Today, Rescuecom issued a press release declaring victory in its litigation against Google. But it's an odd definition of "victory" given that Rescuecom has apparently voluntarily abandoned its 6 year litigation effort without any new concessions from Google. The dismissal notice.

This development reminds me a lot of the American Blinds v. Google denouement, where American Blinds also simply gave up and dropped its multi-year lawsuit without any concessions from Google. Note to future plaintiffs: if you're going to threaten Google's $20B/year cash cow, chances are pretty good that they have the resources to outlast you.

Why did Rescuecom give up? According to Rescuecom's press release, "Google has recently confirmed to Rescuecom that it has removed Rescuecom's trademark from its Keyword Suggestion Tool." That, plus the fact that Google blocks trademark references in ad copy, means that Rescuecom feels it has "obtained two of the three things we initially sought in our complaint against Google." And if two out of three is good enough for Meat Loaf, apparently it's good enough for Rescuecom. At minimum, having low standards makes it a lot easier to declare victory when you give up.

However, this explanation is pretty hollow. Although the press release treats Google's removal of Rescuecom from the keyword suggestion tool as a new development, it appears that Google made this change IN 2005. Wendy Davis reports:

[Rescuecom CEO] Milman says he only learned last week that Google had stopped suggesting Rescuecom as a keyword. "Who knows what would have happened if they had told us back in 2005 that they had taken our name out of their keyword tool?" he said.

Hmm...I think I know the answer to that question! Then again, if getting out of the keyword suggestion tool really was one of Rescuecom's Big Three objectives all along, maybe they might have asked Google about it in 2005...or 2006...or 2007...or, well, you get the point. Spin it however they want, it's hard for Rescuecom to look good while dropping a lawsuit based on a 5 year old fact.

Nevertheless, I'm interested in knowing more about this removal. Does Google have a way for trademark owners to "opt out" of having their trademarks in its keyword suggestion tool? I would expect that option to become very popular if it were well-known. If anyone has information about how trademark owners can make an election with Google, please share it.

Given the completely disingenuous nature of declaring victory based on getting out of the keyword suggestion tool, there may be a better--and more self-interested reason--for Rescuecom to give up. Rescuecom is defending a trademark lawsuit brought by Best Buy over Rescuecom's competitive AdWords purchases of the "geek squad" trademark. Rescuecom was caught in the duplicitous position of making plaintiff-side arguments against Google while making highly contradictory defense-side arguments against Best Buy. As a result, every positive step in its Google case had the potential to degrade its position in the Best Buy case. By abandoning the Google fight, Rescuecom avoids this difficult dilemma.

As an odd byproduct of this development, Google and Rescuecom are now aligned in advancing the arguments that competitive keyword advertising in AdWords is legitimate. Isn't there a passage in the Bible about the lion and the lamb lying down together?

The roster of pending AdWords cases (I most recently double-checked the status of these cases on February 20, 2010):

* Ezzo v. Google
* Rescuecom v. Google
* FPX v. Google
* John Beck Amazing Profits v. Google and the companion Google v. John Beck Amazing Profits
* Stratton Faxon v. Google (not initially a trademark case). Check the status.
* Soaring Helmet v. Bill Me
* Ascentive v. Google
* Jurin v. Google 1.0 (voluntarily dismissed), succeeded by Jurin v. Google 2.0
* Rosetta Stone v. Google
* Flowbee v. Google
* Parts Geek v. US Auto Parts
* Dazzlesmile v. Epic

In Hung Tan Phan v. Lang Van Pham, the President of a group of Vietnamese Navy and Merchant Marine veterans sent an email to fellow veterans. In the email, he wrote that another veteran, Hung Tan Phan, had been disciplined by the Vietnamese Navy for abusive behavior in the final days of the Vietnam War.

Lang Van Pham received the email and forwarded it to at least one fellow veteran. He included the following introductory paragraph: Dear Kmap: Everything will come out to the daylight, I invite you and our classmates to read the following comments of [the] President of the Federation of Associations of the Republic of Vietnam Navy and Merchant Marine.

Hung sued Lang. Hung alleged that Lang, as the forwarder of an allegedly defamatory message, was himself liable as the publisher of a libelous statement. Lang moved to dismiss, citing CDA section 230 immunity. The trial court dismissed the case and Hung appealed.

The appeals court noted the general rule that CDA section 230 provides immunity from liability for all content providers for publishing information received from third parties. Subsection (c)(1) states 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. The court then framed the question as whether by including an introduction to the allegedly defamatory email the forwarder had materially contributed to the illegality of the Internet message. In other words, whether Lang's cover note constituted active involvement in the creation of a defamatory Internet posting such as to to expose Lang to defamation liability as an original source.

The appeals court ruled for defendant Lang. The court held that, on these facts, Lang made no material contribution to the alleged defamatory message he forwarded.

The defendant here, like others, was able to successfully deploy the CDA to escape liability. Still, republishing defamatory (or potentially defamatory) matter is always a risky proposition. If you're intent on republishing potentially defamatory matter, speak with your attorney first to assess your risks and defenses [Hung Tan Phan v. Lang Van Pham, 2010 WL 658244 (Cal. App. 4th Dist., Feb. 25, 2010)].

I will do a more comprehensive year in review for Cyberlaw generally, but I thought it would be fun to take a close look at how 47 USC 230 fared in 2009. This is the first full calendar year following the Ninth Circuit's en banc Roommates.com opinion, and many of us initially feared that the case would create a huge hole in 230's otherwise solid immunity. As it turns out, those concerns have not come to pass. If anything, 2009 shows us just how strong the immunity remains.

I blogged on a total of 22 cases issued in 2009 that discussed the statute. (I blog on every case I see that substantively discusses 47 USC 230). I blogged on other cases in 2009 that were decided before 2009, such as the Woodhull v. Meinel case from October 2008 and DC v. Harvard-Westlake, a 2007 arbitrator's dismissal that came to light in 2009.

Of the 22 calendar year 2009 cases, I would classify 14 of them (63%) as easy defense wins, frequently on a 12(b)(6) motion to dismiss or state law equivalent. Even many of the remaining 8 cases contained good news for defendants. For example, in Shiamili, the defense inexplicably lost at the district court level but got an easy reversal on appeal. The Stayart court granted Yahoo an easy defense win, although co-defendant Various didn't get the 230 ruling. Similarly, the Barnes case granted the defense an easy 230 win on one theory (negligent undertaking) but denied 230 for a different one (promissory estoppel). The Certain Approval Process case said 230 did not prevent the plaintiff from amending the complaint to add a cause of action, but once added, the court instantly zapped the claim on other grounds.

This leaves four unambiguous 230 defense losses in 2009. The leading 230 defense loss was the Tenth Circuit FTC v. Accusearch case, which held a retailer liable for reselling illicit phone records. The other major 230 defense loss was the NPS v. StubHub case, which held that 230 may not apply to a lawsuit over the alleged illegal ticket scalping by StubHub's sellers. Both of these cases involve the retailing of illegal items, suggesting that 230's boundaries may not reach that far.

The other two defense losses are less consequential. The Project Playlist held that 230 does not preempt state IP law claims, a conclusion that deserves note only because the Ninth Circuit held otherwise in the 2007 ccBill case. I believe that no other courts will follow the Ninth Circuit's rule that 230 preempts state IP laws, making the Project Playlist ruling unsurprising.

In People v. Gourlay, a web host was denied a 230 defense to a criminal prosecution for child molestation- and child pornography-related claims. This case turns mostly on the web host's active role creating the child pornography (as well as the host's molestation of the child actor); with that context, this case may have little influence on other cases. Indeed, the court made clear that web hosts providing standard web hosting services could fully qualify for 230 protection against a state criminal prosecution of child pornography dissemination.

In reverse chronological order, a brief overview of the 230 cases from 2009:

Nemet Chevrolet v. ConsumerAffairs.com (4th Cir. Dec. 29, 2009). One of three federal appellate court 230(c)(1) rulings in 2009 (Barnes and Accusearch are the others). A solid defense win for a consumer review website. The plaintiff's claims that the website contributed to the reviews' development and fabricated reviews were tossed on a 12(b)(6) motion to dismiss.

Shiamili v. Real Estate Group (N.Y. App. Div. Dec. 17, 2009). In an unpublicized January 2009 decision, the trial court denied a website's 230 dismissal request for claims based on user-supplied comments. In December, this error was fixed on appeal despite allegations that the website chooses and administers the user content.

Dart v. Craigslist (N.D. Ill. Oct. 20, 2009). Craigslist got a big win in its ongoing battles with various government agencies over prostitution ads on Craigslist when the court held it wasn't liable for those ads.

Riggs v. MySpace (C.D. Cal. Sept. 17, 2009). A goofy case. The court holds that MySpace's deletion of Riggs' account was protected by 230(c)(1) on the apparent theory that Riggs (the plaintiff) was the third party supplier of the deleted content. This case would make more sense as a 230(c)(2) case.

Finkel v. Facebook (N.Y. Sup. Ct. Sept. 15, 2009). Facebook wasn't liable for the contents of a user's private group even though Facebook placed a copyright notice on the page.

Intellect Art v. Milewski (N.Y. Sup. Ct. Sept. 15, 2009). Ripoff Report wins again.

Stayart v. Yahoo (E.D. Wis. Aug. 28, 2009). An convoluted, and possibly confused, ruling that Yahoo wasn't liable for search results snippets. However, Various was denied 230 because it may have originated the content in question.

Cornelius v. DeLuca (E.D. Mo. Aug. 18, 2009). An online retailer wasn't liable for user-supplied comments despite a conspiracy allegation.

Goddard v. Google (N.D. Cal. July 30, 2009). This is a follow-on ruling to an important December 2008 ruling in this case, which dismissed the plaintiff's complaints but gave the plaintiffs another chance. The December 2008 ruling is one of the most interesting and important decisions interpreting Roommates.com. In the July ruling, the judge again found that 230 insulates Google from liability due to allegedly fraudulent ads run through its network and granted a final dismissal.

Doe II v. MySpace (Cal. App. Ct. June 30, 2009). MySpace isn't liable for users' sexual assaults on other users.

FTC v. Accusearch (10th Cir. June 29, 2009). The second of three federal appellate court rulings on 230(c)(1). The defendant was an online retailer of illegal phone records. The retailer claimed that the phone records came from third party suppliers and therefore 230 immunized the retailer from liability associated with the records. The court echoed the Ninth Circuit's Roommates.com decision, effectively extending that case to the Tenth Circuit, and said that the retailer was responsible for selling the illicit phone records despite 230.

Zango v. Kaspersky (9th Cir. June 25, 2009). This is the only 2009 ruling addressing 47 USC 230(c)(2), the overshadowed and frequently overlooked sibling of 230(c)(1). Despite the rarity of 230(c)(2) cases, this case could be fairly influential. The Ninth Circuit held that 230(c)(2) protected an anti-spyware software vendor's decision to classify software as a threat. If you missed it, you might want to take a look at my presentation slides on 230(c)(2), which distill my deep look at 230(c)(2) this summer.

Gibson v. Craigslist (S.D.N.Y. June 15, 2009). Craigslist isn't liable for physical injury caused by a gun purchased via a Craigslist ad.

Doe IX v. MySpace (E.D. Tex. May 22, 2009). MySpace isn't liable for users' sexual assaults on other users.

Barnes v. Yahoo (9th Cir. May 7, 2009; amended opinion June 22, 2009). The third of three federal appellate court opinions on 230(c)(1). The Ninth Circuit held that 230 preempted a claim against a service provider for negligently delaying the removal of user content (essentially, Zeran redux), but 230 did not preempt a promissory estoppel claim based on promises the service provider made to the person requesting takedown. The initial Ninth Circuit opinion had two other unfortunate digressions: (1) it said that 230 was an affirmative defense that did not support a 12(b)(6) motion to dismiss, and (2) the opinion had ambiguous language implying that 230 preempted only state claims, not federal claims. The amended opinion helpfully eliminated both digressions.

Atlantic Records v. Project Playlist (S.D.N.Y. March 25, 2009). 230 does not preempt a state IP claimin this case, a violation of state copyright law for pre-1972 sound recordings.

Joyner v. Lazzareschi (Cal. App. Ct. March 18, 2009). A message board operator wasn't liable for user posts.

Raggi v. Las Vegas Police (D. Nev. March 10, 2009). A union wasn't liable for messages that union members posted on the union-operated message board.

Certain Approval Programs v. Xcentric Ventures (D. Ariz. March 9, 2009). 230 did not bar amending a complaint to add a new cause of action when the plaintiff also adequately alleged that the Ripoff Report contributed to the creation and development of the content at issue.

People v. Gourlay (Mich. App. Ct. March 3, 2009). This case involves the prosecution of a pornographic web host who also molested the child actor. The web host asserted a 230 defense in trying to overturn the conviction for the charges related to pornography dissemination. Although 230 can preempt state criminal prosecutions, and web hosts are protected by 230 for their ordinary web hosting activities, this web host actively participated in the site's development and therefore lost 230's protection.

NPS v. StubHub (Mass. Super. Ct. Jan. 26, 2009). In a long-running battle between the New England Patriots and season ticketholders who want to resell their tickets via StubHub, StubHub was denied summary judgment on 230 grounds. The court cites Roommates.com in saying that StubHub may have contributed to illegal ticket scalping sufficient to potentially disqualify it for 230 protection.

GW Equity v. Xcentric Ventures (N.D. Tex. Jan. 9, 2009). Ripoff Report is protected by 230 even though it offers pull-down menus and manipulates user-submitted reports.

Dart v. Craigslist, Inc., 09 C 1385 (N.D. Ill. Oct. 20, 2009)

Yesterday, Judge John F. Grady of the Northern District of Illinois federal court dismissed Cook County Sheriff Dart's lawsuit against Craigslist for user-posted advertisements in Craigslist's erotic services/adult services category on 47 USC 230 grounds. This is hardly surprising, as I wrote in March that "this lawsuit is almost certainly preempted by 47 USC 230." However, it was nice to see such a clean and decisive opinion--and a little ironic, as our law enforcement officials, who are supposed to enforce the laws rather than bypass them, got schooled in the limits of their legal authority.

With respect to the 230 analysis, the court characterizes Sheriff Dart's claims as alleging that Craigslist negligently published the user-supplied ads. The court says that the Seventh Circuit implicitly said that 230 preempted such claims in the 2008 CLC v. Craigslist case. To get around this, Sheriff Dart tried a Roommates.com styled attack, arguing that Craigslist induced the users' advertisements by creating an erotic/adult services category and letting users do keyword searches. These arguments go nowhere (making this yet another case where Roommates.com is cited for the defense). An adult services category can legitimately contain postings for legal services, and the keyword search functionality was agnostic about the illegality of the search and therefore a "neutral tool" (whatever that meant from Roommates.com).

Two other interesting doctrinal notes from the opinion:

* In FN 6, the court reiterates that 230 preempts a civil action to enforce a federal criminal statute. See Doe v. Bates.

* the court rejects arguments that Craigslist "arranges" meetings for prostitution, "directs" people to prostitution or "provides" contact info for prostitutes because, in all three cases, the user-supplied ad (if anything) satisfies those verbs. Similarly, Craigslist's role in "facilitating," "assisting" or "aiding and abetting" these user activities is governed by 230. I believe this is consistent with my view that 230 should preempt any claim that one party "endorses" third party online content.

Given some ambiguous language floating in Seventh Circuit 230 jurisprudence from the CLC v. Craigslist case and the old Doe v. GTE case, it wouldn't surprise me if Sheriff Dart tried an appeal. However, this opinion was solidly reasoned and completely consistent with that jurisprudence, so I wouldn't expect a different result on appeal.

The question of what effect an employee's disloyalty has on authorization to access an employer's computer has arisen in numerous cases in which employers have added civil claims under the CFAA in actions brought against employees alleged to have misappropriated of trade secrets. A typical scenario in which such a claim would be made is where, before departing for a new job, the employee is alleged to have copied or transmitted an employer's computer files for the benefit of a new employer.

Often, what is at stake in such cases is the employer's ability to maintain an action in federal court. A dispute over misappropriation of trade secrets is likely to involve only state law issues, and unless there is diversity of the parties, there is no basis for jurisdiction in a federal court. But, of course, federal courts have jurisdiction over a CFAA claim, and the trade secret misappropriation claims are then swept into federal court along with the CFAA claim as pendent state law claims.

The Seventh Circuit opinion in International Airport Centers v. Citrin is the ruling that is cited by employers seeking to press CFAA claims in such cases. In that case the circuit, in an opinion written by Judge Posner, ruled that under common law agency principles, an employee who breaches the duty of loyalty to an employer thereby becomes unauthorized to access the employer's computer, at least for the purpose of furthering an act of disloyalty to the employer. In LVRC Holdings, LLC v Brekka, the Ninth Circuit ruled to the contrary, finding that under the plain meaning of the language of the CFAA, acts of disloyalty on the part of an employee do not render the employee's access to the employer's computer unauthorized within the meaning of the statute.

In LVRC, the Ninth Circuit panel concluded that under the ordinary, contemporary, common meaning of the statutory terms, an employer gives an employee 'authorization' to access a computer when the employer gives the employee permission to use it. The court found that there is no statutory language to support the contention that authorization terminates when an employee determines to act contrary to the interest of an employer. The court looked to the term "exceeds authorized access," and concluded that the definition of that term made it clear that Congress had no intent to include in the statute any implicit, rather than explicit, limitation on the term authorization. It is an employer's act of allowing or terminating an employer's authorization to access a computer that determines whether the employee's access is authorized within the meaning of the statute, not the employee's disloyal act. The court reasoned:

Section 1030(e)(6) provides: the term exceeds authorized access' means to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter. 18 U.S.C. 1030(e)(6). As this definition makes clear, an individual who is authorized to use a computer for certain purposes but goes beyond those limitations is considered by the CFAA as someone who has exceed[ed] authorized access. On the other hand, a person who uses a computer without authorization has no rights, limited or otherwise, to access the computer in question. In other words, for purposes of the CFAA, when an employer authorizes an employee to use a company computer subject to certain limitations, the employee remains authorized to use the computer even if the employee violates those limitations. It is the employer's decision to allow or to terminate an employee's authorization to access a computer that determines whether the employee is with or without authorization.

The Ninth Circuit rejected the Seventh Circuit's reasoning in International Airport Centers, LLC v. Citrin, concluding that relying on whether an employee's mental state changed from loyal employee to disloyal competitor to determine whether the statute had been violated would be problematic in the criminal law context. The statute should be interpreted consistently in civil and criminal contexts, the court reasoned. Relying on the employee's mental state with respect to disloyalty to determine whether the statute had been violated would run afoul of the proscription against interpreting criminal statutes in surprising and novel ways that impose unexpected burdens on defendants.

In this respect, the ruling echoes (but does not cite) the recent district court opinion in United States v. Drew, No. CR 08-0582-GW (C.D. Cal. Aug. 28, 2009) (the MySpace "cyberbullying" criminal prosecution). There, the court dismissed a misdemeanor charge of violating the CFAA that was predicated on a user's alleged violation of the MySpace Terms of Service, finding that it would run afoul of the void for vagueness doctrine because individuals of 'common intelligence' arguably would not be on notice that a breach of the terms of a service contract could become a crime under the CFAA.

And conversely, the Ninth Circuit ruling appears to contradict the recent opinion in United States v. Nosal, 2009 U.S. Dist. LEXIS 31423 (N.D. Cal. Apr. 13, 2009), in which the district court declined to dismiss an indictment charging a violation of 18 U.S.C. 1030(a)(4). The indictment alleged that the statute was violated when a former employee accessed an employer''s computer network to copy proprietary information for use in a competitive enterprise. The court found that the statutory element of intent to defraud in subsection 1030(a)(4) could be found in the employee''s knowing access of electronic records for uses outside their intended purpose. The court in Nosal also rejected the defendant''s argument that because subsection 1030(a)(4) had never been addressed in the criminal context the indictment should be dismissed under the rule of lenity. Citing International Airport Centers, LLC v. Citrin and a number of opinions following it, the court found that there was ample authority in civil cases construing this section to conclude that the CFAA was violated by the 'access to the employer's confidential and proprietary information to advance his own competitive enterprise.

No doubt more will be heard on this issue in the Ninth Circuit, and other courts as well. And eventually, perhaps, the U.S. Supreme Court.

Beverly Stayart searched her own name and didn't like the results. She got links to pornographic websites, online pharmacies promoting sexual dysfunction drugs, and an adult-oriented online dating service. She sued Yahoo! and other defendants, including the operator of AdultFriendFinder, for false endorsement under the Lanham Act and state-law privacy violations. The court dismissed the Lanham Act claim and surrendered jurisdiction over the state law claims.

Stayart lives in Wisconsin and was previously employed by several major financial institutions in Chicago, attaining the position of Vice President. She's involved in animal protection and genealogy research throughout the world. This includes an internet presence; her periodic posts on one genealogical website have generated almost 17,000 hits during the past three years. (Okay, I'm sorry, but: on the internet as a whole, that's tiny. My stats look more impressive than thatif you've never seen any others.) And two of her poems appear on two Danish websites (they support the preservation of baby seals).

Stayart alleged that she was the only Beverly/Bev Stayart on the internet, and that she had never engaged in a promiscuous lifestyle, or other overt sexual activities, which are repugnant to her and her community. She alleged that her name had commercial value because of her humanitarian endeavors, positive and wholesome image, and the popularity of her scholarly posts on the Internet. The search engine defendants, she alleged, knowingly used her name on false snippets in results by (1) repeatedly linking Plaintiff to the advertising of Cialis by an online pharmacy; (2) repeatedly linking Plaintiff to six separate websites playing pornographic videos containing computer spy ware; and (3) repeatedly linking Plaintiff to a website captioned Free Streaming Porn--HOTTEST DAILY PORN' displaying 27 hardcore pornographic photos. She asked Yahoo! to stop linking her name to these search results. Yahoo! replied: We do not aim to judge web content for appropriateness or censor materials that we find offensive or inappropriate. Instead, we present information as it is reflected on the Web, allowing you to draw your own informed conclusions about what you see.

Stayart also alleged that Various (which operates AdultFriendFinder) used her name on a website advertising its service. She typed her name into altavista.com and got, among the results, jewellery-makin-doorway.orge.pl/bev-stayart.html. This went to an Under Construction site that stated Meet AdultFriendFinder members near Janesville [Wisconsin]-- Over 20 Million Members and displayed five graphic images of fully or partially nude women, accompanied by the age, nickname and city of residence of the women.

Under Iqbal, though a court must accept all well-pleaded facts as true, the claim must still have facial plausibility. And a plaintiff can plead herself out of court, which was what the court determined had occurred here.

False endorsement means that consumers are likely to be misled about a person's sponsorship or approval of a product or service.

In order to have prudential standing under the Lanham Act, Stayart needed to allege at least an existing intent to commercialize her identity. This she didn't do. Though she alleged that her name has commercial value, her complaint is really about distasteful associations. That emotional desire to prevent others from using her name doesn't create Lanham Act standing. Her correspondence with Yahoo!, attached to the complaint, further indicates that her concerns are with privacy and reputation, defamation and demeaning associations. But the Lanham Act does not create a false light tort claim, absent commercialization.

Stayart relied on Doe v. Friendfinder, which refused to dismiss a false endorsement claim against AdultFriendFinder. But Doe didn't address prudential standing in its decision.

The court went on to reach an independent ground for dismissal, lack of likely confusion as a matter of law. [A] commonsense reading of the complaint demonstrates that there could be no likelihood of confusion. The complaint explicitly disavows any association with pornographic materials, sexual dysfunction drugs, or sexually-oriented dating services. This contravenes likelihood of confusion, so Stayart pleaded herself out of court. (Query: before 1999, would Bob Dole have had a claim? He'd never previously been associated with sexual dysfunction drugs, so wouldn't it have been just as implausible that he'd be a pitchman for them?) No one who accessed these links could reasonably conclude that Bev Stayart endorsed the products at issue.

Stayart argued initial interest confusion against AdultFriendFinder. But on the internet, initial interest confusion depends on relatedness of goods and a consumer's level of care. Given that Stayart's identity is completely unrelated to AdultFriendFinder's services, initial confusion won't facilitate free riding on another mark's goodwill. Without a meaningful effect on the market, confusion is of little or no consequence under the Lanham Act. The type of person looking for information about Bev Stayart would not be fooled into using an online adult-oriented dating website. (I'd add in to find her at the end of that; the court might be surprised to find outjust as Stayart might bethe non-Stayart-related interests of the type of people looking for information about Stayart. I'd be willing to bet that even genealogists and animal rescuers sometimes like to meet adult friends!)

Next, a puzzling CDA discussion. The court commented that if Stayart successfully stated a false endorsement claim under the Lanham Act, it would probably fall under the CDA's intellectual property exclusion. But, it continued, one of the fatal flaws of that claim is that Yahoo! didn't use Stayart's name in connection with its own goods or services. It just included snippets from third-party websites and didn't create the content of which Stayart complained. So the proper analysis is vicarious liability/contributory infringement under the Lanham Act.

Under settled doctrine, Yahoo! can't be held liable for failing to remove the search results even after Stayart complained. It didn't control the third-party websites, which fact defeated both contributory and vicarious liability. (That's a shortcut on contributory liability analysis, but not particularly troubling under the circumstances.) The only way Yahoo! could control the results would be to change its algorithm, which goes to the heart of Yahoo!'s role as an interactive computer service. Because ordinary search engines play no part in developing any unlawful searches, Yahoo! should be entitled to immunity because it acted as an interactive computer service, even though Stayart's claims are nominal intellectual property claims. Immunizing Yahoo! doesn't contravene the CDA's IP exclusion because Stayart doesn't have a valid IP claim.

Comment: oh, my. Look, I like CDA immunity generally. But what's weird here is not the court's willingness to use CDA reasoning on an IP claim despite the IP exclusion; what's weird is the court's failure to notice that IP secondary liability doctrine itself incorporates the tech-promoting rationales underlying the CDA. Well, trademark does much more than copyright, these daysbut it's trademark doctrine that's at issue here! There's no need to bring in the CDA! And that last bitthis analysis only applies because Stayart doesn't have a valid IP claimmakes this whole excursion even more obviously useless.

The court then said that matters were less clear with respect to AdultFriendFinder. The site is in some ways interactive, but Stayart's complaint relates to the banner ad associated with the bev-stayart.html URL. AdultFriendFinder's role in the creation of the banner ad content was unclear, so the court couldn't grant it immunity at this stage.

The only claims that remained were state-law claims. Given that the dismissal was on the pleadings, ordinarily a federal court should relinquish jurisdiction, unless it is so obvious how the claims should be decided that the plaintiff should be put out of her misery rather than involving state-court resources. Defendants argued that Wisconsin requires a name to have commercial value in order to maintain a right of publicity claim. But some variations of the appropriation tort, which Wisconsin may recognize, require only commercial use plus bruised feelings. (Doesn't Yahoo! get out of this even if AdultFriendFinder has to proceed in state court? Under what theory is Yahoo!'s use commercial? If it's using snippets from other sites, how can it possibly be distinguished from the New York Times using Stayart's name in a story?)

The distinction between appropriation and the right to publicity (based on commercial damage) is also relevant to CDA immunity. The latter is an IP claim. (Implicit holding: to the extent Stayart is bringing an appropriation claim, Yahoo! is immune.) Plus there's the Perfect 10 versus Friendfinder split over whether state IP claims are preempted by the CDA. Since this is an unsettled issue of federal law, the court couldn't conclude that there was an obvious resolution of the state law claims. Even though the Court already held that Yahoo! was entitled to CDA immunity, the Court cannot say with certainty that a potential right to publicity claim under Wisconsin law is without merit, meaning that the intellectual property exception could save Stayart's claims. Also, AdultFriendFinder's CDA status is unclear, leaving it potentially vulnerable under either a misappropriation or right of publicity claim.

Judge Der-Yeghiayan granted defendants' Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction even though plaintiff brought a federal Lanham Act trademark infringement claim. While Lanham Act claims are generally considered federal questions creating subject matter jurisdiction, plaintiffs claims were in essence breach of contract claims. Plaintiff was a franchisor of Mindy's Restaurants. Defendants were franchisees, until they allegedly stopped making required franchise payments and plaintiff terminated the franchise agreement. While plaintiff's claims were for use of plaintiff's trademarks when defendants allegedly continued operating their restaurant after the franchise agreement was canceled. As a result, the Court held that the parties dispute and plaintiff's claims sounded in contract, not the Lanham Act. The reason the trademarks were allegedly infringed was the termination of the franchise agreement.

Max Ray Butler, 36, faces up to 60 years in prison for the two felonies under law, but his actual sentence will be influenced by a number of factors, not least a plea agreement with federal prosecutors that was filed under seal Monday.

Wearing an ill-fitting orange jail uniform and round glasses, his hair cut short and neat, the six-foot-plus Butler towered over the burly deputy marshals that brought him into the court room. Once he settled into his seat, he spoke softly and evenly as he answered questions from the judge, frequently drawing admonishments to speak up for the benefit of the court reporter.

I actually did the actions that are relevant in the indictment, and I am guilty, Butler said, at one point.

Butler identified himself in court as Max Vision, the name he gave himself in the 1990s when he became a superstar in the computer security community. At that time Butler was billing himself out as a $100-an-hour computer security consultant, and he earned the respect of his peers for creating and curating an open source library of attack signatures used to detect computer intrusions.

But it turned out Butler was staging recreational hacks on the side, and in 2001 he was sent to federal prison for 18 months for launching a scripted attack that closed security holes on thousands on Pentagon systems, and left backdoors behind for his own use.

While in prison, Butler met more serious criminals, and he was befriended by a professional swindler named Jeffrey Norminton. After his release, Norminton introduced him to an Orange County, California entrepreneur and former bank robber named Chris Aragon.

Butler admitted Monday that he began hacking banks, merchants and other hackers to steal credit card numbers, then sold them to Aragon. Aragon, who's pending trial on related state charges in southern California, turned that stolen data into near-perfect counterfeit cards, complete with holograms, and recruited a crew of shoppers who used the cards to snap up designer merchandise for resale on eBay. Aragon earned at least $1 million in the business, police say.

Butler became a priority to federal law enforcement officials in 2006, when, under the handle Iceman, he staged a brazen takeover of the online carder forums where hackers and fraudsters buy and sell stolen data, fake IDs and specialized underground services.

He hacked into the forums, wiped out their databases, and absorbed their content and membership into his own site, called CardersMarket.

On one of the sites he hacked, called DarkMarket, Butler later discovered that an administrator named Master Splyntr was logging in from an FBI office in Pittsburgh. Butler partnered with a Canadian hacker to try and expose Master Splyntr as a fed, but his claim was largely dismissed in the underground as inter-forum rivalry. DarkMarket went on to become a full-blown undercover FBI operation, and the FBI and Secret Service began an investigation into Iceman.

(I wrote about Butler in the January issue of Wired. I'm now working on a book about him and the carder forums for Crown publishing).

Using informants and some genuine electronic gumshoe work, the feds identified Iceman as Butler about a year later, and arrested him in September 2007 at a corporate apartment he used as a hacking safe house.

When the feds seized Butler's hard drive, they found five terabytes of encrypted data on his harddrive, the government said Monday. They later cracked Butler's crypto, and discovered 1.8 million stolen credit card numbers belonging to 1,000 different banks. The banks tallied the fraudulent charges on the cards at $86.4 million.

But Butler's defense attorney told U.S. District Judge Maurice B. Cohill Jr. Monday that Butler and his associates weren't' responsible for all of the fraudulent charges.

Butler, noted federal public defender, Michael Novara, frequently cracked the computers of other members of the underground, and stole their stuff. Some of the credit card numbers found on Butler's hard drive had been in the hands of cyber thieves before Butler began his hacking spree.

Max is kind of a hacker's hacker, said Novara. There was a lot of stuff on his computer that he was not responsible for, and did not intend to use.

I don't think I ever heard the expression, a hacker's hacker' before, said Judge Cohill, with a smile.

Sources say Butler's plea deal will also wrap up a separate federal case in Virginia, in which Butler is charged with staging the first documented spear phishing attack against employees of a financial institution, gaining access to the corporate network of Capitol One bank.

Butler was calm and attentive at Monday's proceeding, which opened with federal prosecutor Luke Dembosky crossing to the defense table to shake hands with the hacker, who smiled and nodded.

Through his attorney, Butler released a two-paragraph statement following his plea.

Max Vision, known in this case as Max Butler, pled guilty today as a first step toward getting this sad chapter of his life behind him. It is unfortunate that his life circumstances in 2005 led him to participate in this criminal conduct, and he very much regrets doing so, he wrote.

Max has always preferred using his extraordinary computer skills his computer vision for the good of society and the cyber world, and he hopes that he will be given the opportunity in the future to once again don the white hat.

Asked afterward what kind of sentence the government expects for Butler, Dembosky was vague with reporters. Suffice to say, it won't be probation.

See Also:

• Notorious Crime Forum DarkMarket Goes Dark
• Cybercrime Supersite DarkMarket' Was FBI Sting, Documents Confirm
• 56 Arrested in DarkMarket Sting, Says FBI
• One Hacker's Audacious Plan to Rule the Black Market in Stolen Credit Cards
• A White Hat' Goes to Jail

Gibson v. Craigslist, 2009 WL 1704355 (SDNY June 15, 2009). The CMLP page. The Justia page.

In my lengthy deconstruction of the Barnes v. Yahoo case, I criticized the Ninth Circuit for concluding that 47 USC 230 was an affirmative defense (and thus could not support a 12b6 motion to dismiss) without proper briefing or analysis. First, this was sloppy work by the court. Second, the elimination of a 12b6 possibility for the defendants creates a real risk that defendants will be exposed to expensive and time-consuming discovery to eliminate plainly meritless cases. Yahoo and a group of amici have asked the Ninth Circuit to reconsider this aspect of the ruling, and I hope they do so.

Meanwhile, today's case does a competent job reviewing whether or not 47 USC 230 can support a 12b6 motion to dismiss. Unlike the Ninth Circuit, it actually cites and discusses the numerous cases in the area although, remarkably, it does not cite or address the Barnes v. Yahoo case! The court reaches the sensible positions that (1) 47 USC 230 does support a 12b6 motion, (2) as a result, the plaintiff was not entitled to discovery, and (3) the case should be dismissed. For more discussion on why 47 USC 230 supports a 12b6, see Paul Levy's excellent brief.

Substantively, today's lawsuit is brought by a shooting victim who claims that the shooter bought the gun via Craigslist. The complaint argues that Craigslist had a duty to prevent the sale of guns to future criminals and therefore Craigslist breached the duty. This argument is similar to the Doe v. MySpace cases (1, 2) in which the plaintiffs argued that MySpace had a duty to police its website "premises" to prevent online communications that lead to offline crimes. The plaintiff's argument here fares no better here than it did in the MySpace cases. 47 USC 230 precludes the imposition of liability for any breach of duty by failing to police its users' communications (putting aside the also-relevant inquiry of whether Craigslist could have any duty that would have prevented this offline tragedy). The plaintiff tries to get around 230 by arguing it's just trying to hold Craigslist accountable as a "business" rather than as a speaker or publisher of third party content, but the court rejects this goofy argument as "unpersuasive."

More on the case from Eugene Volokh.

The pro se attorney plaintiff in Burcham v. Expedia brought suit against the travel site under Missouri consumer law, claiming that Expedia knowingly misrepresented the hotel amenities for a room that he booked on the site. He sought $5 million in damages and class certification.

It didn't help the court's view of the case that the room was booked for a hotel in Missouri in November, and one of the amenities that Burcham claimed was absent when he and his children arrived at the hotel was an outdoor swimming pool. Fair enough, Burcham also claimed that the hotel lacked an indoor swimming pool, conference room, restaurant and bar/lounge. But the court pointed out that Burcham's complaint did not allege that he or his children wished to use any of the absent amenities.

Burcham was off to a bad start.

Expedia moved to dismiss Burcham's complaint, relying on the forum selection provision that specified Kings County, Washington as the proper venue. Expedia submitted evidence showing multiple versions of its terms of use, including the current and past versions, which the court concluded contained the same material terms.

Expedia also established by affidavit that Burcham's booking had been made by a process under which the user was presented with a legend stating: "By continuing on you agree to the following terms and conditions." Beneath the legend, the full text of the terms and conditions was displayed. In order to book a room, the user was required to click on the "continue" button.

Confronted with this evidence, Burcham argued that he simply did not remember seeing the terms and conditions when he used the Expedia site. He suggested that he may have used the site from a shared computer at his law office without checking to see if the prior user of the computer was already logged onto the site. Thus, he argued, the prior user may have clicked past the terms and conditions, but they were never presented to him.

The court briefly reviewed the relevant case law (e.g., Specht v. Netscape, Register.com v. Verio, ProCD v. Zeidenberg) and the distinctions between clickwrap, shrinkwrap and browsewrap agreements, and quickly concluded that Expedia had an "enforceable online clickwrap agreement" with Burcham. Burcham's argument that he never saw the terms and conditions was dismissed both on the facts and the law.

On the facts, the court found, Burcham offered no evidence to support his "clever theory" that someone else clicked past the terms and conditions, and the undisputed facts showed that the user account created at the time the terms and conditions were assented to was associated with Burcham's own e-mail address. On the law, the court concluded that if Burcham in fact had accessed the Web site under someone else's account, he was still bound by the terms and conditions to which that user had assented, citing, e.g., Motise v. America Online, Inc., 346 F.Supp. 2d 563 (S.D.N.Y. 2004) (individual using the online account of another user bound by the same terms and conditions as the account owner).

Burcham also tripped over the evidence he himself submitted to the court along with his brief. The court noted that the Expedia Web pages Burcham submitted as exhibits contained a hyperlink at the bottom to the full text of the Expedia terms and conditions. The court noted that the terms and conditions stated that users of the site consent to be bound by those terms and conditions by accessing and using the Web site. Thus, the court concluded, even if Burcham wasn't clickwrapped, he was browsewrapped.

Finally, the court quickly dismissed Burcham's arguments that the forum selection provision was unreasonable and in contravention of Missouri public policy and that the contract as a whole was one of adhesion.

The ruling in Burcham v. Expedia is a win for the enforceability of online agreements, and another loss for pro se attorney plaintiffs for whom courts seem to have little sympathy. See, e.g., Field v. Google, 412 F.Supp. 2d 1106 (D. Nev. 2006) (rejecting pro se attorney plaintiff's "manufactured" copyright infringement claim based on Google Web crawling and caching).

Burcham v. Expedia, Inc., 2009 U.S. Dist. LEXIS 17104 (E.D. Mo. Mar. 6, 2009)

Boring v. Google, Inc., 2:08-cv-00694-ARH (W.D. Pa. Feb. 17, 2009)

You may recall the Boring case from last Spring. A Pennsylvania couple sued because Google's camera car drove up their private driveway and the resulting pictures were posted to Google's Street View. I thought the whole lawsuit was such a silly publicity stunt that I didn't think it was blog-worthy at the time. Apparently I'm not the only person who wasn't impressed with the suit, because the court didn't give the plaintiffs any benefit of the doubt and dismissed the lawsuit handily (without leave to amend).

Some highlights from the discussion:

Intrusion Into Seclusion. The court says that the plaintiffs did not allege facts supporting that the intrusion was substantial and highly offensive. To reinforce the point that perhaps the plaintiffs didn't experience much harm, the court points out that the plaintiffs didn't take advantage of Google's opt out procedure, plus they drew public attention to themselves by suing and by not redacting or suppressing their contact info in the court filings. I was a little troubled by the latter point, which seemed circular to me--plaintiffs bringing intrusion into seclusion lawsuits unavoidably thrust themselves into the public eye, whether they want to do so or not. This is especially true for anyone suing Google. As a result, it's not fair to hold that consequence against plaintiffs. (As an example of the unwanted publicity faced by privacy rights plaintiffs, consider Robert Steinbuch's experience as a plaintiff against Jessica Cutler). The court also skips over the legal nuances regarding why Google should get a free legal pass when it offers an opt out.

Public Disclosure of Private Facts. As with the intrusion into seclusion claim, the court says that the plaintiffs have not shown the disclosures were highly offensive to reasonable people, as evidenced by the fact that other people haven't opted out of Google's Street View. (An interesting argument on a 12b6).

Common Law Negligence. The court says Google didn't have a duty to the Borings, and it isn't willing to manufacture one.

Trespass. The court says that the plaintiffs' emotional damages were not proximately caused by the trespass.

Unjust Enrichment. The court (correctly, IMO) says that this is not an independent cause of action but is just a quasi-contract remedy.

Injunctive Relief. The court says that the plaintiffs failed to plead "a plausible claim for entitlement to injunctive relief." Which, I think, is one way of saying "not interested."

A clean sweep for Google, and the end (absent an appeal) of a silly lawsuit.

Goddard v. Google, Inc., 2008 WL 5245490 (N.D. Cal. Dec. 17, 2008). My initial post when the complaint was filed. The Justia page.

Goddard sued Google because Google displayed third party AdWords ads for allegedly fraudulent mobile subscription services. On its face, this lawsuit appeared preempted by 47 USC 230 (consistent with other opinions granting 230 for third party ads, such as the recent Cisneros case), although the plaintiff included some allegations to try to get around 230. No such luck for them. This ruling kicks the lawsuit out on 230(c)(1) grounds with leave to amend (more on that in a moment).

I'm a big fan of Judge Fogel's opinions. He's a meticulous and thoughtful judge, and his opinions are always carefully constructed. In particular, this opinion is a terrific read for anyone who would like to see a cutting-edge 230 opinion. It discusses many of the major recent 230 cases (Roommates.com, Mazur, Doe v. MySpace, Craigslist, National Numismatic) and contextualizes them nicely. It's like a 230 year-in-review opinion. If you want a one-stop resource to see what's happened in 47 USC 230 jurisprudence in 2008, read this opinion.

Among other interesting aspects, this is the first opinion by a Ninth Circuit-bound district court judge that has a robust analysis of how Roommates.com applies to the case. (Roommates.com has been cited in a few other opinions, but usually in a very cursory fashion). Judge Fogel deftly wrestles with the multiple contradictory provisions of Roommates.com, noting that it is principally is a defendant-favorable ruling with only a thin layer of plaintiff-side opportunity. For example, Fogel reads the Roommates.com opinion very narrowly when he says "The [Roommates.com] court emphasized repeatedly that the website lost immunity only by forcing its users to provide the allegedly discriminatory information as a condition of access." The opinion did say that, but I'm not sure about the "only," and it said lots of other contradictory things as well.

The Unfair Competition Claim

The plaintiff argued that Google engaged in 17200 unfair competition by receiving funds from fraudulent ads. Though this may be a novel way of framing Google's involvement, it doesn't adequately mask the underlying argument that the defendant should lose 230 coverage because it received an economic benefit from third party tortious conduct--an argument that has been rejected many, many times before and doesn't fare any better here. The court reframes the argument as a premises liability argument and rejects it per Gentry and Doe v. MySpace.

Along the way, the court addresses the plaintiff's allegation in the complaint that Google helped draft the impermissible ad copy. The plaintiff didn't press this point after the complaint, and the court says (referencing its reading of Roommates.com) that "there is no suggestion in the current record that Google encouraged the [advertisers] to create the allegedly fraudulent content, or that the creation of such content was anything less than voluntary."

The court also addressed the plaintiff's argument that the claim was anchored in the federal anti-money laundering criminal statute and therefore should drop out of 230 per the exclusion for federal criminal law (230(e)(1)). The court correctly rejects this but doesn't cite precedent on this point, missing Doe v. Bates.

Breach of Contract/Negligence

The plaintiff's other main attack vector is that Google should be liable because it failed to enforce a provision in Google's AdWords contract with advertisers restricting fraudulent conduct. I've complained repeatedly about arguments trying to treat a vendor's contractual negative behavioral restriction as an affirmative representation by the vendor that such behavior won't occur on the website (my latest rant on this point). Fortunately, Judge Fogel has little difficulty rejecting this argument, correctly pointing to the Green v. AOL precedent involving the distribution of third party viruses in an AOL chatroom (the Noah v. AOL precedent would have been an appropriate additional citation).

To try to get around this, the plaintiff cites to the Mazur case, which said that eBay can be liable for its affirmative marketing representations even if they are rendered untrue by third party conduct. I've repeatedly expressed my concern that the Mazur case is a more scary ruling to defendants than Roommates.com, but this opinion slightly calms my fears. Judge Fogel correctly notes that Google never made affirmative marketing representations on this point and the negative behavioral restrictions in the AdWords contract weren't an affirmative marketing representation.

Google also argued that this line of claims are barred by 230(c)(2), the immunization for filtering decisions. Citing to National Numismatic v. eBay, Judge Fogel rejects the argument based on the statutory list of immunized harmful content, saying "the relevant portions of Google's Content Policy require that [advertisers] provide pricing and cancellation information regarding their services. These requirements relate to business norms of fair play and transparency and are beyond the scope of 230(c)(2)." I'm not sure the 230(c)(2) argument was Google's strongest, but I would have loved to see Judge Fogel unpack this discussion and the implicit assumptions a little more.

Aiding and Abetting

Finally, the court rejects the attempted 230 pleadaround that Google aided and abetted the advertisers, saying "there are no allegations here that Google developed the offending ads in any respect." (Cite to Roommates.com).

Leave to Amend

Given that this case was filed after the Roommates.com en banc opinion, and therefore the plaintiff had the chance to structure the complaint based on a reading of the latest Ninth Circuit standard, it would have made sense to dismiss this complaint without leave to amend. Instead, Judge Fogel gives the plaintiff another chance and articulates his reading of allegations that should survive 230 preemption:

there may be instances in which an internet content provider will be considered responsible' at least in part' for [posted third-party content] because every [posting] is a collaborative effort between the internet provider and the third-party content provider. Fair Housing Council, 521 F.3d at 1167. If Plaintiff could establish Google's involvement in creating or developing the AdWords, either in whole or in part, she might avoid the statutory immunity created by 230. In light of that possibility, Plaintiff will be given an opportunity to amend her complaint in order to allege such involvement.

Reading between the lines, the writing is on the wall for this lawsuit. The plaintiff can't win, and it would be a mistake for the plaintiff to refile. The judge even says as much in a footnote to this quote, saying "at present it appears unlikely that Plaintiff can" make the requisite allegations. Nonetheless, I'd be shocked if the plaintiff didn't refile. If they do, I hope Judge Fogel vigilantly polices the boundaries of Rule 11 for any allegations the plaintiffs make but can't back up--just like he did in the KinderStart v. Google case.

A Final Point

By my count, this is the third post-Roommates.com case where Roommates.com has been cited in favor of the defendant in kicking the case out of court. (The other two are Best Western v. Furber and GW Equity). In contrast, I am not aware of any case yet citing Roommates.com in favor of a plaintiff. It's obviously early, but at this point the limited evidence suggests that Roommates.com was not a watershed change to 230 jurisprudence. On that basis, Roommates.com may not be as bad a substantive ruling as we had initially feared.

Parker v. Yahoo, Inc., 2008 WL 4410095 (E.D. Pa. Sept. 25, 2008).

Gordon Roy Parker is a serial pro se Internet law plaintiff and putative owner of copyrights in seemingly misogynistic works such as "Outfoxing the Foxes" and "Why Hotties Choose Losers." A quick review of Parker's website reminded me a little of the cute date-movie Hitch, but without any of Will Smith's charm.

Last year, the Third Circuit dismissed Parker's copyright infringement lawsuit against Google over Google Groups. In this ruling, the district court rejects most of his copyright infringement claim against Yahoo and Microsoft over the "cache" option in search results.

[Side rant: I once again protest that calling these copies "cached" copies is a serious bastardization of the term. Despite the mislabeling, the search engines present archival copies, not cached copies, and treating them as equivalent creates significant legal doctrinal tension.]

This lawsuit squarely revisits the ground covered in the Field v. Google case, which Google won for 5 different reasons--including that anyone who posts content to the web knowing that search engines display cached copies impliedly licenses the search engines to do so. Here, the search engines apparently obtained the copyrighted works from Parker's site (instead of from some third party infringing site), and Parker admits he knew of the cache function. As a result, Yahoo and Microsoft can claim an implied license for their cached copies.

However, implied licenses are a weak defense because they can be trumped by express restrictions (see, e.g., Ticketmaster v. RMG). As a result, Parker's claim survives to the extent that Microsoft and Yahoo retained their cached copies after learning of his objection through the complaint filing.

Along the way, the court also says that Parker cannot complain about the search engines' initial robotic collection of the copyrighted works for index inclusion because the Third Circuit's ruling in Parker v. Google implicitly rejected the claim, leading to claim preclusion here. That struck me as a pretty liberal reading of the breezy and brief Third Circuit opinion.

Parker also claimed that individual web users downloading the cached copies are direct infringers. However, the court extends the implied license to them as well. The court offhandedly says that the search engines lack both direct financial benefit from the cached copies and knowledge of the infringement, thus giving further reason to dismiss the secondary infringement claims.

Finally, the court breezily dismisses a breach of contract and negligence claim as being preempted by copyright law. I think the preemption of the breach of contract claim is plainly wrong and should be reversed if the case is appealed.

While Parker's lawsuit (barely) lives to fight another day, overall this is another great opinion for search engines. Once again, courts are finding broad legal protection for basic search engine operations. This lawsuit also reiterated how pro se plaintiffs can be very helpful to an Internet defendant seeking to establish favorable low-cost legal precedent.

More on this case from Jeff Neuburger.

[Note: I'm back from my vacation. For a short recap of my experience, see my FAQs about my trip to the Hulahula River in the Arctic National Wildlife Refuge.]

Nemet Chevrolet Ltd. v. ConsumerAffairs.com, Inc., 1:08CV254 (E.D. Va. June 18, 2008). The CMLP page with links to source documents.

ConsumerAffairs.com is a consumer review site with a twist. It describes itself as:

a private, non-govermental [sic] entity that empowers consumers by providing a forum for their complaints and a means for them to be contacted by lawyers if their complaints have legal merit. Your complaints and comments may be published, shared with the news media and reviewed by attorneys at no cost to you.

A Legal Times article written when this lawsuit was first initiated raises some questions about ConsumerAffairs.com's architecture. First, it suggests that the domain name capitalizes on consumers who might mistakenly assume that the site is affiliated with a governmental consumer affairs office. Second, the article questions the ties between the site and the Horwitz plaintiff's class action law firm, which mines the consumer-submitted complaints looking for potential class action claims and named plaintiffs. But regardless of these attributes, for my purposes ConsumerAffairs.com is a garden-variety consumer review site. Consumers submits their gripes and ConsumerAffairs.com publishes them. As a natural consequence, some vendors will be unhappy with the things consumers are saying about them.

This lawsuit's unhappy vendor is Nemet Chevrolet, a Jamaica, NY auto dealer who has been the target of several consumer-submitted complaints on ConsumerAffairs.com. See, e.g., this page. Nemet sued ConsumerAffairs.com twice but each time voluntarily dismissed the lawsuit for jurisdictional concerns. Finally, satisfied it found jurisdiction over ConsumerAffairs.com, it brought out the big guns--specifically, DC powerhouse law firm Patton Boggs. As the Legal Times article quotes Nemet, "I knew I had to do something, and I got a very, very powerful law firm." Sadly for Nemet, its very, very powerful law firm's complaint still got quickly crunched by a 12b6 motion to dismiss.

Nemet's claims for defamation and tortious interference were preempted by 47 USC 230. This is really a textbook application of 230--the complaint even specifies that the posts were written by third party consumers. Thus, the only issue on the court's mind is whether 230 supports a 12b6 (it correctly determines that it does). Nemet tries to get around 230 by alleging in its briefs and supporting documents that ConsumerAffairs.com created the content at issue and wrote headlines and other supporting materials, but the court refuses to consider these allegations because they weren't in the complaint. Some courts might have entertained a leave to amend the complaint to let these allegations in, but this court clearly wasn't interested.

The court also dismisses the Lanham Act unfair competition and false advertising claims for lack of standing because Nemet and ConsumerAffairs.com aren't competitors. Alternatively, even if there was standing, the court would dismiss both claims:

* the unfair competition claim [this is ambiguous but I think it actually is treating it as a trademark infringement claim, even though the complaint didn't allege infringement] because an auto dealer and a consumer complaint site are so dissimilar that there is no possibility of likelihood of consumer confusion. The court's discussion is rather garbled here, so I'm not exactly sure what the court was doing or saying. However, if the court was thinking of this as a trademark infingement claim, then its ruling is clearly out of sync with other uncited cases (such as the SMJ case), and trademark infringement claims are not really susceptible to dismissal on a 12b6.

* the false advertising claim because consumer complaints aren't advertising as contemplated by the statute.

I have some questions about the rigor of this court's legal analysis, but I also think the court's message is clear and unmistakable: if a vendor has a problem with a consumer review or complaint online, TAKE IT UP WITH THE CONSUMER AND LEAVE THE INTERMEDIARY OUT OF IT.

Recently, there were intermediate rulings in two long-standing cases by search engine advertisers against search engines.

CLRB Hanson Industries, LLC v. Google Inc., 2008 WL 2079200 (N.D. Cal. May 14, 2008)

This lawsuit involves the Google AdWords feature that allows advertisers to set "daily budgets." Google doesn't enforce the daily budgets strictly; instead, it gives itself the permission to deliver up to 20% overage in any day and credit the overage against future performance. The lawsuit was initially filed in August 2005. In August 2007, the judge issued an important preliminary ruling that had three main holdings:

1) Google's AdWords contract was a binding contract.
2) Much of the breach of contract claim was dismissed, but the judge left open claims by advertisers of less than 1 month, advertisers who ended their campaign in a partial month, and advertisers who paused their campaign.
3) The false advertising claim was left open.

Because the August 2007 substantially limited the remedies available to advertisers, I expected that ruling to prompt the parties to settle. But here we are in May 2008, and the parties are still going at it. This month's ruling was largely procedural in that it attempted to clean up any lingering confusion over the August 2007 ruling. As a result, it really doesn't break much new ground; instead, the opinion largely reiterates the main rulings from the August 2007 opinion. Rebecca has more thoughts on the false advertising aspects.

In re Yahoo! Litigation, 2008 WL 1882786 (C.D. Cal. April 21, 2008)

This lawsuit got a lot of press when it was first filed in May 2006 as an example of "syndication fraud." See my initial post. It relates to Yahoo's display of ads on pages promoted by adware and on typosquatted and domain name parking pages. The advertisers believed these pages had lower quality traffic than other pages, and this disrupted their expectations.

In the past two years, the case has gone through various procedural shenanigans. This ruling addresses Yahoo's motion to dismiss the second amended complaint on a number of grounds.

Yahoo invoked a clause in its advertising agreement barring class litigation against it. Under prevailing California law, these clauses are probably unenforceable in consumer contracts; but there hasn't been a lot of litigation over these clauses in business-to-business contexts, especially because it's hard to argue unconscionability in B2B contexts. The court punts the issue on Yahoo's motion to dismiss, saying that it needs more facts about the parties' respective positions, which makes this issue more appropriate for resolution on summary judgment. Tom O'Toole has more to say about this issue.

Yahoo also tries to dismiss the breach of contract claim over its alleged promise of targeted ad placement, but the court refuses to dismiss because California law freely allows extrinsic evidence to explain unambiguous contractual terms. However, though the court didn't dismiss the claim, I think the plaintiffs will have difficulty prevailing on this contract breach claim because, as the court implicitly concludes, the plain language of the contract weighs heavily against their arguments.

Yahoo made several other efforts to dismiss clams, and the court rejects all but one of them (it dismissed the claim of civil conspiracy). Because so much of the lawsuit survived, this motion to dismiss ruling appears to be largely a win for the plaintiffs. However, I still think this remains a low-merit lawsuit because it's disingenuous for advertisers to complain when they got everything they paid for. Further, two years later, this lawsuit now seems strangely anachronistic given that the Great Adware Wars of the mid-2000s are over.

On April 15, 2008, the United States District Court for the Western District of Washington dismissed a lawsuit filed by a YouTube user in the wrong venue. In Bowen v. YouTube, Inc., 2008 WL 1757578 (W.D. Wash. 2008), the Court enforced YouTube's Terms of Use which require that all suits arising from YouTube's website be brought in San Mateo County, California. In support of the ruling, the Court noted that

[while] new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract . . . when a benefit is offered subject to stated conditions and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms, which accordingly become binding on the offeree.

Id. at *2 (quoting Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004).

This case further demonstrates the importance of including an enforceable choice of law provision in a website's terms of use.