Attorney Evan Brown

March 20, 2008 Copyright

“Copyright misuse” not an independent cause of action

Ticketmaster L.L.C. v. RMG Technologies, Inc., — F.Supp.2d —-, 2008 WL 649788 (C. D. Cal. March 10, 2008)

Last October I wrote about a decision from the U.S. District Court for the Central District of California in the case of Ticketmaster L.L.C. v. RMG Technologies, Inc. You may recall that the court granted an injunction against RMG’s automated software that accessed Ticketmaster’s Web site, allegedly in violation of the DMCA anticircumvention provisions (17 U.S.C. §1201 et seq.) as well as the site’s terms of use. Because of such ruthless behavior on the part of RMG, some parents were evidently denied the chance to purchase Hannah Montana tickets for their daughters. (How can we be concerned about the economy or the war on terror when things like that are going on?)

RMG didn’t give up after last October’s injunction against it, but went on the offensive, filing a counterclaim against Ticketmaster alleging, among other things, copyright misuse. In general, the doctrine of copyright misuse prevents copyright holders from leveraging their limited monopoly to allow them control of areas outside that monopoly. Trying to extract a licensing fee for the use of a work in the public domain would be a clear example of copyright misuse.

The problem for RMG was that copyright misuse is a defense to an infringement action, not a cause of action in itself. And the court recognized that, citing to a number of cases, including:

Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1090 (9th Cir.2005) (affirming district court’s refusal to “extend [ ] the doctrine of copyright misuse beyond ‘its logical place as a defense to a claim of copyright infringement’ ”)
Practice Mgmt. Info. Corp. v. American Medical Ass’n, 121 F.3d 516, 520 (9th Cir.1997) (adopting rule that “misuse is a defense to copyright infringement”)
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 269 F.Supp.2d 1213, 1225 (C.D.Cal.2003) (noting that, as even defendant conceded, “copyright misuse cannot found a claim for damages”)

Accordingly, the court granted Ticketmaster’s motion to dismiss the claim for copyright misuse. Leaving no uncertainty, the court continued by observing that because “this holding is not based on the way in which this claim was pled, but on the fact that no such claim can ever be pled, the dismissal of this claim is WITH PREJUDICE, as no possible amendment could save it.”

How’s that for black letter law?

March 19, 2008 Computer Crime

CD-ROM is not a computer

GWR Medical, Inc. v. Baez, No. 07-1103, 2008 WL 698995 (E.D.Pa. March 13, 2008)

Now there’s a revelation in that headline.

Plaintiff GWR Medical terminated defendant Baez’s position with the company. Baez took with him a CD-ROM containing training materials and, the company alleged, trade secrets. When Baez wouldn’t return the CD, GWR sued him in federal court for violation of the Computer Fraud and Abuse Act, 18 U.S.C. §1030 et seq. (“CFAA”).

Baez moved to dismiss the CFAA claim, and the court granted the motion. It held that a CD-ROM did not meet the definition of “computer” under the CFAA, and thus the claim could not stand.

The CFAA provides, among other things, that “whoever intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains … information” violates the law. GWR asserted that Baez’s violation occurred when he kept the CD-ROM after he was terminated, thereby exceeding the authorization previously given to him.

A “computer” is defined in the CFAA [at 18 U.S.C. § 1030(e)(1)] as follows:

An electronic, magnetic, optical, electrochemical, or other high speed data processing device that performs logical, arithmetic or storage functions, and includes any data storage facility or communications facility directly related to or operating in conjunction with such device, but does not include an automated typewriter or typesetter, a portable hand held calculator, or similar device.

Electrochemical? Say what? And thank goodness we don’t have to hear about CFAA lawsuits brought for sneaking in late at night to use the automated typewriter. Hey man, come back with my calculator!

In any event, the parties each presented expert testimony on the question of whether a CD-ROM constitutes a computer. The court parsed the definition into three requirements: (1) “[a]n electronic, magnetic, optical, electrochemical, or other high speed data processing device;” (2) “performing logical, arithmetic, or storage functions;” which (3) “includes any data storage facility or communications facility directly related to or operating in conjunction with such device.” If at least one of these requirements were not met, then the CD-ROM fell outside the definition.

Central to the court’s conclusion was the requirement that a computer process information. It found that the lack of the capacity to process information was fatal to GWR’s assertion that the CD-ROM met the statutory definition. Instead, the disc was analogous to a compilation of documents and training materials. Accordingly, the court dismissed the CFAA claim.

March 3, 2008 First Amendment

Court lifts injunction off of Wikileaks

Court Lifts Injunction Against Web Site Accused of Posting Confidential Banking Documents

Bank Julius Baer & Co. Ltd v. Wikileaks, 535 F.Supp.2d 980, 2008 WL 554721 (N.D.Cal. February 29, 2008)

Switzerland-based Bank Julius Baer sued the Web site Wikileaks.org and the registrar of the domain name, and sought an injunction against the publication on the site of allegedly forged and confidential records of Bank Julius Baer customers. The court initially entered a permanent injunction agreed to between Julius Baer and the registrar, which called for a lockdown of the domain name’s registration. The court also, at first, entered a temporary restraining order (TRO) against the Web site, restraining the “display, use or dissemination of the property identified by [Bank Julius Baer] as private, personal banking information of its clients.”

In the days following the entry of injunctive relief, numerous parties seeking to be amicus curiae provided the court with additional information concerning the matter. This additional information led the court to reconsider the entry of the permanent injunction and the TRO. In an order dated February 29, 2008, the court dissolved both orders and denied Julius Baer’s motion for entry of a preliminary injunction.

Among the factors guiding the decision were the First Amendment and the efficacy of any injunction concerning the allegedly confidential banking information. The court noted the important free speech issues implicated, including the right to receive information as “a necessary predicate to . . . meaningful exercise” of free speech. It expressed concern that the previous publication of confidential information meant that “the cat is out of the bag,” and thus an injunction would be ineffective in protecting the privacy rights of the bank’s clients.

Further, the court found that the injunction in place was not the least restrictive means to achieve the plaintiff’s goals, and thus should be dissolved. On this point, the court suggested that a constitutionally-permissible injunction would call for limited redaction of information, while permitting the non-confidential parts of the documents to be displayed online.

February 20, 2008 Trademarks

Alienware goes after “free” computer offer

Alienware Corporation v. Online Gift Rewards, No. 08-1560, S.D.N.Y. (Filed February 14, 2008).

High-performance computer manufacturer Alienware has filed suit against an online marketer alleging trademark infringement, dilution, and other theories of unfair competition. Alienware claims that the defendant has “disseminated mass unsolicited electronic solicitations” and posted Web pages offering “free” Alienware laptops, when in reality, one has to perform some “onerous” tasks to get them.

According to Alienware, after accepting the offer, users must purchase a specified amount of goods from various other sites. And this obligation is not clearly communicated, but is “presented to the consumer, if at all, only after he or she expends significant time and effort in responding to inquiries and navigating the multiple prompts.”

One may be tempted to speculate that the defendant in this case could raise some kind of defense based on fair use of the trademark. (How could you let people know what you’re offering unless you tell them; and giving away actual Alienware computers also seems like it could be protected under the first sale doctrine.)

And Alienware may have anticipated this defense, by alleging that it’s only “Alienware” serving as the source identifier for the offer, and “[t]here is no other recognizable or identifiable indication of source.” The defendant is an entity called “Online Gift Rewards.” Alienware claims that the designation is “likely to be perceived as a generic description of the offering rather than a source indicator.”

[Download the complaint]

February 18, 2008 Computer Crime

MySpace friend request results in criminal charges

People v. Fernino, — N.Y.S.2d —-, 2008 WL 382348 (N.Y.City Crim.Ct. February 13, 2008)

An order of protection, issued by a New York family court, required that defendant Fernino have no contact with a certain Delgrosso. After Fernino added Delgrosso as a “friend” on MySpace, she was charged with contempt of court for allegedly violating the order of protection.

Fernino moved to dismiss the criminal complaint against her, arguing that even if the allegations were true, the purported “contact” through “friending” Degrosso would not support a conviction on the charges. The court denied the motion to dismiss.

Finding that adding Delgrosso as a friend in the social networking context was prohibited “contact,” the court cited to People v. Kochanowski, 186 Misc.2d 441, 442 (App Term, 2nd Dept 2000) and People v. Johnson, 208 A.D.2d 1051 (3rd Dept 1994). In Kochanowski, the appellate court affirmed the harassment conviction of a defendant who participated in building a bogus Web site containing, among other things, alluring pictures of his ex-girlfriend. In Johnson, the court held that the defendant committed aggravated harassment by responding to a personal ad in the victim’s name, causing the person placing the ad to contact the victim.

In this case, the court observed that even though Delgrosso could have simply denied the friend request, it was still a form of contact. It found that the form of communication was no different from the defendant having a third party say to Delgrosso, “Your former friend wants to communicate with you. Are you interested?”

It should also be noted that the court cited approvingly to Wikipedia for a description of MySpace and to Alexa for information about MySpace’s popularity.

Mark Fass of the New York Law Journal has more on this case here. The MyCrimeSpace blog has its take on the case here. Also found on MyCrimeSpace is this article from last year about a poor chap in the UK who was found to have violated a restraining order for friending his ex-wife on Facebook.

February 2, 2008 Trademarks

Network Solutions’s forum selection clause enforced

Doe v. Network Solutions, LLC, No. 07-5115, 2008 WL 191419 (N.D. Cal. January 22, 2008)

Plaintiff Doe alleged violations of the Electronic Communications Privacy Act and similar California statutes when he discovered that personal and financial information about him had allegedly been obtained from a webmail account he established with Network Solutions. Citing to the forum selection clause in the click-wrap agreement Doe had entered into several times, Network Solutions moved to dismiss the action under Fed. R. Civ. P. 12(b)(3) for improper venue.

The court granted the motion to dismiss, finding that the claims brought by plaintiff were within the scope of the clause, and that enforcement would not be unreasonable. The matter was dismissed without prejudice to refile in the Eastern District of Virginia.

The forum selection clause provided, in relevant part, that it governed “any disputes between [customer] and Network Solutions under, arising out of, or related in any way to this Agreement. . . .” In holding that the claims fell within the scope of the clause, the court observed that although there were no claims for breach of contract, the claims arose out of plaintiff’s status as a customer and related to the services, thus implicating the contractual relationship. Moreover, the language “under, arising out of, or related in any way to [the] agreement” led the court to conclude that the clause was to be construed broadly.

In determining that enforcement of the clause would not be unreasonable, the court rejected plaintiff’s argument that it would contravene public policy, as the choice of law provision (naming Virginia) would preclude recovery under various California statutes. The court noted that California law had not expressed any policy against enforcement of a forum selection clause in the context of the claims asserted, and that a clause providing a forum which permits different or less favorable remedies is not, alone, a basis for invalidating the clause.

January 30, 2008 Cybersquatting, Trademarks

Finding ATLAS COPCO and ATLAS CASPIAN confusingly similar, court awards in rem ACPA relief to unopposed plaintiff

Atlas Copco AB v. Atlascopcoiran.com, No. 07-1208, 2008 WL 149128 (E.D. Va. January 8, 2008)

Unable to hail the overseas registrants of domain names, including atlascaspian.com and atlascopcoiran.com into a U.S. court, plaintiff Atlas Copco AB sought in rem relief against the domain names under 15 U.S.C. §1125(d)(2)(a). After the defendants failed to answer the complaint, Atlas Copco moved for summary judgment, relying on the allegations of its verified complaint.

The court granted the motion and ordered the domain names transferred.

In finding that the defendants had engaged in cyberpiracy, the court looked at the “dominant or salient portions of the marks” at issue – the plaintiff’s mark and the marks comprising the offending domain names.

For you trademark experts out there, query whether you might characterize the following analysis as a bit of a stretch:

The dominant portion of each of the Defendant Domain Names is “ATLAS COPCO” or “ATLAS.” These “dominant” terms are paired with the generic terms “CASPIAN” and “IRAN,” which are generic geographic terms that do not distinguish the Defendant Domain Names from the ATLAS COPCO trademark. An internet user might reasonably assume that the geographic term “CASPIAN” and “IRAN” were added to the ATLAS COPCO trademark by the Plaintiffs to identify its geographic location.

It looks like another motivation for the court’s finding was some of the subterfuge on the sites at the offending domain names. Turns out some of them pointed to “copycat” websites bearing “Atlas Caspian” logos confusingly similar to the plaintiff’s trademark, and linked to phishing sites bearing the actual Atlas Copco mark.

January 29, 2008 Computer Crime, First Amendment

Court rejects constitutional challenges to obscenity statutes in prosecution of adult website owner

U.S. v. Little, No. 07-170, 2008 WL 151875 (M.D. Fla. January 16, 2008)

The operator of the Max Hardcore website was indicted under 18 U.S.C. §§1462 and 1465 for distributing allegedly obscene video files which agents downloaded in Tampa, Florida. Max Hardcore moved to dismiss the indictment, raising a number of constitutional challenges to the prosecution. The court rejected each of the defendant’s arguments and denied the motion.

Statutes not facially unconstitutional

The court declined to accept the defendant’s argument that because of the evolving nature of substantive due process law, prior Supreme Court decisions upholding the federal obscenity statutes were no longer valid. It also refused the defendant’s argument that the constitutional right to privately posses obscene materials should translate into a corresponding right to distribute such material.

Statutes not unconstitutional as applied

The defendant also launched a couple of challenges to the application of the Miller test, set forth in the Supreme Court’s decision of Miller v. California, 413 U.S. 15, 93 S.Ct. 2607 (1973). Under the Miller test, the finder of fact determines whether material is obscene by applying the following test: (a) Whether “the average person, applying contemporary community standards’” would find that the work taken as a whole, appeals to prurient interest; (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political or scientific value.

Max Hardcore’s challenge to the Miller test dealt with the requirement that the works at issue be “taken as a whole.” The defendants argued that because of the interconnected nature of the Web, it would be impossible to know what the term “taken as a whole” means, and it would similarly be impossible to determine the community standards against which the works should be evaluated. At the very least, the defendant argued, the entire Max Hardcore site should be considered the work “taken as a whole,” and not just the individual video files.

With little analysis, the court sided with the government, holding that the individual files – and not the whole website – should be the works “taken as a whole.” And the court concluded that the absence of a universal community standard was okay. Citing to U.S. v. Bagnell, 679 F.2d 826 (11th Cir. 1982), it held that “[i]t is constitutionally permissible to subject defendants in obscenity prosecutions to varying community standards of the various judicial districts into which they transmit obscene material.”

January 28, 2008 Computer Crime, Litigation

Damage under CFAA must involve some diminution of the system to be actionable

Garelli Wong & Assoc. v. Nichols, No. 07-6227, 2008 WL 161790 (N.D. Ill. January 16, 2008)

A recent decision from the U.S. District Court for the Northern District of Illinois presents a pretty typical fact pattern (employee leaves with sensitive data to work for a competitor), but also gives some useful guidance on the scope of the Computer Fraud and Abuse Act, 18 U.S.C. 1030 et seq. (CFAA).

Plaintiff Garelli Wong and Associates provides temporary placement for accounting professionals. When defendant Nichols worked for Garelli, he signed an NDA and learned a lot about the company’s clients, employees and strategy.

So when Garelli learned that Nichols allegedly copied a bunch of information before jumping ship, it sued. In addition to breach of contract, Garelli claimed Nichols violated the CFAA.

Nichols moved to dismiss the CFAA claim pursuant to Fed. R. Civ. P. 12(b)(6). The court granted the motion. It held that the CFAA requires a plaintiff to plead both damage and loss, and that Garelli failed to sufficiently plead both.

The CFAA defines “damage” as “impairment to the integrity or availability of data, a program, a system, or information.” Citing approvingly to the unpublished case of ResDev v. Lot Builders, 2005 WL 1924743 (M.D. Fla. August 10, 2005), which held that the word “integrity” required “some diminution in the completeness or useability of data or information on a computer system,” the court sided with Nichols. He had contended that CFAA liability does not arise merely by copying data. A violation of the CFAA requires more — some adverse effect on the system.

Garelli’s loss allegation essentially got Twomblied. The court found that Garelli’s allegations of loss — essentially a formulaic recitation of the CFAA’s $5,000 threshold language — did not provide the grounds of the entitlement to relief with more than labels and conclusions.