July 13, 2010 Anonymity

Ninth Circuit orders anonymous internet speakers be identified

In re Anonymous Online Speakers, — F.3d —, 2010 WL 2721490 (9th Cir. July 12, 2010)

Quixtar (which used to be Amway) sued Signature Management TEAM (“TEAM”) for tortious interference and other claims, alleging that TEAM engaged in a smear campaign against Quixtar on the internet. In his deposition, TEAM’s online content manager refused to answer questions concerning the identity of the authors of certain statements made against Quixtar online. On Quixtar’s motion, the court ordered that the online content manager answer some of the questions concerning the anonymous speakers.

The anonymous speakers sought mandamus relief from the Ninth Circuit. On appeal, the court denied the request. It held that the district court’s decision was not “clearly erroneous as a matter of law.”

The district court had applied the stringent test set out in Doe v. Cahill, which requires, among other things, that the party seeking the identity of an anonymous internet speaker present enough facts to support a hypothetical motion for summary judgment.

The Ninth Circuit looked to the nature of the speech at issue — commercial speech — and held that the Cahill standard was too high. But the application of a too-high standard did not mean that the lower court should be reversed. The outcome would have been the same (i.e., the anonymous speakers would have been ordered unmasked) even if the district court had correctly applied a lower standard appropriate for commercial speech.

This is a significant case on the topic of anonymity because it is only the third federal circuit opinion to consider the question as to when unknown online speakers should be identified. The others are NLRB v. Midland Daily News (6th Cir. 1998) and Lefkoe v. Jos. A. Bank Clothiers, (4th Cir. 2009).

July 13, 2010 Fraud/Misrepresentation, Spam

State law spam claim in federal court not pled with required particularity

Hypertouch, Inc. v. Azoogle.com, Inc., 2010 WL 2712217 (9th Cir. July 9, 2010)

Pleading in federal court is generally a straightforward matter. Federal Rule of Civil Procedure 8 requires only that the plaintiff set forth a short and plain statement as to why that party is entitled to relief. But in cases involving fraud, there is a heightened pleading standard imposed by Rule 9.

In the case of Hypertouch, Inc. v. Azoogle.com, Inc., the plaintiff sued the defendants in federal court over almost 400,000 allegedly spam email messages. Hypertouch brought claims under California law (California Business and Professions Code § 17529.5(a)) but did not meet the heightened pleading standard of Rule 9. So the district court dismissed the case.

Plaintiff appealed to the Ninth Circuit. On review, the appellate court affirmed. It found that not only does the California statute speak in terms of commercial e-mail advertisements that contain “falsified,” “misrepresented,” “forged,” or misleading information — terms common to fraud allegations — but the complaint repeatedly described the advertisements and their content as “fraudulent.” The court held that plaintiff could not circumvent the requirements of the Rules by arguing that it did not plead all of the allegations sufficiently to set forth a claim of fraud.

It’s important to note that the court made clear, despite its holding, that it was not articulating a standard for pleading under this California statute. It merely found that in the circumstances of this case, the claim was not pled with the requisite particularity.

July 7, 2010 Right of Publicity

Use of name and image in YouTube clip did not support right of publicity claim

Fuentes v. Mega Media Holdings, Inc. 2010 WL 2634512 (S.D. Fla. June 30, 2010)

Plaintiff is a famous Cuban author who has written extensively about Raul Castro and other members of the Castro regime. The producers of the Maria Elvira Live show used plaintiff’s name and image in the content of one of the show’s episodes.

In addition to broadcasting the episode on TV, the producers uploaded clips from the show to YouTube. Plaintiff had not consented to that appearance and sued for, among other things, violation of Florida’s right of publicity statute, Florida Statute 540.08.

The show moved to dismiss the right of publicity claim and the court granted the motion.

It held that use of plaintiff’s name and image in this way did not violate the statute because the use was not “for purposes of trade or for commercial or advertsing purposes.” Looking to analogous cases (which, of course, did not involve social media), the court held that for this statutory standard to be met, the use of the name or image has to be separate and apart from the broadcast itself.

In these other cases, the individuals featured in the content of an audiovisual work sued under the statute and lost.

In Lane v. MRA Holdings, the plaintiff sued the producers of Girls Gone Wild. She lost even though her picture appeared on the cover of the DVD. In Tyne v. Time Warner, some individuals who were incorporated into the movie A Perfect Storm lost on the same grounds — their name and image had not been used separate and apart from the work itself.

July 2, 2010 Contracts, Copyright

New copyright lawsuit involves Creative Commons

GateHouse Media, Inc. v. That’s Great News, LLC, No. 10-50164 (N.D. Ill. filed 6/30/2010)

A lawsuit filed this past week in the Northern District of Illinois includes a claim that the defendant violated the terms of a Creative Commons license covering the plaintiff’s copyrighted works. GateHouse Media publishes a slew of local newspapers, including the Rockford Register Star in Rockford, Illinois. The Register Star provides premium online content to its subscribers, and makes that content available under a Creative Commons Attribution-NonCommercial-NoDerivs license.

GateHouse sued a company that sells reprints of articles — including articles from the Register Star — on fancy plaques to the people who are featured in those articles. Since GateHouse has its own reprint business, it views the defendant’s work as a competitive threat.

The complaint has all the claims you’d expect under these facts — copyright infringement, trademark infringement and various claims under Illinois unfair competition law. It also has a breach of contract claim, in which GateHouse invokes the terms of the Creative Commons license, going after the defendant’s commercial use of the licensed material.

Ponder if you will why GateHouse chose to pursue a violation of the Creative Commons license as a breach of contract claim and not as copyright infringement. The license terms are written as conditions and not covenants. So it seems like the defendant’s alleged use would be outside the scope of the license and therefore infringement. Any ideas why plaintiff is proceeding this way?

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June 25, 2010 Contracts

Portability policies are an intriguing innovation

One of the fundamental and inherent technical shifts that are happening as computing moves to the cloud — for enterprise functioning and for more personal things like enjoyment of social media — pertains to the location of the user data being acted upon. Just think about how many different sites and providers across the web store and process and display uploaded user information.

The utility of this information is, in general, enhanced when there are well-understood ways that the uploaded data — whether as-uploaded or as-modified by the service or through user collaboration — can be moved to other computing environments. In some circumstances, easily-moved data is a good thing (think social networking profiles). In other circumstances, a user may want to know that his or her data will securely stay put (think medical information). The contours of the ability to move information is the subject of the notion of “data portability.”

It’s getting to the point where data portability is a real, practical issue. And it’s important enough that the topic should be addressed in terms of the legal relations between user and provider. Enter “portability policies.”

A portability policy — much like a website terms of service or privacy policy — serves to specify the understandings and the legal obligations between parties to a technological transaction. PortabilityPolicy.org is a new project from the DataPortability Project to make the portability policy drafting process easier, and the end results more standardized.

It looks intriguing. Here’s more information about the project from Techdirt.

Photo courtesy Flickr user Extra Ketchup under this Creative Commons license.

June 23, 2010 Copyright, DMCA

YouTube victorious in copyright case brought by Viacom

District court grants summary judgment, finding YouTube protected by DMCA safe harbor.

Viacom v. YouTube, No. 07-2103, (S.D.N.Y. June 23, 2010)

The question of whether and to what extent a website operator should be liable for the copyright infringement occasioned by the content uploaded by the site’s users is one of the central problems of internet law. In talks I’ve given on this topic of “secondary liability,” I’ve often referred it simply as “the YouTube problem”: should YouTube be liable for the infringing content people upload, especially when it knows that there is infringing material.

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Today was a big day in the history of that problem. The district court granted summary judgment in favor of YouTube in the notorious billion dollar copyright lawsuit brought against YouTube by Viacom way back in 2007.

The court held that the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”) (at 17 USC 512) protected YouTube from Viacom’s direct and secondary copyright claims.

Simply stated, the DMCA protects online service providers from liability for copyright infringement arising from content uploaded by end users if a number of conditions are met. Among those conditions are that the service provider “not have actual knowledge that the material or an activity using the material on the system or network is infringing,” or in the absence of such actual knowledge, “is not aware of facts or circumstances from which infringing activity is apparent.”

The major issue in the case was whether YouTube met these conditions of “non-knowledge” (that’s my term, not the court’s) so that it could be in the DMCA safe harbor. Viacom argued that the infringement was so pervasive on YouTube that the site should have been aware of the infringement and thus not in the safe harbor. YouTube of course argued otherwise.

The court sided with YouTube :

Mere knowledge of prevalence of such activity in general is not enough. . . . To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.

Given the magnitude of the case, there’s little doubt this isn’t the end of the story — we’ll almost certainly see the case appealed to the Second Circuit Court of Appeals. Stay tuned.

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June 23, 2010 Copyright

Court rejects RIAA’s arguments against 24 cent ringtone royalty rate

Recording Industry Ass’n of America, Inc. v. Librarian of Congress, — F.3d —, 2010 WL 2487842 (D.C. Cir. June 22, 2010)

Recorded music is usually subject to copyright protection in two ways — the musical composition (think sheet music and lyrics) is protected by one copyright, and the actual sound recording is protected by another copyright. In general, for someone other than the copyright owner to use a copyrighted work (e.g., to copy or distribute it), he or she must get a license from the copyright owner (setting aside exceptions such as fair use).

The compulsory license schema

But there’s a kind of zany exception to the general requirement of a negotiated license when it comes to reuse of a musical composition. Others seeking to make such further reuse can do so without obtaining an agreement with the owner of the copyright in the musical composition, provided that the reuser obtain and pay a fee for a “compulsory license.” The mechanics for such licensing system are set up in Section 115 of the Copyright Act (17 USC 115).

There is a Copyright Royalty Board (CRB) that the Library of Congress oversees. This three-member panel sets the fees due to copyright owners under the Section 115 compulsory license schema.

Ring-a-ling cha-ching

As you probably know, ringtones that sample popular songs are popular these days. (As a commuter on public transportation I can attest to what a scourge this is on our modern society.) Since they’re all the rage, they’re big business.

In 2009, after some complex hearings, the CRB set the rate for payment under a compulsory license at 24 cents per ringtone sold. The Recording Industry Association of American (RIAA) had argued that its copyright owners were entitled to a percentage of total revenue, not a flat “penny-rate.” Unhappy with the CRB’s determination, it appealed to the U.S. Court of Appeals for the District of Columbia Circuit. The court affirmed the CRB’s penny-rate of 24 cents.

How the CRB was right

The CRB determined that a penny-rate was more in line with reimbursing copyright owners for the use of their works. In upholding the CRB’s determination on this point, the court observed that in other cases it had validated the CRB’s preference for a royalty system based on the number of copyrighted works sold — like the penny rate — as being more directly tied to the nature of the right being licensed than a percentage-of-revenue rate.

Moreover, the CRB had determined (and the court agreed) that a percentage revenue model did not make as much sense for the sale of individual copyrighted works as it would in the sale of media that is streamed or broadcast. Simply stated, it is relatively easy to measure how many copies of a ringtone are sold, and thus easy to calculate a penny-rate amount. But that is more difficult to accurately do in the case, for example, of satellite radio. Those difficulties were not present in this situation, and that militated against the adoption of a percentage rate.

Finally, the court agreed with the CRB’s disdain for the complexity of calculating a percentage of revenue licensing fee. A penny-rate structure was much simpler to handle than the “salient difficulties” presented by the RIAA’s percentage mode.

The court found nothing unreasonable about the CRB’s determination (i.e., that the the CRB’s determination was not arbitrary and capricious, and so it affirmed that determination.

Photo courtesy Flickr user totalAldo under this Creative Commons license.

June 17, 2010 Anonymity, Electronic Discovery, Privacy

Illinois court sets standard for unmasking anonymous commenters

Maxon v. Ottawa Pub. Co., — N.E.2d —, 2010 WL 2245065 (Ill.App. 3 Dist. June 1, 2010)

The rules of civil procedure in Illinois permit an aggrieved party to file a petition with the court asking for an order requiring unknown potential defendants to be identified. This is called a Rule 224 petition.

A couple from Ottawa, Illinois got their feelings hurt over some anonymous comments left in response to content published by the local newspaper on its website. Wanting to sue for defamation, the couple filed a Rule 224 petition. The newspaper opposed the petition. (For something similar, see Enterline v. Pocono Medical Center.)

The trial court denied the petition, applying the standards articulated in Dendrite v. Doe and Doe v. Cahill, finding that the petitioners had not presented a strong enough case for defamation to justify the unmasking of the anonymous commenters. Those cases require, among other things, that a party seeking to identify an anonymous speaker make efforts to notify the anonymous party, and present enough evidence to establish a prima facie case of defamation (Dendrite) or survive a hypothetical motion for summary judgment (Cahill).

The aggrieved couple sought review with the Appellate Court of Illinois. Reviewing the decision to deny the Rule 224 petition de novo, the court reversed and remanded, ordering the identification of the anonymous speakers to be made.

In reaching its decision, the court rejected the newspaper’s (and amicis’) arguments that the trial court should apply the rigorous standards of Dendrite and Cahill. That’s not to say, however, that the court left anonymous speakers at great risk of having their First Amendment rights trampled upon.

The court held that the mechanics of Rule 224 adequately protect the potential First Amendment rights of anonymous internet speakers. Here’s why, according to the court:

  • The petition must be verified – the threat of the pain of perjury should keep out half-hearted claims.
  • The petition must state the reason discovery is necessary.
  • The discovery is limited only to learning the identity of the potential defendant.
  • Most importantly, before the discovery will be permitted, the court must hold a hearing and determine the petition sufficiently states a cause of action.

In this fourth step, the court is to apply the standard it would apply in a Section 2-615 motion. Such a motion is, essentially, the Illinois version of a motion to dismiss for failure to state a claim. That is no insignificant test, because unlike federal court and other state jurisdictions, Illinois requires fact pleading. That means the petition needs to include a significant amount of specific information to survive the motion to dismiss.

A troubling aspect of the ruling is the omission from the test of a requirement that the party seeking discovery attempt to notify the anonymous target of the inquisition. The appellate court held that a trial court may, in its discretion, impose such a requirement.

But it would be nice to know that the real party whose First Amendment interests are at stake (the anonymous speaker) is guaranteed a fair opportunity to argue from his or her perspective. After all, it’s that party with the real incentive to do so. Let’s hope the trial courts exercise that discretion wisely (and that they know in the first place that they have that discretion).

Photo courtesy Flickr user TheTruthAbout… under this Creative Commons license.

June 15, 2010 Computer Crime, Privacy

Access to private email server supports Stored Communications Act claims

Devine v. Kapasi, 2010 WL 2293461 (N.D. Ill. June 7, 2010)

Kapasi and Devine were equal shareholders in a corporation. In August 2009, the two decided to part ways. The corporation transferred one of its servers to Devine, and he immediately put it into the service of his new company.

After the server was transferred, Kapasi and some employees of the old company allegedly logged on to the server to access and delete email messages stored on that machine. Devine and his new company sued for violation of the Stored Communications Act (at 18 U.S.C. §2701) and the Computer Fraud and Abuse Act (at 18 U.S.C. §1030).

The defendants moved to dismiss under FRCP 12(b)(6) for failure to state a claim. The court denied the motion as to the Stored Communications Act claims but granted the motion (with leave to amend) as to the Computer Fraud and Abuse Act claims.

The Stored Communications Act claims

The defendants argued that the Stored Communications Act did not apply to access to the server because plaintiffs did not provide an electronic communications service to the public. Defendants relied on the case of Andersen Consulting LLP v. UOP, 991 F.Supp. 1041 (N.D.Il.1998) to support this argument. In that case, the court dismissed a Stored Communications Act claim for unauthorized disclosure of emails under 18 U.S.C. §2702. The Andersen Consulting court held that disclosure of emails obtained from the server of a company not in the business of providing electronic communications services to the public did not violate the Stored Communications Act.

This case, however, arose under 18 U.S.C. §2701, which does not impose the same scope on potential defendants – the term “to the public” does not appear in connection with the provision of electronic communication services in §2701. Section 2701 deals with unauthorized access, while §2702 deals with unauthorized disclosure.

So the court held that “[w]here, as here, a plaintiff pleads that it stores electronic communications on its own systems, and that a defendant intentionally and without authorization got hold of those stored communications through the plaintiff’s electronic facilities, the plaintiff states a claim under § 2701 of the [Stored Communications Act].”

The Computer Fraud and Abuse Act claims

The court dismissed the Computer Fraud and Abuse Act claims, finding that the plaintiffs failed to plead that they suffered a cognizable “loss” under the statute. The plaintiffs were required to plead that the defendants’ conduct “caused . . . loss to 1 or more persons during any 1-year period . . . aggregating at least $5,000 in value.” Such allegations were simply missing from the complaint.

The defendants tried an interesting argument that the court rejected as premature at the motion to dismiss stage. They argued that since one of the plaintiffs was a technology company, it should have had a backup of all the data allegedly deleted. Therefore, any cost in excess of the $5,000 statutory threshold would not be a “reasonable cost.” Though it didn’t fly at the motion to dismiss stage, such an argument may fare better in a motion for summary judgment.

Photo courtesy Flickr user Jordiet under this Creative Commons License.

June 2, 2010 Anonymity

Court scales back Zynga’s attempts to learn about anonymous Mafia Wars infringers

Zynga Game Network Inc. v. Williams, 2010 WL 2077191 (N.D.Cal. May 20, 2010)

Zynga (you know, the creator of Farmville and Mafia Wars) has filed a federal lawsuit against the operators of websites that sell virtual currency and goods for use in Mafia Wars. These websites allegedly give rise to infringement of the Mafia Wars trademark and the sale of these virtual things is in violation of the game’s terms of service.

In federal court, you can’t start the discovery process until the parties have met to discuss certain issues (this is called a Rule 26(f) conference). But there’s an obvious chicken and egg problem in cases like this that have anonymous defendants — how do you confer with a defendant you don’t know? You’re kind of stuck if you can’t take discovery to learn who he is.

Fortunately the court can allow discovery to happen before the Rule 26(f) conference when there is good cause.

So Zynga has argued that there is good cause to allow it to serve subpoenas on Godaddy (the registrant for the MAFIAWARSDIRECT.COM, MWBLACKMARKET.COM, and MWFEXPRESS.COM domain names) and PayPal, who apparently facilitated the purchase of virtual goods.

The court agreed that Zynga should get to serve the subpoenas. But it found that the subpoenas as proposed were too broad. For example, Zynga sought all billing and account records, server logs, website content, contact information, transaction histories and correspondence for the persons or entities that purchased services from the offending sites. The court held that the limited discovery appropriate for Zynga at the early stage would only allow it to get identifying information for the site owners.

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