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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...

Online Policy Group, et al. v. Diebold Incorporated, et al.

337 F. Supp. 2d 1195 (N.D.Cal. September 30, 2004)

Online Policy Group, et al. v. Diebold Incorporated, et al., 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.

Diebold manufactures electronic voting machines which have been the subject of critical commentary.  According to the Court “internal emails exchanged among Diebold employees contain evidence that some employees have acknowledged problems associated with the machines.” 

Apparently an email archive containing these and other internal Diebold employee emails was stolen and posted on the Internet by unknown person(s).  Plaintiffs Pavlovsky and Smith, college students as Swarthmore, obtained a copy of this archive and posted it on websites.  Their ISP for these sites was Swarthmore.  IndyMedia, an online newspaper, published an article critical of Diebold’s electronic voting machines which contained a hypertext link to a Smith/Pavlovsky website that contained the email archive.  For the purpose of this decision, the Court assumed, without deciding, that plaintiff Online Policy Group acted as the ISP for IndyMedia.

Diebold’s outside counsel sent DMCA take-down notices to both Swarthmore and Online Policy Group.  These notices sought to have these entities disable, and/or remove, respectively, the websites containing the archive and the hypertext link thereto.  In these notices, Diebold claimed that the posting of the email archive infringed its copyright therein.  Apparently in response, Swarthmore disabled access to plaintiff Pavolovsky and Smith’s websites.  Online Policy Group took no action with respect to the IndyMedia newstory.  Diebold did not commence an infringement, or other action, against plaintiffs.

Plaintiffs, however, commenced this action, seeking a declaratory judgment that the posting of the email archive constituted a fair use of Diebold’s emails, and thus did not infringe any copyright therein.  Plaintiffs also sought damages and attorneys fees pursuant to Section 512(f) of the DMCA, as a result of the transmission by Diebold of the take-down notices.

DMCA take-down notices trigger the potential liability of ISPs for copyright infringement by giving notice that a customer is using their services to infringe the copyright of another.  Upon receipt of such a notice, an ISP must take certain steps, such as disabling access to the infringing work and notifying the alleged infringer, or risk exposure for infringement itself.  Taking the appropriate action garners the ISP protection from infringement damage claims under the DMCA. 

DMCA Section 512(f) is designed to prevent a copyright owner from abusing this process.  Under this Section, “any person who knowingly materially misrepresents … that material or activity is infringing … shall be liable for any damages including costs and attorneys’ fees incurred by the alleged infringer … as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing …”.

Because of the public’s interest in the performance and capabilities of Diebold’s electronic voting machines, the Court found that plaintiffs’ use of at least those employee emails that expressed reservations about the machines’ capabilities constituted a fair use thereof which did not infringe Diebold’s claimed copyright therein.  Said the Court:

[P]ortions of the email archive [are] clearly subject to the fair use exception ...

*          *          *

The purpose, character, nature of the use, and the effect of the use upon the potential market for or value of the copyrighted work all indicate that at least part of the email archive is not protected by copyright law.  The email archive was posted or hyperlinked to for the purpose of informing the public about the problems associated with Diebold’s electronic voting machines.  It is hard to imagine a subject the discussion of which could be more in the public interest.  If Diebold’s machines in fact do tabulate voters’ preferences incorrectly, the very legitimacy of elections would be suspect. …

The Court also found that Diebold had violated Section 512(F) of the DMCA by sending its take-down notices.  The Court held that by so doing, Diebold knowingly misrepresented that the posting of the archive on plaintffs’ website infringed its claimed copyright therein when in fact it did not because “no reasonable copyright holder could have believed that the portions of the email archive discussing possible technical problems with Diebold’s voting machines were protected by copyright.”  The notices were material within the meaning of the Act because they caused Swarthmore to disable access to Pavlovsky and Smith’s websites.  Accordingly, the Court granted plaintiffs’ motion for summary judgment on their Section 512(f) claim.  According to the Online Policy Group’s website, Diebold paid plaintiffs and their attorneys $125,000 in damages as a result of this determination.

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