October 9, 2007 Contracts

Court shuts down BoardFirst.com for violation of Web site terms of service

Southwest Airlines Co. v. BoardFirst, LLC, No. 06-0891 (N.D. Tex. September 12, 2007)

Southwest Airlines does not have differentiated seating — one cannot get a better seat by paying more. Passengers are allowed to board based on a group classification they are assigned on a first come, first served basis. Passengers in the “A” group get to board first, while passengers in the “C” group go last. One can check in to be assigned to a group up to 24 hours before a flight by visiting Southwest’s Web site.

Boardfirst.com was a web-based company that Southwest passengers could pay to log in for them in hopes of obtaining “A” group passes. Southwest objected to this practice, however, and filed suit in a Texas federal court against Boardfirst alleging violation of the Southwest Web site’s terms of service. Southwest then moved for summary judgment on its breach of contract claim, and the court granted the motion.

The first issue before the court was whether the “browsewrap” terms of service on the Southwest Web site, visible upon clicking a hyperlink at the bottom of the home page, constituted a valid contract between Southwest and BoardFirst. Those terms of service, among other things, prohibited using the Southwest site for anything other than personal, non-commercial purposes.

The court held that a valid contract existed. Finding that the situation resembled the one in the case of Register.com v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004), the court held that the evidence showed BoardFirst had actual knowledge of the terms, which expressly prohibited use of the site for commercial purposes.

Next the court determined that BoardFirst had breached the terms of service by using the site for commercial purposes. It rejected BoardFirst’s argument that BoardFirst was an agent of the ticket purchasers and therefore not a prohibited third party accessing the site. The court also rejected BoardFirst’s argument that prohibiting “commercial” use of the website would mean that every access of the site — ostensibly resulting in Southwest’s commercial advantage — would constitute a breach of the terms of service.

September 28, 2007 Trademarks

Ninth Circuit rejects “disparagement of trademark” claim

The Freecycle Network, Inc. v. Oey, — F.3d —-, 2007 WL 2781902 (9th Cir. September 26, 2007)

“Freecycling” is a collaborative online effort of people working to share and trade items they no longer want. The Freecycle Network is at the forefront of these efforts, providing a website that facilitates the exchange of information and the subsequent exchange of stuff. Read more about the organization in the group’s Wikipedia entry.

freecycle.jpg

Tim Oey was one of the early forces of the Freecycle Network. At first he encouraged the group to take seriously what rights it may have in the word “freecycle.” Some time later he changed his mind, and began advocating online, through message boards and other fora, that the term should be left to the public domain. The Freecyle Network disagreed with this approach, and ultimately sued Oey for infringement and “defamation of trademark” under Section 43(a) of the Lanham Act.

The district court entered a preliminary injunction against Oey. But Oey sought review with the Ninth Circuit, which reversed.

The court provided three reasons why the Freecycling Network’s claim for trademark infringement failed. First, Oey’s conduct did not constitute a “use” of the mark in commerce, as the record in the case did not indicate they were made to promote any competing service or reap any commercial benefit whatsoever. Rather, Oey simply expressed an opinion that the plaintiff lacked trademark rights in the term “freecycle” and encouraged like-minded individuals to continue to use the term in its generic sense and to inform the USPTO of their opinions.

Second, even if Oey’s statements could somehow have been construed to be a “use in commerce,” that use was not likely to cause confusion, mistake, or deceive anyone as to the connection of Oey’s services (or any other) with those of the plaintiff.

Finally, Oey’s statements did not satisfy the requirements for false advertising, misrepresentation, or unfair competition under § 1125(a)(1)(B). There was no evidence that Oey’s statements were made in “commercial advertising or promotion.” And, even if such evidence existed, § 43(a) creates liability only for product disparagement — i.e., misrepresentation of “the nature, characteristics, qualities, or geographic origin” of “another person’s goods, services, or commercial activities.” In this case, the plaintiff did not allege or show that Oey made any statements disparaging its goods or services. Instead, he merely talked about the nature of the mark itself. Indeed, many of his remarks were aimed at ensuring the ongoing success of the plaintiff’s organization and its services.

As for the claim of “trademark disparagement,” the court held that no such cause of action existed under the Lanham Act. It further held that even if trademark disparagement were a viable claim under the law, Oey’s conduct did not satisfy the elements of such a tort that the Freecycling Network asserted. The statements were not “false.” At worst, Oey offered an erroneous legal opinion (by a layperson) that the Freecycle Network lacked trademark rights in the term “Freecycle.” But under the Lanham Act, statements of opinion are not generally actionable.

View the opinion below (or click through if it’s not showing up in the RSS feed):

September 21, 2007 Copyright

Scandal over use of Creative Commons photo on Flickr results in lawsuit

The details on this are still sketchy, but according to this article, the mother of a Texas minor has sued in state court over Virgin Mobile’s use of a Creative Commons attribution-only licensed photo found on Flickr. From what I can tell, Virgin Mobile found the photo on Flickr, cropped it, did a horizontal flip, and added the moniker “Dump Your Pen Friend.” A guy in Australia noticed the Creative Commons work in the add, posted a picture of it on Flickr [here], where the subject of the photo noticed it. [This story unfolds in the comments for the picture.]

I’m sure that more details will emerge and we’ll get a better picture of what’s going on here. There’s one nagging question that in my mind needs answering. Why is the plaintiff suing Creative Commons? Apparently the claims in the lawsuit are state-based right of publicity claims. How, by merely providing a licensing mechanism for the copyright in a photo, could Creative Commons be liable for anything in this situation?

Hat tip to Michael Geistfor alerting me to this story.

September 17, 2007 Copyright

Do ad blocking plugins cause copyright and terms of use problems?

CNet News has run this interesting article which raises questions about whether ad blocking software may face legal challenges from website publishers and advertising providers. What we’re talking about here are browser plugins that the user chooses to install, that allow web pages to be viewed sans the advertisements. Website publishers that rely on ad revenue (as well as upstream providers of advertising services, read: Google) may be concerned about such practices for obvious reasons.

The article speculates that if this kind of software were to face legal scrutiny, the plaintiffs would argue copyright infringement and violation of the sites’ terms of service, which may prohibit the use of this kind of software.

But who exactly would the plaintiffs sue? The individual users? The makers of the software? Maybe both, and depending on the defendant, the theories may be different.

Going after millions of users would seem impracticable, and the damages calculations in each of those situations would be problematic. What we could see, if we see anything at all on the lawsuit front, are challenges against the makers of these browser plugins.

This will require some creative theory-making. It does not seem like the software providers are the ones doing the actual “infringing” (i.e., aren’t the ones changing the appearance of a page thereby making an unauthorized derivative work). So I suppose the advertising side would put forward some type of inducement theory of secondary copyright infringement liability. Grokster will come in handy in those cases. And for the breach of contract aspect, perhaps we’ll see theories of tortious interference.

Maybe it’s a tempest in a teapot, and nothing will happen. But there could be a lot of money at stake, and that aspect could provide a strong catalyst. On the other hand, doesn’t it seem like the individual user has a clear right to determine what content is delivered?

August 31, 2007 Copyright

Don’t make Christopher Knight the posterboy for copyright oppression

Enough already about Christopher Knight’s purported martyrdom because he had a clip pulled from YouTube. [Boing Boing sums it up in 100 words or less here.] Here’s what happened: Knight made some ridicule-worthy videos and posted them on YouTube. Viacom, through it’s VH1 channel, appropriated some of that video into a portion of its show Web Junk 2.0, with the host of the show adding some comedic commentary. Knight then posted the Web Junk 2.0 footage on YouTube. Viacom had the clip removed pursuant to a DMCA takedown notice.

You can’t swing a cat around the blogosphere these past couple days without hitting a post about this. Christopher Knight is to this week what Nixon Peabody was to last.

Sure, Viacom, like many other big content owners, may overreach from time to time when it comes to the enforcement of its intellectual property rights. That’s a disservice to both Viacom and to the public. And to the extent there is overreaching, criticism is appropriate.

But to truly make that criticism effective, one needs to mount arguments against practices that truly are contrary to law. In this Christopher Knight situation, Viacom’s conduct is not beyond the pale. They have rights in the Web Junk 2.0 clip as it is an original work they created. It may be a derivative work, based on Knight’s clip. Fine. What’s more, Knight’s posting was bodily appropriation of VH1’s work.

In any event, it sure looks like VH1’s use of the work is a fair one. And who doesn’t love fair use? (Then I heard something about a goose and a gander.) So by using Knight’s clip in the first place, VH1 was not being the bad actor here. Owen Thomas gets it.

This situation is the wrong one in which to villainize big media. Look for a more sympathetic victim of copyright abuse.

August 30, 2007 Copyright

Copyright infringement threshold set at 70%

Bensbargains.net, LLC v. XPBargains.com, No. 06-1445, 2007 WL 2385092 (S.D. Cal. August 16, 2007).

Before we get into this case, I’d like to thank all the long time readers of Internet Cases. Some of you have been with me since the beginning way back in January 2005. Hard to believe, but this is the 300th post to this weblog. Onward and upward!

And now for an interesting copyright decision from California.

Ben Chui searches the web for good deals on products — from pens to mountain bikes — and posts his findings on his website bensbargains.net. In October 2005, Chui noticed that a competing website, XPBargains.com began featuring a lot of the same deals. Chui sued for copyright infringement in the U.S. District Court for the Southern District of California.

XPBargains.com moved for summary judgment. The court granted the motion in part and denied it in part. Although it was largely a win for XPBargains.com, the game ain’t over.

There were two main issues in the case. The first related to whether Chui owned a copyright in the selection and arrangement of the deals he selected. The second important issue was whether XPBargains’s conduct amounted to actionable copying.

On the first issue, whether the collection of deals was copyrightable, the court found that there was Feist originality because the “compilation [was] not an inclusive list of all deals for all products.” Instead, Chui used “his individual judgment to select among multiple deals for various product.”

As for actionable copying, the court held that some of XPBargains’s postings were similar enough to Chui’s selections to raise a triable issue. Interestingly, the court set that threshold at 70%. (It’s unusual for a court to be so mathematical.) For those instances where the number of identical selections appeared on both Chui’s site and XPBargains.com, the court held that the question of infringement could continue to trial.

Opinion appears below (or click through if it’s not showing up in the RSS feed):

August 28, 2007 Privacy

No recovery for credit monitoring costs after data breach

Pisciotta v. Old National Bancorp, No. 06-3817, — F.3d —-, (7th Cir. August 23, 2007)

Defendant Old National Bank had a website through which it gathered numerous fields of confidential information about its customers, and it stored that information in a database. After a hacker compromised the system and gained access to the confidential customer information, two of the bank’s customers filed suit in an Indiana federal court, alleging breach of contract and negligence. They sought recovery not of any actual loss suffered from the security breach (e.g., amounts drained from the accounts), but instead sought to be reimbursed for future credit monitoring services.

The bank answered the complaint and moved for judgment on the pleadings under Fed. R. Civ. P. 12(c). The court granted the motion, holding that the alleged damages were not cognizable under Indiana law. The plaintiffs sought review with the Seventh Circuit Court of Appeals, which affirmed the dismissal of the action.

The court observed that there was essentially no authority providing guidance on how the issue should be resolved under Indiana law. (The district court sitting in diversity was required to apply the law of the state in which it sits — Indiana.) Part of the analysis, however, relied on a recently enacted Indiana statute dealing with data breaches. Under that statute [I.C. 24-4.9 et seq.], under certain circumstances, if a bank becomes aware of a compromise in its security, it must notify its customers. The only cause of action available under the statute lies with the government, as the attorney general is authorized to pursue civil actions against non-compliant banks. Private individuals are not entitled to recovery under the statute.

The lack of any affirmative right to recover the costs of prospective credit monitoring services in the statute contributed to the court’s decision to hold that none should be available at common law. Given the absence of any state authority directly addressing the point, the federal court declined to implement such a “substantial innovation” on a question of state law.

Opinion appears below (or click through if it’s not showing up in the RSS feed):

August 24, 2007 Section 230

SexSearch.com afforded Section 230 protection in a case with an unconventional plaintiff

Doe v. SexSearch.com, No. 07-604, — F.Supp. —-, (N.D. Ohio August 22, 2007)

Hat tip to Michael Erdman of the new Online Liability Blog for his comprehensive post on this week’s decision by the U.S. District Court for the Northern District of Ohio in an interesting case involving Section 230 immunity.

The facts of the case are pretty wacky, and the alignment of the parties is not what you’d expect. Anonymous plaintiff Doe sued SexSearch.com for, among other things, breach of contract, fraud and breach of warranty after he was arrested for illegal sexual conduct with a minor he met through the SexSearch.com website. The girl’s profile stated she was 18 when in reality she was only 14.

SexSearch filed a 12(b)(6) motion to dismiss, asserting immunity under the Communications Decency Act at 47 U.S.C. § 230. Section 230 provides that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider,” and that “[n]o cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.” The court granted the motion to dismiss.

There are a couple of particularly interesting points in the court’s decision, although the outcome is not surprising, considering the generally favorable treatment Section 230 has gotten over the past decade or so, starting with the 4th Circuit’s decision in Zeran v. America Online, Inc., 129 F.3d 327, 330-31 (4th Cir.1997).

In this case, the plaintiff argued that SexSearch, and not the author of the profile, was the actual information content provider because SexSearch “reserved the right, and [did] in fact, modify the content of profiles when they [did] not meet the profile guidelines and as such they [were] responsible in whole or part for the creation or development of the information.” The court rejected this argument, because while SexSearch may have reserved the right to modify the content, the complaint did not allege that SexSearch modified the content in question.

Another interesting point in the case was the court’s confirmation that Section 230 applies not only to tort claims, but other causes of action as well. The plaintiff had argued that Section 230 immunized service providers only from causes of action for defamation. Citing to a number of cases, however, in which Section 230 had immunized defendants for causes of action such as breach of contract, negligence and violation of state commercial e-mail laws, the court looked to the plain language of the statute, which provides that “no cause of action may be brought and no liability may be imposed under any State or local law that is inconsistent with this section.

Case appears below (or click through if it doesn’t show up in the RSS feed):

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