Attorney Evan Brown

November 10, 2019 Copyright, DMCA

Does a plaintiff claiming unlawful removal of copyright management information have to own a registered copyright?

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)

Employee’s unauthorized conduct was not a DMCA prohibited circumvention

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)

October 29, 2019 Contracts

Software development breach of contract lawsuit moves forward

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)

October 28, 2019 Anonymity, Copyright

Court denies porn company’s request to unmask anonymous copyright infringers

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:

plaintiff based its complaints on unequivocal affirmative representations of alleged facts that it did not know to be true
plaintiff’s subpoenas were misleading and created too great of an opportunity for misidentification of the unknown defendants
the linchpin of plaintiff’s good cause argument, that expedited discovery was the only way to stop infringement of its works, was wrong – plaintiff could have sent takedown notices under the Digital Millennium Copyright Act
plaintiff had other available means to stop infringement besides suing individual subscribers in thousands of John Doe complaints
the deterrent effect of plaintiff’s lawsuits was questionable
substantial prejudice may have inured to subscribers who were misidentified; and
plaintiff underestimated the substantial interest subscribers had in the constitutionally protected privacy of their subscription information.

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)

October 21, 2019 Trademarks

Cost of domain name was relevant in establishing secondary meaning of trademark

In a trademark dispute between two companies in the real estate space, the court was called upon – at the summary judgment stage – to determine if there was a triable issue as to whether plaintiff’s STOCKDALE mark was not merely descriptive but instead had acquired distinctiveness.

Defendants had argued that plaintiff’s case failed because plaintiff did not have a protectable mark. Plaintiff countered that its STOCKDALE mark, which it had used for 30 years and which the court found was primarily merely a surname, had acquired distinctiveness. Guided by the principles in the case of Viacom Int’l v. IJR Capital Investments, LLC, 891 F.3d 178 (5th Cir. 2018) (the Krusty Krab case), the court examined, concerning plaintiff’s mark:

length and manner of use of the mark or trade dress,
volume of sales,
amount and manner of advertising,
nature of use of the mark or trade dress in newspapers and magazines,
consumer-survey evidence,
direct consumer testimony, and
the defendant’s intent in copying the [mark].

It determined that there was a genuine issue of material fact as to whether the mark was protectable as one that had acquired distinctiveness. Interestingly, the plaintiff had not kept track of its advertising expenditures, but did introduce evidence that it had paid more than $50,000 to acquire the domain name stockdale(.)com. The court found that information relevant to inquiry.

Stockdale Investment Group, Inc. v. Stockdale Capital Partners, LLC, No. 18-2949, 2019 WL 5191526 (S.D. Tex., October 15, 2019)

October 17, 2019 Contracts

Browsewrap enforceable: hyperlinked terms on defendant’s website gave reasonable notice

Plaintiff was bound by forum selection clause found in online terms and conditions.

Plaintiff sued TripAdvisor and some related defendants (including Viator, a company that TripAdvisor acquired) for a number of torts arising from an ATV accident that plaintiff had while on a tour in Mexico that she had booked online through defendants’ website. Defendants moved to dismiss, or in the alternative, to transfer the matter to federal court in Massachusetts based on the forum selection clause found in the Terms and Conditions that plaintiff agreed to when she booked the tour. The court granted the motion to transfer.

To purchase the tour, plaintiff was required to click on a “Book Now” icon, directly under which the following message was located: “[b]y clicking Book Now and making a reservation, I acknowledge that I have read and agree to be bound by Viator’s Terms and Conditions and Privacy Statement.” The phrase “Viator’s Terms and Conditions” appeared in blue underlined text, in the form of a hyperlink, which directed the consumer to the website’s Terms and Conditions.

Viator’s Terms and Conditions included a forum selection clause, which, in relevant part, provided:

[T]his agreement is governed by the laws of the Commonwealth of Massachusetts, USA. You hereby consent to the exclusive jurisdiction and venue of courts in Boston, Massachusetts, USA and stipulate to the fairness and convenience of proceedings in such courts for all disputes arising out of or relating to the use of this Website. You agree that all claims you may have against Viator, Inc. arising from or relating to this Website must be heard and resolved in a court of competent subject matter jurisdiction located in Boston, Massachusetts.

The court found that plaintiff had agreed to the forum selection clause, and that the clause was enforceable. In determining whether plaintiff was bound by the clause, the court was guided by “fundamental precepts of contract law.” More specifically, under New Jersey law, “[a] contract term is generally binding if the contract has been mutually agreed upon by the parties, is supported by valid consideration, and does not violate codified standards or offend public policy.” W. Caldwell v. Caldwell, 26 N.J. 9, 24-26 (1958).

Plaintiff had argued that the Terms and Conditions amounted to an invalid browsewrap agreement, because she neither received reasonable notice of their existence, nor provided an unambiguous manifestation of assent. Primarily relying upon Specht v. Netscape, plaintiff argued that she was not bound by the Terms and Conditions, because Viator’s website was designed so that a user can use its services without affirmatively assenting to the web page’s terms of use. According to plaintiff, she was ultimately permitted to purchase the ATV tour without ever being asked to check a box or click an “I Agree” button, or even acknowledge that the Terms existed. Without proper notice, plaintiff maintained that enforcing the forum selection was not appropriate.

The court disagreed. It found that the hyperlinked terms on defendant’s website adhered to the requirements of reasonable notice. Regardless of whether plaintiff was required to scroll through the Check Out page, the hyperlinked Terms and Conditions were conspicuously placed directly underneath the “Book Now” icon. Based on its location, therefore, the court found that the hyperlink was not hidden in an area of the screen that plaintiff was unlikely to notice, but, instead, was clearly displayed in a section of the webpage that she needed to review in order to effectuate her purchase of the ATV tour. Stated differently, the hyperlink was placed within the immediate proximity of an icon that plaintiff was required to click, for the purpose of confirming her purchase on defendant’s website.

Mucciariello v. Viator, Inc., No. 18-14444, 2019 WL 4727896, D.N.J. (September 27, 2019)

October 16, 2019 Cybersquatting

Parked domain names were in “use in commerce” for purposes of Section 43(a) claim

Plaintiff, the owner of a college student housing facility, filed suit for unfair competition under Section 43(a) of the Lanham Act against a number of entities and individuals that operated a competing student housing facility. Defendants registered eight domain names that incorporated plaintiff’s trademarks. At first defendants used some of the domain names to redirect traffic to the website for defendants’ competing student housing facility. But after plaintiff demanded defendants cease and desist, defendants simply parked the domain names with GoDaddy and permitted pay-per-click ads to appear on the pages.

The case went to trial and the court found in plaintiff’s favor on the unfair competition claim. The court determined that the domain names were confusingly similar to plaintiff’s marks that had acquired secondary meaning. And the use of the domain names in the manner defendants had set them up constituted use in commerce. Each of the web pages displayed the domain name associated with it – and each such domain contained plaintiff’s mark. And each of the pages showed pay-per-click ads comprised of links to various vendors’ goods and services. This use met the Lanham Act’s definition of “use in commerce”.

ZP No. 314, LLC v. ILM Capital, LLC, No. 16-521, 2019 WL 4924029 (S.D. Alabama, September 30, 2019)

October 15, 2019 Fraud/Misrepresentation, Section 230, Unfair Competition

Intellectual property exception to CDA 230 immunity did not apply in case against Google

Plaintiff sued Google for false advertising and violations of New Jersey’s Consumer Fraud Act over Google’s provision of Adwords services for other defendants’ website, which plaintiff claimed sold counterfeit versions of plaintiff’s products. Google moved to dismiss these two claims and the court granted the motion.

On the false advertising issue, the court held that plaintiff had failed to allege the critical element that Google was the party that made the alleged misrepresentations concerning the counterfeit products.

As for the Consumer Fraud Act claim, the court held that Google enjoyed immunity from such a claim in accordance with the Communications Decency Act at 47 U.S.C. 230(c).

Specifically, the court found: (1) Google’s services made Google the provider of an interactive computer service, (2) the claim sought to hold Google liable for the publishing of the offending ads, and (3) the offending ads were published by a party other than Google, namely, the purveyor of the allegedly counterfeit goods. CDA immunity applied because all three of these elements were met.

The court rejected plaintiff’s argument that the New Jersey Consumer Fraud Act was an intellectual property statute and that therefore under Section 230(e)(2), CDA immunity did not apply. With immunity present, the court dismissed the consumer fraud claim.

InvenTel Products, LLC v. Li, No. 19-9190, 2019 WL 5078807 (D.N.J. October 10, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown@internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

October 14, 2019 Contracts, Litigation

Is a person who dies while using an app still bound by the app’s terms of service?

App terms of service said that arbitrator – not court – should determine whether arbitration is proper.

The family of a man killed on a Lime scooter sued Lime over the man’s death. Lime looked to its user agreement – which provided that disputes are subject to arbitration – and asked the court to compel such arbitration. The court granted the motion.

The court found that the agreement structure was not a clickwrap or browsewrap, but instead a “sign-in wrap”. Underneath the Facebook button one can use to sign up within the Lime app was a notice that stated, “[b]y singing up, I confirm that I am at least 18 years old, and that I have read and agreed to Lime’s User Agreement & Terms of Service.” The words “User Agreement” and “Terms of Service” were in darker boldface than the rest of the sentence, and they provided a hyperlink to Lime’s user agreement.

If found that a the hyperlink to the user agreement on Lime’s sign-up screen was reasonably conspicuous and placed the deceased on notice of the user agreement. The sign-up screen was visible on one page, and the hyperlink was in close proximity to the two sign-up buttons. Moreover, the notice was legible, and the hyperlinked words “User Agreement & Terms of Service” were in dark, bold font, making them stand out from both the white screen and the surrounding gray text. Based on these circumstances, the court found, a “reasonably prudent smartphone user” would understand that by signing up for Lime, he or she was assenting to the user agreement.

Further, the court found that compelling arbitration – even for purposes of determining the question of whether arbitration was what the parties had agreed to – was appropriate. By stating that the arbitration provider’s rules would govern the arbitration proceedings, the parties “clearly and unmistakably” reserved the determination of arbitrability for the arbitrator.

Phillips v. Neutron Holdings, Inc., No. 18-3382, 2019 WL 4861435 (N.D. Texas, October 2, 2019)

October 11, 2019 Cybersquatting, Trademarks

Yahoo successor does not prevail in bid to obtain ymobile.com domain

Oath, Inc., the successor to Yahoo! Inc., filed an action under the Uniform Domain Name Dispute Resolution Policy (UDRP) against a domainer that acquired ymobile.com earlier in 2019. The split 3-member FORUM panel denied the complaint, finding that Oath failed to demonstrate that the respondent lacked rights or legitimate interests in the disputed domain name, and failed to show it registered and used the disputed domain name in bad faith.

On the question of rights or legitimate interests, the panel found that the respondent’s purchase and sale of the domain name comprised of the generic term “mobile” prefixed by “y” was legitimate, so long as the respondent did not intend to capitalize on Oath’s YMOBILE mark, which is registered in Japan. The panel accepted the respondent’s assertion that it had no notice of the YMOBILE mark prior to acquiring the disputed domain name.

Regarding bad faith registration and use, the panel similarly found that the respondent was not targeting the Y! or YMOBILE mark, and that it had no knowledge of the YMOBILE mark’s existence prior to acquiring the disputed domain name.

One of the panelists dissented, arguing that the disputed domain name should have been transferred. He emphasized how the respondent was using the disputed domain name – which the panel found was identical to a mark the complainant owns – to display pay-per-click ads for goods and services competitive with the complainant’s. Some of the ads, for example, were for online games and downloadable software. And on the issue of bad faith, this panel member observed that although the respondent claimed to not know of the complainant’s YMOBILE mark, a simple web search would have revealed it.

Oath Inc. v. Mira Hold, No. FA 1909001858330 (Forum, October 8, 2019)