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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...

Terms of Use - Internet Library of Law and Court Decisions - Updated March 8, 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.

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.

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 (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.

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.

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.

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.

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.

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.

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.

Download PDF of Court Decision

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.

Download PDF of Court Decision

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.

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