defendants had the requisite knowledge that infringing activities were being carried on at the fair. This determination was based, in part, on evidence that the amount of infringing goods sold at the fair was a relatively small percentage of the overall number of goods sold.

Civ. No. 95C0719 (D.Ill., May 28, 1997)

Plaintiffs, whose videotaped movements served as models for software defendants created for Mortal Kombat games, held not to be joint authors of software under Copyright Act because, inter alia, the source code which reduced this software to a form of fixed tangible expression was created solely by defendants. Such claim was also barred by an agreement between the parties, pursuant to which plaintiffs granted defendants all rights they had in the copyright of the images in question. The court further held that defendants' use of these images did not violate plaintiffs' common law right of publicity, as such claims were preempted by the Federal Copyright Act.

2007 WL 4207923 (S.D. Cal., Nov. 20, 2007)

After trial, court dismissed copyright infringement claims advanced by plaintiff against a competitor as a result of defendant’s alleged use of elements of plaintiff’s website on its own website.  Both parties operated websites at which they sold ‘changing portraits’ that contained antique photos that ‘changed’ into haunted spirits when viewed from different angles.  The court found that plaintiff did not possess a copyright in the individual elements of his site, which included unoriginal fonts, a ‘buy it now’ button, and the frame used to display the ‘changing portraits’ offered for sale on plaintiff’s website.  The court held that plaintiff did possess a copyright in the assembled compilation of these elements on his website.  Because defendant’s website was not ‘substantially similar’ to plaintiff’s, however, the court found that defendant was not guilty of copyright infringement.

The court spent the balance of its opinion addressing claims each of the competitors asserted against the other arising, inter alia, out of derogatory statements each made concerning the other, and claims and statements they made concerning their own activities, history and accomplishments.  These claims, including claims for defamation, false advertising and unfair competition, are of little interest to the legal community at large, and will not be discussed here.  Those interested can read the court’s decision which, in large part, dismissed these claims and counterclaims.

Civ. Act. No. 04-CV-3740 (E.D. Pa., March 30, 2005)

Court holds that defendants, who hired web developer to update their websites, have implied non-exclusive license to use resulting updated websites, and thus are not infringing any copyright developer had therein by making sites available for viewing on the Internet.  The Court accordingly granted defendants' motion for summary judgment, and dismissed copyright infringement claims brought by web developer against his former clients.

2004 WL 2750253, Case No. 1:02-cv-1011-DFH-TAB (S. D. Ind., November 10, 2004)

Court holds that defendant Funeral Depot Inc. ("Funeral Depot") may be infringing plaintiffs' copyright in advertising materials consisting, inter alia, of lithographs of caskets, by placing small thumbnail images of those copyrighted materials on defendant's website which are linked to allegedly infringing full size copies of those same materials that defendant arranged to have placed on the website of a third party.  While this third party website is owned by one of plaintiffs' authorized dealers, visitors to the web pages containing the challenged images view defendant Funeral Depot's contact information, as well as prices for these caskets set by defendant.  Because issues of fact existed as to whether the third party dealer had an implied license to use the advertising materials in this fashion, the Court could not determine if defendant was infringing plaintiff's copyright on the parties' respective summary judgment motions.  The Court did reject a number of defenses advanced by Funeral Depot to plaintiff's copyright infringement claims, including its fair use, copyright misuse and antitrust defenses.

Case No. 06cv1445 BTM (S.D. Cal., August 16, 2007)

Website containing compilation of online deals is protected by copyright as a compilation, as a result of plaintiff’s selection and arrangement, inter alia, of the deals included in the compilation.  Because the individual listings of the deals themselves are not protected by plaintiff’s copyright, however, in the absence of “bodily appropriation of [plaintiff’s] expression” or the “unauthorized use of substantially the entire item,” the use of a portion of those deals in the website of another will not rendered the defendant guilty of copyright infringement.  As a result, the court dismissed most of the copyright infringement claims advanced by Bensbargains.net, a website which posts compilations of online deals, against a competitor, which it accused of copying its listings of deals.  While the defendant did post on its site a number of the deals found in plaintiff’s compilations, it also posted other deals.  As to all compilations as to which the defendant copied less than 70% of the listings, the court dismissed plaintiff’s copyright infringement claim, finding defendant’s site was not sufficiently similar to sustain an infringement claim.  Only plaintiff’s claims as to those compilations as to which defendant copied over 70% of the listings, and those listings, in turn, comprised over 70% of defendant’s own compilation, were allowed to proceed.

478 F.Supp.2d 1240, No. C06-1002RSL (W.D. Wash., Jan. 18, 2007)

Court allows plaintiff Blue Nile to proceed with trade dress infringement claims against direct competitors arising out of their alleged creation of a web site that copied the "look and feel" of plaintiff Blue Nile's web site.  The Court denied defendants' motion to dismiss the trade dress claim, which motion was grounded on defendants' assertion that it was preempted by Copyright Act.  The Court held it could not resolve the preemption issue at the outset of the litigation given the limited factual record developed to date.  It also rested its decision on the precept that claims raising novel issues should not be resolved on motions to dismiss, without the benefit of a development of a complete factual record.

The Court did dismiss so much of plaintiff's complaint that alleged that defendants had violated the Washington Consumer Protection Act, and asserted claims for unfair competition, unjust enrichment and restitution.  These claims were all grounded on defendants' alleged copying of copyrighted elements of plaintiff's web site, and were thus preempted by the Copyright Act.  Notably, this copying formed the basis of copyright infringement claims that were also asserted in the complaint, and were not the subject of the instant motion.

Civ. No. 01-0408, 153 F. Supp.2d 763 (E.D. Pa., August 1, 2001) aff'd. 347 F3d 485 (3rd Cir. 2003)

FCC licensed AM-FM radio stations are permitted to broadcast sound recordings over the air in their geographic region without paying royalties to those who hold a copyright in those sound recordings. The United States Copyright Office promulgated rules ("Rules") making it clear that the statute under which such royalty free transmissions are permitted, 17 U.S.C. §114, does not extend to the simultaneous transmission of those radio broadcasts over the Internet via streaming. Those who wish to make such transmissions must accordingly obtain a license, with attendant fees, from the holders of the copyright in those sound recordings they seek to "stream". Holding both that the Copyright Office had the authority to promulgate rules interpreting the statute in question and had approximately exercised such authority here, the Court upheld the Rules against challenge.

351 F.Supp. 2d 1090 (W.D. Wash., December 21, 2004)

Court holds that the Digital Millennium Copyright Act ("DMCA") immunizes Amazon.com, Inc. ("Amazon") from copyright infringement claims arising out of the sale by nonaffiliated third party vendors on Amazon.com of photographs in which plaintiff claims a copyright.  In reaching this result, the Court held that Amazon had met both the DMCA's threshold requirements, as well as the requirements necessary to qualify for the protection of the safe harbor provisions of 17 U.S.C. § 512(c).  512(c) protects service providers from liability for copyright infringement by reason of their storage of infringing materials at the direction of a third party.

The Court dismissed plaintiff's Lanham Act claim, finding that it was the Copyright Act, and not the Lanham Act, that provided any remedy for the alleged wrongs at issue.  The Court also dismissed plaintiff's Washington State law Consumer Protection Act and tortious interference with business relations claims, finding Amazon immunized therefrom by operation of the Communications Decency Act.

Finally, the Court held that issues of fact precluded dismissal of copyright infringement claims plaintiff asserted arising out of the alleged use of one of its copyrighted images in an advertisement on a separate website owned by Amazon.

373 F.3d 544 (4th Cir., June 21, 2004)

Fourth Circuit holds that web site operator is not guilty of direct copyright infringement as a result of the posting on its site by third parties of images of commercial real estate in which plaintiffs hold the copyright.  In reaching this result, the Court reaffirms the validity of Religious Technology Center v. Netcom, which holds that a party must engage in "volitional conduct" that contributes to the infringement to be liable for direct copyright infringement. 

Importantly, the Court reached this result notwithstanding the fact that defendant's involvement in the posting of images to its site was not completely passive - rather defendant conducted a limited screening of all images presented by third parties to determine if they should be posted, eliminating those that either 1) exhibited obvious evidence of copyright infringement (such as a copyright notice in someone other than the poster) or 2) did not depict commercial real estate.

In a strong dissent, Circuit Judge Gregory argued that because of this gatekeeping activity, defendant's actions were not passive and thus were not entitled to protection under Netcom.  According to Judge Gregory, Netcom protects a defendant only when its involvement in the copying of copyrighted work is passive, and the automatic result of the operation of its facilities by a third party.

No. CV 05-3699-PHX-JAT (D. Arizona, May 19, 2008)

Court holds that unauthorized internet reseller of plaintiff’s tanning products is not guilty of trademark infringement as a result of its use of plaintiff’s trademarks in the meta tags of a website at which such products are sold, and as search engine keywords triggering the display of a link to such a website.  In reaching this result, the Court rejected plaintiff’s claim that such use of its marks causes actionable ‘initial interest confusion’ by directing those searching for plaintiff’s site to that of the defendant.  To sustain such a claim, holds the court, defendant’s conduct must be deceptive.  Plaintiff failed to meet this burden because defendant’s site does indeed offer plaintiff’s products for sale, and thus, its use of plaintiff’s mark in the site’s meta tags is not deceptive, but rather accurately describes the contents of defendant’s site.  This was true, held the Court, notwithstanding the fact that S & L offered plaintiff’s competitors products for sale on its site as well.

The Court also dismissed trademark dilution claims arising out of defendant’s use of plaintiff’s marks.  The Court held that, under the circumstances, defendant’s use of plaintiff’s marks in the meta tags of its site, and as search engine key words, constituted a permissible nominative fair use of those marks.  To establish that a use of a trademark qualifies as a permissible nominative fair use, the defendant must ‘do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.’  Notably, the Court reached this result because plaintiff failed to submit adequate evidence as to the impact this use of its marks had on the listing of defendant’s site in search results for plaintiff’s mark.  The Court left open the possibility that such a use of plaintiff’s mark may not qualify as a nominative fair use if in fact it caused defendant’s site to appear at or near the top of search engine results for plaintiff’s mark, and thereby suggested that plaintiff sponsored or endorsed defendant’s site. 

The Court denied so much of defendant’s motion for summary judgment which sought dismissal of copyright infringement claims arising out of its use of electronic renderings of plaintiff’s products to promote the sale of such products on its web site.  Issues of facts as to whether defendant copied such images from plaintiff’s web site, or created its own, precluded an award of summary judgment.  In allowing this claim to proceed to trial, the Court rejected defendant’s argument that its alleged use of plaintiff’s images was protected as a fair use.  Notwithstanding the fact that defendant’s use did not effect the potential market for plaintiff’s images – which plaintiff does not offer for sale – the Court rejected defendant’s fair use argument, pointing to the fact that its use was commercial, and copied plaintiff’s image, which was a creative work, in its entirety.

Finally, the Court rejected plaintiff’s claim for intentional interference with contractual relations, which arose out of prohibitions contained in contracts with plaintiff’s distributors precluding their resale of plaintiff’s products to Internet resellers such as defendant.  Defendant obtained plaintiff’s products from tanning salons, to whom the distributors were permitted to sell such products.  Because there was no evidence either that such tanning salons were acting as defendant’s agent in purchasing goods from plaintiff’s distributors, or that defendant directly purchased such goods from the distributors in breach of the prohibitions contained in their agreements, this claim failed.

357 F. 3d 1072 (9th Cir. 2004)

Affirming in part and reversing in part the court below, the Ninth Circuit grants so much of defendant America Online's motion for summary judgment which sought dismissal of claims of vicarious copyright infringement advanced by the plaintiff author.  These claims arose out of  the posting of plaintiff's works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it neither posted nor directed the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against AOL were predicated on its commitment, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The Ninth Circuit affirmed the District Court's dismissal of plaintiff's vicarious copyright infringement claim, because plaintiff had failed to submit evidence that AOL "received a direct financial benefit from providing access to the infringing material" to its users.  Thus, "there [was] no evidence that indicate[d] that AOL customers either subscribed because of the availabil[ity of] infringing material or cancelled subscriptions because it was no longer available."

The Ninth Circuit also affirmed so much of the District Court's decision that denied AOL's motion to dismiss the contributory infringement claims plaintiff advanced.  "One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL had the requisite knowledge to be guilty of contributory infringement, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated DMCA notice address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not actually received this e-mail, should nonetheless be charged with notice thereof given its failure to continue to operate this e-mail address, which it had designated with the US Copyright Office as the address to which DMCA notices of copyright infringement were to be sent.    The Ninth Circuit held that this knowledge, coupled with AOL's storage of the infringing material on its servers, and provision of access thereto to AOL users, could render AOL liable for contributory copyright infringement.

The Ninth Circuit reversed the District Court's determination that AOL was protected from this potential liability for contributory copyright infringement by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The Ninth Circuit, affirming the District Court, held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days constituted intermediate and transient storage in the course of transmitting or providing connection to digital material that qualified for protection if AOL met the requirements of the  safe harbor provisions of Section 512(a) of the DMCA.  However, reversing the District Court, the Ninth Circuit held that issues of fact existed as to whether AOL had reasonably implemented a polity to terminate repeat infringers, given, as stated above, that the AOL e-mail address to which DMCA notices of infringement were to be sent was not operational.  As implementation of such a policy was a prerequisite to entitlement to the protections of the DMCA, this branch of AOL's summary judgment motion was denied.

Finally, the District Court held that AOL could not be liable for direct copyright infringement, because AOL's passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  This claim was "abandoned" by Ellison on appeal.

189 F. Supp.2d 1051, 2002 U.S. Dist. Lexis 4166 (C. Dist. Cal., March 12, 2002), aff'd. in part, reversed in part, remanded by 357 F. 3d 1072 (9th Cir. 2004)

Court granted defendant America Online's motion for summary judgment, and dismissed copyright infringement claims advanced by plaintiff author as a result of the posting of his works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it did not post nor direct the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against it were predicated on its agreement, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The court held that AOL could not be liable for direct copyright infringement, because such passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  The court similarly rejected plaintiff's claim that AOL was liable on a theory of vicarious copyright infringement, because it had neither the right and ability to supervise Robertson's infringing activity, nor a direct financial interest therein.  The court held that AOL's ability to block access (over its systems) to the infringing materials in question did not give it the requisite ability to control the infringing activity.  Rather, because AOL could not prevent Robertson from acting, it did not have the requisite ability to control the infringing activities necessary to make AOL vicariously liable for the acts of copyright infringement Robertson initiated.  Nor did AOL derive the necessary direct financial benefit from this infringing activity.  The court held that this required AOL to receive a substantial or significant benefit from the posting of the Usenet material in question, which the evidence showed it did not receive.

The court did, however, hold that issues of fact precluded it from determining whether AOL could be liable for the acts at issue on a theory of contributory infringement.  Under such a theory, "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL was a contributory infringer, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not received this e-mail, should nonetheless be charged with notice thereof given its designation of the e-mail address to which it was sent with the US Copyright Office.  In reaching this conclusion, the court held that "providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, can constitute a material contribution [to the infringing activities and hence expose the ISP to liability for contributory infringement] when the ISP knows or should know of infringing activity on its system yet continues to aid in [its] accomplishment."

Nonetheless, the court dismissed this claim, holding that AOL was protected therefrom by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The court held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days was an intermediate and transient storage for the purpose of the DMCA, and that it met the other requirements of the DMCA necessary to obtain the protection of this provision.  The court accordingly dismissed plaintiff's claim for contributory copyright infringement against AOL.

No. 05-16964 (11th Cir., June 13, 2007)

The 11th Circuit holds that pursuant to 17 U.S.C. Section 201(c), the republication of 1200 National Geographic magazines in a 30 disc cd-rom set titled ‘the Complete National Geographic’ is a permitted revision of those collective works for which the National Geographic, the owner of the copyright therein, does not need additional license or permission from plaintiff, the owner of the copyright in various photos contained in these magazines.  The fact that this cd-rom set also contained a new 25 second video montage of the covers of 10 of the magazines it contained did not alter this conclusion.  In reaching this result, the 11th Circuit followed the decisions of the Second Circuit in Faulkner v. Nat’l Geographic Society, 409 F.3d 26 (2d Cir.) cert denied – US --, 126 S.Ct. 833 (2005) and the Supreme Court in New York Times Co. v. Tasini, 533 U.S. 483 (2001).  The 11th Circuit accordingly reversed its prior contrary decision, and remanded the case to the District Court for further consideration of plaintiff’s claim that the inclusion of one of his photographs in a magazine cover contained in this new 25 second montage infringed his copyright therein.

428 F. Supp. 2d 1369, 4:05 CV 00018-BAE (S.D. Ga. April 18, 2006)

Court holds that the use by defendant Camp Systems International ("Camp") of maintenance manuals prepared by plaintiff Gulfstream Aerospace Corporation ("Gulfstream") to advise owners of the need for maintenance of their Gulfstream aircraft is a permissible fair use of those manuals.  Court accordingly grants Camp's motion for summary judgment, and dismisses both copyright and trademark infringement claims advanced by Gulfstream arising out the placement by Camp of portions of those manuals on its computer system, which manuals Camp made available, and transmitted, to both the aircraft's owner and appropriate repair personnel.

165 F. Supp. 2d 1082, Case No. CV 01-0495 RJK (RNBx) (C.D. Cal. 2001)

Court grants defendants' motion for summary judgment, and dismisses claims brought by plaintiff, the owner of a copyright in the documentary "Manson", against defendant eBay arising out of the use by unaffiliated third parties of the eBay auction site to sell unauthorized copies of the Manson documentary. The Court held that plaintiff's claims for contributory and vicarious copyright infringement were barred by operation of Section 512(c) of the Digital Millennium Copyright Act. The DMCA offers service providers such as eBay protection from copyright infringement claims arising out of the storage of material on their web site provided, inter alia, (i) they do not have actual knowledge of the infringing activity or promptly upon gaining such knowledge move to prevent the use of their service to further it, (ii) do not receive a financial benefit directly attributable to infringing activity they have the ability to control, and (iii) expeditiously remove material from their service on receipt of an appropriate notice. The court held that eBay was entitled to protection under this section because (i) it did not have actual notice of the infringing activity, (ii) could not control it as the transactions were consummated off-line without eBay's involvement, and (iii) eBay had not received the requisite notice of infringing activity because, inter alia, the infringing articles were not appropriately specified in the notice sent by plaintiff. Plaintiff's claims for trademark infringement were mooted, held the Court, because of eBay's status as an innocent infringer, and its removal from its site of those advertisements plaintiff identified as improperly offering infringing copies of his movie for sale.

Case No. MS-07-6236-EJL-MHW (D. Idaho, November, 16, 2007)

Magistrate Judge grants in part and denies in part a motion to quash a subpoena issued pursuant to the Digital Millennium Copyright Act (“DMCA”).  The Magistrate Judge denied so much of the motion to quash which sought to prevent disclosure of the identity of the anonymous individual who posted a copy of a letter sent by a lawyer, for which the lawyer had obtained copyright registration, demanding the removal of other anonymous posts from a blog. 

The Court recommended granting so much of the motion to quash which sought to prevent disclosure of the identity of the anonymous individual who made the allegedly offensive posts that counsel sought to have removed in the demand letter in question.

75 F.Supp. 2d 1290 (D. Utah, Dec. 6, 1999)

The court issued a preliminary injunction, directing defendants to remove from their website statements that informed site visitors of the domain names of websites on which were posted materials that infringed plaintiff's copyright. The posting of such messages was held by the court to constitute contributory copyright infringement. The court reached this result despite the fact that the defendants' website did not contain links to the sites containing the infringing materials.

Defendants claimed that their actions did not constitute contributory infringement because the users defendants referred to the websites on which infringing content was posted did not themselves infringe plaintiff's copyright. As framed by the Court the issue "is whether those who browse any of the three infringing websites are infringing plaintiff's copyright. Central to this inquiry is whether the persons browsing are merely viewing the Handbook (which is not a copyright infringement), or whether they are making a copy of the Handbook (which is a copyright infringement)." The court held that by viewing a web page containing infringing material thru a browser, the user is himself infringing the copyright in the underlying work because in so doing he creates a copy of the infringing materials in his computer's random access memory.

505 F.Supp.2d 755, Civ. No. 06-cv-01726-LTB-CBS (D. Colo., Feb. 13, 2007)

Court allows pro se litigant to proceed with breach of contract claims against the Internet Archive, operator of the Way Back Machine, arising out of the Internet Archive's reproduction and display of historical versions of defendant's website without her consent.  Defendant alleged that such copying of her site constituted an acceptance of the site's terms of use, which require the payment of exorbitant fees for such copying, and even greater amounts as liquidated damages should the copier fail to pay the required copying fees.  The court denied plaintiff's motion to dismiss this claim, holding the counterclaims stated a viable cause of action for breach of contract.  In reaching this result, the court noted it could not determine if the Internet Archive knew at the time it copied defendant's site that that act constituted an acceptance of the site's terms of use.  The court could not resolve that question on the instant motion because the record before it was unclear both as to the manner in which such terms of use were displayed on defendant's site, as well as to whether Internet Archive received any notice thereof, given  its claim to only have accessed the site via a web crawler, and not via an individual.

The Court did dismiss so much of defendant's counterclaims that advanced claims for conversion, civil theft and RICO arising out of the same copying activities.  The Court dismissed the conversion claims both because Internet Archive did not exercise sufficient dominion over defendant's property merely by copying her site and displaying it online, and because Internet Archive removed defendant's site, and thereby ceased exercising any dominion over it, promptly upon her request.

The Internet Archive did not move to dismiss copyright infringement claims defendant asserted arising out of its copying activities, which will also go forward.

No. 00-55521, 280 F.3d 934 (9th Cir., February 6, 2002) withdrawn, -- F.3d --- (9th Cir., July 3, 2003)

The Ninth Circuit Court of Appeals holds that defendant's display on a visual search engine of lower resolution "thumbnails" of copyrighted images appearing elsewhere on the Internet, without the copyright owners' permission, is a protected fair use of those images under the Copyright Act. The court further holds that defendant's display of the full copyrighted image as part of its search engine results, either via inline linking or framing, infringes the copyright owner's right to publicly display the work. Such use of the full images as they appear on the copyright owner's site is not a protected fair use because it is done for the same purpose, to attract viewers, as the copyright owner's own use, and causes injury to the copyright owner by diverting users from his site.

In the decision that replaced its original decision of February 6, 2002, the 9th Circuit affirmed so much of the lower court's determination that held that Arriba Soft's production of thumb nails of plaintiff's copyrighted works to facilitate its display of image search results was a permitted fair use for the reasons stated in its original decision of February 6.  However, in the revised July 3, 2003, the 9th Circuit did not determine, as it had previously, that Arriba Soft's in-line linking to the full images of plaintiff's works constituted copyright infringement.  Instead, it reversed the lower court's determination on this score on procedural grounds, and remanded the issue to that court for further consideration.

77 F.Supp. 2d 1116 (C.D. Cal., Dec. 15, 1999) aff'd. in part, reversed in part, 280 F.3d 934 (9th Cir., Feb. 6, 2002)

Court holds that defendant's operation of a "visual search engine" which presents, without the owners' permission, "thumbnails" of copyrighted images that appear both without identifying copyright management information, and separated from the Internet web page in which the image was originally displayed, is a protected fair use under the Copyright Act which does not run afoul of the Digital Millennium Copyright Act ("DMCA").

The court's ruling that this represented a fair use was based predominantly on its determination that defendant's use was "transformative" of and "very different" from the original work. Said the court: "Plaintiff's photographs are artistic works used for illustrative purposes. Defendant's visual search engine is designed to catalog and improve access to images on the Internet. The character of the thumbnail index is not esthetic, but functional; its purpose is not to be artistic, but to be comprehensive."

Defendant's separation of the image from its copyright management information did not constitute a violation of Section 1202(b)(3) of the DMCA, because defendant did not have reasonable grounds to believe such separation would cause copyright infringement. The court reached this conclusion because defendant posted warnings on its site concerning the possibility of use restrictions, and referred the user to the originating web site, which could be visited via a provided link, to ascertain any applicable restrictions before copying. What made the images vulnerable to copying, according to the court, was their display by plaintiff on a web site.

78 Cal. App. 4th 362 (Cal. App., 2d Dist., Feb. 17, 2000)

The California Court of Appeals holds that a right of publicity claim asserted under California Civil Code Section 3344 seeking to stop an unauthorized third party from using photographs containing an individual's likeness is not preempted by federal copyright law, provided the claim is asserted against a party other than the holder of the copyright in the photograph.

Civ. Act. No. 02-571-KSF (E.D. Kentucky, February 27, 2003)

Court issues preliminary injunction, enjoining defendant from continuing to manufacture and sell Smartek microchips for use in connection with plaintiff's toner cartridges.  Defendant's chips contain software that circumvents authentication procedures installed by plaintiff in its own toner cartridges, which authentication procedures prevent use of unauthorized cartridges in printers manufactured by plaintiff.  These chips also contain a copy of Toner Loading software programs in which plaintiff holds a copyright, which programs are used in the operation of the printer.  In issuing this injunction, the Court finds that plaintiff is likely to prevail on its claim that defendant's conduct infringed plaintiff's copyright in its Toner Loading Programs, as well as on its claim that defendant's chips are products which circumvent technological measures used by plaintiff to restrict access to its copyrighted works in violation of the Digital Millennium Copyright Act ("DMCA").

271 F.Supp.2d 737, Civil No. WDQ-01-3898 (D. Md., July 10, 2003)

On the parties’ cross-motions for partial summary judgment, the Court found defendant Legg Mason guilty of copyright infringement as the result of its unauthorized copying and distribution of numerous editions of a financial newsletter published by plaintiff Lowry’s Reports.  An individual employed in Legg Mason’s research department contracted with Lowry’s to receive a single copy of its financial newsletter.  Her contract prohibited copying or dissemination of the newsletter or its contents.  Without authorization, that employee made numerous copies of various newsletters received which were faxed to Legg Mason brokers and branch offices, posted on the company intranet, and supplied to other members of the research department.  Legg Mason brokers downloaded copies of the newsletter from Legg Mason’s website.  After receipt of a cease and desist letter from Lowry’s, the employee continued to provide copies to other members of the research department.  These activities were conducted over an extended period of time.

The Court found that such activities constituted copyright infringement.  In reaching this result, the Court held Legg Mason vicariously liable for this misconduct of its employees, given that it had both the right and ability to supervise the conduct of its employees at issue, and a direct financial interest in exploitation of the copyrighted materials.

The Court denied so much of defendants’ motion that sought to reduce the statutory damages available to plaintiff for such infringement because defendant was an innocent infringer.  Such a defense was not available as the newsletters contained a copyright notice.

The Court further held that whether defendant was a willful infringer, and thus exposed to additional, and higher statutory damages, would have to await resolution at trial.

The Court did hold that plaintiff could not pursue claims for any indirect profits defendants made by use of the information contained in the newsletter.  While a copyright owner can recover, in addition to its own damages, profits an infringer made from the unauthorized use of his copyrighted materials, Lowry’s could not do so here because the link to such damages was too attenuated.  Thus, held the Court, plaintiff could not prove that profits made by Legg Mason as a result of investments it made were the result of information contained in plaintiff’s newsletters, which did not recommend specific investments, but rather provided informational gauges on the market as a whole.

The Court held that plaintiff could proceed with breach of contract claims, holding they were not preempted by application of the Copyright Act.

The same was not true of Lowry’s state law unfair competition claim, however, which rested on a ‘hot news’ theory.  This claim arose out of Legg Mason’s inclusion of factual information contained in Lowry’s reports – market predictors known as the ‘Lowry’s numbers’ – in a morning phone broadcast to its brokers.  Lowry’s could not pursue such a claim on a copyright infringement theory because the information conveyed – the ‘Lowry’s numbers’ - was held to consist of unprotectable facts.  And because Lowry’s unfair competition claim rested on the same elements as a copyright infringement claim – the broadcast was held akin to a ‘performance’ of the newsletter – it was held preempted by the Copyright Act.

It should be noted that this case was ultimately tried to a jury, which awarded Lowry’s just under $20 million as a result of Legg Mason’s infringing activities.  The case subsequently settled for an undisclosed sum.

999 F.2d 511 (9th Cir. 1993)

9th Circuit held computer repair company guilty of copyright infringement, as a result of its use of computer's operating software resident on the customer's computer to display the computer's system error log for the purpose of aiding repair.  To cause the customer's computer to display such software, the software was retrieved from the client's computer storage system, and placed in the computer's Random Access Memory ("RAM").  Such constituted the creation of a copy of the software.  As this use was unauthorized by the plaintiff, the manufacturer of the computer being repaired, it was held to constititue copyright infringement. 

983 F. Supp. 1167 (N.D. Ill., Nov. 13, 1997)

Defendant NAFED was guilty of direct copyright infringement because, without plaintiff's permission or authorization, NAFED obtained copies of plaintiff's copyrighted clip art and uploaded it onto computers hosting NAFED's website accesible to those using the web. Defendant Northwest, however, which hosted NAFED's site on its computers and made it available to those using the Internet, was neither liable for direct nor vicarious copyright infringement. Northwest only provided the means to copy plaintiff's work, much like the owner of a public copying machine used by a third party to copy protected material. It did not actually engage in the copying itself and accordingly, was not guilty of direct infringement. And because Northwest only received a flat fee from NAFED for its hosting activities that did not vary based on the use of NAFED's site, it did not profit from defendant NAFED's infringing activities, and hence was not guilty of vicarious infringement.

94 Civ. 0589 (S.D.N.Y., May 19, 1997) aff'd. 158 F.3d 674 (2d Cir. 1998)

Plaintiffs were permitted to copy court decisions published by West in a series of compilations, because the changes West made to those decisions, including the addition of parallel citations and the subsequent history of the case, together with the identification of the judge and attorneys involved in the action, and correction of citation errors, were insufficient to create a derivative work protectable under copyright law. The plaintiffs did not, nor did the court permit, the copying of West's key number head note system.

259 F. Supp. 2d 1029 (C.D. Cal., April, 2003) aff'd. -- F.3d -- (9th Cir., Aug. 19, 2004)

Granting defendants' motion for summary judgment, the District Court holds that neither Grokster Ltd. ("Grokster") nor StreamCast Networks Ltd. ("StreamCast") are liable, on theories of contributory or vicarious copyright infringement, for infringing plaintiffs' copyrights as a result of their distribution, respectively, of branded versions of Kazaa (Grokster) and Gnutella (StreamCast) software.  This software enables third party users to connect to peer-to-peer file sharing networks, over which they frequently share and download copyrighted materials without the consent of the owners of the copyrights therein.  The court held that defendants were not liable for contributory copyright infringement both because there were "substantial non-infringing uses" to which their software applications could be put, and because defendants were not involved in the third parties' use of their software after its distribution.  Similarly, the court held that defendants were not responsible for vicarious copyright infringement because they could not control the uses to which their software were put.  In making this conclusion, the court rejected plaintiffs' arguments that defendants should be held liable for vicarious infringement because, by altering the functionality of their software, defendants could prevent it from being used to infringe the copyrights of third parties.

___ F.3d __ (9th Cir., August 19, 2004)

Affirming the court below, the Ninth Circuit Court of Appeals holds that distributors of Kazaa and Morpheus are not liable for the infringing uses to which their peer-to-peer file sharing programs are put by third parties.  These third parties use defendants' software to make and distribute unauthorized copies of sound recordings and motion pictures in which plaintiffs hold copyrights.  Because, however, defendants' programs can also be used for 'substantial non-infringing uses,' such as the sharing of works either in the public domain, or with the permission of the holders of the copyrights therein, the Ninth Circuit held that defendant distributors are not liable as contributory infringers for such third party activities.  These claims fail because defendants did not have the requisite knowledge of the users' infringing activities at a time when they contributed to, or could take steps to prevent that infringement, given the decentralized nature of defendants' software.  Nor are the distributor defendants liable as vicarious infringers, as they did not have the requisite right and ability to supervise, or prevent, the infringing conduct of the users of their software.  The Ninth Circuit accordingly affirmed the District Court's grant of partial summary judgment to the distributor defendants, dismissing so much of the complaint which asserted copyright infringement claims arising out of those versions of defendants' software being distributed at the time of the District Court's decision.

5 F. Supp. 2d 823 (C.D. Cal. April 27, 1998)

Court enjoined Internet Entertainment Group ("IEG") from distributing on its adult-oriented subscription website a video tape depicting plaintiff and Pamela Anderson Lee engaging in sexual activity. Such dissemination would infringe plaintiff's and Ms. Lee's copyright in the video, as well as violate their rights of publicity and privacy. In so holding, the court rejected IEG's claim that, for $16,500, it had purchased a non-exclusive license to display the video. This claim was disproven by statements from both plaintiff and Ms. Lee that they had not conveyed such license, by evidence that plaintiff had rejected a $1 million dollar offer to grant such a license and finally, by evidence that the alleged source of this license admitted that he did not have (and therefore could not convey) a right to distribute the tape. The Court also held that IEG could not display small excerpts or stills from the video under the guise of the fair use doctrine.

Civ. 02-C-0038-C (W.D. Wis., May 2, 2002)

Court granted defendants' motion for summary judgment and dismissed copyright infringement claim brought by plaintiff, who asserted that defendants had copied a series of FAQs (Frequently Asked Questions) found on plaintiff's website.  The court held that a comparison of the parties' respective FAQs did not support plaintiff's contention of copying.  While there were similarities between the FAQs, they arose from the fact that the parties each created their FAQs to answer factual questions about their respective tanning products, which were themselves similar.  These similarities were not the product of copying.  As neither the ideas and facts presented in these FAQs nor the FAQ format itself could be copyrighted, plaintiff's copyright infringement claim failed.  The balance of plaintiff's claims - unfair competition and trademark infringement arising from the same alleged copying - were dismissed on preemption grounds.

376 F.Supp.2d 877, Civ. No. 03 C 4349 (N.D. Ill., July 12, 2005)

After a bench trial, court holds that defendant Bitstream Inc. is neither guilty of contributory copyright infringement nor indirect trademark infringement as a result of its creation and distribution of a software program which permits the user to copy and incorporate into a document any typeface font, whether or not the owner of the copyright in such font has consented to such copying and use.  In an earlier decision, the court, on defendant’s summary judgment motion, dismissed claims of direct copyright and trademark infringement, as well as vicarious copyright infringement, arising out of defendant’s activities.  The court’s decision was grounded principally on the absence of admissible evidence that defendant’s software had been used by its licensees to copy typeface fonts in which plaintiffs held copyright.  The Court also based its decision on its holding that defendant Bitstream neither was aware of any such infringing activities, nor sought to increase the sales of its software by advertising that its products could be used for that purpose.

121 S. Ct. 2381 (June 25, 2001)

The Supreme Court holds that The New York Times and various other publishers, by licensing all of the content of various editions of their newspapers and magazines to operators of electronic databases, which in turn permit users to search those databases for, and retrieve individual articles that appeared in such newspapers and magazines, violated the copyrights possessed in such articles by the freelance authors thereof. The Supreme Court held that Section 201(c) of the Copyright Act does not provide either the Times or other publishers who are parties to this litigation with the right to so license their publications, because the databases at issue reproduce the individual articles separate and apart from the collective work in which the publishers hold a copyright.

337 F. Supp. 2d 1195 (N.D.Cal. September 30, 2004)

Court holds that defendants Diebold Incorporated and Diebold Election Systems Inc. (collectively “Diebold”) violated Section 512(f) of the Digital Millennium Copyright Act (“DMCA”) by having outside counsel send DMCA take-down notices to Internet Service Providers (“ISPs”).  These notices demanded that the ISPs disable access to or remove a website containing an archive of emails prepared by Diebold employees in which “some employees acknowledged problems associated with [Diebold’s electronic voting] machines.”  Diebold claimed a copyright in this archive, which had apparently been stolen and posted on the Internet.  The take-down notices also sought to disable a hypertext link to this website, found in an online newspaper article critical of Diebold’s electronic voting machines.  The Court held that because “portions of the email archive are subject to fair use protections,” the notices constituted knowing material misrepresentations that material or activity infringes Diebold’s claimed copyright in the archive in violation of Section 512(f), exposing Diebold to liability for the damages and attorneys’ fees resulting from actions taken by the ISPs in response to these notices.  It has subsequently been reported by the Online Policy Group that Diebold paid $125,000 to plaintiffs and their attorneys in satisfaction of this claim.

Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006), affirmed -- F.3d – (3rd Cir., July 10, 2007).

District Court dismisses claims charging Google with direct copyright infringement as a result both of its archiving Usenet postings that contain excerpts of plaintiff’s copyrighted works, and its display of excerpts of plaintiff’s copyrighted website in search results.  The District Court holds that Google has not engaged in the requisite volitional conduct necessary to be held guilty of direct copyright infringement because such copying is a by-product of the automated operation of Google’s search engine and related technologies.  As such, Google’s acts are akin to a user’s use of its ISP to transmit infringing material to a third party, which do not give rise to direct infringement claims against the ISP.  On appeal, the Third Circuit affirmed the dismissal of Parker’s direct infringement claims, on the grounds that Google’s archiving of infringing Usenet postings lacked the requisite “volitional conduct.”

Relying on Field v. Google, (D. Nevada 2006), the District Court also dismisses direct copyright infringement claims arising out of Google’s presentation to users of “archival” copies of plaintiff’s website in search results denominated “cache.”  The District Court holds that Section 512(b) of the Digital Millennium Copyright Act (“DMCA”), applicable to copyright infringement claims arising out of “system caching,” bars such claims here.

The District Court also dismissed vicarious and contributory copyright infringement claims arising out of Google’s archiving of Usenet posts created by third parties that themselves allegedly infringe plaintiff’s copyright, both because Google lacks the requisite knowledge of such inadequately identified infringing activity, and because it does not derive sufficient direct financial benefit therefrom.  This decision too was affirmed by the Third Circuit on appeal.

The District Court further dismissed defamation, invasion of privacy and negligence claims advanced by plaintiff arising both out of Google’s archiving of Usenet posts authored by third parties that allegedly defamed plaintiff, as well as out of Google’s storage and display in its “cache” of a website that purportedly defamed plaintiff.  Such claims are barred by the immunity afforded Google by Section 230 of the Communications Decency Act (“CDA”), a decision affirmed on appeal.

Finally, the District Court dismissed Lanham Act claims brought against Google as a result of its alleged republication of a website operated by a third party titled “the Official Roy Gordon FAQ.”  The District Court held that the third party was not violating the Lanham Act both because it was not using a mark in commerce as it was not selling anything on its site, and because consumers were not likely to be confused as to the origin of the site, given the criticism of plaintiff found thereon.  The Lanham Act claims against Google also failed because it was not a “moving force” or “active participant” in the creation of this site, or the alleged use thereon of plaintiff’s ‘mark.’  The Third Circuit affirmed the dismissal of the Lanham Act claims because of the absence of a likelihood of consumer confusion.  The Court also affirmed the dismissal of plaintiff’s trade disparagement claims because the statements at issue on the third party website were not made in the context of commercial advertising.

It should be noted that the plaintiff appeared pro se.  In addition, the Third Circuit’s opinion was denoted “Not Precedential.”

Case No. CV 04-9484 AHM (SHx) (C.D. Cal., February 2006) aff'd. in part, reversed in part, remanded, 487 F.3d 701 (9th Cir., May 16, 2007).

On a motion for a preliminary injunction, the Court holds plaintiff likely to succeed on copyright infringement claims arising out of defendant Google's display of "thumbnail" images of plaintiff's copyrighted photographs in response to users' searches for images matching their description.  The Court held that it is likely to find that such a display is not a fair use of plaintiff's works, given, inter alia, its commercial nature, and the fact that such use likely interferes with a market for plaintiff's photographs.

The Court further holds that plaintiff is not likely to prevail on copyright infringement claims arising out of Google's use of "in-line links" that incorporate into Google's own web pages the web pages of third parties that themselves contain infringing copies of plaintiff's copyrighted photographs.  These "in-line links" allow users who are interested in a thumbnail image presented in Google's search results to view the actual image on the web page on which Google found it.  The Court held that it is not likely to find that Google directly infringed plaintiff's copyrights by such conduct, because, adopting the "server test," it is the third parties who created the websites that contain the infringing images, and not Google, that are displaying and/or distributing them in violation of plaintiff's copyright.

The Court further held that it was not likely to find Google guilty of contributory or vicarious copyright infringement as a result of such third party displays, notwithstanding any advertising Google may deliver to the web pages that contain such images, or revenue Google may derive therefrom.  Google is not guilty of vicarious infringement because it does not possess the requisite ability to control the content of such third party sites, or compel the third parties that operate them to remove infringing content found thereon.  Google's ability to remove such websites from search engine results does not constitute such control.  Nor, the Court stated, was it likely to hold that Google encourages or assists such infringement sufficiently to be guilty of contributory infringement.  The Court held that the record before it was insufficient to establish that the third parties displaying plaintiff's content were motivated by the revenue they might derive from the display of Google ads or that such revenue contributed to their posting of the infringing images in question.

487 F.3d 701, No. 06-55405 (9th Cir., May 16, 2007).

The Ninth Circuit holds that Google’s creation and display in search results of lower resolution ‘thumbnail’ copies of infringing images found on third party websites for the purpose of aiding the public in locating such images is a fair use that does not infringe the rights of the holder of the copyright therein.  In reaching this result, the court relied largely on the transformative nature of the thumbnails Google created, which, by facilitating the public’s ability to search the web for images, serve a different purpose than the original images, which are designed to entertain.  The Ninth Circuit accordingly reversed so much of the decision of the District Court which had enjoined Google from displaying such thumbnails in its search results. 

The Ninth Circuit further held that framing infringing images found on third party web sites via “in-line linking” to such sites does not directly infringe the display or distribution rights of the holder of the copyrights in such images.  As part of the process by which it provides results to those who search for images, Google presents a ‘framed page,’ the bottom half of which comes directly from the third party web site on which the image is found, and contains that image.  For the purpose of direct infringement, the Ninth Circuit endorsed the “server test” applied by the District Court.  Under this test, a party infringes the display rights of a copyright holder in an image when it stores a copy of that image on its own server, and delivers it to a third party.  When a party merely provides a link to a third party website on which such infringing material can be found, it is that third party web site, and not the party providing the link, that directly infringes the display rights of the copyright holder by causing that infringing image to be displayed on a user’s computer screen.  Applying this test, Google did not directly infringe by providing “in-line links” to third party websites that themselves contained infringing images.

Reversing the District Court, the Ninth Circuit held, however, that Google is potentially liable on a theory of contributory infringement for infringing plaintiff’s copyrights as a result of its provision of such in-line links.  According to the Court, “Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.”  Issues of fact as to the adequacy of notices sent by Perfect 10 alerting Google that it was in fact providing links to third party web sites that contained infringing images, of Google’s response thereto, and of Google’s ability to remove such infringing sites from its search results, mandated denial of plaintiff’s motion for summary judgment.  Also left for the District Court to resolve on remand was whether the Digital Millennium Copyright Act (“DMCA”) immunized Google from liability for such contributory infringement, an issue the District Court had not addressed because it had determined that Google was not likely to be found liable for contributory infringement.

Finally, the Ninth Circuit held that Perfect 10 was unlikely to prevail on vicarious infringement claims arising out of Google’s provision of in-line links to third party web sites that contained infringing images.  The Court held that Perfect 10 had not demonstrated that Google had the ability to control such third party websites, and compel them to remove infringing images found on their sites, a prerequisite to a finding of vicarious infringement.

The Ninth Circuit resolved the copyright infringement claims Perfect 10 asserted against Amazon.com in a similar fashion.  These claims arose out of the provision by Amazon.com to users of its site of Google search results, “framed” via in-line links. By this arrangement, the Amazon user received the same search result as the Google user.  Accordingly, the Court reached the same conclusions concerning Amazon’s conduct as it did concerning Google’s.  All claims save that which sought to hold Amazon.com liable on a theory of contributory infringement were held likely to fail.  The contributory infringement claim, arising out of Amazon’s provision of in-line links to third party sites that contained infringing images, was remanded for further consideration by the District Court.

488 F.3d 1102, No. 04-57143 (9th Cir., March 29, 2007) cert. denied, 128 S.Ct. 709 (2007)

The Ninth Circuit allows Perfect 10 to pursue copyright infringement claims against defendants, who provide web hosting and credit card billing services, arising out of the unauthorized posting on the web by their third party customers of “adult” images in which Perfect 10 holds copyrights.  Questions of fact precluded a determination of whether defendants were immunized from monetary liability for such claims by the Digital Millennium Copyright Act (“DMCA”).  Such immunity extends only to service providers who “reasonably implement” a policy for terminating those of their customers that repeatedly infringe copyrights.  In considering this question, the Ninth Circuit held  courts should consider not only the manner in which the defendants responded to “take down” infringement notices sent by the plaintiff copyright holder, here Perfect 10, but also the manner in which they responded to similar notices from third party copyright holders.  Because the District Court failed to consider whether defendants terminated customers identified in such third party “take down” infringement notices, the Ninth Circuit could not determine whether defendants “reasonably implemented” a compliant DMCA policy, and thus whether they were entitled to DMCA immunity.  The case was accordingly remanded to the District Court for further consideration.

The Ninth Circuit held that defendants had no obligation to respond to the “take down” notices provided by Perfect 10, or take steps to prevent the infringing conduct alleged therein, due to Perfect 10’s failure to provide such notices under penalty of perjury.  Absent the sworn acknowledgement required under the DMCA that the complainant is both an authorized representative of the copyright owner, and has a good faith belief that the material at issue is unlicensed, the service provider has no obligation to act upon the notice. 

Nor, held the Ninth Circuit, were defendants obligated to take action against purported “red flag” sites defendants serviced, which included sites that purported without authorization to provide users with passwords to access plaintiff’s materials, or other websites bearing names such as “stolencelebritypics.com” or “illegal.net.”   The DMCA does not impose on service providers the obligation to conduct an affirmative investigation into the bona fides of such sites.  To qualify as a “red flag” site that imposes an obligation on a service provider to act, held the Ninth Circuit “it … need[s] to be apparent that the website instructed or enabled users to infringe another’s copyright.”

The Ninth Circuit allowed Perfect 10 to pursue direct copyright infringement claims against the defendants as a result of the posting of infringing images on hornybees.com.  The court held that sufficient evidence of defendants’ direct involvement in the operation of that site was presented to survive a motion for summary judgment.

Finally, the Ninth Circuit held that the Communications Decency Act immunized defendants from the unfair competition, false advertising and right of publicity claims advanced by Perfect 10.

2002 U.S. Dist. Lexis 7333, CV 01-2595 LGB (C.D. Ca., April 22, 2002)

Court issues preliminary injunction against Cybernet Ventures, which operates an Age Verification Service, based on the use by web sites operated by third parties of various images in which plaintiff held the copyright, or featuring a model who had assigned her right of publicity to plaintiff. 

Cybernet Ventures operates the Age Verification Service "Adult Check."  Participating web sites put a script on their site which direct first time users to Cybernet, who sells them access to the Adult Check family of sites.  The user is thereafter free to visit Adult Check sites for a set period of time.  The fees generated by this user are paid to Cybernet, who splits them with the web site which sent the user to Cybernet.  To assist the user in finding Adult Check sites to his liking, Cybernet provides both a series of links as well as a search engine.  It also advertises its network. 

Cybernet takes an active interest in the content of Adult Check sites, employing a staff of 12 to review the site both before it is admitted to the Adult Check family, and periodically thereafter.  The content of the site is reviewed by Cybernet to prevent the inclusion of prohibited images.  Cybernet also provides comment on the site's layout.  The images on each site, however, are not provided by Cybernet.  Instead, each site is run by a third party, who is responsible for locating the images, arranging to have the site hosted, and advertising the site.

Perfect 10, which holds the copyright in a number of images of nude women made available to the public both on its web site and in a magazine, brought this suit, charging that web sites in the Adult Check family contained over 10,000 images in which Perfect 10 held the copyright. 

The court determined that Perfect 10 was likely to prevail on its claims contributory and vicarious copyright infringement against Cybernet, as well on its claims of unfair competition under Cal. Bus. and Professions Code Section 17200.  The court held that Perfect 10 was likely to prevail on its contributory infringement claim because Cybernet was likely to be held to have the requisite notice of the infringing activities at issue, and to have materially contributed to this infringement by its operation of the Age Verification Service, and particular its collection of fees for, and advertising of the web sites in question.

The court further held that Perfect 10 was likely to prevail on its vicarious infringement claim, because Cybernet had the ability to control the web sites, as evidenced by the review of its content it conducted, and received a direct financial benefit from the presence on these web sites of the infringing images.  Lastly, the court held that Perfect 10 was likely to prevail on its unfair competition claim, because Cybernet was likely to be held to have aided and abetted a violation of various models' right to publicity, again by virtue of its knowledge of infringement, and contributed thereto by virtue of its operation of the AVS system.

The court further held that Cybernet was unlikely to be able to avoid this liability under the safe harbor provisions of the Digital Millennium Copyright Act, because the court was likely to hold both that the DMCA policy Cybernet adopted failed to comply with the DMCA, and that Cybernet failed to reasonably implement such a policy, or terminate repeat infringers.  Cybernet was also unlikely to be able to seek the protections of the DMCA because it received a financial benefit directly attributable to infringing activity it had the right and ability to control.

The court accordingly issued a preliminary injunction, which prohibited Cybernet from utilizing or linking to the images in question.  The injunction further obligated Cybernet to stop linking to sites containing the images in question where Cybernet had either notice thereof, or knew or should have known of the presence of the images, under circumstances specified in the injunction.  The injunction also obligated Cybernet to undertake reviews both of sites seeking to become members of the Adult Check network, and of designated existing sites, to ascertain whether they were using any of the images at issue, and to bar such new sites from entering the network without proper rights documentation.  The scope of this injunction is discussed in greater depth in the accompanying "in depth" analysis of this decision.

968 F. Supp. 1171 (N.D. Tex. 1997)

Webbworld, which operated a subscription website on which it offered users access to unlicensed copyrighted images originally appearing in publication owned by plaintiff, held liable for copyright infringement. It was no defense that the infringing images were originally uploaded by third-parties onto the adult newsgroups from which Webbworld drew its content. Court further held Webbworld's principals liable for vicarious copyright infringement as a result of this activity, due to their financial interest in and control over the operations of Webbworld's site

839 F.Supp. 1552 (M.D. Fla. 1993)

In this case, Playboy charged the defendants, operators of a bulletin board system, with copyright and trademark infringement, as well as unfair competition. Defendants' bulletin board system is accessible via telephone modem to subscribers. Subscribers uploaded onto the bulletin board various pictures published by Playboy to which Playboy owned the applicable copyright. In addition, these subscribers, in the description of the material they provided other bulletin board users, utilized Playboy's trademarks Playboy and Playmate. Lastly, in some instances, Playboy's trademark was removed from the photograph, and replaced with the name of the bulletin board service and its telephone number.

On these facts, the court granted plaintiff's motion for partial summary judgment, finding defendants guilty of copyright and trademark infringement, as well as unfair competition. The court reached such conclusion notwithstanding defendant Frena's claim both that he did not upload the images onto his bulletin board system (subscribers did) and he was unaware of the presence of such images on his service until such time as he was served with the summons and complaint in this action, at which time he caused them to be deleted.

982 F. Supp. 503 (N.D. Ohio, Nov. 25, 1997)

Operators of bulletin board service found liable for both direct and contributory copyright infringement. The BBS operators had adopted a policy which encouraged their subscribers to upload GIFs onto the BBS in exchange for additional usage credits of the BBS system. After uploading, defendants briefly checked the new files to ascertain that they were neither pornographic nor blatantly protected by copyright, and then posted those files which passed muster onto the BBS. Approximately 400 GIFs uploaded by subscribers and posted on the BBS contained adult photographs in which plaintiff owned the copyright. This constituted direct copyright infringement, notwithstanding defendants' claim that they were unaware that plaintiff was the owner of the copyright in the images in question.

No. 97 Civ. 1140, 1998 U.S. Dist. Lexis 10201 (S.D.N.Y., July 10, 1998)

Unauthorized posting on organization's website of photographs plaintiff took at organization events held to constitute copyright infringement. Such infringement was not willful, however, because the defendant organization did not know who took the photographs at the time they were posted on its site, because plaintiff, on prior occasions, had authorized defendant's use of other photographs he had taken, and because of the parties' apparent confusion over the organization's policies concerning appropriate use of photographs taken at organization events. As a result, plaintiff was only awarded damages in an amount equal to the statutory minimum of $500 for each infringement.

857 F. Supp. 679 (N.D. Cal. 1994)

Court of Session, Edinburgh (Lord Hamilton, J.) (October 24, 1996)

2000 WL 1705637, Civ. No. 305666 (Sup. Ct. Ca., November 7, 2000)

Court holds that Section 230 of the Communications Decency Act ("CDA") renders Ebay immune from a suit charging that the use by third parties of Ebay's web site to sell "bootleg" musical recordings violates Cal. Bus. and Professions Code Section 17200.

No. 95 C2154, U.S. Dist. Lexis 11789, 13 F. Supp. 2d 782 (N.D. Ill., July 29, 1998)

Court holds that unauthorized commercial distribution of shareware posted on the Internet in violation of express restrictions prohibiting such distribution infringed plaintiffs' copyright in the software. Because such distribution did not amount to "fair use," the court held defendant liable for statutory damages in the amount of $20,000.

488 F.Supp.2d 991, 2007 WL 214595 (E.D. Ca., January 25, 2007)

Court allows the operator of a subscription-based website to proceed with copyright infringement and other claims arising out of the allegedly unauthorized access by the defendants of copyrighted materials contained on plaintiff's site.  These materials consist of pharmacist prepared monographs describing the results and/or effects of various drug treatments.  The complaint alleged that defendants NBTY, Rexall Sundown and Le Naturiste improperly used passwords obtained from plaintiff to allow more users to access plaintiff's site than permitted by applicable license agreements, thereby depriving plaintiff of appropriate license fees.  The court denied in its entirety defendants' motion to dismiss plaintiff's claims that such conduct constituted copyright infringement, violations of the Computer Fraud and Abuse Act ("CFAA"), the Electronic Communications Privacy Act and California Penal code section 502, as well as common law trespass and misappropriation of trade secrets. 

The Court held that plaintiff had adequately plead a copyright infringement claim by alleging that the defendants had accessed the monographs on its website without its permission, and had cut and pasted portions thereof into emails that were transmitted to others.

The Court further held that plaintiff had alleged damages sufficient to support its CFAA claim by alleging that it lost revenue as a result of defendants' unauthorized use of its site in excess of their license rights.

Finally, the Court held that the passwords necessary to access plaintiff's site were trade secrets entitled to protection under the Uniform Trade Secrets Protection Act.

488 F.3d 352, No. 06-2080 (6th Cir., June 14, 2007)

Reversing the court below, the Sixth Circuit awards plaintiff Thoroughbred Software International (“Thoroughbred Software”) $183,794.25 in “actual” damages it sustained as a result of defendant Dice Corporation’s (“Dice”) distribution of unauthorized copies of plaintiff’s software to its customers, which software was never used.  Such ‘actual’ damages were held to be the license fees plaintiff would have charged Dice for its use and/or distribution of the software in question.  These actual damages were awarded pursuant to 17 U.S.C. section 504(b) of the Copyright Act.  In reaching this result, the Sixth Circuit rejected defendant’s argument that Thoroughbred Software was not entitled to such relief because it could not prove that defendant’s infringing acts caused Thoroughbred Software any actual injury, as the software in question was never used.  The requisite ‘causal connection’ between defendant’s infringement and plaintiff’s loss of anticipated revenue was satisfied by the parties’ contract, which obligated defendant to pay a license fee for each copy it made and distributed of plaintiff’s software.

The Sixth Circuit also vacated the District Court’s denial of attorney’s fees to Thoroughbred Software as the prevailing party in a copyright infringement action, and remanded the matter for further consideration in light of the Court’s decision on appeal.

2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

2000 U.S. Dist. Lexis 4553 (C.D. Ca., March 27, 2000)

The court, in granting defendant's motion to dismiss plaintiffs' breach of contract claim, held that a contract is not created simply by use of a web site on which is posted at the bottom of the site's home page terms and conditions that provide that such use constitutes the user's assent to be bound by the site's Terms and Conditions. The court left open the possibility, however, that use of a web site, coupled with knowledge of Terms and Conditions which declare such use evidence of assent to be bound thereby, could create a binding contract, and granted plaintiffs leave to replead their claim.

The court further held that "hyperlinking [without framing] does not itself involve a violation of the Copyright Act ... since no copying is involved." In addition, the court held that "deep linking by itself (i.e. without confusion of source) does not necessarily involve unfair competition."

The court refused at the outset of a litigation, however, to dismiss plaintiffs' claim that defendant, by deep linking, was tortuously interfering with plaintiffs' prospective business advantage, by depriving them of advertising revenue that might otherwise be achieved if the user were forced first to go to the site's home page (with the necessary increase in traffic that would generate) before he could proceed to an event page.

Lastly, the court held that defendant did not infringe plaintiffs' copyright in their site by extracting data concerning concert and other entertainment events from plaintiffs' web site (such as location, date and time of the event) and presenting it on defendant's web site in its own format. The court further held that plaintiffs could not attempt to recast such a claim into either state law misappropriation, trespass, unfair business practice or unjust enrichment claims, as those claims, to the extent they prohibited conduct permitted under the copyright act, were preempted thereby.

2000 U.S. Dist. Lexis 12987 (C.D. Ca., August 10, 2000)

Court denies plaintiff's application to enjoin defendant from using spiders to copy factual information contained on plaintiff's web site. In so holding the court rejects plaintiff's claim that such spidering constitutes an improper trespass on plaintiff's computers, because the spidering neither harms plaintiff's computers, nor interferes with their use. The court also held that even though copies of plaintiff's materials were made during this spidering, this was likely to constitute a protected fair use akin to the copying permitted during the reverse engineering of a product.

507 F.Supp.2d 1096 (C.D. Ca., October 16, 2007)

This case arises out of the use of automated devices by ticket brokers and others to purchase tickets from plaintiff Ticketmaster, and thereby prevent the public from purchasing those tickets themselves. 

In this case, the Court holds that plaintiff Ticketmaster LLC (“Ticketmaster”) is likely to prevail on claims of direct and contributory copyright infringement as a result of defendant RMG Technologies Inc. (“RMG”) distribution of a software application that permits its clients to circumvent Ticketmaster.com’s CAPTCHA access controls, and use Ticketmaster’s  copyrighted website in manners prohibited by the site’s Terms of Use.  Among other things, Ticketmaster prohibits the use of automated devices such as the software application at issue to access Ticketmaster’s site and search for and purchase tickets to events.  Because defendant was likely to be held to have exceeded its license to use Ticketmaster’s copyrighted site, the Court held it was likely to be found guilty of direct copyright infringement, having made unauthorized copies of plaintiff’s site in its computer’s RAM when it viewed the site to create and test its product.

By distributing its software application to third parties, and encouraging them to use it in violation of Ticketmaster’s Terms of Use, the Court held plaintiff was also likely to prevail on claims of contributory copyright infringement.

The Court further held that Ticketmaster was likely to prevail on claims that defendant RMG breached its contract with Ticketmaster by using the site in a manner prohibited by the site’s Terms of Use, which, among other things, prohibited use of the site for commercial purposes, and use of automated devices on the site.  These Terms of Use were likely to be binding on defendant RMG, because it used the site with notice of the Terms, which advised that such use would constitute assent to be bound thereby.

Finally, the Court held that plaintiff Ticketmaster was likely to prevail on claims that defendant, by distributing its software application, violated the Digital Millennium Copyright Act, because it trafficked in a device designed both to circumvent technological measures that control access to, and protect, a copyrighted work – namely plaintiff’s website.

The Court held that defendant’s conduct was likely to cause plaintiff irreparable injury.  Because it constituted infringement of plaintiff’s copyright, such irreparable harm was presumed.  In addition, plaintiff submitted evidence that the use of automated devices on its site by ticket brokers and others was injuring its reputation and good will with the public, who attributed their inability to obtain tickets to events to misdeeds in which plaintiff and its employees were involved.

As a result, the Court issued a preliminary injunction, enjoined defendant from further trafficking in or using its software application.

279 F. Supp.2d 723 (E.D. Va., September 5, 2003)

Court grants defendants' motion for summary judgment, and dismisses trademark infringement, copyright infringement and unfair competition claims brought by website owner against distributor of pop-up ads.  Defendants distribute a software program, which causes pop-up ads to be displayed on a user's computer screen in a window that covers all or part of plaintiff's website.  The court held that such conduct does not constitute a use of plaintiff's trademark, a prerequisite to a trademark infringement claim.  Quite the contrary, the display results from the computer user's consensual download of defendants' software, and his ability to control, via the multitasking capabilities of window's operating environment, what appears on his own computer screen.  Similarly, defendants' acts do not infringe plaintiff's copyright in the material that appears on plaintiff's website, because defendants neither display plaintiff's copyrighted materials nor make a derivative work thereof.  Defendants' ads instead appear in a separate window on a user's computer screen, which operates independently of plaintiff's website, and leaves the content appearing thereon untouched.

92 F. Supp. 2d 349 (S.D.N.Y., May 4, 2000)

Court held that defendant's My.MP3.com service infringes plaintiffs' copyrights in various sound recordings. Defendant claims in advertisements that this service permits users to store and listen to their CDs from any location at which they can access the Internet. To operate this service, defendant purchased a large number of CD's containing plaintiffs' sound recordings, converted them to MP3 files, and stored these MP3 files on its servers. A user wishing to access any of the songs contained in these files was first required either to demonstrate to defendant that it owned a CD containing the song in question (by inserting the CD into its computer), or to purchase the CD from a designated online vendor. Once the user satisfied this requirement, he was permitted for free to access the MP3 file resident on defendant's server, which MP3 file had been created from plaintiffs' CDs.

The court held that defendant's act of converting plaintiffs' CDs into MP3 files, and providing access to these files to users in the manner outlined above, infringed plaintiffs' copyrights in these sound recordings. In addition, the court rejected defendant's arguments that this was a fair use of plaintiffs' sound recordings because its activities "transform" the original recordings. Instead, the court held that in the case at bar, "unauthorized copies are being retransmitted in another medium" in violation of the copyright laws.

192 F. Supp.2d 321 (D.N.J., March 28, 2002) aff'd. 342 F.3d 191 (3rd Cir. 2003)

Court issues preliminary injunction, enjoining plaintiff Video Pipeline Inc. ("Video Pipeline") from continuing to display over the Internet 62 promotional "trailers" plaintiff made to promote the sale of videos of movies in which defendant's licensors hold copyrights.  (Defendant and it's licensors will be referred to herein collectively as "Defendant").  The trailers in question consist of excerpts from Defendant's movies, combined with a display of Defendant's trademarks and the title of the film.  Plaintiff did not add any commentary, music or voice overs to its trailers.  The trailers were made available to the public via the Internet websites of Vendors selling authorized copies of Defendant's films.  For this service, the Vendors paid plaintiff a fee based on the amount of time users spent viewing the trailers.

The court held that plaintiff's conduct infringed Defendant's copyright in the films, including Defendant's exclusive right to create derivative works of the copyrighted films, as well as its right to perform and publicly display the work under 17 U.S.C. Section 106.

The court further held that plaintiff's actions were not protected by either the 'first sale' or 'fair use' doctrines.  Plaintiff could not claim protection under the first sale doctrine because it only permits owners, and not their licensees, to advertise the sale of a copy of the copyrighted work that they own.  Moreover, the court held that the 'first sale' doctrine probably would not permit Vendors to display over the Internet promotional trailers they created to advertise the sale of copies of the films they owned.  Rather, such display was probably limited under 17 U.S.C. Section 109(c) to "the place where the copy [owned by the Vendor] is located."

The court held that plaintiff could not claim protection under the 'fair use' doctrine, because its use of Defendant's copyrighted materials was commercial and not transformative, represented a copying of the heart of the works in question, and was of a fictional, and not factual work.

The court accordingly issued the requested injunctive relief.  In so doing, the court rejected arguments that its order would allow Defendant to control the sale of home videos over the Internet to the detriment of the public and/or Vendors of legitimate copies of the works.  The court held that other means were available to the Vendors to market Defendant's films, including via written descriptions of the films.

Civil Action No. 04-90-KAJ (D. Del. September 26, 2005)

After a bench trial, a Federal Delaware District Court found defendant Consumer Innovations guilty of willfully infringing plaintiff Webloyalty.com's copyrights in a banner ad and related "sell page."  These materials are used by Webloyalty to promote an online "club" whose members, for a monthly fee, can purchase merchandise offered for sale through the "club" at a discount.  Defendant, a competitor, was held to have infringed plaintiff's copyrights by copying substantial portions of these advertising materials.  Such copying was held to be willful, in large part, because Consumer Innovations denied copying plaintiff's materials in the face of convincing evidence to the contrary.  As a result, the Court awarded plaintiff statutory damages of $50,000, comprised of $25,000 for each act of infringement, together with a significant portion of the attorneys' fees expended by plaintiff in prosecuting this action.  In setting the amount of such damages, the Court took into account both the absence of any evidence that plaintiff had been injured by defendant's activities, as well as evidence that defendant generated only $1,000 in revenue from its use of the promotional materials at issue.

293 F.Supp.2d 734 (E.D. Mich., November 19, 2003)

Court denies website operators' application for a preliminary injunction, and refuses to enjoin defendant WhenU.com, Inc. from delivering advertisements, triggered by a computer user's visit to plaintiffs' sites, that either pop-up or under those sites.  Defendant WhenU delivers such ads via its software applications Save and Save Now!  These applications are typically consensually downloaded by the user to his or her computer as the quid pro quo of his free receipt of another software application.

The Court held that WhenU's delivery of these ads neither infringes the trademarks found on plaintiffs' sites, nor their copyrights in the material thereon.  WhenU's activities - including the use of plaintiffs' marks in a directory which determines the ads a user receives, and the display of ads in windows that partially obscure plaintiffs' websites but do not contain plaintiffs' marks - do not constitute a use of plaintiffs' marks in commerce, a prerequisite to a trademark infringement claim.  Plaintiffs' trademark infringements claims also failed because plaintiffs did not present evidence sufficient to establish that users would likely be confused by WhenU's activities, and conclude that plaintiffs sponsored WhenU's ads.  Rather, the Court held, users with Save and Save Now! installed on their computers are likely to conclude that WhenU is the sponsor of the ads in question, both because the ads so inform the user, and because of their familiarity with such displays.

The Court held that plaintiffs' copyright infringement claims failed because the appearance of WhenU's ads in a window that partially obscures plaintiffs' sites does not constitute the creation of an unauthorized derivative work in violation of plaintiffs' exclusive right to create the same.  Rather, plaintiffs' copyrighted works - the content of their websites - remain unaltered on the servers on which they are hosted, and simply appear simultaneously with WhenU's advertisements in separate windows opened by and with the consent of the user on whose computer screen they appear.  Plaintiffs' copyright infringement claims also failed because any images appearing on a user's screen are simply too transitory to constitute the creation of a work.  As such, WhenU and the users cannot be held to have created a derivative work, and thus cannot be held to have infringed plaintiffs' copyrights.

CopyrightCopyrightCopyrightCopyrightCopyrightCopyrightCopyrightCopyrightCopyright Quick Hits

BMG Music, et al. v. Cecilia Gonzalez
438 F.3d 888 (7th Cir., December 9, 2005)

Affirming the decision of the court below, the Seventh Circuit finds defendant Cecilia Gonzalez (“Gonzalez”) guilty of copyright infringement because she downloaded and retained on her computer over 1370 copyrighted songs.  The Court rejected Gonzalez’ contention that she was engaging in a permissible fair use by downloaded the songs to sample and purchase if they appealed to her.  In finding defendant guilty of copyright infringement, the Court made no distinction between songs Gonzalez owned at the time of her download, subsequently purchased, or never owned.  Said the Seventh Circuit:


Although BMG Music sought damages for only the 30 songs that Gonzalez concedes she has never purchased, all 1000+ of her downloads violated the [copyright] statute.  All created copies of an entire work.  All undermined the means by which authors seek to profit. … With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrights material without compensation to authors cannot be deemed ‘fair use.’

The Seventh Circuit accordingly affirmed the lower court’s award to BMG of statutory damages of $22,500 on its motion for summary judgment.  This represented the minimum statutory damage award permitted under the Copyright Act of $750 for each of 30 works Gonzalez was held to have infringed.  Importantly, this was the relief requested by BMG, and not the result of the trial court’s exercise of its discretion as to an appropriate damage award.  BMG elected to seek damages for only those songs Gonzalez downloaded which she admitted she did not own or purchase, either before or after downloading.

In reaching this result, the Seventh Circuit rejected defendant’s claim that the lower court erred in failing, under Section 504 of the Act, to reduce this statutory damage award because defendant did not believe her acts constituted infringement.  Such a defense is not available where the infringed works, such as those at bar, bear an appropriate copyright notice.  This was true notwithstanding the fact that the actual copies Gonzalez copied did not themselves contain such notice.

Getaped.com Inc. v. Cangemi
188 F. Supp. 2d 398 (S.D.N.Y. 2002)

District Court awards Getaped.com $46,015 in statutory damages, attorney’s fees and court costs as a result of the copying of its website’s source code by a direct competitor, who utilized the same to operate a competing website. Of import, the court determined that a Web site's source code is considered "published" when the site goes live on the Internet. As Getaped registered its website within three months of this date, it was entitled to statutory damages under the Copyright Act, 17 USC 505, as a result of defendants’ copying of its site, which occurred after plaintiff’s site went live, but before a copyright therein was registered. As noted by the court “both statutory damages and attorney’s fee and costs are unavailable if “(1) an infringement of copyright in a unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” 17 USC section 412.  
 
The court determined that $30,000 in statutory damages was appropriate given that defendants’ conduct was “willful” within the meaning of 17 USC Section 504. In reaching this result, the court relied on the fact that defendants copied the source code of Getaped’s site, which featured a prominent copyright notice, and continued to use this content after receipt of notice of infringement from Getaped. The Court also awarded plaintiff the actual attorneys fees it incurred in prosecuting the suit under 17 USC section 505.
Chris Gregerson v. Vilana Financial Inc., et al.
2007 U.S. Dist. Lexis 64960, Civ. No. 06-1164 ADM/AJB (D. Minn., August 31, 2007)

On the parties’ cross-motions for summary judgment, the Court finds the corporate defendants guilty of copyright infringement as a result of their unauthorized use of two of plaintiff’s copyrighted photographs in advertisements for their businesses. 

The Court further held that defendant Andrew Vilenchik, the sole board member and shareholder of defendant Vilana Financial, could not be held vicariously liable for defendant’s copyright infringement, because he did not have or derive a sufficiently direct financial interest from the use of plaintiff’s photographs.

The Court granted plaintiff summary judgment, dismissing defendants’ claim that his use of defendants’ trademark in the path of his site’s domain name violated the Anticybersquatting Consumer Protection Act.  Defendants’ claim failed both because they failed to submit sufficient evidence that plaintiff had a bad faith intent to profit from this use of the mark, and because use of the mark in the path of the domain name does not constitute actionable use of the mark in a domain name

The Court also dismissed trademark infringement claims brought by defendants as a result of plaintiff’s use of their trademark in a website that purportedly disparaged defendants as a result of their use of the photographs at issue, and in the meta tags of that site.  The court held defendants failed to establish the requisite likelihood of consumer confusion sufficient to sustain such a claim, given that the parties were not competitors – plaintiff was a photographer, and defendants sold real estate and mortgage services – and plaintiff’s website was highly critical of defendants.  In reaching this result the court noted that “a defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.”

Finally, the Court left for trial defendants’ remaining claims, which included deceptive trade practices, interference with contractual and business relationships, and misappropriation of name and likeness, all of which arose out of the disparaging remarks posted on plaintiff’s website about the defendants.  This site included a photograph of defendant Vilenchik.  Because issues of fact existed as to the truth of these statements, the court reserved decision on these claims until trial.

It should be noted that plaintiff ultimately prevailed at trial, was awarded approximately $20,000 on his copyright infringement claims, and that defendants’ remaining claims were dismissed.

Live Nation Motor Sports Inc. f/k/a SFX Motor Sports Inc. v. Robert Davis, d/b/a/ TripleClamps and www.supercrosslive.com
2006 WL 3616983, Civ. Act. No. 3:06-CV-276-L (N.D.Texas, December 12, 2006).


Court issues preliminary injunction, enjoining defendant from continuing to provide hyperlinks on his supercrosslive.com website that permit users to access live audio webcasts of plaintiff’s motorcyle racing events.  Court holds that plaintiff is likely to prevail on its claim that such acts infringe plaintiff’s copyrights in these audio webcasts, and violate its exclusive rights to publically display and perform such works.  Said the Court:  “the court finds that the unauthorized ‘link’ to the live webcasts that Davis provides on his website would likely qualify as a copied display or performance of SFX’s conpyrightable material.”  It should be noted that defendant denied “streaming” plaintiff’s audio webcasts.   He claimed that he merely included a "hyperlink, which launches the visitor's media player" instead of copying the audio file and republishing it.  As such, this decision is at odds with the Ninth Circuit’s recent decision in Perfect 10 v. Amazon, No. 06-55405 (9th Cir., May 16, 2007).  There, the court held that the provision of in-line links which instruct a user’s browser to display the contents of a third party site that itself contains infringing material does not constitute a direct infringement of the copyright in such material, because it is the infringing site, and not the provider of the link, that is actually displaying the materials in question.

Merle Norman Cosmetics, Inc. v. Joyce Labarbera and Jane Doe
Case No. 07-60811-CV-Cohn (S.D. Fla, August 3, 2007)

Court denies defendant Labarbera’s motion to dismiss tortuous interference with contract, civil conspiracy and deceptive and unfair trade practice claims advanced by plaintiff Merle Norman Cosmetics as a result of defendant’s sale of plaintiff’s cosmetic products on the Internet.  Plaintiff claimed that defendant obtained the products at issue from a studio – named here as Jane Doe – which by contract was prohibited from reselling Merle Norman Cosmetics on the Internet.  Defendant denied that allegation, claiming she obtained the cosmetics from another source.  Plaintiff “conceded … that if Labarbera’s source is a flea market, than she can make the sales in question without committing a tort.”  However, for the purpose of the instant motion, the Court accepted plaintiff’s contentions as to the source of the goods defendant sold.

Defendant argued that plaintiff’s claims were barred by application of the First Sale doctrine which, inter alia, permits a party who has lawfully acquired a copyrighted work to resell it free from claims of copyright infringement.  The Court held that this doctrine had not been extended to tort claims such as that at bar, and accordingly denied defendant’s motion.  Said the Court “the point at this early stage of this litigation is that the First Sale Doctrine has not been accepted as a complete defense to tortuous interference and civil conspiracy claims.  Therefore, the Court will deny the motion to dismiss …”.

Nautical Solutions Marketing, Inc. v. Boats.com
2004 WL 783121 (M.D. Fla. 2004)

Use by competing yacht broker of internet "spider" to extract non-copyrightable facts concerning yachts for sale from competitor's website did not infringe website owner's copyright.  Court held that "momentary copying" of competitor's site during this "extraction" process was a permissible fair use under Section 107 of the Copyright Act.  Court further held that copying, modifying and reposting individual yacht listings and the pictures contained therein with the permission of either the yacht owner or his broker did not infringe any copyrights in such works, which were held by the yacht broker and not the competitor's web site on which the listings were posted.  Finally, web site's owners claim that competitor infringed its copyright by copying the site's "look and feel" failed because, according to the court, the similarities between the sites derived from unprotectable elements, including pictures, headings and descriptions of yacht listings.

Pollstar v. Gigmania Ltd.
170 F. Supp. 2d 974 (E.D. Cal. 2000)

Court denies motion to dismiss, and allows Pollstar to proceed with common law misappropriation and unfair competition claims arising out of Gigmania's alleged copying and reposting on its own website of factual concert listings found on Pollstar's site.  The complaint alleged that this information was "hot news" which is protected against misappropriation if plaintiff can show that it "(i) generates or collects information at some cost or expense (ii) the value of the information is highly time-sensitive; (iii) the defendant's use of information constitutes free-riding on the plaintiff's costly efforts to generate or collect it' (iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; (v) the ability of the other party to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened."

The Court also allowed Pollstar to proceed with claims the Gigmania's conduct breached a browse-wrap license agreement between the parties, which prohibits the acts complained of.  The Contract provides that use of the information found on the site constitutes acceptance of the contract's terms.  Notably, the court allowed this claim to proceed despite the fact that notice of such terms were given "in small gray text on a gray background" which, in turn, contained a link to the actual contract terms, without the usual "underlining" signifying such a link.

SMC Promotions, Inc., et al. v. SMC Promotions, et al.
355 F. Supp.2d 1127 (C.D. Cal. 2005)

Court finds web developer guilty of copyright infringement by copying without authorization plaintiff Specialty Merchandise Corporation’s (“SMC”) copyrighted photographs and descriptions of its products, and an uploading them on clients’ websites, who are authorized distributors of plaintiffs’ products.  In reaching this result, the Court held the web developer was not authorized to engage in such activity, notwithstanding the fact that its clients were licensed by SMC to place the photos on their own websites.  This license was expressly limited by SMC to the distributor, who was not allowed to “delegate or authorize any other person to do so, whether on [the distributor’s] behalf, or otherwise.”  Because the web developer had copied works in which plaintiff SMC held copyright without authorization, it was found guilty of copyright infringement.

The Court also found the web developer guilty of trademark infringement, by using plaintiff’s ‘SMC’ trademark in the domains of various websites at which it advertised it web development services for SMC distributors.  These domains included SMCPromotions.com, SellSMC.com, and SMCForums.com.  The Court found that defendants’ use was likely to cause consumer confusion.  In reaching this result, because the matter arose ‘in the context of the Internet,’ the Court relied on three of the 9th Circuit’s eight ‘Sleekcraft’ factors for evaluating consumer confusion, known as the ‘internet trinity.’  Each of these three factors, held the Court – the similarity of the marks used, the related nature of the parties’ goods and services, and the parties’ simultaneous use of the internet as a marketing channel – pointed strongly in favor of a finding of likely consumer confusion.  Notably, defendants were competing with an affiliate of SMC, plaintiff eMerchants Club, which also offered web development services to SMC distributors.  The use on defendants’ site of a disclaimer, disclaiming affiliation with plaintiffs, and the addition of generic terms such as ‘sell’ ‘promotion’ or ‘forum’ in the domain names, did not alter this conclusion.  Said the Court:

The use of such confusingly similar marks in Defendants' domain names and on their websites creates initial interest confusion, regardless of Defendants' use of a disclaimer on their websites that they are not "owned, operated, endorsed or recommended" by Plaintiffs.

The Court’s finding was buttressed by the presence of actual confusion on the part of a SMC distributor who thought defendants were affiliated with plaintiffs when he hired them.  Because the remaining five “Sleekcraft” factors did not ‘weigh strongly’ against a finding of likelihood of confusion, the Court found defendants guilty of copyright infringement. 

Plaintiff SMC and its affiliates import and distribute various products through a network of distributors known as members.  The products plaintiffs sell are depicted in catalogues, which contain copyrighted photos and descriptions of those products.  Members can access these photographs and descriptions on a secure portion of plaintiff’s website, and are allowed to display them on their own website.  Plaintiff SMC’s affiliate offers SMC members web development services.  Defendants were attempting to compete with this affiliate for the web development business of SMC members, which efforts gave rise to this suit.

Veeck v. Southern Building Code Congress Int'l Inc.
293 F.3d 791, No. 99-40632 (5th Cir. 2002)

The Fifth Circuit, sitting en banc, held that both laws and the judicial opinions of the courts are not copyrightable.  As such, the Fifth Circuit directed the dismissal of copyright infringement claims brought by the Southern Building Code Congress International ("SBCCI") arising out of plaintiff's posting on his not-for-profit website of model building codes authored by the SBCCI and adopted as law by two Texas municipalities.  Plaintiff had obtained a CD-Rom from SBCCI, and copied the building code it contained onto his website.  The Court held that the building code, once adopted as law, became a "fact" no longer subject to the protection of copyright.  As there was only one way to express the "idea" represented by the code, that expression, as found in the SBCCI's CD-Rom, was not subject to the protection of the copyright statutes, and its copying could not, therefore, give rise to a copyright infringement claim.  This result, held the court, was mandated by appropriate application of the merger doctrine.  Finally, the court held that the SBCCI maintained its copyright in the model building codes it authored until such time, as any, as the code became enacted into law.

Copyright - Actual Damages - Updated November 26, 2007

271 F.Supp.2d 737, Civil No. WDQ-01-3898 (D. Md., July 10, 2003)

On the parties’ cross-motions for partial summary judgment, the Court found defendant Legg Mason guilty of copyright infringement as the result of its unauthorized copying and distribution of numerous editions of a financial newsletter published by plaintiff Lowry’s Reports.  An individual employed in Legg Mason’s research department contracted with Lowry’s to receive a single copy of its financial newsletter.  Her contract prohibited copying or dissemination of the newsletter or its contents.  Without authorization, that employee made numerous copies of various newsletters received which were faxed to Legg Mason brokers and branch offices, posted on the company intranet, and supplied to other members of the research department.  Legg Mason brokers downloaded copies of the newsletter from Legg Mason’s website.  After receipt of a cease and desist letter from Lowry’s, the employee continued to provide copies to other members of the research department.  These activities were conducted over an extended period of time.

The Court found that such activities constituted copyright infringement.  In reaching this result, the Court held Legg Mason vicariously liable for this misconduct of its employees, given that it had both the right and ability to supervise the conduct of its employees at issue, and a direct financial interest in exploitation of the copyrighted materials.

The Court denied so much of defendants’ motion that sought to reduce the statutory damages available to plaintiff for such infringement because defendant was an innocent infringer.  Such a defense was not available as the newsletters contained a copyright notice.

The Court further held that whether defendant was a willful infringer, and thus exposed to additional, and higher statutory damages, would have to await resolution at trial.

The Court did hold that plaintiff could not pursue claims for any indirect profits defendants made by use of the information contained in the newsletter.  While a copyright owner can recover, in addition to its own damages, profits an infringer made from the unauthorized use of his copyrighted materials, Lowry’s could not do so here because the link to such damages was too attenuated.  Thus, held the Court, plaintiff could not prove that profits made by Legg Mason as a result of investments it made were the result of information contained in plaintiff’s newsletters, which did not recommend specific investments, but rather provided informational gauges on the market as a whole.

The Court held that plaintiff could proceed with breach of contract claims, holding they were not preempted by application of the Copyright Act.

The same was not true of Lowry’s state law unfair competition claim, however, which rested on a ‘hot news’ theory.  This claim arose out of Legg Mason’s inclusion of factual information contained in Lowry’s reports – market predictors known as the ‘Lowry’s numbers’ – in a morning phone broadcast to its brokers.  Lowry’s could not pursue such a claim on a copyright infringement theory because the information conveyed – the ‘Lowry’s numbers’ - was held to consist of unprotectable facts.  And because Lowry’s unfair competition claim rested on the same elements as a copyright infringement claim – the broadcast was held akin to a ‘performance’ of the newsletter – it was held preempted by the Copyright Act.

It should be noted that this case was ultimately tried to a jury, which awarded Lowry’s just under $20 million as a result of Legg Mason’s infringing activities.  The case subsequently settled for an undisclosed sum.

488 F.3d 352, No. 06-2080 (6th Cir., June 14, 2007)

Reversing the court below, the Sixth Circuit awards plaintiff Thoroughbred Software International (“Thoroughbred Software”) $183,794.25 in “actual” damages it sustained as a result of defendant Dice Corporation’s (“Dice”) distribution of unauthorized copies of plaintiff’s software to its customers, which software was never used.  Such ‘actual’ damages were held to be the license fees plaintiff would have charged Dice for its use and/or distribution of the software in question.  These actual damages were awarded pursuant to 17 U.S.C. section 504(b) of the Copyright Act.  In reaching this result, the Sixth Circuit rejected defendant’s argument that Thoroughbred Software was not entitled to such relief because it could not prove that defendant’s infringing acts caused Thoroughbred Software any actual injury, as the software in question was never used.  The requisite ‘causal connection’ between defendant’s infringement and plaintiff’s loss of anticipated revenue was satisfied by the parties’ contract, which obligated defendant to pay a license fee for each copy it made and distributed of plaintiff’s software.

The Sixth Circuit also vacated the District Court’s denial of attorney’s fees to Thoroughbred Software as the prevailing party in a copyright infringement action, and remanded the matter for further consideration in light of the Court’s decision on appeal.

Copyright - Attorneys' Fees - Updated May 17, 2007

Civil Action No. 04-90-KAJ (D. Del. September 26, 2005)

After a bench trial, a Federal Delaware District Court found defendant Consumer Innovations guilty of willfully infringing plaintiff Webloyalty.com's copyrights in a banner ad and related "sell page."  These materials are used by Webloyalty to promote an online "club" whose members, for a monthly fee, can purchase merchandise offered for sale through the "club" at a discount.  Defendant, a competitor, was held to have infringed plaintiff's copyrights by copying substantial portions of these advertising materials.  Such copying was held to be willful, in large part, because Consumer Innovations denied copying plaintiff's materials in the face of convincing evidence to the contrary.  As a result, the Court awarded plaintiff statutory damages of $50,000, comprised of $25,000 for each act of infringement, together with a significant portion of the attorneys' fees expended by plaintiff in prosecuting this action.  In setting the amount of such damages, the Court took into account both the absence of any evidence that plaintiff had been injured by defendant's activities, as well as evidence that defendant generated only $1,000 in revenue from its use of the promotional materials at issue.

Copyright - Attorneys' Fees Quick Hits

Getaped.com Inc. v. Cangemi
188 F. Supp. 2d 398 (S.D.N.Y. 2002)

District Court awards Getaped.com $46,015 in statutory damages, attorney’s fees and court costs as a result of the copying of its website’s source code by a direct competitor, who utilized the same to operate a competing website. Of import, the court determined that a Web site's source code is considered "published" when the site goes live on the Internet. As Getaped registered its website within three months of this date, it was entitled to statutory damages under the Copyright Act, 17 USC 505, as a result of defendants’ copying of its site, which occurred after plaintiff’s site went live, but before a copyright therein was registered. As noted by the court “both statutory damages and attorney’s fee and costs are unavailable if “(1) an infringement of copyright in a unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” 17 USC section 412.  
 
The court determined that $30,000 in statutory damages was appropriate given that defendants’ conduct was “willful” within the meaning of 17 USC Section 504. In reaching this result, the court relied on the fact that defendants copied the source code of Getaped’s site, which featured a prominent copyright notice, and continued to use this content after receipt of notice of infringement from Getaped. The Court also awarded plaintiff the actual attorneys fees it incurred in prosecuting the suit under 17 USC section 505.

Copyright - Compilation - Updated January 19, 2008

2007 WL 4207923 (S.D. Cal., Nov. 20, 2007)

After trial, court dismissed copyright infringement claims advanced by plaintiff against a competitor as a result of defendant’s alleged use of elements of plaintiff’s website on its own website.  Both parties operated websites at which they sold ‘changing portraits’ that contained antique photos that ‘changed’ into haunted spirits when viewed from different angles.  The court found that plaintiff did not possess a copyright in the individual elements of his site, which included unoriginal fonts, a ‘buy it now’ button, and the frame used to display the ‘changing portraits’ offered for sale on plaintiff’s website.  The court held that plaintiff did possess a copyright in the assembled compilation of these elements on his website.  Because defendant’s website was not ‘substantially similar’ to plaintiff’s, however, the court found that defendant was not guilty of copyright infringement.

The court spent the balance of its opinion addressing claims each of the competitors asserted against the other arising, inter alia, out of derogatory statements each made concerning the other, and claims and statements they made concerning their own activities, history and accomplishments.  These claims, including claims for defamation, false advertising and unfair competition, are of little interest to the legal community at large, and will not be discussed here.  Those interested can read the court’s decision which, in large part, dismissed these claims and counterclaims.

Case No. 06cv1445 BTM (S.D. Cal., August 16, 2007)

Website containing compilation of online deals is protected by copyright as a compilation, as a result of plaintiff’s selection and arrangement, inter alia, of the deals included in the compilation.  Because the individual listings of the deals themselves are not protected by plaintiff’s copyright, however, in the absence of “bodily appropriation of [plaintiff’s] expression” or the “unauthorized use of substantially the entire item,” the use of a portion of those deals in the website of another will not rendered the defendant guilty of copyright infringement.  As a result, the court dismissed most of the copyright infringement claims advanced by Bensbargains.net, a website which posts compilations of online deals, against a competitor, which it accused of copying its listings of deals.  While the defendant did post on its site a number of the deals found in plaintiff’s compilations, it also posted other deals.  As to all compilations as to which the defendant copied less than 70% of the listings, the court dismissed plaintiff’s copyright infringement claim, finding defendant’s site was not sufficiently similar to sustain an infringement claim.  Only plaintiff’s claims as to those compilations as to which defendant copied over 70% of the listings, and those listings, in turn, comprised over 70% of defendant’s own compilation, were allowed to proceed.

Copyright - Contributory Copyright Infringement - Updated March 08, 2008

No. C 99-05183 MHP (N.D. Cal. 2000)

The court denied Napster Inc.'s ("Napster") motion for partial summary judgment, in which motion Napster sought to limit the damages and other relief that could be awarded against it for alleged direct or contributory copyright infringement by application of the safe harbor provisions of 17 U.S.C. section 512(a) of the Digital Millennium Copyright Act ("DMCA"). Section 512(a) limits a service provider's liability for copyright infringement by reason of the service provider's "transmitting, routing or providing connections for material through a system or network controlled or operated by or for the service provider ...".

The court held that Napster's role in the transmission of MP3 files by and among the various users of its system was not entitled to protection under Section 512(a) because such transmission does not occur through Napster's system. Rather, although Napster informs the user's computer of the location of a computer on which MP3 files the user seeks are stored, and its willingness to permit the user to download such files, all files transfer directly from the computer of one Napster user through the Internet to the computer of the requesting user. Similarly, any role that Napster plays in providing or facilitating a connection between these two computers does not occur through its system. "Although the Napster server conveys address information to establish a connection between the requesting and host users, the connection itself occurs through the Internet."

The court also held that issues of fact existed as to whether Napster was entitled to any protection under the DMCA at all. To be entitled to such protection, a service provider must meet the requirements of section 512(i) of the DMCA, which, among other things, obligates the service provider to "adopt[] and reasonably implement[] and inform[] subscirbers and account holders of the service provider's system or network of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers ...". The court held that issues of fact existed as to whether Napster had appropriately adopted and informed its users of such an effective policy which precluded at this time any relief to Napster under the DMCA.

173 F.Supp.2d 1044, Civ. No. CV00-02963DDPAJWX (C.D.Cal., October 23, 2001)

Court denies plaintiff's motion for summary judgment, seeking to hold operator of computer fairs liable for copyright infringement as a result of the sale of allegedly infringing software by various unaffiliated vendors at fairs operated by defendants. The court held that issues of fact precluded it from determining that the fair operator was liable, on theories of vicarious and contributory infringement, for such sales. As to the former, the court held that issues of fact existed both as to whether the copyright infringement at issue provided a direct financial benefit to the fair operators, or whether the defendants had the requisite ability to control the vendor selling the allegedly infringing merchandise, both necessary to establish vicarious infringement. The court held that while defendants did not need to share in the proceeds of the goods in question to establish the requisite financial benefit, the sale of the infringing materials had to be the "draw" which attracted customers to defendants' shows, and hence produced revenue for defendants in terms of entrance and vendor fees. Issues of fact precluded the court from reaching a determination on this issue. Such issues also existed as to whether defendants had the ability to exercise the requisite control over the vendors, given, in part, the difficulty in determining whether the vendors in question had authority to sell the products in question. The court also held that issues of fact precluded it from holding defendants liable on a theory of contributory infringement, as the record did not permit the court to determine whether defendants had the requisite knowledge that infringing activities were being carried on at the fair. This determination was based, in part, on evidence that the amount of infringing goods sold at the fair was a relatively small percentage of the overall number of goods sold.

2004 WL 2750253, Case No. 1:02-cv-1011-DFH-TAB (S. D. Ind., November 10, 2004)

Court holds that defendant Funeral Depot Inc. ("Funeral Depot") may be infringing plaintiffs' copyright in advertising materials consisting, inter alia, of lithographs of caskets, by placing small thumbnail images of those copyrighted materials on defendant's website which are linked to allegedly infringing full size copies of those same materials that defendant arranged to have placed on the website of a third party.  While this third party website is owned by one of plaintiffs' authorized dealers, visitors to the web pages containing the challenged images view defendant Funeral Depot's contact information, as well as prices for these caskets set by defendant.  Because issues of fact existed as to whether the third party dealer had an implied license to use the advertising materials in this fashion, the Court could not determine if defendant was infringing plaintiff's copyright on the parties' respective summary judgment motions.  The Court did reject a number of defenses advanced by Funeral Depot to plaintiff's copyright infringement claims, including its fair use, copyright misuse and antitrust defenses.

357 F. 3d 1072 (9th Cir. 2004)

Affirming in part and reversing in part the court below, the Ninth Circuit grants so much of defendant America Online's motion for summary judgment which sought dismissal of claims of vicarious copyright infringement advanced by the plaintiff author.  These claims arose out of  the posting of plaintiff's works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it neither posted nor directed the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against AOL were predicated on its commitment, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The Ninth Circuit affirmed the District Court's dismissal of plaintiff's vicarious copyright infringement claim, because plaintiff had failed to submit evidence that AOL "received a direct financial benefit from providing access to the infringing material" to its users.  Thus, "there [was] no evidence that indicate[d] that AOL customers either subscribed because of the availabil[ity of] infringing material or cancelled subscriptions because it was no longer available."

The Ninth Circuit also affirmed so much of the District Court's decision that denied AOL's motion to dismiss the contributory infringement claims plaintiff advanced.  "One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL had the requisite knowledge to be guilty of contributory infringement, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated DMCA notice address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not actually received this e-mail, should nonetheless be charged with notice thereof given its failure to continue to operate this e-mail address, which it had designated with the US Copyright Office as the address to which DMCA notices of copyright infringement were to be sent.    The Ninth Circuit held that this knowledge, coupled with AOL's storage of the infringing material on its servers, and provision of access thereto to AOL users, could render AOL liable for contributory copyright infringement.

The Ninth Circuit reversed the District Court's determination that AOL was protected from this potential liability for contributory copyright infringement by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The Ninth Circuit, affirming the District Court, held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days constituted intermediate and transient storage in the course of transmitting or providing connection to digital material that qualified for protection if AOL met the requirements of the  safe harbor provisions of Section 512(a) of the DMCA.  However, reversing the District Court, the Ninth Circuit held that issues of fact existed as to whether AOL had reasonably implemented a polity to terminate repeat infringers, given, as stated above, that the AOL e-mail address to which DMCA notices of infringement were to be sent was not operational.  As implementation of such a policy was a prerequisite to entitlement to the protections of the DMCA, this branch of AOL's summary judgment motion was denied.

Finally, the District Court held that AOL could not be liable for direct copyright infringement, because AOL's passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  This claim was "abandoned" by Ellison on appeal.

189 F. Supp.2d 1051, 2002 U.S. Dist. Lexis 4166 (C. Dist. Cal., March 12, 2002), aff'd. in part, reversed in part, remanded by 357 F. 3d 1072 (9th Cir. 2004)

Court granted defendant America Online's motion for summary judgment, and dismissed copyright infringement claims advanced by plaintiff author as a result of the posting of his works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it did not post nor direct the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against it were predicated on its agreement, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The court held that AOL could not be liable for direct copyright infringement, because such passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  The court similarly rejected plaintiff's claim that AOL was liable on a theory of vicarious copyright infringement, because it had neither the right and ability to supervise Robertson's infringing activity, nor a direct financial interest therein.  The court held that AOL's ability to block access (over its systems) to the infringing materials in question did not give it the requisite ability to control the infringing activity.  Rather, because AOL could not prevent Robertson from acting, it did not have the requisite ability to control the infringing activities necessary to make AOL vicariously liable for the acts of copyright infringement Robertson initiated.  Nor did AOL derive the necessary direct financial benefit from this infringing activity.  The court held that this required AOL to receive a substantial or significant benefit from the posting of the Usenet material in question, which the evidence showed it did not receive.

The court did, however, hold that issues of fact precluded it from determining whether AOL could be liable for the acts at issue on a theory of contributory infringement.  Under such a theory, "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL was a contributory infringer, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not received this e-mail, should nonetheless be charged with notice thereof given its designation of the e-mail address to which it was sent with the US Copyright Office.  In reaching this conclusion, the court held that "providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, can constitute a material contribution [to the infringing activities and hence expose the ISP to liability for contributory infringement] when the ISP knows or should know of infringing activity on its system yet continues to aid in [its] accomplishment."

Nonetheless, the court dismissed this claim, holding that AOL was protected therefrom by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The court held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days was an intermediate and transient storage for the purpose of the DMCA, and that it met the other requirements of the DMCA necessary to obtain the protection of this provision.  The court accordingly dismissed plaintiff's claim for contributory copyright infringement against AOL.

165 F. Supp. 2d 1082, Case No. CV 01-0495 RJK (RNBx) (C.D. Cal. 2001)

Court grants defendants' motion for summary judgment, and dismisses claims brought by plaintiff, the owner of a copyright in the documentary "Manson", against defendant eBay arising out of the use by unaffiliated third parties of the eBay auction site to sell unauthorized copies of the Manson documentary. The Court held that plaintiff's claims for contributory and vicarious copyright infringement were barred by operation of Section 512(c) of the Digital Millennium Copyright Act. The DMCA offers service providers such as eBay protection from copyright infringement claims arising out of the storage of material on their web site provided, inter alia, (i) they do not have actual knowledge of the infringing activity or promptly upon gaining such knowledge move to prevent the use of their service to further it, (ii) do not receive a financial benefit directly attributable to infringing activity they have the ability to control, and (iii) expeditiously remove material from their service on receipt of an appropriate notice. The court held that eBay was entitled to protection under this section because (i) it did not have actual notice of the infringing activity, (ii) could not control it as the transactions were consummated off-line without eBay's involvement, and (iii) eBay had not received the requisite notice of infringing activity because, inter alia, the infringing articles were not appropriately specified in the notice sent by plaintiff. Plaintiff's claims for trademark infringement were mooted, held the Court, because of eBay's status as an innocent infringer, and its removal from its site of those advertisements plaintiff identified as improperly offering infringing copies of his movie for sale.

75 F.Supp. 2d 1290 (D. Utah, Dec. 6, 1999)

The court issued a preliminary injunction, directing defendants to remove from their website statements that informed site visitors of the domain names of websites on which were posted materials that infringed plaintiff's copyright. The posting of such messages was held by the court to constitute contributory copyright infringement. The court reached this result despite the fact that the defendants' website did not contain links to the sites containing the infringing materials.

Defendants claimed that their actions did not constitute contributory infringement because the users defendants referred to the websites on which infringing content was posted did not themselves infringe plaintiff's copyright. As framed by the Court the issue "is whether those who browse any of the three infringing websites are infringing plaintiff's copyright. Central to this inquiry is whether the persons browsing are merely viewing the Handbook (which is not a copyright infringement), or whether they are making a copy of the Handbook (which is a copyright infringement)." The court held that by viewing a web page containing infringing material thru a browser, the user is himself infringing the copyright in the underlying work because in so doing he creates a copy of the infringing materials in his computer's random access memory.

259 F. Supp. 2d 1029 (C.D. Cal., April, 2003) aff'd. -- F.3d -- (9th Cir., Aug. 19, 2004)

Granting defendants' motion for summary judgment, the District Court holds that neither Grokster Ltd. ("Grokster") nor StreamCast Networks Ltd. ("StreamCast") are liable, on theories of contributory or vicarious copyright infringement, for infringing plaintiffs' copyrights as a result of their distribution, respectively, of branded versions of Kazaa (Grokster) and Gnutella (StreamCast) software.  This software enables third party users to connect to peer-to-peer file sharing networks, over which they frequently share and download copyrighted materials without the consent of the owners of the copyrights therein.  The court held that defendants were not liable for contributory copyright infringement both because there were "substantial non-infringing uses" to which their software applications could be put, and because defendants were not involved in the third parties' use of their software after its distribution.  Similarly, the court held that defendants were not responsible for vicarious copyright infringement because they could not control the uses to which their software were put.  In making this conclusion, the court rejected plaintiffs' arguments that defendants should be held liable for vicarious infringement because, by altering the functionality of their software, defendants could prevent it from being used to infringe the copyrights of third parties.

___ F.3d __ (9th Cir., August 19, 2004)

Affirming the court below, the Ninth Circuit Court of Appeals holds that distributors of Kazaa and Morpheus are not liable for the infringing uses to which their peer-to-peer file sharing programs are put by third parties.  These third parties use defendants' software to make and distribute unauthorized copies of sound recordings and motion pictures in which plaintiffs hold copyrights.  Because, however, defendants' programs can also be used for 'substantial non-infringing uses,' such as the sharing of works either in the public domain, or with the permission of the holders of the copyrights therein, the Ninth Circuit held that defendant distributors are not liable as contributory infringers for such third party activities.  These claims fail because defendants did not have the requisite knowledge of the users' infringing activities at a time when they contributed to, or could take steps to prevent that infringement, given the decentralized nature of defendants' software.  Nor are the distributor defendants liable as vicarious infringers, as they did not have the requisite right and ability to supervise, or prevent, the infringing conduct of the users of their software.  The Ninth Circuit accordingly affirmed the District Court's grant of partial summary judgment to the distributor defendants, dismissing so much of the complaint which asserted copyright infringement claims arising out of those versions of defendants' software being distributed at the time of the District Court's decision.

376 F.Supp.2d 877, Civ. No. 03 C 4349 (N.D. Ill., July 12, 2005)

After a bench trial, court holds that defendant Bitstream Inc. is neither guilty of contributory copyright infringement nor indirect trademark infringement as a result of its creation and distribution of a software program which permits the user to copy and incorporate into a document any typeface font, whether or not the owner of the copyright in such font has consented to such copying and use.  In an earlier decision, the court, on defendant’s summary judgment motion, dismissed claims of direct copyright and trademark infringement, as well as vicarious copyright infringement, arising out of defendant’s activities.  The court’s decision was grounded principally on the absence of admissible evidence that defendant’s software had been used by its licensees to copy typeface fonts in which plaintiffs held copyright.  The Court also based its decision on its holding that defendant Bitstream neither was aware of any such infringing activities, nor sought to increase the sales of its software by advertising that its products could be used for that purpose.

Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006), affirmed -- F.3d – (3rd Cir., July 10, 2007).

District Court dismisses claims charging Google with direct copyright infringement as a result both of its archiving Usenet postings that contain excerpts of plaintiff’s copyrighted works, and its display of excerpts of plaintiff’s copyrighted website in search results.  The District Court holds that Google has not engaged in the requisite volitional conduct necessary to be held guilty of direct copyright infringement because such copying is a by-product of the automated operation of Google’s search engine and related technologies.  As such, Google’s acts are akin to a user’s use of its ISP to transmit infringing material to a third party, which do not give rise to direct infringement claims against the ISP.  On appeal, the Third Circuit affirmed the dismissal of Parker’s direct infringement claims, on the grounds that Google’s archiving of infringing Usenet postings lacked the requisite “volitional conduct.”

Relying on Field v. Google, (D. Nevada 2006), the District Court also dismisses direct copyright infringement claims arising out of Google’s presentation to users of “archival” copies of plaintiff’s website in search results denominated “cache.”  The District Court holds that Section 512(b) of the Digital Millennium Copyright Act (“DMCA”), applicable to copyright infringement claims arising out of “system caching,” bars such claims here.

The District Court also dismissed vicarious and contributory copyright infringement claims arising out of Google’s archiving of Usenet posts created by third parties that themselves allegedly infringe plaintiff’s copyright, both because Google lacks the requisite knowledge of such inadequately identified infringing activity, and because it does not derive sufficient direct financial benefit therefrom.  This decision too was affirmed by the Third Circuit on appeal.

The District Court further dismissed defamation, invasion of privacy and negligence claims advanced by plaintiff arising both out of Google’s archiving of Usenet posts authored by third parties that allegedly defamed plaintiff, as well as out of Google’s storage and display in its “cache” of a website that purportedly defamed plaintiff.  Such claims are barred by the immunity afforded Google by Section 230 of the Communications Decency Act (“CDA”), a decision affirmed on appeal.

Finally, the District Court dismissed Lanham Act claims brought against Google as a result of its alleged republication of a website operated by a third party titled “the Official Roy Gordon FAQ.”  The District Court held that the third party was not violating the Lanham Act both because it was not using a mark in commerce as it was not selling anything on its site, and because consumers were not likely to be confused as to the origin of the site, given the criticism of plaintiff found thereon.  The Lanham Act claims against Google also failed because it was not a “moving force” or “active participant” in the creation of this site, or the alleged use thereon of plaintiff’s ‘mark.’  The Third Circuit affirmed the dismissal of the Lanham Act claims because of the absence of a likelihood of consumer confusion.  The Court also affirmed the dismissal of plaintiff’s trade disparagement claims because the statements at issue on the third party website were not made in the context of commercial advertising.

It should be noted that the plaintiff appeared pro se.  In addition, the Third Circuit’s opinion was denoted “Not Precedential.”

Case No. CV 04-9484 AHM (SHx) (C.D. Cal., February 2006) aff'd. in part, reversed in part, remanded, 487 F.3d 701 (9th Cir., May 16, 2007).

On a motion for a preliminary injunction, the Court holds plaintiff likely to succeed on copyright infringement claims arising out of defendant Google's display of "thumbnail" images of plaintiff's copyrighted photographs in response to users' searches for images matching their description.  The Court held that it is likely to find that such a display is not a fair use of plaintiff's works, given, inter alia, its commercial nature, and the fact that such use likely interferes with a market for plaintiff's photographs.

The Court further holds that plaintiff is not likely to prevail on copyright infringement claims arising out of Google's use of "in-line links" that incorporate into Google's own web pages the web pages of third parties that themselves contain infringing copies of plaintiff's copyrighted photographs.  These "in-line links" allow users who are interested in a thumbnail image presented in Google's search results to view the actual image on the web page on which Google found it.  The Court held that it is not likely to find that Google directly infringed plaintiff's copyrights by such conduct, because, adopting the "server test," it is the third parties who created the websites that contain the infringing images, and not Google, that are displaying and/or distributing them in violation of plaintiff's copyright.

The Court further held that it was not likely to find Google guilty of contributory or vicarious copyright infringement as a result of such third party displays, notwithstanding any advertising Google may deliver to the web pages that contain such images, or revenue Google may derive therefrom.  Google is not guilty of vicarious infringement because it does not possess the requisite ability to control the content of such third party sites, or compel the third parties that operate them to remove infringing content found thereon.  Google's ability to remove such websites from search engine results does not constitute such control.  Nor, the Court stated, was it likely to hold that Google encourages or assists such infringement sufficiently to be guilty of contributory infringement.  The Court held that the record before it was insufficient to establish that the third parties displaying plaintiff's content were motivated by the revenue they might derive from the display of Google ads or that such revenue contributed to their posting of the infringing images in question.

487 F.3d 701, No. 06-55405 (9th Cir., May 16, 2007).

The Ninth Circuit holds that Google’s creation and display in search results of lower resolution ‘thumbnail’ copies of infringing images found on third party websites for the purpose of aiding the public in locating such images is a fair use that does not infringe the rights of the holder of the copyright therein.  In reaching this result, the court relied largely on the transformative nature of the thumbnails Google created, which, by facilitating the public’s ability to search the web for images, serve a different purpose than the original images, which are designed to entertain.  The Ninth Circuit accordingly reversed so much of the decision of the District Court which had enjoined Google from displaying such thumbnails in its search results. 

The Ninth Circuit further held that framing infringing images found on third party web sites via “in-line linking” to such sites does not directly infringe the display or distribution rights of the holder of the copyrights in such images.  As part of the process by which it provides results to those who search for images, Google presents a ‘framed page,’ the bottom half of which comes directly from the third party web site on which the image is found, and contains that image.  For the purpose of direct infringement, the Ninth Circuit endorsed the “server test” applied by the District Court.  Under this test, a party infringes the display rights of a copyright holder in an image when it stores a copy of that image on its own server, and delivers it to a third party.  When a party merely provides a link to a third party website on which such infringing material can be found, it is that third party web site, and not the party providing the link, that directly infringes the display rights of the copyright holder by causing that infringing image to be displayed on a user’s computer screen.  Applying this test, Google did not directly infringe by providing “in-line links” to third party websites that themselves contained infringing images.

Reversing the District Court, the Ninth Circuit held, however, that Google is potentially liable on a theory of contributory infringement for infringing plaintiff’s copyrights as a result of its provision of such in-line links.  According to the Court, “Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.”  Issues of fact as to the adequacy of notices sent by Perfect 10 alerting Google that it was in fact providing links to third party web sites that contained infringing images, of Google’s response thereto, and of Google’s ability to remove such infringing sites from its search results, mandated denial of plaintiff’s motion for summary judgment.  Also left for the District Court to resolve on remand was whether the Digital Millennium Copyright Act (“DMCA”) immunized Google from liability for such contributory infringement, an issue the District Court had not addressed because it had determined that Google was not likely to be found liable for contributory infringement.

Finally, the Ninth Circuit held that Perfect 10 was unlikely to prevail on vicarious infringement claims arising out of Google’s provision of in-line links to third party web sites that contained infringing images.  The Court held that Perfect 10 had not demonstrated that Google had the ability to control such third party websites, and compel them to remove infringing images found on their sites, a prerequisite to a finding of vicarious infringement.

The Ninth Circuit resolved the copyright infringement claims Perfect 10 asserted against Amazon.com in a similar fashion.  These claims arose out of the provision by Amazon.com to users of its site of Google search results, “framed” via in-line links. By this arrangement, the Amazon user received the same search result as the Google user.  Accordingly, the Court reached the same conclusions concerning Amazon’s conduct as it did concerning Google’s.  All claims save that which sought to hold Amazon.com liable on a theory of contributory infringement were held likely to fail.  The contributory infringement claim, arising out of Amazon’s provision of in-line links to third party sites that contained infringing images, was remanded for further consideration by the District Court.

2002 U.S. Dist. Lexis 7333, CV 01-2595 LGB (C.D. Ca., April 22, 2002)

Court issues preliminary injunction against Cybernet Ventures, which operates an Age Verification Service, based on the use by web sites operated by third parties of various images in which plaintiff held the copyright, or featuring a model who had assigned her right of publicity to plaintiff. 

Cybernet Ventures operates the Age Verification Service "Adult Check."  Participating web sites put a script on their site which direct first time users to Cybernet, who sells them access to the Adult Check family of sites.  The user is thereafter free to visit Adult Check sites for a set period of time.  The fees generated by this user are paid to Cybernet, who splits them with the web site which sent the user to Cybernet.  To assist the user in finding Adult Check sites to his liking, Cybernet provides both a series of links as well as a search engine.  It also advertises its network. 

Cybernet takes an active interest in the content of Adult Check sites, employing a staff of 12 to review the site both before it is admitted to the Adult Check family, and periodically thereafter.  The content of the site is reviewed by Cybernet to prevent the inclusion of prohibited images.  Cybernet also provides comment on the site's layout.  The images on each site, however, are not provided by Cybernet.  Instead, each site is run by a third party, who is responsible for locating the images, arranging to have the site hosted, and advertising the site.

Perfect 10, which holds the copyright in a number of images of nude women made available to the public both on its web site and in a magazine, brought this suit, charging that web sites in the Adult Check family contained over 10,000 images in which Perfect 10 held the copyright. 

The court determined that Perfect 10 was likely to prevail on its claims contributory and vicarious copyright infringement against Cybernet, as well on its claims of unfair competition under Cal. Bus. and Professions Code Section 17200.  The court held that Perfect 10 was likely to prevail on its contributory infringement claim because Cybernet was likely to be held to have the requisite notice of the infringing activities at issue, and to have materially contributed to this infringement by its operation of the Age Verification Service, and particular its collection of fees for, and advertising of the web sites in question.

The court further held that Perfect 10 was likely to prevail on its vicarious infringement claim, because Cybernet had the ability to control the web sites, as evidenced by the review of its content it conducted, and received a direct financial benefit from the presence on these web sites of the infringing images.  Lastly, the court held that Perfect 10 was likely to prevail on its unfair competition claim, because Cybernet was likely to be held to have aided and abetted a violation of various models' right to publicity, again by virtue of its knowledge of infringement, and contributed thereto by virtue of its operation of the AVS system.

The court further held that Cybernet was unlikely to be able to avoid this liability under the safe harbor provisions of the Digital Millennium Copyright Act, because the court was likely to hold both that the DMCA policy Cybernet adopted failed to comply with the DMCA, and that Cybernet failed to reasonably implement such a policy, or terminate repeat infringers.  Cybernet was also unlikely to be able to seek the protections of the DMCA because it received a financial benefit directly attributable to infringing activity it had the right and ability to control.

The court accordingly issued a preliminary injunction, which prohibited Cybernet from utilizing or linking to the images in question.  The injunction further obligated Cybernet to stop linking to sites containing the images in question where Cybernet had either notice thereof, or knew or should have known of the presence of the images, under circumstances specified in the injunction.  The injunction also obligated Cybernet to undertake reviews both of sites seeking to become members of the Adult Check network, and of designated existing sites, to ascertain whether they were using any of the images at issue, and to bar such new sites from entering the network without proper rights documentation.  The scope of this injunction is discussed in greater depth in the accompanying "in depth" analysis of this decision.

982 F. Supp. 503 (N.D. Ohio, Nov. 25, 1997)

Operators of bulletin board service found liable for both direct and contributory copyright infringement. The BBS operators had adopted a policy which encouraged their subscribers to upload GIFs onto the BBS in exchange for additional usage credits of the BBS system. After uploading, defendants briefly checked the new files to ascertain that they were neither pornographic nor blatantly protected by copyright, and then posted those files which passed muster onto the BBS. Approximately 400 GIFs uploaded by subscribers and posted on the BBS contained adult photographs in which plaintiff owned the copyright. This constituted direct copyright infringement, notwithstanding defendants' claim that they were unaware that plaintiff was the owner of the copyright in the images in question.

507 F.Supp.2d 1096 (C.D. Ca., October 16, 2007)

This case arises out of the use of automated devices by ticket brokers and others to purchase tickets from plaintiff Ticketmaster, and thereby prevent the public from purchasing those tickets themselves. 

In this case, the Court holds that plaintiff Ticketmaster LLC (“Ticketmaster”) is likely to prevail on claims of direct and contributory copyright infringement as a result of defendant RMG Technologies Inc. (“RMG”) distribution of a software application that permits its clients to circumvent Ticketmaster.com’s CAPTCHA access controls, and use Ticketmaster’s  copyrighted website in manners prohibited by the site’s Terms of Use.  Among other things, Ticketmaster prohibits the use of automated devices such as the software application at issue to access Ticketmaster’s site and search for and purchase tickets to events.  Because defendant was likely to be held to have exceeded its license to use Ticketmaster’s copyrighted site, the Court held it was likely to be found guilty of direct copyright infringement, having made unauthorized copies of plaintiff’s site in its computer’s RAM when it viewed the site to create and test its product.

By distributing its software application to third parties, and encouraging them to use it in violation of Ticketmaster’s Terms of Use, the Court held plaintiff was also likely to prevail on claims of contributory copyright infringement.

The Court further held that Ticketmaster was likely to prevail on claims that defendant RMG breached its contract with Ticketmaster by using the site in a manner prohibited by the site’s Terms of Use, which, among other things, prohibited use of the site for commercial purposes, and use of automated devices on the site.  These Terms of Use were likely to be binding on defendant RMG, because it used the site with notice of the Terms, which advised that such use would constitute assent to be bound thereby.

Finally, the Court held that plaintiff Ticketmaster was likely to prevail on claims that defendant, by distributing its software application, violated the Digital Millennium Copyright Act, because it trafficked in a device designed both to circumvent technological measures that control access to, and protect, a copyrighted work – namely plaintiff’s website.

The Court held that defendant’s conduct was likely to cause plaintiff irreparable injury.  Because it constituted infringement of plaintiff’s copyright, such irreparable harm was presumed.  In addition, plaintiff submitted evidence that the use of automated devices on its site by ticket brokers and others was injuring its reputation and good will with the public, who attributed their inability to obtain tickets to events to misdeeds in which plaintiff and its employees were involved.

As a result, the Court issued a preliminary injunction, enjoined defendant from further trafficking in or using its software application.

293 F.Supp.2d 734 (E.D. Mich., November 19, 2003)

Court denies website operators' application for a preliminary injunction, and refuses to enjoin defendant WhenU.com, Inc. from delivering advertisements, triggered by a computer user's visit to plaintiffs' sites, that either pop-up or under those sites.  Defendant WhenU delivers such ads via its software applications Save and Save Now!  These applications are typically consensually downloaded by the user to his or her computer as the quid pro quo of his free receipt of another software application.

The Court held that WhenU's delivery of these ads neither infringes the trademarks found on plaintiffs' sites, nor their copyrights in the material thereon.  WhenU's activities - including the use of plaintiffs' marks in a directory which determines the ads a user receives, and the display of ads in windows that partially obscure plaintiffs' websites but do not contain plaintiffs' marks - do not constitute a use of plaintiffs' marks in commerce, a prerequisite to a trademark infringement claim.  Plaintiffs' trademark infringements claims also failed because plaintiffs did not present evidence sufficient to establish that users would likely be confused by WhenU's activities, and conclude that plaintiffs sponsored WhenU's ads.  Rather, the Court held, users with Save and Save Now! installed on their computers are likely to conclude that WhenU is the sponsor of the ads in question, both because the ads so inform the user, and because of their familiarity with such displays.

The Court held that plaintiffs' copyright infringement claims failed because the appearance of WhenU's ads in a window that partially obscures plaintiffs' sites does not constitute the creation of an unauthorized derivative work in violation of plaintiffs' exclusive right to create the same.  Rather, plaintiffs' copyrighted works - the content of their websites - remain unaltered on the servers on which they are hosted, and simply appear simultaneously with WhenU's advertisements in separate windows opened by and with the consent of the user on whose computer screen they appear.  Plaintiffs' copyright infringement claims also failed because any images appearing on a user's screen are simply too transitory to constitute the creation of a work.  As such, WhenU and the users cannot be held to have created a derivative work, and thus cannot be held to have infringed plaintiffs' copyrights.

Copyright - Fair Use - Updated November 03, 2008

Civ. Act. No. 07-0293 (E.D. Va., March 11, 2008)

Court holds that minors entered into valid ‘click wrap’ agreement with defendant IParadigms LLC (“IParadigms”) by clicking an “I agree” icon which appeared directly below an online Usage Agreement, and indicated their assent to be bound thereby.  Plaintiffs were high school students that were directed by the schools they attended to submit class work to defendant IParadigm’s “Turnitin” website to check for plagiarism.  As part of this submission process, plaintiffs were obligated to assent to the site’s Usage Agreement.  Because the Usage Agreement contained a limitation of liability clause precluding liability to plaintiffs as a result of their use of the Turnitin site, the Court rejected plaintiffs’ copyright infringement claims, which arose out of defendant’s storage of plaintiffs’ class work in a database used to check student homework for plagiarism.

In reaching this result, the Court rejected plaintiffs’ claims that, as minors, they were not bound by the terms of the site’s Usage Agreement.  Because they had accepted the benefits of the agreement – the ability to submit their class work for grade to their respective schools was dependent upon their use of the site – they could not escape the contractual conditions upon which such benefits were rendered.

The Court further held that plaintiffs’ copyright infringement claims failed because defendant had made a permissible fair use of their works.  In reaching this result, the Court relied on the fact that Turnitin’s use of plaintiffs’ school work was highly transformative of the original works, in that it added plaintiffs’ school work to a non-publicly available database used only to check for plagiarism by students.  The Court also rested its holding of fair use on the fact that defendant’s use did not impact the market for plaintiffs’ works, as the copies Turnitin made thereof were not available to the public, but rather maintained in a non-public database.

The Court rejected the counterclaims advanced by defendant iParadigms, including a claim for indemnification as a result of the commencement of this action.  This claim was based on a separate “Usage Policy” found on the Turnitin site.  The Court held that plaintiffs were not bound by this policy, which was not linked or otherwise referenced in the Usage Agreement to which plaintiffs were in fact bound.  There was no evidence that plaintiffs were aware of this separate “usage policy,” which was contained in a link on each page of the Turnitin site.  As a result, and because the parties’ contract stated that it constituted the full agreement between the parties, the plaintiffs’ use of the site was held not to create a valid browse wrap agreement, and the claim for indemnification, predicated on the Usage Policy, was dismissed.

The remaining counterclaims advanced by iParadigms arose out of the use of the site by one of the plaintiffs to submit class work to an institution he did not attend.  These claims for trespass to chattels, and violations of both the Computer Fraud and Abuse Act and Virginia Computer Crimes Act, failed due to the absence of the requisite damage.

2004 WL 2750253, Case No. 1:02-cv-1011-DFH-TAB (S. D. Ind., November 10, 2004)

Court holds that defendant Funeral Depot Inc. ("Funeral Depot") may be infringing plaintiffs' copyright in advertising materials consisting, inter alia, of lithographs of caskets, by placing small thumbnail images of those copyrighted materials on defendant's website which are linked to allegedly infringing full size copies of those same materials that defendant arranged to have placed on the website of a third party.  While this third party website is owned by one of plaintiffs' authorized dealers, visitors to the web pages containing the challenged images view defendant Funeral Depot's contact information, as well as prices for these caskets set by defendant.  Because issues of fact existed as to whether the third party dealer had an implied license to use the advertising materials in this fashion, the Court could not determine if defendant was infringing plaintiff's copyright on the parties' respective summary judgment motions.  The Court did reject a number of defenses advanced by Funeral Depot to plaintiff's copyright infringement claims, including its fair use, copyright misuse and antitrust defenses.

No. CV 05-3699-PHX-JAT (D. Arizona, May 19, 2008)

Court holds that unauthorized internet reseller of plaintiff’s tanning products is not guilty of trademark infringement as a result of its use of plaintiff’s trademarks in the meta tags of a website at which such products are sold, and as search engine keywords triggering the display of a link to such a website.  In reaching this result, the Court rejected plaintiff’s claim that such use of its marks causes actionable ‘initial interest confusion’ by directing those searching for plaintiff’s site to that of the defendant.  To sustain such a claim, holds the court, defendant’s conduct must be deceptive.  Plaintiff failed to meet this burden because defendant’s site does indeed offer plaintiff’s products for sale, and thus, its use of plaintiff’s mark in the site’s meta tags is not deceptive, but rather accurately describes the contents of defendant’s site.  This was true, held the Court, notwithstanding the fact that S & L offered plaintiff’s competitors products for sale on its site as well.

The Court also dismissed trademark dilution claims arising out of defendant’s use of plaintiff’s marks.  The Court held that, under the circumstances, defendant’s use of plaintiff’s marks in the meta tags of its site, and as search engine key words, constituted a permissible nominative fair use of those marks.  To establish that a use of a trademark qualifies as a permissible nominative fair use, the defendant must ‘do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.’  Notably, the Court reached this result because plaintiff failed to submit adequate evidence as to the impact this use of its marks had on the listing of defendant’s site in search results for plaintiff’s mark.  The Court left open the possibility that such a use of plaintiff’s mark may not qualify as a nominative fair use if in fact it caused defendant’s site to appear at or near the top of search engine results for plaintiff’s mark, and thereby suggested that plaintiff sponsored or endorsed defendant’s site. 

The Court denied so much of defendant’s motion for summary judgment which sought dismissal of copyright infringement claims arising out of its use of electronic renderings of plaintiff’s products to promote the sale of such products on its web site.  Issues of facts as to whether defendant copied such images from plaintiff’s web site, or created its own, precluded an award of summary judgment.  In allowing this claim to proceed to trial, the Court rejected defendant’s argument that its alleged use of plaintiff’s images was protected as a fair use.  Notwithstanding the fact that defendant’s use did not effect the potential market for plaintiff’s images – which plaintiff does not offer for sale – the Court rejected defendant’s fair use argument, pointing to the fact that its use was commercial, and copied plaintiff’s image, which was a creative work, in its entirety.

Finally, the Court rejected plaintiff’s claim for intentional interference with contractual relations, which arose out of prohibitions contained in contracts with plaintiff’s distributors precluding their resale of plaintiff’s products to Internet resellers such as defendant.  Defendant obtained plaintiff’s products from tanning salons, to whom the distributors were permitted to sell such products.  Because there was no evidence either that such tanning salons were acting as defendant’s agent in purchasing goods from plaintiff’s distributors, or that defendant directly purchased such goods from the distributors in breach of the prohibitions contained in their agreements, this claim failed.

428 F. Supp. 2d 1369, 4:05 CV 00018-BAE (S.D. Ga. April 18, 2006)

Court holds that the use by defendant Camp Systems International ("Camp") of maintenance manuals prepared by plaintiff Gulfstream Aerospace Corporation ("Gulfstream") to advise owners of the need for maintenance of their Gulfstream aircraft is a permissible fair use of those manuals.  Court accordingly grants Camp's motion for summary judgment, and dismisses both copyright and trademark infringement claims advanced by Gulfstream arising out the placement by Camp of portions of those manuals on its computer system, which manuals Camp made available, and transmitted, to both the aircraft's owner and appropriate repair personnel.

No. 00-55521, 280 F.3d 934 (9th Cir., February 6, 2002) withdrawn, -- F.3d --- (9th Cir., July 3, 2003)

The Ninth Circuit Court of Appeals holds that defendant's display on a visual search engine of lower resolution "thumbnails" of copyrighted images appearing elsewhere on the Internet, without the copyright owners' permission, is a protected fair use of those images under the Copyright Act. The court further holds that defendant's display of the full copyrighted image as part of its search engine results, either via inline linking or framing, infringes the copyright owner's right to publicly display the work. Such use of the full images as they appear on the copyright owner's site is not a protected fair use because it is done for the same purpose, to attract viewers, as the copyright owner's own use, and causes injury to the copyright owner by diverting users from his site.

In the decision that replaced its original decision of February 6, 2002, the 9th Circuit affirmed so much of the lower court's determination that held that Arriba Soft's production of thumb nails of plaintiff's copyrighted works to facilitate its display of image search results was a permitted fair use for the reasons stated in its original decision of February 6.  However, in the revised July 3, 2003, the 9th Circuit did not determine, as it had previously, that Arriba Soft's in-line linking to the full images of plaintiff's works constituted copyright infringement.  Instead, it reversed the lower court's determination on this score on procedural grounds, and remanded the issue to that court for further consideration.

77 F.Supp. 2d 1116 (C.D. Cal., Dec. 15, 1999) aff'd. in part, reversed in part, 280 F.3d 934 (9th Cir., Feb. 6, 2002)

Court holds that defendant's operation of a "visual search engine" which presents, without the owners' permission, "thumbnails" of copyrighted images that appear both without identifying copyright management information, and separated from the Internet web page in which the image was originally displayed, is a protected fair use under the Copyright Act which does not run afoul of the Digital Millennium Copyright Act ("DMCA").

The court's ruling that this represented a fair use was based predominantly on its determination that defendant's use was "transformative" of and "very different" from the original work. Said the court: "Plaintiff's photographs are artistic works used for illustrative purposes. Defendant's visual search engine is designed to catalog and improve access to images on the Internet. The character of the thumbnail index is not esthetic, but functional; its purpose is not to be artistic, but to be comprehensive."

Defendant's separation of the image from its copyright management information did not constitute a violation of Section 1202(b)(3) of the DMCA, because defendant did not have reasonable grounds to believe such separation would cause copyright infringement. The court reached this conclusion because defendant posted warnings on its site concerning the possibility of use restrictions, and referred the user to the originating web site, which could be visited via a provided link, to ascertain any applicable restrictions before copying. What made the images vulnerable to copying, according to the court, was their display by plaintiff on a web site.

5 F. Supp. 2d 823 (C.D. Cal. April 27, 1998)

Court enjoined Internet Entertainment Group ("IEG") from distributing on its adult-oriented subscription website a video tape depicting plaintiff and Pamela Anderson Lee engaging in sexual activity. Such dissemination would infringe plaintiff's and Ms. Lee's copyright in the video, as well as violate their rights of publicity and privacy. In so holding, the court rejected IEG's claim that, for $16,500, it had purchased a non-exclusive license to display the video. This claim was disproven by statements from both plaintiff and Ms. Lee that they had not conveyed such license, by evidence that plaintiff had rejected a $1 million dollar offer to grant such a license and finally, by evidence that the alleged source of this license admitted that he did not have (and therefore could not convey) a right to distribute the tape. The Court also held that IEG could not display small excerpts or stills from the video under the guise of the fair use doctrine.

Case No. CV 04-9484 AHM (SHx) (C.D. Cal., February 2006) aff'd. in part, reversed in part, remanded, 487 F.3d 701 (9th Cir., May 16, 2007).

On a motion for a preliminary injunction, the Court holds plaintiff likely to succeed on copyright infringement claims arising out of defendant Google's display of "thumbnail" images of plaintiff's copyrighted photographs in response to users' searches for images matching their description.  The Court held that it is likely to find that such a display is not a fair use of plaintiff's works, given, inter alia, its commercial nature, and the fact that such use likely interferes with a market for plaintiff's photographs.

The Court further holds that plaintiff is not likely to prevail on copyright infringement claims arising out of Google's use of "in-line links" that incorporate into Google's own web pages the web pages of third parties that themselves contain infringing copies of plaintiff's copyrighted photographs.  These "in-line links" allow users who are interested in a thumbnail image presented in Google's search results to view the actual image on the web page on which Google found it.  The Court held that it is not likely to find that Google directly infringed plaintiff's copyrights by such conduct, because, adopting the "server test," it is the third parties who created the websites that contain the infringing images, and not Google, that are displaying and/or distributing them in violation of plaintiff's copyright.

The Court further held that it was not likely to find Google guilty of contributory or vicarious copyright infringement as a result of such third party displays, notwithstanding any advertising Google may deliver to the web pages that contain such images, or revenue Google may derive therefrom.  Google is not guilty of vicarious infringement because it does not possess the requisite ability to control the content of such third party sites, or compel the third parties that operate them to remove infringing content found thereon.  Google's ability to remove such websites from search engine results does not constitute such control.  Nor, the Court stated, was it likely to hold that Google encourages or assists such infringement sufficiently to be guilty of contributory infringement.  The Court held that the record before it was insufficient to establish that the third parties displaying plaintiff's content were motivated by the revenue they might derive from the display of Google ads or that such revenue contributed to their posting of the infringing images in question.

487 F.3d 701, No. 06-55405 (9th Cir., May 16, 2007).

The Ninth Circuit holds that Google’s creation and display in search results of lower resolution ‘thumbnail’ copies of infringing images found on third party websites for the purpose of aiding the public in locating such images is a fair use that does not infringe the rights of the holder of the copyright therein.  In reaching this result, the court relied largely on the transformative nature of the thumbnails Google created, which, by facilitating the public’s ability to search the web for images, serve a different purpose than the original images, which are designed to entertain.  The Ninth Circuit accordingly reversed so much of the decision of the District Court which had enjoined Google from displaying such thumbnails in its search results. 

The Ninth Circuit further held that framing infringing images found on third party web sites via “in-line linking” to such sites does not directly infringe the display or distribution rights of the holder of the copyrights in such images.  As part of the process by which it provides results to those who search for images, Google presents a ‘framed page,’ the bottom half of which comes directly from the third party web site on which the image is found, and contains that image.  For the purpose of direct infringement, the Ninth Circuit endorsed the “server test” applied by the District Court.  Under this test, a party infringes the display rights of a copyright holder in an image when it stores a copy of that image on its own server, and delivers it to a third party.  When a party merely provides a link to a third party website on which such infringing material can be found, it is that third party web site, and not the party providing the link, that directly infringes the display rights of the copyright holder by causing that infringing image to be displayed on a user’s computer screen.  Applying this test, Google did not directly infringe by providing “in-line links” to third party websites that themselves contained infringing images.

Reversing the District Court, the Ninth Circuit held, however, that Google is potentially liable on a theory of contributory infringement for infringing plaintiff’s copyrights as a result of its provision of such in-line links.  According to the Court, “Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.”  Issues of fact as to the adequacy of notices sent by Perfect 10 alerting Google that it was in fact providing links to third party web sites that contained infringing images, of Google’s response thereto, and of Google’s ability to remove such infringing sites from its search results, mandated denial of plaintiff’s motion for summary judgment.  Also left for the District Court to resolve on remand was whether the Digital Millennium Copyright Act (“DMCA”) immunized Google from liability for such contributory infringement, an issue the District Court had not addressed because it had determined that Google was not likely to be found liable for contributory infringement.

Finally, the Ninth Circuit held that Perfect 10 was unlikely to prevail on vicarious infringement claims arising out of Google’s provision of in-line links to third party web sites that contained infringing images.  The Court held that Perfect 10 had not demonstrated that Google had the ability to control such third party websites, and compel them to remove infringing images found on their sites, a prerequisite to a finding of vicarious infringement.

The Ninth Circuit resolved the copyright infringement claims Perfect 10 asserted against Amazon.com in a similar fashion.  These claims arose out of the provision by Amazon.com to users of its site of Google search results, “framed” via in-line links. By this arrangement, the Amazon user received the same search result as the Google user.  Accordingly, the Court reached the same conclusions concerning Amazon’s conduct as it did concerning Google’s.  All claims save that which sought to hold Amazon.com liable on a theory of contributory infringement were held likely to fail.  The contributory infringement claim, arising out of Amazon’s provision of in-line links to third party sites that contained infringing images, was remanded for further consideration by the District Court.

No. 95 C2154, U.S. Dist. Lexis 11789, 13 F. Supp. 2d 782 (N.D. Ill., July 29, 1998)

Court holds that unauthorized commercial distribution of shareware posted on the Internet in violation of express restrictions prohibiting such distribution infringed plaintiffs' copyright in the software. Because such distribution did not amount to "fair use," the court held defendant liable for statutory damages in the amount of $20,000.

2003 U.S. Dist. Lexis 6483 (C.D. CA., March 7, 2003)

Court holds that a binding agreement can be formed by the use of a web site, without more, if the user has actual knowledge that the site's Terms and Conditions so provide.  As a result, the Court denied defendant Tickets.com's summary judgment motion, which sought dismissal of breach of contract claims arising out of Tickets.com's use of a search robot to obtain information about concerts from plaintiff Ticketmaster's web site.  The Court held that issues of fact as to defendant's knowledge of the site's Terms and Conditions at the time it used plaintiff's site precluded a determination as to the binding nature of such Terms.

The Court did grant so much of Tickets.com's summary judgment motion which sought dismissal of trespass to chattels claims Ticketmaster asserted as a result of such activity.   These claims failed because of the absence of evidence that "the use or utility" of Ticketmaster's computers were being adversely affected by Tickets.com's use of a search robot to gather information from plaintiff's site.

Finally, the Court dismissed several copyright infringement claims brought by Ticketmaster.  These included infringement claims arising out of the temporary copying into the RAM of defendant's computers of data from plaintiff's site, including materials in which plaintiff held a copyright.  These materials were copied as an intermediate step to obtaining, and displaying on Tickets.com's own site, factual information contained therein.  The Court held such copying was a protectable fair use given the only materials retained at the end of the process were the facts -- as to concert locations, dates and times -- contained therein, which facts were not protected by copyright.  Infringement claims arising out of deep linking to interior pages of plaintiff's website were dismissed because, by deep linking into plaintiff's site, Tickets.com was not showing or displaying plaintiff's copyrighted materials (which instead were being displayed by plaintiff itself).  Finally, infringement claims arising out of copying the URLs from such interior pages were dismissed because such URLs did not have sufficient originality to be copyrightable.

2000 U.S. Dist. Lexis 12987 (C.D. Ca., August 10, 2000)

Court denies plaintiff's application to enjoin defendant from using spiders to copy factual information contained on plaintiff's web site. In so holding the court rejects plaintiff's claim that such spidering constitutes an improper trespass on plaintiff's computers, because the spidering neither harms plaintiff's computers, nor interferes with their use. The court also held that even though copies of plaintiff's materials were made during this spidering, this was likely to constitute a protected fair use akin to the copying permitted during the reverse engineering of a product.

92 F. Supp. 2d 349 (S.D.N.Y., May 4, 2000)

Court held that defendant's My.MP3.com service infringes plaintiffs' copyrights in various sound recordings. Defendant claims in advertisements that this service permits users to store and listen to their CDs from any location at which they can access the Internet. To operate this service, defendant purchased a large number of CD's containing plaintiffs' sound recordings, converted them to MP3 files, and stored these MP3 files on its servers. A user wishing to access any of the songs contained in these files was first required either to demonstrate to defendant that it owned a CD containing the song in question (by inserting the CD into its computer), or to purchase the CD from a designated online vendor. Once the user satisfied this requirement, he was permitted for free to access the MP3 file resident on defendant's server, which MP3 file had been created from plaintiffs' CDs.

The court held that defendant's act of converting plaintiffs' CDs into MP3 files, and providing access to these files to users in the manner outlined above, infringed plaintiffs' copyrights in these sound recordings. In addition, the court rejected defendant's arguments that this was a fair use of plaintiffs' sound recordings because its activities "transform" the original recordings. Instead, the court held that in the case at bar, "unauthorized copies are being retransmitted in another medium" in violation of the copyright laws.

192 F. Supp.2d 321 (D.N.J., March 28, 2002) aff'd. 342 F.3d 191 (3rd Cir. 2003)

Court issues preliminary injunction, enjoining plaintiff Video Pipeline Inc. ("Video Pipeline") from continuing to display over the Internet 62 promotional "trailers" plaintiff made to promote the sale of videos of movies in which defendant's licensors hold copyrights.  (Defendant and it's licensors will be referred to herein collectively as "Defendant").  The trailers in question consist of excerpts from Defendant's movies, combined with a display of Defendant's trademarks and the title of the film.  Plaintiff did not add any commentary, music or voice overs to its trailers.  The trailers were made available to the public via the Internet websites of Vendors selling authorized copies of Defendant's films.  For this service, the Vendors paid plaintiff a fee based on the amount of time users spent viewing the trailers.

The court held that plaintiff's conduct infringed Defendant's copyright in the films, including Defendant's exclusive right to create derivative works of the copyrighted films, as well as its right to perform and publicly display the work under 17 U.S.C. Section 106.

The court further held that plaintiff's actions were not protected by either the 'first sale' or 'fair use' doctrines.  Plaintiff could not claim protection under the first sale doctrine because it only permits owners, and not their licensees, to advertise the sale of a copy of the copyrighted work that they own.  Moreover, the court held that the 'first sale' doctrine probably would not permit Vendors to display over the Internet promotional trailers they created to advertise the sale of copies of the films they owned.  Rather, such display was probably limited under 17 U.S.C. Section 109(c) to "the place where the copy [owned by the Vendor] is located."

The court held that plaintiff could not claim protection under the 'fair use' doctrine, because its use of Defendant's copyrighted materials was commercial and not transformative, represented a copying of the heart of the works in question, and was of a fictional, and not factual work.

The court accordingly issued the requested injunctive relief.  In so doing, the court rejected arguments that its order would allow Defendant to control the sale of home videos over the Internet to the detriment of the public and/or Vendors of legitimate copies of the works.  The court held that other means were available to the Vendors to market Defendant's films, including via written descriptions of the films.

Copyright - Fair UseCopyright - Fair Use Quick Hits

BMG Music, et al. v. Cecilia Gonzalez
438 F.3d 888 (7th Cir., December 9, 2005)

Affirming the decision of the court below, the Seventh Circuit finds defendant Cecilia Gonzalez (“Gonzalez”) guilty of copyright infringement because she downloaded and retained on her computer over 1370 copyrighted songs.  The Court rejected Gonzalez’ contention that she was engaging in a permissible fair use by downloaded the songs to sample and purchase if they appealed to her.  In finding defendant guilty of copyright infringement, the Court made no distinction between songs Gonzalez owned at the time of her download, subsequently purchased, or never owned.  Said the Seventh Circuit:


Although BMG Music sought damages for only the 30 songs that Gonzalez concedes she has never purchased, all 1000+ of her downloads violated the [copyright] statute.  All created copies of an entire work.  All undermined the means by which authors seek to profit. … With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrights material without compensation to authors cannot be deemed ‘fair use.’

The Seventh Circuit accordingly affirmed the lower court’s award to BMG of statutory damages of $22,500 on its motion for summary judgment.  This represented the minimum statutory damage award permitted under the Copyright Act of $750 for each of 30 works Gonzalez was held to have infringed.  Importantly, this was the relief requested by BMG, and not the result of the trial court’s exercise of its discretion as to an appropriate damage award.  BMG elected to seek damages for only those songs Gonzalez downloaded which she admitted she did not own or purchase, either before or after downloading.

In reaching this result, the Seventh Circuit rejected defendant’s claim that the lower court erred in failing, under Section 504 of the Act, to reduce this statutory damage award because defendant did not believe her acts constituted infringement.  Such a defense is not available where the infringed works, such as those at bar, bear an appropriate copyright notice.  This was true notwithstanding the fact that the actual copies Gonzalez copied did not themselves contain such notice.

Nautical Solutions Marketing, Inc. v. Boats.com
2004 WL 783121 (M.D. Fla. 2004)

Use by competing yacht broker of internet "spider" to extract non-copyrightable facts concerning yachts for sale from competitor's website did not infringe website owner's copyright.  Court held that "momentary copying" of competitor's site during this "extraction" process was a permissible fair use under Section 107 of the Copyright Act.  Court further held that copying, modifying and reposting individual yacht listings and the pictures contained therein with the permission of either the yacht owner or his broker did not infringe any copyrights in such works, which were held by the yacht broker and not the competitor's web site on which the listings were posted.  Finally, web site's owners claim that competitor infringed its copyright by copying the site's "look and feel" failed because, according to the court, the similarities between the sites derived from unprotectable elements, including pictures, headings and descriptions of yacht listings.

Copyright - Statutory Damages - Updated October 14, 2007

No. 97 Civ. 1140, 1998 U.S. Dist. Lexis 10201 (S.D.N.Y., July 10, 1998)

Unauthorized posting on organization's website of photographs plaintiff took at organization events held to constitute copyright infringement. Such infringement was not willful, however, because the defendant organization did not know who took the photographs at the time they were posted on its site, because plaintiff, on prior occasions, had authorized defendant's use of other photographs he had taken, and because of the parties' apparent confusion over the organization's policies concerning appropriate use of photographs taken at organization events. As a result, plaintiff was only awarded damages in an amount equal to the statutory minimum of $500 for each infringement.

No. 95 C2154, U.S. Dist. Lexis 11789, 13 F. Supp. 2d 782 (N.D. Ill., July 29, 1998)

Court holds that unauthorized commercial distribution of shareware posted on the Internet in violation of express restrictions prohibiting such distribution infringed plaintiffs' copyright in the software. Because such distribution did not amount to "fair use," the court held defendant liable for statutory damages in the amount of $20,000.

Civil Action No. 04-90-KAJ (D. Del. September 26, 2005)

After a bench trial, a Federal Delaware District Court found defendant Consumer Innovations guilty of willfully infringing plaintiff Webloyalty.com's copyrights in a banner ad and related "sell page."  These materials are used by Webloyalty to promote an online "club" whose members, for a monthly fee, can purchase merchandise offered for sale through the "club" at a discount.  Defendant, a competitor, was held to have infringed plaintiff's copyrights by copying substantial portions of these advertising materials.  Such copying was held to be willful, in large part, because Consumer Innovations denied copying plaintiff's materials in the face of convincing evidence to the contrary.  As a result, the Court awarded plaintiff statutory damages of $50,000, comprised of $25,000 for each act of infringement, together with a significant portion of the attorneys' fees expended by plaintiff in prosecuting this action.  In setting the amount of such damages, the Court took into account both the absence of any evidence that plaintiff had been injured by defendant's activities, as well as evidence that defendant generated only $1,000 in revenue from its use of the promotional materials at issue.

Copyright - Statutory DamagesCopyright - Statutory Damages Quick Hits

BMG Music, et al. v. Cecilia Gonzalez
438 F.3d 888 (7th Cir., December 9, 2005)

Affirming the decision of the court below, the Seventh Circuit finds defendant Cecilia Gonzalez (“Gonzalez”) guilty of copyright infringement because she downloaded and retained on her computer over 1370 copyrighted songs.  The Court rejected Gonzalez’ contention that she was engaging in a permissible fair use by downloaded the songs to sample and purchase if they appealed to her.  In finding defendant guilty of copyright infringement, the Court made no distinction between songs Gonzalez owned at the time of her download, subsequently purchased, or never owned.  Said the Seventh Circuit:


Although BMG Music sought damages for only the 30 songs that Gonzalez concedes she has never purchased, all 1000+ of her downloads violated the [copyright] statute.  All created copies of an entire work.  All undermined the means by which authors seek to profit. … With all of these means available to consumers who want to choose where to spend their money, downloading full copies of copyrights material without compensation to authors cannot be deemed ‘fair use.’

The Seventh Circuit accordingly affirmed the lower court’s award to BMG of statutory damages of $22,500 on its motion for summary judgment.  This represented the minimum statutory damage award permitted under the Copyright Act of $750 for each of 30 works Gonzalez was held to have infringed.  Importantly, this was the relief requested by BMG, and not the result of the trial court’s exercise of its discretion as to an appropriate damage award.  BMG elected to seek damages for only those songs Gonzalez downloaded which she admitted she did not own or purchase, either before or after downloading.

In reaching this result, the Seventh Circuit rejected defendant’s claim that the lower court erred in failing, under Section 504 of the Act, to reduce this statutory damage award because defendant did not believe her acts constituted infringement.  Such a defense is not available where the infringed works, such as those at bar, bear an appropriate copyright notice.  This was true notwithstanding the fact that the actual copies Gonzalez copied did not themselves contain such notice.

Getaped.com Inc. v. Cangemi
188 F. Supp. 2d 398 (S.D.N.Y. 2002)

District Court awards Getaped.com $46,015 in statutory damages, attorney’s fees and court costs as a result of the copying of its website’s source code by a direct competitor, who utilized the same to operate a competing website. Of import, the court determined that a Web site's source code is considered "published" when the site goes live on the Internet. As Getaped registered its website within three months of this date, it was entitled to statutory damages under the Copyright Act, 17 USC 505, as a result of defendants’ copying of its site, which occurred after plaintiff’s site went live, but before a copyright therein was registered. As noted by the court “both statutory damages and attorney’s fee and costs are unavailable if “(1) an infringement of copyright in a unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.” 17 USC section 412.  
 
The court determined that $30,000 in statutory damages was appropriate given that defendants’ conduct was “willful” within the meaning of 17 USC Section 504. In reaching this result, the court relied on the fact that defendants copied the source code of Getaped’s site, which featured a prominent copyright notice, and continued to use this content after receipt of notice of infringement from Getaped. The Court also awarded plaintiff the actual attorneys fees it incurred in prosecuting the suit under 17 USC section 505.

Copyright - Vicarious Infringement - Updated February 18, 2008

173 F.Supp.2d 1044, Civ. No. CV00-02963DDPAJWX (C.D.Cal., October 23, 2001)

Court denies plaintiff's motion for summary judgment, seeking to hold operator of computer fairs liable for copyright infringement as a result of the sale of allegedly infringing software by various unaffiliated vendors at fairs operated by defendants. The court held that issues of fact precluded it from determining that the fair operator was liable, on theories of vicarious and contributory infringement, for such sales. As to the former, the court held that issues of fact existed both as to whether the copyright infringement at issue provided a direct financial benefit to the fair operators, or whether the defendants had the requisite ability to control the vendor selling the allegedly infringing merchandise, both necessary to establish vicarious infringement. The court held that while defendants did not need to share in the proceeds of the goods in question to establish the requisite financial benefit, the sale of the infringing materials had to be the "draw" which attracted customers to defendants' shows, and hence produced revenue for defendants in terms of entrance and vendor fees. Issues of fact precluded the court from reaching a determination on this issue. Such issues also existed as to whether defendants had the ability to exercise the requisite control over the vendors, given, in part, the difficulty in determining whether the vendors in question had authority to sell the products in question. The court also held that issues of fact precluded it from holding defendants liable on a theory of contributory infringement, as the record did not permit the court to determine whether defendants had the requisite knowledge that infringing activities were being carried on at the fair. This determination was based, in part, on evidence that the amount of infringing goods sold at the fair was a relatively small percentage of the overall number of goods sold.

189 F. Supp.2d 1051, 2002 U.S. Dist. Lexis 4166 (C. Dist. Cal., March 12, 2002), aff'd. in part, reversed in part, remanded by 357 F. 3d 1072 (9th Cir. 2004)

Court granted defendant America Online's motion for summary judgment, and dismissed copyright infringement claims advanced by plaintiff author as a result of the posting of his works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it did not post nor direct the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against it were predicated on its agreement, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The court held that AOL could not be liable for direct copyright infringement, because such passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  The court similarly rejected plaintiff's claim that AOL was liable on a theory of vicarious copyright infringement, because it had neither the right and ability to supervise Robertson's infringing activity, nor a direct financial interest therein.  The court held that AOL's ability to block access (over its systems) to the infringing materials in question did not give it the requisite ability to control the infringing activity.  Rather, because AOL could not prevent Robertson from acting, it did not have the requisite ability to control the infringing activities necessary to make AOL vicariously liable for the acts of copyright infringement Robertson initiated.  Nor did AOL derive the necessary direct financial benefit from this infringing activity.  The court held that this required AOL to receive a substantial or significant benefit from the posting of the Usenet material in question, which the evidence showed it did not receive.

The court did, however, hold that issues of fact precluded it from determining whether AOL could be liable for the acts at issue on a theory of contributory infringement.  Under such a theory, "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL was a contributory infringer, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not received this e-mail, should nonetheless be charged with notice thereof given its designation of the e-mail address to which it was sent with the US Copyright Office.  In reaching this conclusion, the court held that "providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, can constitute a material contribution [to the infringing activities and hence expose the ISP to liability for contributory infringement] when the ISP knows or should know of infringing activity on its system yet continues to aid in [its] accomplishment."

Nonetheless, the court dismissed this claim, holding that AOL was protected therefrom by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The court held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days was an intermediate and transient storage for the purpose of the DMCA, and that it met the other requirements of the DMCA necessary to obtain the protection of this provision.  The court accordingly dismissed plaintiff's claim for contributory copyright infringement against AOL.

357 F. 3d 1072 (9th Cir. 2004)

Affirming in part and reversing in part the court below, the Ninth Circuit grants so much of defendant America Online's motion for summary judgment which sought dismissal of claims of vicarious copyright infringement advanced by the plaintiff author.  These claims arose out of  the posting of plaintiff's works by defendant Robertson on a Usenet newsgroup made available by AOL to its users and others, and stored for a period of 14 days on AOL's servers.  AOL's involvement in these infringing activities was passive - it neither posted nor directed the posting of the infringing material to the Usenet newsgroup in question.  Rather, the claims against AOL were predicated on its commitment, via peering agreements, to store the content of the Usenet newsgroup to which this offending post was made on its servers, and to transmit that content to, and make it available for viewing by, others.

The Ninth Circuit affirmed the District Court's dismissal of plaintiff's vicarious copyright infringement claim, because plaintiff had failed to submit evidence that AOL "received a direct financial benefit from providing access to the infringing material" to its users.  Thus, "there [was] no evidence that indicate[d] that AOL customers either subscribed because of the availabil[ity of] infringing material or cancelled subscriptions because it was no longer available."

The Ninth Circuit also affirmed so much of the District Court's decision that denied AOL's motion to dismiss the contributory infringement claims plaintiff advanced.  "One who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be liable as a 'contributory infringer.'"  Here the court held that issues of fact existed as to whether AOL had the requisite knowledge to be guilty of contributory infringement, given the fact that plaintiff's attorneys had sent an e-mail to an AOL designated DMCA notice address that informed AOL of the infringing activity in question, after which AOL continued to allow the material in question to be posted on its servers, and made available to others.  The court held that issues of fact existed as to whether AOL, which it found had not actually received this e-mail, should nonetheless be charged with notice thereof given its failure to continue to operate this e-mail address, which it had designated with the US Copyright Office as the address to which DMCA notices of copyright infringement were to be sent.    The Ninth Circuit held that this knowledge, coupled with AOL's storage of the infringing material on its servers, and provision of access thereto to AOL users, could render AOL liable for contributory copyright infringement.

The Ninth Circuit reversed the District Court's determination that AOL was protected from this potential liability for contributory copyright infringement by operation of the safe harbor provisions of section 512(a) of the Digital Millennium Copyright Act.  This section protects a qualifying internet service provider from liability for copyright infringement by reason of the intermediate and transient storage of digital material (such as e-mails) in the course of transmitting, routing or providing connections thereto.  The Ninth Circuit, affirming the District Court, held that AOL's practice of storing the Usenet postings in question on its servers for a period of 14 days constituted intermediate and transient storage in the course of transmitting or providing connection to digital material that qualified for protection if AOL met the requirements of the  safe harbor provisions of Section 512(a) of the DMCA.  However, reversing the District Court, the Ninth Circuit held that issues of fact existed as to whether AOL had reasonably implemented a polity to terminate repeat infringers, given, as stated above, that the AOL e-mail address to which DMCA notices of infringement were to be sent was not operational.  As implementation of such a policy was a prerequisite to entitlement to the protections of the DMCA, this branch of AOL's summary judgment motion was denied.

Finally, the District Court held that AOL could not be liable for direct copyright infringement, because AOL's passive involvement in the infringing activity at issue was insufficient to sustain a direct copyright infringement claim.  This claim was "abandoned" by Ellison on appeal.

165 F. Supp. 2d 1082, Case No. CV 01-0495 RJK (RNBx) (C.D. Cal. 2001)

Court grants defendants' motion for summary judgment, and dismisses claims brought by plaintiff, the owner of a copyright in the documentary "Manson", against defendant eBay arising out of the use by unaffiliated third parties of the eBay auction site to sell unauthorized copies of the Manson documentary. The Court held that plaintiff's claims for contributory and vicarious copyright infringement were barred by operation of Section 512(c) of the Digital Millennium Copyright Act. The DMCA offers service providers such as eBay protection from copyright infringement claims arising out of the storage of material on their web site provided, inter alia, (i) they do not have actual knowledge of the infringing activity or promptly upon gaining such knowledge move to prevent the use of their service to further it, (ii) do not receive a financial benefit directly attributable to infringing activity they have the ability to control, and (iii) expeditiously remove material from their service on receipt of an appropriate notice. The court held that eBay was entitled to protection under this section because (i) it did not have actual notice of the infringing activity, (ii) could not control it as the transactions were consummated off-line without eBay's involvement, and (iii) eBay had not received the requisite notice of infringing activity because, inter alia, the infringing articles were not appropriately specified in the notice sent by plaintiff. Plaintiff's claims for trademark infringement were mooted, held the Court, because of eBay's status as an innocent infringer, and its removal from its site of those advertisements plaintiff identified as improperly offering infringing copies of his movie for sale.

983 F. Supp. 1167 (N.D. Ill., Nov. 13, 1997)

Defendant NAFED was guilty of direct copyright infringement because, without plaintiff's permission or authorization, NAFED obtained copies of plaintiff's copyrighted clip art and uploaded it onto computers hosting NAFED's website accesible to those using the web. Defendant Northwest, however, which hosted NAFED's site on its computers and made it available to those using the Internet, was neither liable for direct nor vicarious copyright infringement. Northwest only provided the means to copy plaintiff's work, much like the owner of a public copying machine used by a third party to copy protected material. It did not actually engage in the copying itself and accordingly, was not guilty of direct infringement. And because Northwest only received a flat fee from NAFED for its hosting activities that did not vary based on the use of NAFED's site, it did not profit from defendant NAFED's infringing activities, and hence was not guilty of vicarious infringement.

259 F. Supp. 2d 1029 (C.D. Cal., April, 2003) aff'd. -- F.3d -- (9th Cir., Aug. 19, 2004)

Granting defendants' motion for summary judgment, the District Court holds that neither Grokster Ltd. ("Grokster") nor StreamCast Networks Ltd. ("StreamCast") are liable, on theories of contributory or vicarious copyright infringement, for infringing plaintiffs' copyrights as a result of their distribution, respectively, of branded versions of Kazaa (Grokster) and Gnutella (StreamCast) software.  This software enables third party users to connect to peer-to-peer file sharing networks, over which they frequently share and download copyrighted materials without the consent of the owners of the copyrights therein.  The court held that defendants were not liable for contributory copyright infringement both because there were "substantial non-infringing uses" to which their software applications could be put, and because defendants were not involved in the third parties' use of their software after its distribution.  Similarly, the court held that defendants were not responsible for vicarious copyright infringement because they could not control the uses to which their software were put.  In making this conclusion, the court rejected plaintiffs' arguments that defendants should be held liable for vicarious infringement because, by altering the functionality of their software, defendants could prevent it from being used to infringe the copyrights of third parties.

___ F.3d __ (9th Cir., August 19, 2004)

Affirming the court below, the Ninth Circuit Court of Appeals holds that distributors of Kazaa and Morpheus are not liable for the infringing uses to which their peer-to-peer file sharing programs are put by third parties.  These third parties use defendants' software to make and distribute unauthorized copies of sound recordings and motion pictures in which plaintiffs hold copyrights.  Because, however, defendants' programs can also be used for 'substantial non-infringing uses,' such as the sharing of works either in the public domain, or with the permission of the holders of the copyrights therein, the Ninth Circuit held that defendant distributors are not liable as contributory infringers for such third party activities.  These claims fail because defendants did not have the requisite knowledge of the users' infringing activities at a time when they contributed to, or could take steps to prevent that infringement, given the decentralized nature of defendants' software.  Nor are the distributor defendants liable as vicarious infringers, as they did not have the requisite right and ability to supervise, or prevent, the infringing conduct of the users of their software.  The Ninth Circuit accordingly affirmed the District Court's grant of partial summary judgment to the distributor defendants, dismissing so much of the complaint which asserted copyright infringement claims arising out of those versions of defendants' software being distributed at the time of the District Court's decision.

376 F.Supp.2d 877, Civ. No. 03 C 4349 (N.D. Ill., July 12, 2005)

After a bench trial, court holds that defendant Bitstream Inc. is neither guilty of contributory copyright infringement nor indirect trademark infringement as a result of its creation and distribution of a software program which permits the user to copy and incorporate into a document any typeface font, whether or not the owner of the copyright in such font has consented to such copying and use.  In an earlier decision, the court, on defendant’s summary judgment motion, dismissed claims of direct copyright and trademark infringement, as well as vicarious copyright infringement, arising out of defendant’s activities.  The court’s decision was grounded principally on the absence of admissible evidence that defendant’s software had been used by its licensees to copy typeface fonts in which plaintiffs held copyright.  The Court also based its decision on its holding that defendant Bitstream neither was aware of any such infringing activities, nor sought to increase the sales of its software by advertising that its products could be used for that purpose.

Civ. No. 04-CV-3918 (E.D. Pa., March 10, 2006), affirmed -- F.3d – (3rd Cir., July 10, 2007).

District Court dismisses claims charging Google with direct copyright infringement as a result both of its archiving Usenet postings that contain excerpts of plaintiff’s copyrighted works, and its display of excerpts of plaintiff’s copyrighted website in search results.  The District Court holds that Google has not engaged in the requisite volitional conduct necessary to be held guilty of direct copyright infringement because such copying is a by-product of the automated operation of Google’s search engine and related technologies.  As such, Google’s acts are akin to a user’s use of its ISP to transmit infringing material to a third party, which do not give rise to direct infringement claims against the ISP.  On appeal, the Third Circuit affirmed the dismissal of Parker’s direct infringement claims, on the grounds that Google’s archiving of infringing Usenet postings lacked the requisite “volitional conduct.”

Relying on Field v. Google, (D. Nevada 2006), the District Court also dismisses direct copyright infringement claims arising out of Google’s presentation to users of “archival” copies of plaintiff’s website in search results denominated “cache.”  The District Court holds that Section 512(b) of the Digital Millennium Copyright Act (“DMCA”), applicable to copyright infringement claims arising out of “system caching,” bars such claims here.

The District Court also dismissed vicarious and contributory copyright infringement claims arising out of Google’s archiving of Usenet posts created by third parties that themselves allegedly infringe plaintiff’s copyright, both because Google lacks the requisite knowledge of such inadequately identified infringing activity, and because it does not derive sufficient direct financial benefit therefrom.  This decision too was affirmed by the Third Circuit on appeal.

The District Court further dismissed defamation, invasion of privacy and negligence claims advanced by plaintiff arising both out of Google’s archiving of Usenet posts authored by third parties that allegedly defamed plaintiff, as well as out of Google’s storage and display in its “cache” of a website that purportedly defamed plaintiff.  Such claims are barred by the immunity afforded Google by Section 230 of the Communications Decency Act (“CDA”), a decision affirmed on appeal.

Finally, the District Court dismissed Lanham Act claims brought against Google as a result of its alleged republication of a website operated by a third party titled “the Official Roy Gordon FAQ.”  The District Court held that the third party was not violating the Lanham Act both because it was not using a mark in commerce as it was not selling anything on its site, and because consumers were not likely to be confused as to the origin of the site, given the criticism of plaintiff found thereon.  The Lanham Act claims against Google also failed because it was not a “moving force” or “active participant” in the creation of this site, or the alleged use thereon of plaintiff’s ‘mark.’  The Third Circuit affirmed the dismissal of the Lanham Act claims because of the absence of a likelihood of consumer confusion.  The Court also affirmed the dismissal of plaintiff’s trade disparagement claims because the statements at issue on the third party website were not made in the context of commercial advertising.

It should be noted that the plaintiff appeared pro se.  In addition, the Third Circuit’s opinion was denoted “Not Precedential.”

Case No. CV 04-9484 AHM (SHx) (C.D. Cal., February 2006) aff'd. in part, reversed in part, remanded, 487 F.3d 701 (9th Cir., May 16, 2007).

On a motion for a preliminary injunction, the Court holds plaintiff likely to succeed on copyright infringement claims arising out of defendant Google's display of "thumbnail" images of plaintiff's copyrighted photographs in response to users' searches for images matching their description.  The Court held that it is likely to find that such a display is not a fair use of plaintiff's works, given, inter alia, its commercial nature, and the fact that such use likely interferes with a market for plaintiff's photographs.

The Court further holds that plaintiff is not likely to prevail on copyright infringement claims arising out of Google's use of "in-line links" that incorporate into Google's own web pages the web pages of third parties that themselves contain infringing copies of plaintiff's copyrighted photographs.  These "in-line links" allow users who are interested in a thumbnail image presented in Google's search results to view the actual image on the web page on which Google found it.  The Court held that it is not likely to find that Google directly infringed plaintiff's copyrights by such conduct, because, adopting the "server test," it is the third parties who created the websites that contain the infringing images, and not Google, that are displaying and/or distributing them in violation of plaintiff's copyright.

The Court further held that it was not likely to find Google guilty of contributory or vicarious copyright infringement as a result of such third party displays, notwithstanding any advertising Google may deliver to the web pages that contain such images, or revenue Google may derive therefrom.  Google is not guilty of vicarious infringement because it does not possess the requisite ability to control the content of such third party sites, or compel the third parties that operate them to remove infringing content found thereon.  Google's ability to remove such websites from search engine results does not constitute such control.  Nor, the Court stated, was it likely to hold that Google encourages or assists such infringement sufficiently to be guilty of contributory infringement.  The Court held that the record before it was insufficient to establish that the third parties displaying plaintiff's content were motivated by the revenue they might derive from the display of Google ads or that such revenue contributed to their posting of the infringing images in question.

487 F.3d 701, No. 06-55405 (9th Cir., May 16, 2007).

The Ninth Circuit holds that Google’s creation and display in search results of lower resolution ‘thumbnail’ copies of infringing images found on third party websites for the purpose of aiding the public in locating such images is a fair use that does not infringe the rights of the holder of the copyright therein.  In reaching this result, the court relied largely on the transformative nature of the thumbnails Google created, which, by facilitating the public’s ability to search the web for images, serve a different purpose than the original images, which are designed to entertain.  The Ninth Circuit accordingly reversed so much of the decision of the District Court which had enjoined Google from displaying such thumbnails in its search results. 

The Ninth Circuit further held that framing infringing images found on third party web sites via “in-line linking” to such sites does not directly infringe the display or distribution rights of the holder of the copyrights in such images.  As part of the process by which it provides results to those who search for images, Google presents a ‘framed page,’ the bottom half of which comes directly from the third party web site on which the image is found, and contains that image.  For the purpose of direct infringement, the Ninth Circuit endorsed the “server test” applied by the District Court.  Under this test, a party infringes the display rights of a copyright holder in an image when it stores a copy of that image on its own server, and delivers it to a third party.  When a party merely provides a link to a third party website on which such infringing material can be found, it is that third party web site, and not the party providing the link, that directly infringes the display rights of the copyright holder by causing that infringing image to be displayed on a user’s computer screen.  Applying this test, Google did not directly infringe by providing “in-line links” to third party websites that themselves contained infringing images.

Reversing the District Court, the Ninth Circuit held, however, that Google is potentially liable on a theory of contributory infringement for infringing plaintiff’s copyrights as a result of its provision of such in-line links.  According to the Court, “Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.”  Issues of fact as to the adequacy of notices sent by Perfect 10 alerting Google that it was in fact providing links to third party web sites that contained infringing images, of Google’s response thereto, and of Google’s ability to remove such infringing sites from its search results, mandated denial of plaintiff’s motion for summary judgment.  Also left for the District Court to resolve on remand was whether the Digital Millennium Copyright Act (“DMCA”) immunized Google from liability for such contributory infringement, an issue the District Court had not addressed because it had determined that Google was not likely to be found liable for contributory infringement.

Finally, the Ninth Circuit held that Perfect 10 was unlikely to prevail on vicarious infringement claims arising out of Google’s provision of in-line links to third party web sites that contained infringing images.  The Court held that Perfect 10 had not demonstrated that Google had the ability to control such third party websites, and compel them to remove infringing images found on their sites, a prerequisite to a finding of vicarious infringement.

The Ninth Circuit resolved the copyright infringement claims Perfect 10 asserted against Amazon.com in a similar fashion.  These claims arose out of the provision by Amazon.com to users of its site of Google search results, “framed” via in-line links. By this arrangement, the Amazon user received the same search result as the Google user.  Accordingly, the Court reached the same conclusions concerning Amazon’s conduct as it did concerning Google’s.  All claims save that which sought to hold Amazon.com liable on a theory of contributory infringement were held likely to fail.  The contributory infringement claim, arising out of Amazon’s provision of in-line links to third party sites that contained infringing images, was remanded for further consideration by the District Court.

2002 U.S. Dist. Lexis 7333, CV 01-2595 LGB (C.D. Ca., April 22, 2002)

Court issues preliminary injunction against Cybernet Ventures, which operates an Age Verification Service, based on the use by web sites operated by third parties of various images in which plaintiff held the copyright, or featuring a model who had assigned her right of publicity to plaintiff. 

Cybernet Ventures operates the Age Verification Service "Adult Check."  Participating web sites put a script on their site which direct first time users to Cybernet, who sells them access to the Adult Check family of sites.  The user is thereafter free to visit Adult Check sites for a set period of time.  The fees generated by this user are paid to Cybernet, who splits them with the web site which sent the user to Cybernet.  To assist the user in finding Adult Check sites to his liking, Cybernet provides both a series of links as well as a search engine.  It also advertises its network. 

Cybernet takes an active interest in the content of Adult Check sites, employing a staff of 12 to review the site both before it is admitted to the Adult Check family, and periodically thereafter.  The content of the site is reviewed by Cybernet to prevent the inclusion of prohibited images.  Cybernet also provides comment on the site's layout.  The images on each site, however, are not provided by Cybernet.  Instead, each site is run by a third party, who is responsible for locating the images, arranging to have the site hosted, and advertising the site.

Perfect 10, which holds the copyright in a number of images of nude women made available to the public both on its web site and in a magazine, brought this suit, charging that web sites in the Adult Check family contained over 10,000 images in which Perfect 10 held the copyright. 

The court determined that Perfect 10 was likely to prevail on its claims contributory and vicarious copyright infringement against Cybernet, as well on its claims of unfair competition under Cal. Bus. and Professions Code Section 17200.  The court held that Perfect 10 was likely to prevail on its contributory infringement claim because Cybernet was likely to be held to have the requisite notice of the infringing activities at issue, and to have materially contributed to this infringement by its operation of the Age Verification Service, and particular its collection of fees for, and advertising of the web sites in question.

The court further held that Perfect 10 was likely to prevail on its vicarious infringement claim, because Cybernet had the ability to control the web sites, as evidenced by the review of its content it conducted, and received a direct financial benefit from the presence on these web sites of the infringing images.  Lastly, the court held that Perfect 10 was likely to prevail on its unfair competition claim, because Cybernet was likely to be held to have aided and abetted a violation of various models' right to publicity, again by virtue of its knowledge of infringement, and contributed thereto by virtue of its operation of the AVS system.

The court further held that Cybernet was unlikely to be able to avoid this liability under the safe harbor provisions of the Digital Millennium Copyright Act, because the court was likely to hold both that the DMCA policy Cybernet adopted failed to comply with the DMCA, and that Cybernet failed to reasonably implement such a policy, or terminate repeat infringers.  Cybernet was also unlikely to be able to seek the protections of the DMCA because it received a financial benefit directly attributable to infringing activity it had the right and ability to control.

The court accordingly issued a preliminary injunction, which prohibited Cybernet from utilizing or linking to the images in question.  The injunction further obligated Cybernet to stop linking to sites containing the images in question where Cybernet had either notice thereof, or knew or should have known of the presence of the images, under circumstances specified in the injunction.  The injunction also obligated Cybernet to undertake reviews both of sites seeking to become members of the Adult Check network, and of designated existing sites, to ascertain whether they were using any of the images at issue, and to bar such new sites from entering the network without proper rights documentation.  The scope of this injunction is discussed in greater depth in the accompanying "in depth" analysis of this decision.

968 F. Supp. 1171 (N.D. Tex. 1997)

Webbworld, which operated a subscription website on which it offered users access to unlicensed copyrighted images originally appearing in publication owned by plaintiff, held liable for copyright infringement. It was no defense that the infringing images were originally uploaded by third-parties onto the adult newsgroups from which Webbworld drew its content. Court further held Webbworld's principals liable for vicarious copyright infringement as a result of this activity, due to their financial interest in and control over the operations of Webbworld's site

Copyright - Vicarious Infringement Quick Hits

Chris Gregerson v. Vilana Financial Inc., et al.
2007 U.S. Dist. Lexis 64960, Civ. No. 06-1164 ADM/AJB (D. Minn., August 31, 2007)

On the parties’ cross-motions for summary judgment, the Court finds the corporate defendants guilty of copyright infringement as a result of their unauthorized use of two of plaintiff’s copyrighted photographs in advertisements for their businesses. 

The Court further held that defendant Andrew Vilenchik, the sole board member and shareholder of defendant Vilana Financial, could not be held vicariously liable for defendant’s copyright infringement, because he did not have or derive a sufficiently direct financial interest from the use of plaintiff’s photographs.

The Court granted plaintiff summary judgment, dismissing defendants’ claim that his use of defendants’ trademark in the path of his site’s domain name violated the Anticybersquatting Consumer Protection Act.  Defendants’ claim failed both because they failed to submit sufficient evidence that plaintiff had a bad faith intent to profit from this use of the mark, and because use of the mark in the path of the domain name does not constitute actionable use of the mark in a domain name

The Court also dismissed trademark infringement claims brought by defendants as a result of plaintiff’s use of their trademark in a website that purportedly disparaged defendants as a result of their use of the photographs at issue, and in the meta tags of that site.  The court held defendants failed to establish the requisite likelihood of consumer confusion sufficient to sustain such a claim, given that the parties were not competitors – plaintiff was a photographer, and defendants sold real estate and mortgage services – and plaintiff’s website was highly critical of defendants.  In reaching this result the court noted that “a defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.”

Finally, the Court left for trial defendants’ remaining claims, which included deceptive trade practices, interference with contractual and business relationships, and misappropriation of name and likeness, all of which arose out of the disparaging remarks posted on plaintiff’s website about the defendants.  This site included a photograph of defendant Vilenchik.  Because issues of fact existed as to the truth of these statements, the court reserved decision on these claims until trial.

It should be noted that plaintiff ultimately prevailed at trial, was awarded approximately $20,000 on his copyright infringement claims, and that defendants’ remaining claims were dismissed.

Corporate Officer - Updated February 18, 2008

Case No. 2:06-cv-327 (S.D. Ohio, June 19, 2007)

Court holds that defendants, individual officers of co-defendant Search Cactus LLC (“Search Cactus”) can be held personally liable for violations of the Ohio Consumer Sales Practices Act (“OCSPA”) arising out of the transmission by Search Cactus of allegedly misleading and deceptive promotional emails, if “the officer took part in the act, specifically directed the act, or participated or cooperated in the act.”  Because the complaint alleged that the individual defendants approved the content of the promotional emails in question, the Court denied the individual defendants’ motion to dismiss, and allowed plaintiff, a recipient of such emails, to pursue his OCSPA claim against them.

Corporate OfficerCorporate Officer Quick Hits

Ballistic Products Inc. v. Precision Reloading, Inc.
2003 WL 21754816, Civil No. 03-2950 ADM/AJB (D. Minn., July 28, 2003)

Court finds plaintiff Ballistic Products Inc. likely to prevail on its claim that its competitor - defendant Precision Reloading Inc. – violated the  Anticybersquatting Consumer Protection Act as a result of its registration of two “typo” domain names, containing misspellings of plaintiff’s then common law trademark.  Defendants registered these domain names to “attract potential customers” and pointed them to their own web site, at precisionreloading.com, where they sold competing products.  Finding such actions likely to confuse consumers, the Court issued a preliminary injunction, enjoining defendants from further use of the “typo” domains, and directed their immediate transfer to the plaintiff.

The Court further held that it could assert personal jurisdiction over the non-resident defendants.  The Court held that defendant Precision Reloading Inc. had sufficient contact with Minnesota to permit the assertion of general personal jurisdiction over it.  It had over the last 18 months sold over $21,000 in product to Minnesota customers, and purchased over $32,000 of merchandise from Minnesota sellers.  It had also distributed 223 catalogues to Minnesota residents, advertising its products, advertised nationally in publications sent to Minnesota and operated a website that received numerous ‘hits’ some of which were likely to be from Minnesota residents.  Specific jurisdiction could be exercised over both Precision and the remaining defendants under the ‘effects test’ articulated by the Supreme Court in Calder v. Jones.  The Corporate defendants committed tortuous misconduct directed against the plaintiff, a Minnesota company, the effects of which would be felt by that company in Minnesota.  Said the Court:

Defendants’ registration of domain names that are slight misspellings of Ballistic’s trademark and domain name was an action directed at Minnesota such that Defendants’ should ‘reasonably anticipate being haled into court’ in Minnesota. … ‘[a]n individual injured in Minnesota need not got to Connecticut to seek redress from persons who, though remaining in Connecticut, knowingly caused the injury in Minnesota.’ 

The Court held that the individual defendants, officers of Precision, “are primary participants in an alleged wrongdoing intentionally directed at a forum state resident, and jurisdiction over them is proper on that basis.”  It was the individual defendants who came up with the idea of registering the ‘typo’ domain names at issue to attract business for the defendant Precision Reloading. 

Chris Gregerson v. Vilana Financial Inc., et al.
2007 U.S. Dist. Lexis 64960, Civ. No. 06-1164 ADM/AJB (D. Minn., August 31, 2007)

On the parties’ cross-motions for summary judgment, the Court finds the corporate defendants guilty of copyright infringement as a result of their unauthorized use of two of plaintiff’s copyrighted photographs in advertisements for their businesses. 

The Court further held that defendant Andrew Vilenchik, the sole board member and shareholder of defendant Vilana Financial, could not be held vicariously liable for defendant’s copyright infringement, because he did not have or derive a sufficiently direct financial interest from the use of plaintiff’s photographs.

The Court granted plaintiff summary judgment, dismissing defendants’ claim that his use of defendants’ trademark in the path of his site’s domain name violated the Anticybersquatting Consumer Protection Act.  Defendants’ claim failed both because they failed to submit sufficient evidence that plaintiff had a bad faith intent to profit from this use of the mark, and because use of the mark in the path of the domain name does not constitute actionable use of the mark in a domain name

The Court also dismissed trademark infringement claims brought by defendants as a result of plaintiff’s use of their trademark in a website that purportedly disparaged defendants as a result of their use of the photographs at issue, and in the meta tags of that site.  The court held defendants failed to establish the requisite likelihood of consumer confusion sufficient to sustain such a claim, given that the parties were not competitors – plaintiff was a photographer, and defendants sold real estate and mortgage services – and plaintiff’s website was highly critical of defendants.  In reaching this result the court noted that “a defendant’s use of a trademark in metatags in a descriptive manner can constitute a non-infringing fair use.”

Finally, the Court left for trial defendants’ remaining claims, which included deceptive trade practices, interference with contractual and business relationships, and misappropriation of name and likeness, all of which arose out of the disparaging remarks posted on plaintiff’s website about the defendants.  This site included a photograph of defendant Vilenchik.  Because issues of fact existed as to the truth of these statements, the court reserved decision on these claims until trial.

It should be noted that plaintiff ultimately prevailed at trial, was awarded approximately $20,000 on his copyright infringement claims, and that defendants’ remaining claims were dismissed.

Crimes - Updated March 29, 2008

179 Misc.2d 903 (Criminal Crt., City of NY, February 9, 1999)

Court holds that posting a threatening message to an Internet newsgroup, which is read by the person threatened, constitutes Aggravated Criminal Harassment in the Second Degree in violation of New York Penal Law Section 240.30.  The Court accordingly denied defendant’s motion to dismiss this charge, which accused defendant of posting a death threat against complainant on an Internet newsgroup.

186 Misc.2d 441 (2d Dept., 2000)

Second Department holds that the creation of a website that invites users to contact complainant for sex, which causes third parties to contact complainant via a telephone number provided on the site, constitutes aggravated harassment in the second degree in violation of New York Penal law section 240.30.  As a result, the Second Department affirms defendant’s conviction of aggravated harassment as a result of his involvement in the creation of such a website.

The Second Department did overturn defendant’s conviction for criminal contempt in the second degree, arising out of his purported violation of an order of protection, prohibiting contact with the complainant.  The Court held that such conviction could not stand, because the website at issue was created prior to the issuance of the order of protection, and its continued maintenance was not clearly prohibited thereby.

Case No. 98-2083 (N.Y. App. Div., 4th Dept., June 18, 1999)

The Fourth Department held that New York Penal Law §235.22 did not run afoul of either the First Amendment or the Commerce Clause of the United States Constitution. This statute makes it a crime for an individual to use a computer system to engage in communications with a minor which both "disseminate[] graphic images to [the] minor depicting nudity, sexual conduct or sadomasochistic abuse that is 'harmful to minors'", and "importunes, invites or induces a minor to engage in sexual activity." In reaching this conclusion, the court rejected defendant's contentions that Penal Law §235.22 was overbroad, vague or an impermissible content-based regulation on protected speech. Quite the contrary, held the court, the statute was "a precise means of accomplishing the Legislature's objectives" of protecting children from "high-tech cybersex abuse and actual sexual abuse."

QDS:22310325, 1999 N.Y. Misc. Lexis 425 (Sup. Ct. N.Y.Co., July 24, 1999)

Court holds that permitting New Yorkers, from their home computers, to access and use Antiguan-based computers to engage in gambling activities, violates New York State's prohibitions on gambling within New York, as well as the Federal Wire Act (18 U.S.C. section 1084(a)), the Travel Act (18 U.S.C. section 1952) and Interstate Transportation of Wagering Paraphernalia Act.

Respondent Golden Chips Casino Inc. ("GCC") is an Antiguan corporation licensed to operate a land-based casino in Antigua. GCC is also a wholly-owned subsidiary of respondent World Interactive Gaming Corporation ("WIGC"). GCC promotes a service which permits individuals, via their home computers, to access and use computers located in Antigua to gamble. Before a user can begin gambling, he must first wire funds to GCC in Antigua (which funds are credited to an account in his name) and download software from respondent GCC's website. He is then asked to supply GCC with his "permanent address." Provided the user provides respondent with an address from a state in which land-based gambling is legal, he is permitted to start gambling. It does not matter whether this is in fact the user's true address or not, as respondent takes no steps to verify the accuracy of the information supplied by the user. Once approved, the user can engage in gambling activities from his home.

GCC promoted the availability of this gaming service at its web site, on the Internet, and in a "national gambling magazine."

GCC was aided in these activities by its corporate parent, WIGC, which , according to the court, is GCC's "alter ego." WIGC is a Delaware corporation with its corporate headquarters in New York, from which location it "operated its entire business." Many of these New York activities aided the parties' gambling enterprise, including editing versions of the gambling software at issue, contacting a third party for the purpose of obtaining graphics for that software, and purchasing both the servers and software used to run respondent's activities. According to the court, "the evidence also indicates that the individuals who gave the [Antigua] computer commands operated from WIGC's New York Office." To make matters worse, respondent WIGC engaged in the unlicensed solicitation, primarily via "cold call", of investors for its activities from its New York headquarters.

Based on these activities, the court determined that respondents were "doing business in New York for purposes of acquiring personal jurisdiction" and that "even without physical presence in New York, WIGC's activities are sufficient to meet the minimum contact requirement of International Shoe Co.".

Finding respondents subject to the court's jurisdiction, the court went on to hold that their activities ran afoul of various New York State statutes designed to prohibit gambling in New York. In so doing, the court rejected respondents' argument that the gambling at issue took place in Antigua, where it was legal.

The act of entering the bet and transmitting the information from New York via the internet is adequate to constitute gambling activity within New York State.

This determination was consistent with New York Penal Law 225.00(2) which provides that "if the person engaged in gambling is located in New York, then New York is the location where the gambling occurred."

The court held that respondents' acts violated the prohibitions on gambling contained in New York Penal Law 225.05. The court further held that "by hosting this casino and exchanging betting information with the user, an illegal communication in violation of the Wire Act [18 U.S.C. section 1084(a)] and the Travel Act [18 U.S.C. section 1952] has occurred. ... Gambling conducted via the Internet from New York to Antigua is indistinguishable from any other form of gambling since both the Wire Act and the Travel Act apply to the transmission of information into a foreign country." Thus, the court held that "the Wire Act bars citizens from engaging 'in the business of betting or wagering knowingly using a wire communication for the transmission of interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers.'" The court determined that as a result of the violations of these and other laws, the State was entitled to injunctive relief, as well as restitution, penalties and costs.

281 F.3d 1130 (10th Cir., February 22, 2002), cert. denied, 537 U.S. 845 (2002)

10th Circuit holds that a University professor has no reasonable expectation of privacy in an office computer supplied for his use by the University which employed him.  This result was mandated by the University's computer policy, which provides both that the University may inspect such computers at any time to ensure their appropriate use, and that the University is the owner of everything stored in such computers.  As a result, the court held that the seizure of these images did not violate defendant's Fourth Amendment rights, given his lack of a reasonable expectation of privacy in this computer.  The 10th Circuit accordingly affirmed the denial of defendant's motion to suppress the introduction of child pornography found in files defendant attempted to delete from his computer hard drive and upheld defendant's agreement to plead guilty to violating 18 U.S.C. §2252(a)(5)(b) based on his possession of child pornography.

Docket No. 00-1574, 260 F.3d 68 (2d Cir., July 31, 2001)

The Second Circuit affirmed the conviction of defendant Jay Cohen of conspiracy to, and substantive violations of, 18 U.S.C. §1084, which, inter alia, prohibits the use of wire communication facilities to transmit wagers in interstate or foreign commerce. The Second Circuit held that defendant violated this statute by using both the Internet and telephones to transmit calls from bettors in New York, where gambling is illegal, to World Sports Exchange in Antigua, where gambling is legal, during which transmissions bets were placed. Defendant was sentenced to a term of 21 months in prison.

206 F. 3d 392 (4th Cir., February 28, 2000)

Fourth Circuit holds that various warrantless searches of the defendant employee's computer did not violate his Fourth Amendment protections against unreasonable governmental search and seizures. The Fourth Circuit remanded for reconsideration that portion of the lower court's determination that upheld a search of the defendant employee's office and computer pursuant to a warrant where the searching officials, contrary to its terms, failed to leave the warrant for the employee after completing their search.

No. 06-3094 (10th Cir., April 25, 2007)

Affirming the decision of the District Court below, the Tenth Circuit, by a 2-1 margin, holds that the defendant’s ninety-one year old father had apparent authority to consent to the government’s warrantless search of defendant’s password protected computer.  The computer was located in defendant’s bedroom in his father’s house.  The Court reached this result notwithstanding the fact that defendant’s father neither used the computer, nor knew the password thereto.  As a result, the Tenth Circuit affirmed the denial of defendant’s motion to suppress the evidence of child pornography found during the resulting search, and affirmed defendant’s conviction for violation of 18 U.S.C. Section 2252(a)(4)(B), which prohibits the possession of materials depicting minors engaged in explicit sexual conduct.

The Tenth Circuit holds that an individual with apparent (but not actual) authority can give valid consent for a warrantless governmental search of another’s computer.  An individual has such apparent authority when, examining the totality of the circumstances, the facts available to the officers at the time they commenced their search would lead a reasonable officer to believe that that individual had authority to consent to such a search based on that individual’s relationship to the object searched.

There was a strong dissent by Judge McKay, who would have held, under the circumstances, that the officers had a duty to inquire as to whether the computer was password protected and, if so, whether the party consenting to the search knew the password or had access to the computer in question.  As the government neither made such inquiry, nor knew the password in question, the dissent would hold that defendant’s father did not have apparent authority to consent to the alleged search.

151 F. Supp. 2d 82 (D. Maine, June 25, 2001)

Court denies defendant's motion to suppress both pornographic images obtained from the hard drives of two University computers located in a computer lab that defendant used, and logs pertaining to the usage of such computers.  In so doing, the court rejected  defendant's claim that he had a reasonable expectation of privacy in such hard drives, holding that "there is no generic expectation of privacy for shared usage of computers at large."  As defendant did not advance any evidence to support his claimed expectation of privacy, the court denied defendant's motion to suppress.

Crim No. 02-13-B-S (D. Maine, May 10, 2002)

Magistrate Judge issues report, recommending denial of so much of defendant's motion to suppress which sought to prevent use of various pornographic images found in the recycle bin of a University computer, in a personal computer maintained by defendant at his home, and in a computer used by defendant at his place of employ.  In so holding, the Magistrate Judge determined that defendant did not have a reasonable expectation of privacy in either the University or office computers, so that their searches did not violate the Fourth Amendment.  The court further held that the search of defendant's home computer was made pursuant to a validly issued search warrant.

CrimesCrimes Quick Hits

People of the State of New York v. Melisa Fernino
851 N.Y.S.2d 339 (N.Y. City Crim. Crt., February 13, 2008)

Court denies defendant’s motion to dismiss a misdemeanor complaint charging her with three counts of Criminal Contempt in the Second Degree in violation of NY Penal Law Section 215.50(3).  The Court held that defendant’s utilization of Myspace to transmit a Myspace ‘friend request’ to complainants violated an order of protection that prohibited the defendant from having any contact with the complainant. 

In reaching this result, the Court rejected defendant’s argument that she could not be found guilty of violating the order of protection because she did not contact the complainant – rather, Myspace did.  Said the Court:

The defendant should not be exculpated because she, instead of contacting her victim directly, used the MySpace Mail Center Friend Request Manager …  In this case, the defendant used MySpace as a conduit for communication prohibited by the temporary order of protection issued by the Family Court.  The Myspace Friend Requests fall within the court’s mandate that ‘respondent shall have No contact with [complainant].’ …  that request was … a contact and no contact was allowed by the order of protection.  It is no different than if the defendant arranged for any agent to make known to a claimant ‘your former friend wants to communicate with you.  Are you interested?’

Kathleen Smith v. Alan Smith
24 A.D.3d 822, 804 N.Y.S.2d 854 (3rd Dept., 2005)

Court holds that “aggravated harassment in the second degree [in violation of New York Penal Law section 240.30] may be committed by sending harassing or threatening messages by email.”

Dating Services - Updated April 30, 2008

207 F. Supp. 2d 1055 (C.D. Cal., March 11, 2002), aff'd. on other grds., 339 F.3d 1119, No. 02-55658 (9th Cir., August 13, 2003)

Court grants motion of defendants Metrosplash.com and Lycos for summary judgment, and dismisses claims of invasion of privacy, defamation, misappropriation of right of publicity and negligence brought against them by plaintiff Carafano, an actress.  These claims arose out of the posting of a dating profile by a third party on the defendants' Matchmaker website, which profile allegedly contained fictious information about plaintiff, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendants to which site members had to respond.

The court rejected defendants' argument that plaintiff's claims were barred by application of Section 230 of the Communications Decency Act.  While the defendants were "interactive service providers" within the meaning of the statute by virtue of their operation of the Matchmaker website, defendants were not entitled to the statute's protection because of the role they played in originating the content in question.  Such protections are available only as to claims arising out of information provided by an information content provider other than the defendant.  The court barred defendants from using the CDA as a shield because the information in question was posted in response to a questionnaire prepared by defendants.

Nonetheless, the court dismissed each of the claims raised by plaintiff against defendants.  Plaintiff's invasion of privacy claim failed because the information in question, her address, was "newsworthy," making its publication non-actionable.  The defamation claim was dismissed because, given plaintiff's status as a public figure, she could not show that defendants acted with actual malice in publishing the statements in question, a prerequisite to such a claim.  Such malice was absent because defendants were unaware of the information contained in "plaintiff's" profile at the time it was posted to defendants' site by a third party, and thus did not entertain any serious doubt as to its truth at the time it was published.  Plaintiff's misappropriation of right of publicity and negligence claims failed for the same reason, plaintiff's inability to establish that defendants acted with the requisite actual malice.

339 F.3d 1119 (9th Cir., August 13, 2003)

Ninth Circuit holds that operator of online dating service is immunized by the Communications Decency Act ("CDA") from defamation, invasion of privacy, misappropriation of right of publicity and negligence claims arising out of the unauthorized posting on defendant's website by a third party of a fictitious dating profile.  This profile contained fictitious information about plaintiff, an actress, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendant to which all users of its service had to respond.

SCNY 3034/05 (N.Y. Civ. Crt., November 9, 2005)

Court finds that the defendant Internet dating service Great Expectations, also known as GE Management Group of N.Y., Inc., violated New York’s Dating Services Law, General Business Law Section 394(c), by charging two clients $1000 and $3790, respectively, pursuant to contracts which failed to promise to provide either client with a specified number of social referrals per month.  In such situations, held the Court, New York’s Dating Services Law only permits the clients to be charged $25 for ‘social referral services’.  As a result, the Court awarded each client damages in an amount equal to the payments they made to Great Expectations, or $1000 and $3790 respectively.  In reaching this result, the Court found that the Dating Services Law applied to Great Expectations even though it only provided the means, via the Internet, for clients to contact each other, but apparently did not actually refer clients to one another.  Finally, the Court held that Great Expectations was subject to New York’s Dating Services Law because GE Management Group of N.Y., Inc., the entity that contracted with plaintiffs, was a New York business, and the transactions in question occurred in New York.

502 F.Supp. 2d 719, Case No. 3:07 CV 604 (N.D. Ohio, August 22, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230, immunizes operator of online adult dating service from claims arising out of a user’s false statement in her user-profile that she was over 18.  Relying on this profile, plaintiff met and had consensual sexual relations with a minor, for which he was subsequently arrested.  Plaintiff brought this suit, seeking redress.  Importantly, the contract between the parties expressly provided that SexSearch.com does not “assume any responsibility for verifying the accuracy of the information provided by other users of the Service.”  Because plaintiff sought to hold SexSearch.com, a provider of Interactive Computer Services, liable for its publication of content authored by another, his claims, whether couched as breach of contract, fraud or negligent misrepresentation, were barred by application of the CDA.  Plaintiff’s breach of contract claim similarly failed because SexSearch did not assume responsibility for verifying the age of users.

Dating ServicesDating ServicesDating Services Quick Hits

Robert Anthony v. Yahoo! Inc.
421 F.Supp.2d 1257 (N.D. Ca. March 17, 2006)

Court holds that Communications Decency Act does not bar fraud and negligent misrepresentation claims advanced against Yahoo as a result of its alleged creation of false user profiles.  These false user profiles were allegedly included in online dating services Yahoo operates to cause users such as plaintiff to sign-up for, or renew their subscriptions to, the service.   The Court further held that the Communications Decency Act did not bar claims that asserted that Yahoo falsely represented to subscribers that various expired user profiles were in fact still current in an effort to cause them to continue their subscriptions.  Said the Court:

Anthony alleges that Yahoo creates false profiles, not merely fails to delete them. ... In addition, Anthony claims that Yahoo sends users false profiles for the purpose of luring them into renewing their subscriptions. ... No case of which this court is aware has immunized a defendant from allegations that it created tortious content. ... If, as Anthony claims, Yahoo manufactured false profiles, then it is an 'information content provider' itself and the CDA does not shield it from tort liability.  In addition, the CDA does not defeat Anthony's allegations that Yahoo sent 'profiles of actual legitimate former subscribers whose subscriptions had expired and who were no longer members of the service, to current members of the service.  Admittedly, third parties created there profiles.  Nevertheless, the CDA only entitles Yahoo not to be 'the publisher or speaker' of the profiles.  It does not absolve Yahoo from liability for any accompanying misrepresentations.  Because Anthony posits that Yahoo's manner of presenting the profiles - not the underlying profiles themselves - constitute fraud, the CDA does not apply.

Michael Cohn v. Truebeginnings, LLC, et al.
B190423 (Cal. Crt. App., July 31, 2007)

Court held that plaintiff, by clicking a “continue” icon in the course of completing a user profile for an online dating service, was bound by the site’s Terms of Use, available via a hyperlink on the webpage he was viewing.  The “continue” icon appeared at the foot of the initial webpage the user saw in the course of completing his profile, and just to the right of a sentence that read “I am 18 years old and I have read and agree to the True Terms of Use and Code of Ethics.”  The phrase ‘Terms of Use’ were linked to the site’s Terms of Use, which appeared in a pop-up window when a user clicked on this link.  The Terms of Use advised the user that “once you click on the ‘continue’ button at the end of this sign-up form, you are agreeing to be bound by the Terms of this Agreement.”

Importantly, the Court found plaintiff bound despite his claim that he was not asked to agree to be bound by the Terms of Use as part of the sign-up process.  This evidence was effectively refuted by that supplied by the defendant, which demonstrated that all users, to obtain a profile, must click the ‘continue’ icon.

Similarly, the fact that the Terms were available via a hyperlink did not prevent plaintiff from being bound thereby.  Said the Court:

Respondents presented substantial evidence that appellant had to click on the ‘continue’ button in order to register for his trial membership on the Web site, and that doing so constituted an agreement to the ‘Terms of Use’ on the Web site.  Appellant may not have read the ‘Terms of Use’ but they were readily available to him on the True.com Web site if he clicked on the ‘Terms of Use’ link near the ‘Continue’ button.  Under these circumstances, where appellant obviously had access to the Internet and was entering into a contract on the Internet, there was nothing inherently unfair in requiring him to access contractual terms via hyperlink, which is a common practice in Internet businesses.  The trial court did not abuse its discretion in finding that appellant agreed to the forum selection clause contained in the ‘Terms of Use.’

The Appellate Court nonetheless reversed the lower court’s decision, which had dismissed plaintiff’s claims because of the forum selection clause contained in True’s Terms of Use.  The clause in question, held the Appellate Court, only provided that disputes arising out of a party’s use True.com’s online dating service may be brought in the Texas.  Because this clause did not mandate that such suits must brought in Texas, the lower court needed to analyze, under traditional forum non conveniens analysis, whether California or Texas was the appropriate forum in which the suit should proceed.  The forum selection clause at issue provided “you agree to personal jurisdiction by and venue in the State of Texas and the U.S. District Court for the Northern District of Texas.”  The case was remanded to the lower court for the performance of this analysis.

White Buffalo Ventures, LLC v. University of Texas at Austin
420 F.3d 366 (5th Cir., August 2, 2005) cert. denied, 126 S.Ct. 1039 (January 9, 2006)

Affirming the Court below, the Fifth Circuit holds that the University of Texas at Austin (“UT”) can block unsolicited commercial email sent by plaintiff White Buffalo Ventures (“White Buffalo”) to UT students that promote plaintiff’s online dating services.  Importantly, UT can take such action notwithstanding the fact that White Buffalo’s commercial emails comply with CAN-SPAM.

In reaching this result, the Fifth Circuit rejected White Buffalo’s arguments that UT’s conduct constituted state action preempted by CAN-SPAM.  The Court held that UT was a state actor, and that its determination to block unsolicited commercial email was a state regulation that fell within the ambit of CAN-SPAM’s preemption clause, found in section 7707(b)(1).  This section provides that CAN-SPAM preempts state regulation of email unless such regulation ‘prohibits falsity or deception’ in the email.

However, the statute further provides that ‘nothing in this chapter shall be construed to have any effect on the lawfulness or unlawfulness … of the adoption, implementation or enforcement by a provider of Internet access service of a policy of declining to transmit, route, relay , handle or store certain types of electronic mail messages.’  Section 7707(c).   As the provider of Internet access service – students are enabled by UT to access the internet via its wireless network, and to use email addresses UT provides – this section expressly permitted UT to adopt a policy blocking those who send spam to its network.

The Fifth Circuit held that Section 7707(c) conflicts with Section 7707(b)(1), and thus draws into question the limits of the preemptive effect of CAN-SPAM.   Given these conflicting provisions, held the Court, the presumption against preemption counseled against finding UT’s regulations invalidated by CAN-SPAM.  As such, the Court rejected White Buffalo’s argument that CAN-SPAM mandated that UT’s policies be invalidated on the ground that they ran afoul of CAN-SPAM, or were preempted thereby.

The Court similarly rejected White Buffalo’s claim that UT’s bar on the transmission of its commercial emails ran afoul of the First Amendment.  The Court held that the regulation was reasonably calculated to protect a substantial governmental interest – protecting users of its email network from the hassle associated with unwanted spam – and was no more extensive than necessary to protect that interest. 

The Fifth Circuit did hold that an absolute ban on the transmission of White Buffalo’s emails may be an overly broad restriction – from a First Amendment prospective – if the only interest protected was the capacity of UT’s system to handle the needs of its user community.  Summary judgment was inappropriate, on the record then before the Court, to sustain such a contention.  

Defamation/Libel/Communications Decency Act - Updated November 21, 2008

This section of the Internet Law Library contains a host of court decisions addressing online defamation and libel claims, the jurisdictions in which they can be brought and the application of the single publication rule thereto. The cases discussed below also address the potential liability of third party publishers such as Internet Service Providers, chat room and bulletin board operators for the defamatory comments of others, and the protections they can be expect to receive in these and other situations by application of the Communications Decency Act.

26 Med. L. Rptr. 1032 (Cal. Superior Crt., San Francisco City and County, Sept. 23, 1997)

Communications Decency Act preempts state law claims against ISP for negligence, breach of contract, intentional infliction of emotional distress, alter ego liability, injunctive relief and violation of civil rights arising from IPS's distribution of material written by another that contained derogatory comments about plaintiffs, including that they were the "ring leaders" of an "international conspiracy" to further "Satanic Ritual Abuse" of children.

1 CA-CV 04-0823, 125 P.3d 389 (Arz. Crt. App., 2006)

Court holds that the Communications Decency Act, 47 U.S.C. § 230 ("CDA") immunizes web hosting company from liability arising out of its hosting of a third party's website that allegedly contained defamatory statements about plaintiff.  Following the Fourth Circuit's decision in Zeran v. AOL, the Court holds that such immunity exists notwithstanding any notice the web hosting company received concerning the defamatory nature of the content it was hosting.  The Court also dismisses plaintiff's defamation claims against the originator of the content at issue, holding it lacks personal jurisdiction over him.  The Court reached this result notwithstanding the fact that this defendant had contracted with an Arizona web hosting company to host the website which contained the defamatory statements at issue.  The Court held the exercise of jurisdiction over the defendant would be unreasonable given the fact he was a non-resident, the parties each operated Bali-related travel services, and the dispute was governed by Bali law.

Index No. (Sup. Ct. N.Y. Co., December 14, 2001)

Plaintiff bank brought defamation claims against defendant Mario Menendez-Rodriguez, a Mexican resident and journalist, defendant Narco News, a web site, and defendant Al Giordano, its publisher, arising, in part, out of statements defendants made concerning Roberto Hernandez-Ramirez, plaintiff's largest shareholder, general director and chairman of its board of directors, and the bank itself. In these statements, defendants accused Hernandez-Ramirez of being a "drug trafficker", and of having used gains from illegal endeavors to acquire the plaintiff bank. The Narco News also allegedly claimed that "bank officials have been arrested for drug-money laundering …". Defendants allegedly made the statements in question in a newspaper published in Mexico, Por Esto! with which defendant Menendez-Rodriguez is affiliated, in an interview given to The Village Voice, a New York publication, during a panel discussion at Columbia University in New York, and/or in articles published on the Narco News web site.

The court, on defendants' motions, dismissed the complaint. The claims advanced against defendant Menendez-Rodriguez were dismissed on the ground that the court lacked personal jurisdiction over him given the plaintiff's failure to allege facts sufficient to show that Menendez-Rodriguez, a non-resident, "transacted purposeful business activity bearing a substantial relationship to the subject matter of the lawsuit in [New York]." The defamation claims against the remaining defendants were dismissed as a result of plaintiff's failure to allege facts sufficient to state a claim against them. The court determined that these defendants were media defendants entitled to heightened protection under the First Amendment. Given that they were reporting on matters of public concern plaintiff, to state a claim against them, had to allege facts sufficient to show both that the statements they allegedly made were false, and that they were made with "actual malice," that is with knowledge that the statements were false or made with reckless disregard for the truth. The court held that plaintiff had not alleged facts sufficient to establish that the remaining defendants had acted with actual malice, given, inter alia, their reliance on articles appearing in Por Esto! for the statements they made, and accordingly dismissed the complaint against them.

2005 WL 3005602, Civ. No. 05-926-AA (D. Or., November 8, 2005)

Court holds that the Communications  Decency Act, 47 U.S.C. § 230 ("CDA"), immunizes defendant Yahoo, Inc. ("Yahoo") from tort claims arising out of its alleged failure to timely honor promises to remove from Yahoo's web site objectionable content about plaintiff posted by a third party.  The content consisted of "profiles" contained both nude photos of plaintiff, and accurate contact information.

S122953, 40 Cal.4th 33 (Cal. Sup. Ct., November 20, 2006)

Reversing the Court of Appeals, the California Supreme Court holds that Section 230 of the Communications Decency Act ("CDA") immunizes defendant Ilena Rosenthal ("Rosenthal") from defamation claims arising out of her republication in two online newsgroups of an allegedly defamatory article authored by a third party.  In reaching this result, the California Supreme Court rejected the Court of Appeals' attempts to limit the immunity afforded by Section 230(c)(1) of the CDA to publishers, while leaving exposed to defamation claims "distributors" of defamatory statements who have notice of the defamatory nature of the statements they distribute.  The Supreme Court held that such "distributors," commonly know as "secondary publishers," are entitled to the same broad immunity afforded publishers under the CDA.  As explained by the Fourth Circuit in Zeran v. AOL, cited with approval by the California Supreme Court, the CDA "creates a federal immunity to any cause of action that would make service providers liable for information originating with a third party user of the service" except claims such as those arising under the Intellectual Property laws, specifically exempted by the statute.

The Supreme Court also held that the broad immunity afforded under the statute to the providers of interactive computer services extended by operation of the statute's express language to "users" of such services.  "Users" protected by the CDA included those who use an interactive computer service to access the Internet and thereby to post or republish on the Internet a defamatory statement authored by a third party.  As stated by the Court, "by declaring that no 'user' may be treated as a 'publisher' of third party content, Congress has comprehensively immunized republication by individual Internet users."

9 Cal.Rpt.3d 142, A096451 (Cal. App. Crt., 1st App. Dist., October 15, 2003) reversed 40 Cal.4th 33, S 122953 (Cal. Sup. Ct., November 20, 2006)

Rejecting Zeran v. America Online, (4th Cir. 1997) and its progeny, an intermediate California Appellate court holds that the Communications Decency Act ("CDA") does not immunize a user of interactive computer services from a defamation claim arising out of her republication of statements authored by a third party, when the user knew or had reason to know of the falsity of those statements.  As a result, the Appellate Court reversed to much of the decision of the trial court below which had dismissed a defamation claim brought against defendant Ilena Rosenthal as a result of her republication in Usenet postings of a statement authored by a third party (defendant Timothy Bolen) which accused plaintiff Polevoy of criminal conduct.

The trial court had also rested its dismissal under California's Anti-SLAPP statute of plaintiffs' defamation claims on its determination that Polevoy lacked the requisite probability of success because, as a public figure, he could not prove that defendant Rosenthal acted with 'malice' when republishing Bolen's statements.  The Appellate court rejected this determination, holding that plaintiff may be able to establish that Rosenthal acted with the required malice, and therefore could proceed, notwithstanding Rosenthal's allegation that she had checked the veracity of the statements she was republishing with the alleged victim.  The Appellate Court held that such was insufficient to require dismissal of plaintiff's complaint, because of the alleged bias of both the victim and the original author of the posting against the plaintiff.

The Appellate Court did affirm the lower court's dismissal of defamation claims advanced by plaintiff Barrett, because the statements at issue were non-actionable opinion, as well as the trial court's decision to award Rosenthal attorney's fees expended in pursuing her Anti-SLAPP motion to dismiss (though reducing the recoverable amounts to reflect the reversal of that court's decision as to the claims asserted by Polevoy).

This decision, if followed, could have important ramifications for internet service providers and others who regularly repost publications authored by third parties without reviewing their content.  Under the court's ruling, service providers can be liable for defamation as a result of their republication of such statements if they know or have reason to know of the falsity of those statements.  According to the court "distributor liability would [generally] not require a service provider to review communications in advance of posting them but only to act reasonably after being put on notice that the communication is defamatory."  As a result, once the service provider receives notice (from the allegedly defamed individual) of falsity, it must either undertake adequate steps to ascertain the veracity of the statement, remove it, or face potential liability.  This creates tremendous uncertainty as the court did not specify what such adequate steps would be.  Indeed, as noted above, in the case at bar, where plaintiff alleged he was defamed by a statement that he had engaged in criminal conduct, the court held that contacting the victim was not sufficient as a matter of law to warrant dismissal of plaintiff's suit because of the victim's purported bias against plaintiff Polevoy.  Subsequent developments in this case should be watched closely by those interested in this field.

333 F.3d 1018, No. 01-56380 (9th Cir., June 24, 2003) petition rehearing and rehearing en banc, denied, 351 F.3d 904 (9th Cir., December 3, 2003)

In this defamation suit, the Ninth Circuit Court of Appeals holds that the operator of a listserv and website is a user of interactive computer services entitled to the protections of the Communications Decency Act ("CDA") against liability arising out of his publication of information provided by another information provider.  Because, however, the author of the information at issue claimed he did not mean for the defendant operator of the listserv to publish it, the Ninth Circuit remanded the case to the District Court for a determination as to whether the listserv operator was entitled to immunity under the CDA in this particular case.  Such immunity should be granted, held the Ninth Circuit, if the information in question was provided to the listserv operator by a third party under circumstances in which a reasonable person would conclude that the third party provided the information for publication on the Internet.  The Ninth Circuit accordingly vacated so much of the District Court's decision which denied defendant's motion to dismiss this defamation action under California's Anti-SLAPP statute, which motion was to be reconsidered on remand.  The Ninth Circuit also affirmed the District Court's rejection of plaintiff's defamation claims against Mosler, which were predicated solely on its placement of ads on the website at issue.

No. CV-06-1537-PHX-DGC (D. Az., September 5, 2008)

Court in large part grants defendants’ motion for summary judgment, and dismisses claims arising out of defendants’ operation of a website on which third parties, and defendants themselves, posted a number of statements critical of plaintiff Best Western International Inc.  Left unresolved by the Court’s motion were plaintiff’s claims that a number of additional posts authored by defendants were in fact defamatory.

Best Western is a non-profit member corporation, which assists its members in running their hotels.  Defendants are members of Best Western who operate hotels, their spouses, and an individual who assisted in the creation of the website at issue.  The member defendants are bound by the terms of membership agreements with plaintiff. 

The Court held that the immunity granted defendants under the Communications Decency Act barred plaintiff from seeking to hold them liable for defamatory posts authored by third parties that appeared on defendants’ website.  Defamation claims arising out of 50 posts defendants themselves authored failed because plaintiff did not present sufficient evidence to establish that defendants acted with the requisite degree of fault necessary to sustain a defamation claim.  Thus, plaintiff failed to establish that defendants acted with either actual malice or negligence in making these statements, or with knowledge of their alleged falsity.   In reaching this result the Court noted that possessing ill will toward plaintiff was insufficient to establish ether that defendants acted with the requisite degree of fault, or that they were guilty of defaming plaintiff. 

The Court also rejected tortuous interference with contract or prospective advantage claims arising out of the posting on defendants’ site of statements urging plaintiff’s members to switch to a competitor’s organization.  The Court held that plaintiff failed to prove either that such statements caused it any injury, or that defendants or the competitor acted improperly in making these posts.  In reaching this result, the Court noted that plaintiff’s competitor is free to make posts that promote itself and its own economic interests.

Finally, the Court rejected various breach of contract claims advanced by plaintiff, asserting that defendants breached the parties’ membership agreement by making public confidential information, or failing to meet the membership agreement’s requirement to use their best efforts to maintain positive relationships with customers.  As to the former, the Court held there were no such prohibitions in the parties’ agreement that bound defendants.  As to the later, the Court held that the prohibitions applied to other aspects of defendants’ business, with which obligations defendants complied.

The Court did allow plaintiff Best Western to pursue breach of contract claims arising out of the use by the member defendants of Best Western’s trademark on the website at issue, which use purportedly violated the parties’ membership agreement.

CV-06-1537-PHX-DGC (D. Az., July 25, 2006)

Following the lead of the Delaware Supreme Court in Cahill, the Court holds that to obtain leave to serve a subpoena to ascertain the identity of an anonymous online speaker accused of making defamatory statements, a plaintiff must submit evidence of the validity of his claim sufficient to defeat a motion for summary judgment, and establish the existence of a prima facie case.  Because Best Western had not even identified the allegedly defamatory statements, let alone attempted to show their falsity, the court denied Best Western's motion for leave to serve a subpoena.  Plaintiff was given leave to renew its motion on a more substantive evidentiary showing as to the validity of its claims.  The Court did direct the ISPs from whom discovery was sought to preserve any information they may have concerning the identity of the speakers at issue, recognizing that absent such relief, this data may well be lost.

B160126 (Cal. Crt. App., March 4, 2003)

Court denies defendant's motion, brought under California Code of Civil Procedure Section 425.16, to strike defamation, disparagement and intentional interference claims arising out of statements defendant allegedly made in Internet chat rooms.  Defendant sought to strike these claims on the ground that they were advanced to inhibit his criticism of plaintiff in violation of Section 425.16, which provides protection against "Strategic Lawsuits Against Public Participation," otherwise known as SLAPP suits.  While the Court found that defendant's chat room comment were entitled to protection under Section 425.26, it held that plaintiffs had proffered sufficient evidence in support of the validity of their defamation claims to be permitted to proceed therewith.

C.A. No. 6:06-109-HMH (D.S.C. October 22, 2007)

Granting defendant’s motion for summary judgment, the District Court dismisses defamation, trademark infringement, and invasion of privacy claims brought by plaintiffs against a blogger.  The claims arose out of defendant’s publication of articles on his blog, featuring plaintiff’s trademark, that were critical of plaintiffs’ eBay auction listing business. 

The Court held plaintiff’s trademark dilution claims failed because defendant used the mark in connection with “news reporting and news commentary,” a non-actionable use under the Federal dilution statute.  The Court held plaintiffs’ defamation claims failed because the statements at issue – which purportedly accused plaintiff Schmidt of being a “yes man” ‘who overpromised and underdelivered’ were non-actionable statements of opinion.  Finally, the Court held plaintiffs’ invasion of privacy claims – which were premised on a link on defendant’s blog to another site which contained a picture of plaintiffs – failed.  The Curt rested this holding on its determination both that South Carolina does not recognize a claim for false light invasion of privacy, and that, in any event, the link and article in question did not cast plaintiffs in a false light.  The Court also grounded its rejection of this claim on its holding that the link and corresponding use of the photo did not constitute a viable ‘wrongful appropriation of personalty’ invasion of privacy claim, given that plaintiffs had consented to the use of their photo on the internet site on which it was contained.

2000 U.S. Dist. Lexis 14180, 119 F. Supp. 2d 309 (S.D.N.Y., September 28, 2000)

Court refuses to enjoin defendants from operating web sites critical of plaintiffs' business, or from utilizing plaintiffs' common-law service mark in meta tags on those sites to attract visitors seeking information about plaintiffs. The court also refused to enjoin defendants from continuing to publish allegedly libelous statements about plaintiffs on their web sites.

992 F. Supp. 44 (D.D.C. April 22, 1998)

Court holds defamation claim against AOL as a result of its making available a gossip column written by a third-party content provider titled the"Drudge Report" was barred by the Communications Decency Act. Court reached this conclusion notwithstanding the fact that AOL had reserved the right to exercise control over the Report's editorial content, and further, had promoted the report as a gossip column, thereby acknowledging the nature of the report's general content and the risks inherent therein.

The court denied defendant Drudge's motion to dismiss for want of personal jurisdiction. Drudge's maintenance of an interactive website, on which his Report appeared, which permitted users to subscribe to the Drudge report via e-mail, and solicited contributions from forum residents to defray publication costs, combined with other contacts with Washington D.C., including a visit to D.C. to promote the report, and mail and phone contacts to obtain gossip, made the exercise of jurisdiction over him appropriate.

C.A. No. 04C-11-022 JRS (Superior Crt. Del., June 16, 2005), reversed, No. 266, 2005 (Del. Supreme Crt., October 5, 2005)

Court holds that ISP can be compelled in response to Subpoena Duces Tecum to release information that will identify an anonymous speaker accused of making defamatory statements in a blog about plaintiffs provided plaintiffs can show: (i) they have a "good faith basis" to bring their defamation claim; (ii)  the information sought is directly and materially related thereto; and (iii) the information sought cannot be obtained from another source.  Finding plaintiffs had met this burden, the Court directed Comcast to disclose the requested information concerning defendant's identity.  In reaching this result, the Court declined to follow Dendrite Intl. v. Doe, 775 A.2d 756  (N.J. Sup. Ct. App. Div. 2000), which held the party seeking relief to a higher standard, requiring him to demonstrate a prima facie case as a prerequisite to obtaining such disclosure.

S02G0361 (Ga. Sup. Ct., Nov. 25, 2002)

Reversing the court below, a divided Georgia Supreme Court holds that plaintiff, the President of a waste hauling company, is a limited purpose public figure who accordingly must prove that defendant proceeded with “actual malice” to prevail on libel claims arising out of defendant’s allegedly defamatory postings on an Internet bulletin board. The court further holds that plaintiff is barred by Georgia statute from pursuing punitive damage claims as a result such postings. According to the court, Georgia statute 51-5-11 requires any plaintiff libeled by a communication to first demand a retraction of the libelous statement before being permitted to proceed with a claim for punitive damages. As plaintiff did not make such a demand, he could not pursue his punitive damage claim. In a spirited dissent, three judges disagreed with each of these holdings.

339 F.3d 1119 (9th Cir., August 13, 2003)

Ninth Circuit holds that operator of online dating service is immunized by the Communications Decency Act ("CDA") from defamation, invasion of privacy, misappropriation of right of publicity and negligence claims arising out of the unauthorized posting on defendant's website by a third party of a fictitious dating profile.  This profile contained fictitious information about plaintiff, an actress, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendant to which all users of its service had to respond.

207 F. Supp. 2d 1055 (C.D. Cal., March 11, 2002), aff'd. on other grds., 339 F.3d 1119, No. 02-55658 (9th Cir., August 13, 2003)

Court grants motion of defendants Metrosplash.com and Lycos for summary judgment, and dismisses claims of invasion of privacy, defamation, misappropriation of right of publicity and negligence brought against them by plaintiff Carafano, an actress.  These claims arose out of the posting of a dating profile by a third party on the defendants' Matchmaker website, which profile allegedly contained fictious information about plaintiff, as well as accurate contact information and photographs of her.  This information was posted in response to a form questionnaire prepared by defendants to which site members had to respond.

The court rejected defendants' argument that plaintiff's claims were barred by application of Section 230 of the Communications Decency Act.  While the defendants were "interactive service providers" within the meaning of the statute by virtue of their operation of the Matchmaker website, defendants were not entitled to the statute's protection because of the role they played in originating the content in question.  Such protections are available only as to claims arising out of information provided by an information content provider other than the defendant.  The court barred defendants from using the CDA as a shield because the information in question was posted in response to a questionnaire prepared by defendants.

Nonetheless, the court dismissed each of the claims raised by plaintiff against defendants.  Plaintiff's invasion of privacy claim failed because the information in question, her address, was "newsworthy," making its publication non-actionable.  The defamation claim was dismissed because, given plaintiff's status as a public figure, she could not show that defendants acted with actual malice in publishing the statements in question, a prerequisite to such a claim.  Such malice was absent because defendants were unaware of the information contained in "plaintiff's" profile at the time it was posted to defendants' site by a third party, and thus did not entertain any serious doubt as to its truth at the time it was published.  Plaintiff's misappropriation of right of publicity and negligence claims failed for the same reason, plaintiff's inability to establish that defendants acted with the requisite actual malice.

461 F.Supp.2d 681, Case No. 06 C 0657 (N.D. Ill., November 14, 2006) aff'd -- F.3d -- (7th Cir. Mar. 14, 2008)

Court holds that the Communications Decency Act ("CDA") immunizes defendant Craigslist, Inc. ("Craigslist") from liability for publishing housing ads authored by third parties that allegedly violate the Fair Housing Act, 42 U.S.C. § 3604(c) ("FHA").  In reaching this result, the Court held that the immunity afforded internet service providers under section 230(c)(1) of the CDA only extends to claims seeking to hold an ISP liable as a publisher for content authored by third parties, and not to all claims arising out of the ISP's role in giving the public access to such content.  Because the FHA claims at issue were premised on Craigslist's publication of offensive ads authored by third parties, the Court held they were barred by the immunity granted under Section 230(c)(1).

CV 2007-003720 (D. Ariz., October 24, 2007)

Court holds that the Communications Decency Act (“CDA”), 47 U.S.C. Section 230(c)(1), mandates dismissal of so much of plaintiff’s defamation claim that arises from the publication by third parties of comments critical of plaintiff on a website defendants operate known as the “ripoffreport.com.”  The CDA further mandates dismissal of claims arising out of defendants’ promotion of its site and the allegedly objectionable content thereon, making the site more accessible to search engines and users, or soliciting contributions to assist in making the information on the site available.  The Court did , however, allow plaintiff to pursue defamation claims arising out of the headlines for third party content authored by the defendants, which themselves purportedly contained defamatory content.

351 F.Supp. 2d 1090 (W.D. Wash., December 21, 2004)

Court holds that the Digital Millennium Copyright Act ("DMCA") immunizes Amazon.com, Inc. ("Amazon") from copyright infringement claims arising out of the sale by nonaffiliated third party vendors on Amazon.com of photographs in which plaintiff claims a copyright.  In reaching this result, the Court held that Amazon had met both the DMCA's threshold requirements, as well as the requirements necessary to qualify for the protection of the safe harbor provisions of 17 U.S.C. § 512(c).  512(c) protects service providers from liability for copyright infringement by reason of their storage of infringing materials at the direction of a third party.

The Court dismissed plaintiff's Lanham Act claim, finding that it was the Copyright Act, and not the Lanham Act, that provided any remedy for the alleged wrongs at issue.  The Court also dismissed plaintiff's Washington State law Consumer Protection Act and tortious interference with business relations claims, finding Amazon immunized therefrom by operation of the Communications Decency Act.

Finally, the Court held that issues of fact precluded dismissal of copyright infringement claims plaintiff asserted arising out of the alleged use of one of its copyrighted images in an advertisement on a separate website owned by Amazon.

776 F.Supp. 135 (S.D.N.Y. 1991)

433 F. Supp. 2d 523 (E. D. Pa., May 26, 2006), aff'd., No. 06-3171 (3rd Cir., September 19, 2007).

Communications Decency Act immunizes operator of message board from defamation claims arising out of posts appearing thereon that were authored by others.  Such immunity extends to the defendant operator notwithstanding plaintiff’s claim that the defendant edits posts that appear on his boards, and selects posts that will either be published thereon, or removed therefrom.  The Court accordingly dismissed with prejudice defamation claims asserted by plaintiff Anthony DiMeo III arising out of offensive postings that appeared on defendant’s message boards. 

The Court also dismissed plaintiff’s claim that defendant violated the criminal statute 47 U.S.C. § 223 (a)(1)(C), which prohibits use of a telecommunications device anonymously to harass another.  Defendant neither acted anonymously – his name appeared both in the domain name and title of the message boards found on his website – nor did he use a telecommunications device, within meaning of the statute, in operating his web site.

Analysis of the Third Circuit's decision can be found below in the Quick Hits section of this page.

Case No. 97-2587, 718 So. 2d 385 (Fourth District Court of Appeal, Fla, October 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Relying heavily on Zeran v. AOL, 129 F.2d 327 (4th Cir. 1997) cert. denied, 118 S.Ct. 2341 (1998), the Florida District Court of Appeal affirmed the lower court's holding that the Communications Decency Act preempts state law claims advanced against an information service provider arising out of the ISP's allegedly improper participation in the sale or distribution of obscene material due to its alleged notice that a third party was using the ISP's chat rooms to market pornographic materials. The Court also affirmed that lower court's holding that the CDA preempts state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Case No. CL 97-631AE (Cir. Ct. Palm Beach Co. Fla, June 26, 1997), aff'd. 718 So. 2d 385 (Fl. Ct. App., Oct. 14, 1998) aff'd. 2001 Fla. Lexis 449 (Fla. March 8, 2001)

Communications Decency Act preempts state law claim of improper participation in sale or distribution of obscene material asserted against information service provider as a result of its alleged notice that third party was using ISP's chat rooms to market pornographic materials. Court further held that CDA applies retroactively to preempt state law claims arising out of events that occurred prior to the CDA's enactment, but which claims were not asserted until after the CDA's enactment.

Civil Action No. 07-cv-286 (D. N.H., March 27, 2008)

Court holds that the Communications Decency Act immunizes defendants from various non-intellectual property claims arising out of their making available on their adult social networking sites an anonymous profile authored by an unknown third party which plaintiff claims falsely appears to people who know her to be her own.  The Court holds that this immunity also covers non-intellectual property claims arising out of defendants reposting this profile on third party sites, making slight alterations to the profile as to the participant’s age, and using the profile in teasers and other advertisements for defendants’ site.  As a result, the Court dismissed claims plaintiff advanced for defamation, intentional infliction of emotional distress, intentional, reckless, negligent and/or willful and wanton conduct, and violations of the New Hampshire Consumer Protection Act, arising out of such alleged misconduct.

The Court held that the Communications Decency Act did not, however, immunize defendants from intellectual property claims plaintiff advanced, both under applicable federal and state laws, including right of publicity claims advanced under New Hampshire state law.   Plaintiff was accordingly allowed to proceed with claims that defendants, by including identifiable aspects of plaintiff’s persona in advertisements and ‘teasers’ in an effort to increase the profitability of their websites, violated her right to publicity.

The Court further held that plaintiff could proceed with Lanham Act false designation of origin and false advertising claims against the defendants.   The false advertising claim was based on the inclusion of the profile at issue in ‘teasers’ and other advertisements for defendants’ site.  These acts allegedly deceived consumers into registering for defendants’ services in the hope of interacting with plaintiff, and caused injury to her reputation as a result, including alleged lost employment opportunities.  The false designation of origin claims similarly arose out of defendants’ use of the profile at issue in marketing their sites, which falsely implied plaintiff’s affiliation with, or sponsorship and approval of, defendants’ site and service.

2000 Conn. Super. Lexis 570, 46 Conn. Supp. 406, 755 A.2d 1000 (Sup. Ct. Conn., March 7, 2000)

Court holds that under Communications Decency Act, ("CDA"), 47 U.S.C. §230, America Online ("AOL") is immune from suit seeking to hold it liable for participating in the transmission, as an ISP, of an e-mail message composed by another defendant (unaffiliated with AOL) to various individuals.

2000 U.S. Dist. Lexis 8845 (N.D. Ill., June 21, 2000)

Court holds that those engaging in web site hosting activities are immunized by the Communications Decency Act, 47 U.S.C. 230(c) from liability arising out of their involvement, via those activities, in the dissemination or publication of information originating from third parties. Section 230(c)(1) provides that "no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider." The court held that those who provide web hosting services are service providers within the meaning of the CDA, and hence entitled to the immunity it provides. Said the court: "by offering web hosting services which enable someone to create a web page, [defendants] are not magically rendered the creators of those web pages. See 47 U.S.C. 230(c)(1). As such, plaintiffs' new characterization of [defendants] as web hosts neither prevents these defendants from being deemed service providers protected by immunity under the CDA nor makes them content providers unprotected by the CDA's immunity."

27 Med. L. Reptr. 1794(D.N.M., Mar. 1, 1999), aff'd. 206 F.3d 980 (10th Cir.,Mar. 14, 2000), cert. denied, 531 U.S. 824 (Oct. 2, 2000)

Court dismissed claims of defamation and negligence asserted by plaintiff company against America Online ("AOL") arising out of AOL's posting of allegedly inaccurate stock quotes concerning plaintiff on its website, which quotes had been supplied to AOL by third-party content providers. Court held that such claims were barred by 47 U.S.C. §230, and the immunity granted thereunder to providers of "interactive computer services" such as AOL, for publication of content prepared by third-party information content providers. This dismissal was mandated even though AOL attempted to have its vendors correct the errors at issue.

Civ. Act. No. 6:02CV0040 (W.D.Va., March 4, 2003)

Court dismisses action brought against a non-resident for want of personal jurisdiction.  In the action, plaintiff, a nationally known public figure who resides in Virginia, sued a non-resident, inter alia, for defamation and violation of the Anticybersquatter Consumer Protection Act ("ACPA") as a result of critical statements defendant made on a website he operated at a Url bearing plaintiff's name.  Finding that defendant had not, by his activities, expressly targeted a Virginia audience, the court dismissed the suit for want of personal jurisdiction.

Claim No. 97999, 184 Misc. 2d 105, 706 N.Y.S 2d 835 (N.Y. Crt. of Claims, March 8, 2000), aff'd., 731 N.Y.S. 2d 244 (N.Y. App. Div., 2001), aff'd., -- N.Y. -- (N.Y., July 2, 2002)

Court of Claims holds the "single publication" rule applicable to the publication of a governmental report on the Internet. Under this rule, the Statute of Limitations on a claim for defamation arising out of such publication begins to run on the date the report first appears on the Internet; the continued maintenance of the report on the Internet in identical fashion does not constitute multiple or repeated republications which give rise to separate defamation claims, or a new limitations period.

207 F. Supp.2d 914 (W.D. Wis., March 28, 2002)

Court allows plaintiff to proceed with claims advanced against his employer and various fellow employees under the Electronic Communications Privacy Act, the Electronic Communications Storage Act, and Wisconsin's right to privacy statute, Wis. Stat. Section 895.50, as well as a common law defamation claim, arising out of defendants' interception of a telephone call plaintiff placed from his place of employ, and defendants' review of e-mails contained in a personal e-mail account plaintiff maintained with Hot Mail, which account plaintiff accessed from his work place.  There were sharply differing versions of the content of these various communications.  Defendants alleged that during the telephone call, the participants, while masturbating, graphically described homosexual activity between two males.  Plaintiff denied this.  Defendants also alleged that e-mails read from plaintiff's email account evidenced that plaintiff was involved in homosexual activity.  Plaintiff denied that these e-mails had been sent to him.

Defendants' version of the telephone conversation was related to various third parties, which resulted in the termination of plaintiff's employment.  This lawsuit ensued.  The court determined that plaintiff should be permitted to proceed with various claims he asserted. 

The court refused to dismiss plaintiff's claim, advanced under Wisconsin's right of privacy law, section 895.50, arising out of the review of e-mail from plaintiff's personal Hot Mail account.  The court held that issues of fact existed as to whether the review of such e-mail would be highly offensive to a reasonable person, and as to whether a reasonable person could consider such an account to be private, which precluded a grant of summary judgment to defendants.  The court also refused to dismiss the claim plaintiff brought under the Electronic Communications Storage Act arising out of the review of these e-mails.  If such a review took place (as opposed to defendants' having fabricated the e-mails) it would run afoul of the Stored Communications Act.  The court did dismiss the claims plaintiff raised under the Computer Fraud and Abuse Act, holding that plaintiff had not alleged economic damages arising from the review of these e-mails sufficient to state a claim under the Act.

The court also refused to dismiss the claims plaintiff advanced under the Electronic Communications Privacy Act and Wisconsin Privacy Act arising out of the interception of the telephone call described above.  The court refused to dismiss plaintiff's ECPA claim because, depending on what actually occurred, the defendants should have stopped listening to the telephone call when they discovered it was personal in nature.  The court refused to dismiss plaintiff's privacy act claims because plaintiff may have had a reasonable expectation of privacy in the telephone call if his claim that he made the call from a place his employer designated for private personal calls was true.

Lastly, the court refused to dismiss plaintiff's defamation claim, finding that issues of fact precluded it from determining whether defendants' communication of their version of the telephone call to third parties was protected by the common interest privilege possessed by members of religious associations as to communications pertaining to the qualifications of those who work for the organization.  Such privilege may have been lost, given plaintiff's claim that the defendants were lying about what took place during the telephone call.

99 Cal. App. 4th 816, Super Ct. No. GIC746980 (Cal. Crt. App., June 26, 2002)

California intermediate appellate court affirms the decision of the trial court, and dismisses claims brought by plaintiffs against eBay under both California's Autographed Sports Memorabilia statute and California's Unfair Competition law, as well as for negligence, arising out of plaintiffs' purchase of allegedly non-authentic autographed sports memorabilia offered for sale by third parties on eBay's web site. Plaintiffs sought to hold eBay liable under California's Autographed Sports Memorabilia statute as a result of eBay's alleged failure to supply certificates warranting the authenticity of the goods purchased.  The court held that eBay was not obligated to supply the certificates because it was not a "dealer" of sports memorabilia within the meaning of the statute, as the goods in question were sold by third parties.  The court further held that section 230 of the Communications Decency Act ("CDA") immunized eBay from any liability arising out of its failure to supply these certificates.  The court held that, however couched, plaintiffs' claim sought to hold eBay liable for the allegedly false descriptions of the goods supplied by third parties.  As the CDA creates "federal immunity to any cause of action that would make interactive service providers liable for information originating with a third party use of the service" (excepting intellectual property claims) plaintiffs' Autographed Sports Memorabilia claims had to be dismissed.

The court held that plaintiffs' negligence and Unfair Competition claims were also barred by the CDA as each of these claims was also premised on content supplied by third parties.  These claims attacked eBay for giving the sellers of the goods at issue positive ratings concerning their past sales history, and urging purchasers to rely thereon in making their decision to purchase goods from those sellers.  These positive ratings were, however, simply an accurate reporting of customer feed back supplied by third parties concerning their alleged transactions with the sellers.  As such, eBay could not be held liable for the inaccuracy of such positive ratings because to do so would be to hold eBay liable for content originated by third parties, which is barred by the CDA.

No. 07-956-PHX-FJM (D.Az. October 10, 2007)

Court dismisses defamation claims advanced against defendant, operator of the website ripoffreport.com, arising out of defendants’ publication of statements authored by a third party that were critical of plaintiffs.  The Court held such claims barred by application of the Communications Decency Act (“CDA”), 47 U.S.C. Section 230.  Notably, the court refused to issue plaintiff relief notwithstanding the fact that the author of the statements at issue allegedly requested without success that defendants remove them from ripoffreport.com.

The Court also declined to enforce a preliminary injunction issued on default by a Canadian court, directing defendants to remove the statements at issue from their website, on the ground that United States courts will not enforce injunctions issued by foreign courts.

318 F.3d 465, No. 01-1120 (3rd Cir., January 16, 2003)

Affirming the decision of the court below, the Third Circuit holds that the Communications Decency Act ("CDA") immunizes America Online ("AOL") from claims arising out of the transmission by unrelated third parties in an AOL chat room of (i) a "punter program", which disrupts the operation of the recipient's computer, and (ii) defamatory messages concerning the plaintiff.  The Third Circuit further holds that AOL's allegedly negligent failure to prevent such events from occurring did not breach its Member Agreement, in which it expressly disclaimed liability for the transmissions of others.

2007 WL 1300065 (Cal. Crt. App., 2d Dist., My 4, 2007)

Granting defendant’s motion pursuant to California’s anti-SLAPP statute, Cal. Code Civ. Pro. Section 425.16, the court affirms the dismissal of plaintiff GTX Global Corp.’s (“GTX”) complaint, and awards defendant Andrew Left (“Left”) attorneys fees expended both in defending this suit and plaintiff’s appeal from the decision of the court below.  SLAPP is an acronym that stands for “Strategic Lawsuits Against Public Participation.”  GTX had sued Left, who runs the stocklemon.com website, for publishing statements critical of GTX.&n