Changing market and other economic situations will no doubt put many parties in the situation of not being able to perform under the contracts they’ve entered into. Below is a brief video outlining the doctrines of:
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Amazon.com scored a Ninth Circuit win on Section 230 grounds when the court affirmed the lower court’s summary judgment against a pro se plaintiff’s claim against Amazon for tortious interference with prospective and actual business relations, and interference with an economic advantage. The claim apparently arose out of a third party posting a review on Amazon that plaintiff did not like. Citing to Barnes v. Yahoo!, Inc., 570 F.3d 1096 (9th Cir. 2009), the court observed that the Communications Decency Act (at Section 230(c)(1)) provides immunity from liability if a claim “inherently requires the court to treat the defendant as the ‘publisher or speaker’ of content provided by another.” Plaintiff had failed to raise a genuine dispute of material fact as to whether Amazon was not a publisher or speaker of content within the meaning of Section 230.
Sen v. Amazon.com, 2020 WL 708701 (9th Cir. February 12, 2020)
If customers use your website or online service or app, you need to have enforceable terms and conditions. That way, if there is some dispute, you can control over how it’s resolved,. You can also contain the costs by putting an arbitration clause in the terms and conditions. Instead of an expensive lawsuit, you can resolve it in arbitration which is often less expensive, quicker, and more private.
For terms and conditions to be enforceable, one must prove that the customer actually agreed to them. You’d be surprised how often companies find themselves in the expensive hassle of fighting over whether their terms are enforceable, then finding out they’re not. This can cause them to miss out on the cost savings and efficiency of arbitration.
This happened just just this week. A federal court of appeals ruled that an app developer didn’t structure the interface in a way to put users on notice of the terms. So since the developer couldn’t prove the users saw the terms, the case will proceed in court instead of arbitration.
And perhaps even worse, the case will probably move forward as a class action. Had the terms been enforceable, it would probably have just been limited to one-on-one lawsuits. That would have been much better for the developer.
If you’d like to discuss your terms and conditions, drop me a line or give me a call.
See also: Browsewrap enforceable: hyperlinked terms on defendant’s website gave reasonable notice
Benson v. Double Down Interactive, LLC, 2020 WL 468422 (9th Cir. January 29, 2020)
About the author:Evan Brown is a technology and intellectual property attorney in Chicago. Follow him on Twitter and Instagram, connect on LinkedIn and subscribe to his YouTube channel for videos on interesting topics about law and technology.
A recent federal case from Virginia provides information on the types of “losses” that are actionable under the federal anti-hacking statute, the Computer Fraud and Abuse Act (“CFAA”).
Underlying facts
Plaintiff worked as a campaign manager, communications director and private sector employee of a Virginia state legislator. While plaintiff was in the hospital, defendant allegedly, without authorization, accessed plaintiff’s Facebook, Gmail and Google Docs accounts, and tried to access her Wells Fargo online account.
Plaintiff’s lawsuit
Plaintiff sued, alleging a number of claims, among them a claim for violation of the CFAA. Defendant moved to dismiss. Although the court denied the motion to dismiss on other grounds, it held that plaintiff’s alleged emotional distress was not the type of “loss” that is actionable under the CFAA.
Loss under the CFAA
One can bring a civil action under the CFAA if the defendant’s alleged conduct involves certain factors. One of those factors, set out at 18 U.S.C. § 1030(c)(4)(A)(i)(II), provides recovery if there is “the modification or impairment, or potential modification or impairment, of the medical examination, diagnosis, treatment, or care of 1 or more individuals”.
Plaintiff alleged that defendant’s unauthorized access and attempted access to her accounts caused her to sustain a “loss” under this definition because it caused her to suffer emotional distress for which she needed to seek counseling.
The court disagreed with plaintiff’s assertions. Essentially, the court held, the modification of or impairment of a plaintiff’s treatment must be based on impairment due to the ability to access or used deleted or corrupted medical records. As an example – this was not in the court’s opinion but is provided by the author of this post – one might be able to state a claim if, for example, medical records were modified by a hacker to change prescription information. Further, the court held, to recover under the relevant provision of the CFAA, a defendant’s violation must modify or impair an individual’s medical treatment as it already exists, not merely cause the plaintiff mental pain and suffering that requires additional care.
Hains v. Adams, 2019 WL 5929259 (E.D. Virginia, November 12, 2019)
Case underscores reason why companies using independent contractors should consider negotiating provisions that require those independent contractors to indemnify the company in the event of third party intellectual property claims.
Plaintiff’s claims
Plaintiff photographer sued a real estate brokerage firm and the firm’s independent agent who published on her brokerage-branded website one of plaintiff’s photos without authorization. Plaintiff asserted a direct infringement claim against the agent, and a vicarious infringement claim against the brokerage. Defendant brokerage firm moved to dismiss for failure to state a claim. The court denied the motion.
Elements of vicarious copyright infringement
To state a claim for vicarious copyright infringement, in addition to stating a claim for direct infringement by the agent, the plaintiff had to successfully plead that the brokerage (1) had a direct financial interest in the appearance of the infringing photo on its agent’s website, and (2) had the right and ability to supervise the infringing activity.
The court’s decision
On the first element of vicarious copyright infringement, the court found that plaintiff adequately alleged that defendant brokerage had a direct financial interest in defendant agent’s use of the photo on her website. Defendant agent was defendant brokerage’s sponsored agent, and it was plausible that her use of the photo to enhance the appeal of her website provided both defendant agent and defendant brokerage with a direct financial benefit in the form of increased business.
As for the second element – right and ability to supervise – the court found that plaintiff’s undisputed allegation that defendant agent was a licensed real estate agent under defendant brokerage’s sponsorship, coupled with defendant brokerage’s statutory obligation to supervise defendant agent’s actions, were sufficient to state a plausible claim that defendant brokerage had the right and ability to supervise defendant agent’s infringing activity.
The parties disputed the level of supervision and control that defendant brokerage had, and the “right and ability” to exercise control over defendant agent’s activity on her website.
Plaintiff asserted that the website was one published by the defendant brokerage, while the defendant brokerage disclaimed all responsibility for the website. Yet regardless of which party actually exercised direct control over the website, the fact remained – in the court’s view – that defendant agent carried out the alleged copyright infringement on the website under the auspices of defendant brokerage’s sponsorship, and defendant brokerage had a statutory obligation to supervise her conduct as a sponsored agent.
Moreover, although defendant agent could hypothetically continue her alleged infringement in a different setting were defendant brokerage to terminate her sponsorship, the undisputed fact that defendant brokerage could have terminated her sponsorship lent further support to the inference that defendant brokerage had the right and ability to supervise defendant agent’s infringing acts.
Stross v. PR Advisors, LLC, 2019 WL 5697225 (N.D. Tex. October 31, 2019)
Plaintiffs provide “verification and security services for blockchain-based cryptocurrencies.” Grant County, Washington decided to charge plaintiffs and others in “evolving industries” more for electricity. Plaintiffs sued and tried to get an injunction against the rate increase.
The lower court denied the preliminary injunction. Plaintiffs sought review with the Ninth Circuit. On appeal, the court affirmed the denial of the preliminary injunction.
It held that simple monetary harm would not constitute an immediate threat of irreparable harm that would be appropriately remedied by an injunction. Although a legitimate threat that a company might face bankruptcy or be driven out of business may constitute irreparable harm, in this case, plaintiffs failed to introduce competent evidence that they would be driven out of business because of the increased rates.
Blocktree Propterties, LLC. v. Pub. Utility Dist. No. 2 of Grant County, 2019 WL 5704281 (9th Cir. November 5, 2019)
Plaintiff sued defendants for violation of the provisions of the Digital Millennium Copyright Act (“DMCA”) that prohibit one from intentionally removing or altering any copyright management information (“CMI”) with the knowledge, or having reasonable grounds to know, that it will induce, enable, facilitate, or conceal a copyright infringement (17 U.S.C. § 1202(b)).
Defendants moved to dismiss, asserting that the court should reject plaintiff’s DMCA cause of action for failure to state a claim for which relief may be granted because copyright registration, which plaintiff admits it lacks, was a prerequisite for bringing suit under this provision of the DMCA.
The court denied the motion. It held that copyright registration was not a prerequisite to this sort of action.
Defendants had argued that the provisions of 17 U.S.C. § 411(a) required registration. That section provides that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” Defendants argued that this requirement applied to DMCA actions and tried to justify their position by asserting that (1) a plain reading of Section 1202(b) of the DMCA establishes that a claim brought thereunder constitutes a civil action for infringement, (2) the provisions of Title 17 of the United States Code, including 17 U.S.C. § 411(a), apply to the DMCA despite its silence as to those provisions, and (3) precedent shows that the registration requirement applies to the DMCA. The court rejected these arguments.
First, a plain reading of the DMCA did not establish that it is subject to the registration requirement found in 17 U.S.C. § 411(a). Such requirement pertains to “civil action[s] for infringement of the copyright.” However, a DMCA action under Section 1202(b) is not an action for infringement, but rather for the improper removal or alteration of CMI. Second, the court held that Section 411(a) need not apply to the DMCA merely because other provisions of Title 17 do. Finally, the case law defendants cited, including the recent Supreme Court case of Fourth Estate v. Wall-Street.com, did not indicate that registration is required for DMCA actions.
Diamondback Industries, Inv. v. Repeat Precision, LLC, 2019 WL 5842756 (N.D.Tex., November 7, 2019)
See also:
About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.
Plaintiff sued its former employee and alleged, among other things, that defendant violated the anticircumvention provisions of the Digital Millennium Copyright Act (17 USC 1201). While defendant was still an employee, she used her username and password to access and download copyrighted material stored on plaintiff’s server after she had already accepted an employment offer from a competitor.
Defendant moved to dismiss the anticircumvention claim. The court granted the motion to dismiss.
The court’s holding centered on what the DMCA means by “circumvent a technological measure”. The statute requires that for there to be circumvention, one must “descramble a scrambled work . . . decrypt an encrypted work, or otherwise . . . avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner.”
In this case, the court followed the line of reasoning in prior cases, including Egilman v. Keller & Heckman LLP to hold that defendant did not circumvent any measures because she validly accessed the system using her username and password.
The court found that even if the use that defendant made of that access was not something that plaintiff would have authorized her to do, i.e. copy the materials at issue, defendant’s alleged abuse of her logon privileges did not rise to the level of descrambling, decrypting, or otherwise avoiding, bypassing, removing, deactivating, or impairing anything.
R. Christopher Goodwin & Assoc., Inc. v. Search, Inc., 2019 WL 5576834 (E.D. Louisiana October 29, 2019)
About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.
Plaintiff sued defendant software developer for breach of contract and other claims, asserting that defendant failed to develop and deliver a video editing application on time and within budget. Defendant moved to dismiss the case, arguing that plaintiff had failed to state a claim upon which relief may be granted. The court denied the motion to dismiss the breach of contract claim, allowing that claim to move forward.
The court found that plaintiff had successfully pled a breach of contract claim under Texas law. Defendant had argued that the parties agreed to benchmark the developed software’s performance in comparison to “recreational” software, but that plaintiff later demanded the software be benchmarked against professional grade software. Plaintiff responded that it had asked defendant to benchmark the program’s speed to iMovie, which it characterized as recreational and not professional.
The court looked past this benchmarking aspect and found that even in light of the apparent disagreement on the standard, the allegations in the complaint – that defendant had not provided a viable product under the agreement – were sufficient to support a breach of contract claim.
Polar Pro Filters, Inc. v Frogslayer LLC, 2019 WL 5400934 (S.D. Texas, October 22, 2019)
Serial copyright plaintiff Strike 3 Holdings filed a number of copyright complaints against defendants – known only by their IP addresses – for copyright infringement. Since plaintiff needed to know the identities of the defendants to move forward, it asked the court for leave to seek expedited discovery. In a consolidated matter – addressing a number of complaints – the court denied the motion.
The main reason for denying the motion was that, in the court’s view, as pleaded, plaintiff’s complaints were futile – they did not meet the standard for a motion to dismiss under Rule 12(b)(6).
Further, even if plaintiff had pled a cognizable copyright infringement claim, the court would still have denied the requests for expedited discovery. Good cause for the expedited discovery did not exist because:
On balance, therefore, the court found that the overall administration of justice and the prejudice to subscriber defendants outweighed plaintiff’s interest in expedited discovery.
Strike 3 Holdings, LLC v. Does, 2019 WL 5446239 (D.N.J. October 24, 2019)
