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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...

United States of America v. Bradford C. Councilman

373 F.3d 197 (1st Cir., June 29, 2004), reversed 418 F.3d 67 (1st Cir. 2005)

Affirming the court below, the First Circuit, by a 2-1 vote, holds that defendant's alleged involvement in a scheme in which e-mails were copied while in transit to, but before their receipt by, their intended recipients, was not a violation of the Wiretap Act, 18 U.S.C. §§ 2510 et seq. and accordingly dismisses an indictment charging defendant with conspiring to violate the Wiretap Act.  In reaching this result, the Court held that the Wiretap Act does not apply to the interception of e-mails in storage.  Because the e-mails at issue were in temporary storage when intercepted, no violation of the Wiretap Act occurred.

In a vigorous dissent, Circuit Judge Lipez warned that the majority's holding would effectively eliminate all protection for e-mail under the Wiretap Act, as all e-mail, when in transit, is stored in either the hard drives or RAM of the various computers involved in its delivery.  As such, e-mail recipients would be relegated to the lesser protections provided by the Stored Communications Act, 18 U.S.C. §§ 2701 et seq., which, among other things, provides certain exceptions for "conduct authorized by the person or entity providing a wire or electronic communications service …", and lowers the showing law enforcement officials must make to access such stored communications.  Judge Lipez accordingly would reverse the court below, and hold that the Wiretap Act applies to the unauthorized interception of e-mail while such e-mail is being transmitted, whether then in storage or not.

Interloc operated an online listing service for rare and out-of print books.  To encourage the use of this service, Interloc provided e-mail service to various book dealer customers (the "Book Dealers") for whom it acted as an Internet Service Provider.

Defendant was responsible for supervising these ISP services.  The Indictment alleged that, at defendant's behest, Interloc employees wrote a program which intercepted and copied all e-mails addressed to the Book Dealers from Amazon.com.  These e-mails were allegedly read by defendant in the hopes of obtaining a competitive advantage.

These e-mails were accessed "as they were being transmitted" to their intended recipients.  Importantly, however, the parties stipulated that at the time of their interception, "the messages existed in the random access memory (RAM) or in hard disks, or both, within Interloc's computer system."  According to the Court, this is true of most, if  not all e-mail, which is stored temporarily on various computers throughout most of its transmission from sender to recipient.  As explained by the majority: 

An e-mail message, which is composed using an e-mail program, is transferred from one computer to another on its way to its final destination, the addressee.  Building on the principle of store and forward, the message is handed to a Message Transfer Agent ("MTA") which stores the message locally.  The message is routed through the network from one MTA to another until it reaches the recipient's mail server, which accepts it and stores it in a location accessible to the recipient.  Once the e-nail is accessible to the recipient, final delivery has been completed.  The final delivery process places the message into storage in a message store area.  Often, a separate Mail Delivery Agent ("MDA") will be required to retrieve the e-mail from the MTA in order to make final delivery. 

This was echoed by the dissent: 

All digital transmissions must be stored in RAM or on hard drives while they are being processed by computers during transmission.  Every computer that forwards the packets that comprise an e-mail message must store those packets in memory while it reads their addresses, and every digital switch that makes up the telecommunications network through which the packets travel between computers must also store the packets while they are being routed across the network.

The defendant moved to dismiss the Indictment on the grounds that the Wiretap Act does not protect e-mail when it is in storage.  Both the District Court and First Circuit agreed, holding that the Act only prohibits the interception of e-mail while in transit - it does not apply to e-mail that is in storage.  Because defendant was not indicted under the Stored Communications Act 18 U.S.C. §§ 2701 et seq., the dismissal of the Wiretap Act claims resulted in the dismissal of all claims against him.

In reaching the result, the Court relied upon the Act's then distinction between "wired communications" and "electronic communications."  The Wiretap Act makes it a crime to "intercept" a "wire" or "electronic" communication 18 U.S.C. §2511(1)(a).  However, while the definition of "wired communication" in the Act included communications in "electronic storage," the definition of "electronic communications" did not.  Thus, the Act defined "wired communications" as:

any aural transfer made in whole or part through the use of facilities for the transmission of communications by the aid of wire, cable or other like connection between the point of origin and the point of reception furnished or operated by any person engaged in providing or operating such facilities … and such term includes any electronic storage of such communication.  18 U.S.C. 2510(1)

The Act defined "electronic communication" as "any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system." 18 U.S.C. §2510(12).

Because of this distinction, the First Circuit held that the Act did not apply to "electronic communications" while they were in storage, and accordingly, affirmed the dismissal of the indictment against defendant.  The Court found support for its holding in both Steve Jackson Games Inc. v. U.S. Secret Service, 36 F.3d 457 (5th Cir. 1994), which held that the Wiretap Act did not apply to the seizure of sent but unretrieved e-mail that was stored on a computer's hard drive, and Konop v. Hawaiian Airlines Inc., 302 F.3d 868 (9th Cir. 2002) cert. den'd. 537 U.S. 1193 (2003) which held that "for a web site such as Konop's to be 'intercepted' in violation of the Wiretap Act, it must be acquired during transmission, not while in electronic storage."

While the Court recognized that "it may well be that the protections of the Wiretap Act have been eviscerated as technology advances," it nonetheless felt constrained by the language of the statute to reach this result.

Circuit Judge Lipez strongly disagreed.  He too noted that the Court's decision would leave e-mail effectively unprotected by the Wiretap Act, as all e-mail, while in transit, is stored on the various machines involved in its delivery.  Judge Lipez believes that Congress did not intend such a result.  Accordingly, he would hold that the Act applied to e-mail intercepted during its transmission, whether then in temporary storage or not.

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