Doctor's Associates, Inc. v. QIP Holders LLC, 2010 WL 669870 (D. Conn. Feb. 19, 2010). My prior post on this case.

As a long-time vegetarian (over a quarter-century), I find America's obsession with "more meat" competitions simultaneously amusing and repulsive. On my personal blog, I have routinely chronicled the "burger wars" between heartland restaurants trying to outdo each other by offering bigger and bigger burgers. As far as I know, the current high-water mark is the Beer Barrel Main Event Charity Burger, a 123 pound burger that includes 80 pounds of meat. See the photo. If you're one of those people who thinks a burger can never have too much meat, good luck working on that bad boy.

Today's post involves subway sandwiches instead of burgers, but it turns out that subway sandwich restaurants' competition over claims of having more meat is no less stiff. Quiznos kicked off the war in 2006 by launching a "double meat" line of sandwiches. Quiznos ran two TV ads comparing the meat in its sandwiches to Subway's and set up a website soliciting individuals to make and submit their own comparative digital video ads. Subway was not amused and ultimately filed a seventh amended complaint (!) over Quiznos' ad campaigns. (What a patient judge).

The parties hotly contested every aspect of the litigation, and Rebecca does a thorough recap of the lengthy ruling. I'm going to focus on the court's discussion of the crowdsourced video ads published on Quiznos' ad campaign website, which Quiznos defended on 47 USC 230 grounds.

Citing the MCW v. Badbusinessbureau case from 2004, the court says "the critical inquiry with respect to CDA immunity in this case is whether the Defendants merely published information provided by third parties or instead were actively responsible for the creation and development of disparaging representations about Subway contained in the contestant videos."

The MCW decision was questionable even at its time, but it's bizarre to see the court reach into history for this obscure, archaic, unpublished and geographically distant (it was a TX precedent being cited in a CT court) district court precedent. To do this, the court bypasses dozens of more recentand more thoughtfulcases, including the multiple Ripoff Report cases that have expressly and implicitly rejected the MCW case. A more natural citation would have been the Roommates.com case, which also referenced legal distinctions between active/passive websites similar to the legal standard quoted above. However, if the court had followed Roommates.com, it almost certainly would have ruled for the defense, as Quiznos didn't require illegality or even channel users towards illegality. (Rebecca makes the same point). Therefore, I'm baffled how the court got to this legal standard citing this legal precedent.

Using this odd legal standard, the court says it's up to the jury to decide if Quiznos just exercised traditional editorial control or impermissibly "actively participated in creating or developing the third-party content submitted to the Contest website."

Unquestionably, sending this case to a jury is a 230 loss, but how bad is unclear. We'll never find out what the jury would do with the case because the parties promptly settled the case after this ruling. However, a plaintiff's ability to hold a case open through trial, rather than having it disposed of earlier in the proceedings, would itself represent a significant win for plaintiffs--it would mean plaintiffs can get discovery to fish for embarrassing facts, force the defense to incur lots of litigation costs, and get a chance to tell their sob story before a jury. (FWIW, I am not aware of any 230 case that has ever reached a juryam I forgetting something?) Nevertheless, I think very few courts will follow this precedent given the plethora of more persuasive precedents and the fact that Quiznos' crowdsourced ads were just one part of Quiznos' larger allegedly false ad campaign. Therefore, I don't expect this 230 loss to spread to many other cases.

I also don't think this case shines much light on the legitimacy of crowdsourcing ads. There's no reason to believe that crowdsourced ads are per se problematic. At the same time, if the advertiser uses the ads offline, clearly the advertiser "adopts" the ad and takes full responsibility for its contents. If the advertiser only publishes the ad online, 230 might be available but the advertiser still might tread cautiously due to the FTC Endorsement and Testimonial Guidelines, which basically ignores 230 and holds advertisers liable for certain types of third party advertisements anyway. I think 230 may nullify this part of the FTC guidelines, but most advertisers would rather not tangle with the FTC to establish the deficiencies in the FTC's thinking. As a result, I expect most advertisers will vet most crowdsourced ads, even if they only publish them only, as if the advertiser is legally responsible for the ads and not protected by 230.

BTW, the Subway v. Quiznos lawsuit isn't the only litigation over subway restaurants' claims of double meat. In an apparently unrelated lawsuit, last month a class action suit was filed over Blimpie's "Super Stacked" sandwich for overclaiming that it had double meat.

I confess some schadenfreude when I see lawsuits against meat pushers for overhyping meat quantities. I would not shed a tear if the meat pushers lock up each other in litigation death struggles and sue each other to oblivion. Of course, consumers can facilitate that outcome by refusing to patronize vendors who "compete" with each other by encouraging us to overconsume the Earth's resources.

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

The matter was remanded by the Federal Circuit to the District Court, and, as we blogged in December, several additional pre-trial rulings again favored the JMRI project, including a ruling on the eligibility of software code that is distributed for free for copyright infringement damages. The settlement was reached with a trial date on the not-too-distant horizon.

With the settlement, the Federal Circuit and District Court rulings will not be subject to direct appeal. Given the rarity of litigation over open source software, it seems unlikely that the reasoning of these two rulings will be questioned judicially in any other open source litigation for some time.

The settlement agreement is here, and the permanent injunction is here.

The explanation of the settlement on the JMRI site indicates that the proprietary software company has agreed, among other things, not to misuse the JMRI software at issue, or to register any domain names incorporating certain terms attributable to the JMRI project, and will make a payment of $100,000. Future disputes will be settled by mediation or arbitration.

Scherillo v. Dun & Bradstreet, Inc., 2010 WL 537805 (E.D.N.Y. Feb. 17, 2010)

I teach my Cyberspace Law students that the most effective online contract formation process is a "mandatory non-leaky clickthrough agreement":

* mandatory = the user cannot proceed to the destination without going through a screen soliciting their consent to the user agreement.
* non-leaky = there are no alternative ways the user can reach the destination. I realize this is redundant with "mandatory," but I remind students that a seemingly mandatory process can have leaks. For example, if customer support representatives will manually set up user accounts occasionally, the mandatory online process has become leaky because now a few users reached the destination without consenting to the agreement.
* clickthrough = the user manifests assent to the contract by clicking, and the user is told that the click signifies assent.

There are other ways to form online contracts (e.g., email exchanges), but if executed properly, the mandatory non-leaky clickthrough process should do very well against contract formation challenges. But even this description leaves open a number of user interaction judgments. Does likelihood of contract formation vary if:

* the agreement terms are presented on the clickthrough page itself or are only available for review by hyperlink?
* the agreement terms are presented in a scrollbox? If a scrollbox is used, must the user be forced to scroll through the scrollbox?
* the user is asked to check an additional box, such as a certification that the user has read the agreement?

In all of these cases, I believe the contract should be properly formed whether the answer to these questions is yes or no. However, I'm now a fan of adding a bonus mandatory checkbox as part of the formation process after reading today's opinion. A user mounts a sophisticated challenge to a mandatory non-leaky clickthrough process, and the bonus mandatory checkbox helps squelch the challenge. I think the court would have enforced it without the checkbox, but it sure put the user in an awkward/untenable position.

Scherillo bought a financial report about a company from Dun & Bradstreet's Small Business Solutions website. Scherillo alleges that the report painted an overly rosy picture of the company, leading him to make bad investment decisions that cost him money when the company tanked. Scherillo wants D&B to cover his investment losses.

Scherillo is almost certain to lose on the merits. Indeed, this case brought to mind one of the earliest cyberlaw cases, Daniel v. Dow Jones, 520 N.Y.S. 2d 334 (N.Y.C. Civ. Ct. Spec. Term 1987). (This case is a fun read--see how the court discusses electronic networked communications almost a quarter-century ago). That case involved Dow Jones' publication of an ambiguous report via a dial-up online service that led the plaintiff to make a bad investment decision. The court said that any tort claim for publishing inaccurate information required the plaintiff to show that it had a "special relationship" (analogous to a fiduciary relationship) with the information vendor, and an ordinary customer-vendor relationship did not qualify as a special relationship.

Interestingly, D&B would rather hear the case in NJ rather than keep it in NY and hope to benefit from substantive NY law that surely would doom Scherillo's case. (Perhaps NJ has a similar law). To move the case to NJ, D&B invoked the venue selection clause in its user agreement. Let's look at the online contract formation process. The court says:

"since 2007, the SBS website has included a page that requires users to register before purchasing a Dun and Bradstreet product ("the registration page"). On the registration page, users input information, including their e-mail address and name. The bottom quarter to third of the page contains a scrollable text box with the title "Terms and Conditions" [which contained a mandatory venue selection clause designating NJ]. Directly below this text box there is more text that reads: "I have read and AGREE to the terms and conditions shown above." Immediately adjacent to this text is a much smaller, empty box ("the terms and conditions check box"). Also at the bottom of the page is another box containing the phrase "Complete Registration" ("the Complete Registration box"). Clicking on this box completes the user's registration. McDonald testified that if a user clicks on the Complete Registration box without checking the terms and conditions check box, the user is unable to complete registration and is returned to the registration page."

Check out the page yourself as I saw it in Google Chrome on Feb. 18 (with cropping). The formation process looks pretty standard to me.

Scherillo attacked the formation process by saying he never consented to the agreement because "it was possible for him to unknowingly and involuntarily 'check' the terms and conditions check box." Not only that, he lined up Sean Chumura, "a cyberwarfare and computer forensics expert" who is also [LINK NSFW] helping Perfect 10 in its lawsuit against Google, to testify that "it was possible for plaintiff, while 'tabbing' through the registration page, to inadvertently hit the space bar and thereby 'check' the terms and conditions box."

[Snarky paragraph alert] First, this may prove the adage that you can find an expert to testify about ANYTHING. Second, Scherillo alleged $75k of investment losses. For a low-value lawsuit like that, he needs a cyberwarfare expert??? Third, I believe Chumura has a MySpace page. Really...? I wonder if he uses an AOL.com email address too. The MySpace page also reveals that its author appeared to attend the Dan Quayle school of spelling.

OK, back to the case. The judge was no more tolerant of this nonsense than I am. He resolves the factual dispute by saying:

even under plaintiff's theory--that, while "tabbing" through the fields on the registration page, he accidentally hit the space bar key and thereby "checked" the terms and conditions box--plaintiff would have seen the check mark appear in the box and then still would have had to hit the "return" key (or clicked the "complete registration" box with the mouse) to complete the registration and advance to the next screen. Plaintiff would have had an opportunity to see that he checked the box inadvertently before he then hit the return key on the "complete registration" box. Thus, to accept plaintiff's theory, the Court would have to find that plaintiff hit two keys accidentally-the space bar and the return key-and that he was then involuntarily and unexpectedly sent to the next screen where he nonetheless proceeded to enter his credit card information and complete the purchase of the report. This alleged chain of events is simply not credible.

Therefore, Scherillo's click on the "Complete Registration" box manifested Scherillo's assent to the terms, even if Scherillo chose not to review them. The court says that the fact that the terms were in a scrollbox is immaterial, and the fact that some sites require the user to scroll through the scrollbox before proceeding doesn't affect the effectiveness of D&B's implementation.

I believe this court would have upheld the formation process even without the bonus checkbox, but you can see how the checkbox defused the withering assault of a cyberwarfare expert. Thus, you might consider implementing the bonus checkbox to discourage similar silly attacks against your contract formation process in the future.

While the saga between TechCrunch and Fusion Garage continues, the latter company is moving forward with the launch of the controversial web tablet, now called JooJoo. While it's not the magical tablet that inspired this blog (In African, the word joujou' means magical device.') Fusion Garage thinks they've got a winner on their hands.

For the same $499 that Apple intends to charge for an entry-level iPad with 140,000 available apps, Fusion Garage will provide you with a browser-based tablet without any capability to run and install local applications. It also lacks a 3G wireless option of any kind, relying solely on WiFi.

But what does the JooJoo have that iPad doesn't?

For starters, a 12.1 inch LCD touch screen in a widescreen aspect ration that we're more accustomed to seeing these days. And you can use all of that screen to render full HD quality video but only from your favorite video sites since the device has only 4 GB of SSD storage not nearly enough to store HD content of any real duration. It has the front-facing camera for videoconferencing that so many people feel is lacking in iPad as well as a USB port, though what one might do with that port is still unknown. As for the software, it's a Linux variant running a Webkit browser that will support both Adobe Flash 10.1 and Java.

So, do they have a winning device?

They may have had one before the iPad announcement, but not now not at that price point and limited functionality, anyway.

You can pre-order the JooJoo now which is expected to ship in 8 to 10 weeks though the site has indicated that time horizon for some time. If you're considering a JooJoo you may want to contact them for an update on a ship date, though the latest word from company executives is late Februrary.

Will you JooJoo?

[JooJoo]

Related articles by Zemanta

• Fusion Garage Files to Dismiss TechCrunch Lawsuit as JooJoo Wars Escalate [Lawsuits] (gizmodo.com)
• Controversial Joojoo Tablet Release Set For Late February (huffingtonpost.com)
• Fusion Garage says JooJoo tablet is on track for Feb. launch (seattlepi.com)
• JooJoo CEO pledges to ship this month, claims deal with leading phone maker (Paul Boutin/VentureBeat) (techmeme.com)
• JooJoo will be manufactured by Malaysia's CSL Group (venturebeat.com)

Will You JooJoo? is a post from: The Magical Tablet

A federal lawsuit alleging collusion among the major music labels over digital download pricing can proceed, a three judge Appeals Court panel ruled today.

As lawsuits go, this one's a humdinger, charging that the labels engaged in a price-fixing conspiracy to ensure that they each made about 70 cents per track sold online, and that no one received a better deal than anyone else. The case had earlier been tossed for a "failure to state a claim," but the Second Circuit Court of Appeals has reinstated it and ordered the trial judge to proceed with the case.

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.

Nemet Chevrolet Ltd. v. ConsumerAffairs.com, Inc., No. 08-2097 (4th Cir. Dec. 29, 2009)

Introduction

Citing 47 USC 230, today the Fourth Circuit upheld a 12(b)(6) dismissal of defamation and related claims against a consumer review website. This case is noteworthy because the court rejected some common allegations that plaintiffs make to evade 230, so this case may help defendants get 12(b)(6) motions to dismiss more easily.

ConsumerAffairs.com is a consumer review website with a twist: it works in conjunction with a law firm that mines the submitted complaints for potential class action lawsuits. In June 2008, I blogged about the district court's 12(b)(6) dismissal of the case.

Development of the Reviews

Nemet tried two tactics in its complaint to draft around 230. First, it alleged that ConsumerAffairs.com partially developed 20 reviews. Nemet pled:

Upon information and belief, Defendant participated in the preparation of this complaint by soliciting the complaint, steering the complaint into a specific category designed to attract attention by consumer class action lawyers, contacting the consumer to ask questions about the complaint and to help her draft or revise her complaint, and promising the consumer that she could obtain some financial recovery by joining a class action lawsuit. Defendant is therefore responsible, in whole or in part, for developing the substance and content of the false complaint . . . about the Plaintiffs.

These allegations do not survive a 12(b)(6) motion to dismiss.

* the website "structure and design" argument fails, despite Nemet's attempt to invoke Roommates.com, because ConsumerAffairs' structure was not illegal. To me, the court's discussion reinforces that Roommates.com' real holding is If you don't encourage illegal content, or design your website to require users to input illegal content, you will be immune. Chalk this case up as yet another citation of Roommates.com for the defense.

* Asking users questions about their posts does not qualify as development.

* The unsupported assertion that ConsumerAffairs edited posts did not pass the Iqbal standard. Plus, as Zeran indicated, 230 protects editorial decisions, so the allegations needed to assert some editing beyond this protected zone.

Review Fabrication

Second, Nemet alleged that ConsumerAffairs fabricated 8 reviews. Nemet pled:

Because Plaintiffs cannot confirm that the [customer] complaint . . . was even created by a Nemet Motors Customer based on the date, model of car, and first name, Plaintiffs believe that the complaint. . . was fabricated by the Defendant for the purpose of attracting other consumer complaints. By authoring the complaint . . . the Defendant was therefore responsible for the substance and content of the complaint.

This allegation has an obvious (and IMO embarrassing) logic flaw. Even if Nemet can't use its records to validate the facts in a consumer review, ConsumerAffairs.com's fabrication of the post is only one of many possible explanations. The court notes some other possible explanations: "the post could be anonymous, falsified by the consumer, or simply missed by Nemet." (I would also add the possibility of weak recordkeeping by Nemet). To try to get around this logical deficiency, Nemet marshals up some additional allegations:

(1) that Nemet has an excellent professional reputation, (2) none of the consumer complaints at issue have been reported to or acted upon by the New York City Department of Consumer Affairs, (3) Consumeraffairs.com's sole source of income is advertising and this advertising is tied to its webpage content, and (4) some of the posts on Consumeraffairs.com's website appeared online after their listed creation date

But all of these facts are non-sequiturs; none of them show that ConsumerAffairs fabricated the posts, and post-Iqbal these allegations are not enough to state a claim. The dissent disagreed with this conclusion (about the alleged fabrication) and would have allowed those claims to proceed.

230 as an Immunity Redux

In FN 4, the court notes that the Seventh Circuit questioned if 230(c)(1) was just a definitional section. Citing Zeran, which addressed this issue explicitly, the court says "Of whatever academic interest that distinction may be, our Circuit clearly views the 230 provision as an immunity:" As a result, the court "aim[s] to resolve the question of 230 immunity at the earliest possible stage of the case because that immunity protects websites not only from 'ultimate liability,' but also from 'having to fight costly and protracted legal battles.'" It looks like there could be a brewing catfight between circuits over whether 230(c)(1) is an immunity, an affirmative defense, a definitional section or something else.

Conclusion

Given that this court was bound by the Zeran precedent, it's perhaps not surprising that the court found 230 protection for a consumer review website. Nevertheless, by rejecting another plaintiff's attempt to make hay from Roommates.com and rejecting weakly supported allegations of fabrication, this court gave defendants even more support to fend off claims that are, at their core, based on third party content.

The updated census of Roommates.com citations:

Roommates.com Cited for Defense (11 cases): GW Equity v. Xcentric, Best Western v. Furber, Goddard v. Google (and second ruling) Joyner v. Lazzareschi, Atlantic Records v. Project Playlist, Barnes v. Yahoo (note: although the case was a partial loss for the defendant, the Roommates.com discussion came in the defense-favorable part), Doe IX v. MySpace, Doe II v. MySpace, Dart v. Craigslist, Shiamili v. Real Estate Group, Nemet v. ConsumerAffairs

Roommates.com Cited for Plaintiff (2 cases): NPS v. StubHub, FTC v. Accusearch

King Pharmaceuticals, Inc., v ZymoGenetics, Inc., 2009 WL 4931238 (E.D. Tenn. Dec. 10, 2009). Seattle Trademark Lawyer has some background.

This case involves the cutthroat (sorry) world of blood clotting drugs. King Pharmaceuticals sells bovine (cow) thrombin, a clotting agent. ZymoGenetics sells thrombin made from hamster ovaries and snake venom. ZymoGenetics' version has been making inroads on the thrombin market, and King isn't too pleased about that. King claims that its dropping market share is due to several bad acts on ZymoGenetics's part, including ZymoGenetics' AdWords campaign that included the King trademark "Thrombin-JM" as a keyword.

Blaming illegitimate AdWords for King's dropping market share seemed particularly implausible for two reasons. First, the product is purely B2B and has no consumer-facing side. It's used for post-surgery recuperation, so doctors/hospitals are the target customers--and for professional and liability reasons, they are pretty careful about what they prescribe to patients. So if the AdWords ads have helped facilitate doctor switching, it's more likely due to doctors learning of a new drug that doesn't have some of cow thrombin's negative side effects than any marketplace mistake over brands or other "unfair" diversion.

Second, the AdWords ads produced a trivial number of clicks. ZymoGenetics reports that it got 84 clicks on "Thrombin-JM" (and only 803 on the generic term "thrombin"). The court doesn't expressly guffaw at King for fighting over 84 clicks, but I can hear a snicker or two in the opinion. Not surprisingly given the minuscule volume of clicks, ZymoGenetics voluntarily dropped the competitive keyword purchase when it learned of King's lawsuit (it wasn't giving up much), and it agreed not to buy the keyword again. King pressed for a preliminary injunction to forcibly hold ZymoGenetics to its word, which many courts will issue in these situations, but this court decides that ZymoGenetics' promise is good enough and denied the preliminary injunction.

Now, King was going to court to redress ZymoGenetics' perceived transgressions no matter what, so it would be a little unfair to beat up on them for litigating over 84 clicks. However, this case is yet another example of how competitive AdWord lawsuits often are ridiculous overkill given the economic value at issue. (Related examples are 1-800 JR Cigar, which involved $345 of revenue, and Storus, which involved 1,374 clicks over an 11 month period). It's a good reminder to trademark owners to be smart with their litigation dollars!

The week before Thanksgiving, I attended an unusual symposium sponsored by the University of Denver Law Review entitled Cyber Civil Rights: New Challenges for Civil Rights and Civil Liberties in our Networked Age. The symposium covered standard Cyberlaw topics, but the raison d'tre was University of Maryland law professor Danielle Citron's two recent articles on online harassment of women: "Law's Expressive Value in Combating Cyber Gender Harassment" (Michigan Law Review) and "Cyber Civil Rights" (Boston University Law Review). It is unusual for a law school to celebrate another school's professor and her research, especially when the professor is fairly junior. Nevertheless, Danielle's participation brought together academics from both the Cyberlaw and civil rights communities, which provided a rare and interesting mix of folks..

First Panel

Danielle Citron started off by recapping her two papers. Online participation, such as blogging, is essential to professional standing, and employers are reviewing online profiles of prospective employees as part of their hiring considerations. However, women are being targeted for abuse online. These attacks are harming women by changing their online and offline activities, reducing their job opportunities, and causing women to change their gender representations online. Further, folks are trivializing these problems. Women are underreporting the attacks, and law enforcement only intervenes when there are offline harms. New laws can serve an expressive function to communicate that online attacks against women are socially unacceptable. The new laws can validate women's feelings that they have been harmed and encourage law enforcement to pursue more cases.

Commenting on the papers, Robert Kaczorowski of Fordham Law (and Danielle's stepdad) made an extended analogy between the Ku Klux Klan and cybermobs.

Wendy Seltzer asked if we could deemphasize the effect of words rather than prohibit them. Danielle responded that we don't know how seriously to take any particular threat.

An audience member asked if is there a difference between mobs and individual actors who are just taking advantage of being anonymous. Danielle answered that groups can become more extreme online. I think this point deserves more exploration: a series of uncoordinated individual decisions to pile on to an attack can look like a coordinated attack to the victim. This is part of why I thought the KKK references were puzzlingKKK activities are clearly coordinated, while online attacks against women can succeed without any coordination or ongoing connection between the attackers.

Paul Ohm argued that that legal solutions are better for cyber civil rights problems than technological solutions. Paul discussed what he labeled Felten's Third Law. (He doesn't know of two earlier laws named for Ed Felten; he just assumes they exist given Ed's impressive and influential oeuvre). As articulated by Paul, Felten's Third Law is that in Cyberlaw conflicts, lawyers love technical solutions and technologists love legal solutions. In other words, we love the solution we don't know because we assume it has to be better than the one we do. As both a law professor and technologist, Paul picks law over technology for these problems.

Paul categorically rejects any technical solution that would create a fully identified Internet. For example, we should not mandate server log retention because we know the logs will be co-opted to regulate other forms of unwanted content, not just online harassment.

Wendy Seltzer discussed the unintended consequences of legal intervention. For example, mandatory Internet filtering in school libraries hasn't stopped kids from bypassing the filters, but it has facilitated a marketplace for improving filtering technologies that has benefited repressive regimes. Another example: anti-circumvention technology fails to restrict copying but has reduced innovation around DRMed content. Wendy also noted how norms can help curb abuses. For example, while there are online cesspools, she praised Wikipedia's evolving guidelines for living people's biographies.

In response, Danielle admitted that her solutions need to be more surgical. She said she might consider moving from a notice-and-takedown model to a notice-and-preserve model for intermediaries.

Second Panel

This panel was composed of three women academics from the civil rights community, so it was a noticeable shift from the typical Cyberlaw academic discussion.

Mary Anne Franks is a University of Chicago Bigelow Fellow and soon-to-be full-time law professor. She expresses our collective disappointment that cyberspace isn't a utopia that allows people to escape offline discrimination and harassment. She laments that women can lose control of their identities online, such as when someone creates a fake online profile in their names.

She then addressed how cyberspace is unique/special/different with respect to gender harassment. Many commentators try to duck cyberspace exceptionalism, so it was refreshing to see her tackle the issue squarely. Existing offline discrimination/harassment laws assume interactions between repeat players at work and school; online harassment can be divorced totally from any existing social networks. However, because the online activities still harm targeted individuals at work and school, we should treat the harms the same. Offline, there are switching costs to changing jobs or school; online, search engines' consolidation of results for search on a person's name creates a different type of switching cost. In terms of supervisory power, she thinks web operators have analogous control to employers or school administrators. Thus, when web operators receive notice of online harassment, they should have a duty to do something about it. Offline, employers can develop a variety of responses and policies to combat workplace harassment. Web operators should have similar latitude; for example, they can delete offending posts or suspend/ban accounts.

Helen Norton, a University of Colorado law professor, did not share Danielle's optimism (expressed in her first article) that existing discrimination laws can curb online harassment. Instead, Helen thinks a new civil rights statute is needed, but she might limit its remedies to exclude money damages. Helen is pessimistic that there will be regulation any time soon, noting that it can take years to enact civil rights legislation. Helen would also like to see more precise definitions of the exact harms that women are experiencing only online.

Nancy Ehrenreich, a Denver University law professor, began her talk by saying that we should not overstate the Internet's benefits. She then clarified that we should not assume that disadvantaged folks can overcome barriers online. For example, we impose cultural categories on people in every interaction, so even if people try to mask their identity online, they can't really escape. She wondered why we aren't talking about an anti-discrimination law for the web. Her concern is that discrimination denies individuals access to the Internet.

In Q&A, Paul Ohm observed that civil rights scholars often invoke free speech as the countervailing concern to their desired regulations, but Cyberlaw scholars are often more interested in other generative effects of the Internet, such as new business models, new labor models and new modes of production.

Panel 3

James Grimmelmann (see his slides) started with the Skanks in NYC case. In that case, the defendant criticized someone else in her social network on a blog, calling the plaintiff (among other unflattering things) a skank. The plaintiff sued to obtain the blogger's identity. After a successful unmasking, the plaintiff dropped the lawsuit, having successfully publicly shamed the blogger.

James hypothesized that this unmasking and shaming was an appropriate remedythe blogger got shamed (like an eye for an eye), and unmasking is a better outcome than other legal remedies like damage suits. James then posited a thought exercise that provided plaintiffs with an expedited unmasking procedure if they drop any damages claim. This would have a number of benefits. Unmasking curbs online harassment is especially effective at busting online mobs. Also, an unmasking remedy avoids messy debates over the First Amendment's scope, and it may be more desirable than trying to hold online providers liable.

Having advanced his own strawman, James then cut it down. In some cases, defamation remedies may be more desirable, and plaintiffs may not know that until they learn the putative wrongdoer's identity. In other cases, plaintiffs who just want unmasking would appreciate a lower legal hurdle. Also, we provide legal protection for anonymity for good reasons.

James' lessons from the thought exercise: we should consider ways to decouple an unmasking remedy from litigation. At the same time, we need to protect defendants from pretextual unmasking; in some cases, retaliation is a big concern, and we should incorporate this concern into the unmasking decision.

From Chris Wolf's talk (see his full remarks), the most interesting thing I learned is that 18 states have laws banning wearing masks in public, enacted to suppress KKK activities. This was the second speaker's KKK reference of the day, and it made me wonder if we were experiencing some variation of Godwin's Law.

Panel 4

Viva Moffat observed that secondary liability issues generate the most heat in online harassment discussions. She expressed concern that imposing legal duties on third parties may not help law's norm-shaping effect, and it's not appropriate to impose liability just because the provider has deeper pockets or the direct actor can't be found. She also suggested that imposing liability on third parties creates a greater risk of collateral damage than direct liability. [Note: I would like to know more about this last assertion. I suspect we cannot make a utilitarian calculation a priori]. As a result, she favors focusing more efforts on sharpening direct liability.

Ed Felten talked about identifying and anonymizing online activity. He explained the usual sequence of events in chasing bad online content:

log file => IP address => identity => justice

But the IP address => identity step breaks down when users use an anonymizing proxy or the user's network uses network address translation (used by home wireless routers or in coffee shops) and all connected devices' requests share a single IP address. He said that a majority of Internet connections use NAT.

Because IP address tracebacks can dead-end at the intermediary, an IP address can reveal too little information. However, even when users aren't investigatory targets, IP addresses can reveal too much information, such as geolocation. This paradoxIP addresses simultaneously reveal both too much and too little informationreflects that the IP address system was built for routing, not identification. So could we design a better authenticating technology?

He then conducted a semi-realistic thought experiment of a new technological tag that could be used instead of IP addresses. This tag could have the following attributes:

* can be placed by any intermediary
* conveys no information about the sender unless unwrapped by the intermediary (presumably for good legal cause)
* unwrapping the tag yields the best identity information the intermediary has
* the tag's use is voluntary as a technical matter
* the tag is removable as a technical matter

I then batted clean-up. A summary of my remarks:

Today's conversation has revisited long-standing Cyberlaw issues, such as:

* anonymity v. accountability, and who should be responsible for online content and actions
* cyberspace as a physical place. See, e.g., Noah v. AOL (an online discrimination case), National Federation of the Blind v. Target (also an online discrimination case) and Estavillo v. Sony
* cyberspace exceptionalism and cyberspace utopianism (on the latter point, see my article on search engine utopianism)
* when is the optimal time to regulate rapidly evolving technology? Early, when the technology is still in its infancy, or later, when market forces and new technological evolutions may have cured the early problems?

Danielle's articles convinced me that women are experiencing serious harms online that menincluding mecould easily trivialize. Danielle's articles also convinced me that online harassment has strong parallels to the 1970s legal evolution of workplace harassment doctrines, where a big part of the battle was to get people to take the harms seriously.

While I find a lot of descriptive value in Danielle's work, the normative implications are not as clear. As usual with attempts to regulate rapidly evolving technology, there are many important but overwhelmingly hard definitional challenges, such as who is an intermediary, what are online mobs and what constitutes online harassment. For example, I do not think the Skanks in NYC incident is an online harassment case or an attack, but James Grimmelmann's talk assumed those characterizations.

While we can debate what should be the right level of regulatory intervention, we should not overlook that Congress already enacted a law squarely governing intermediary liability for online harassment: 47 USC 230. The angst that prompted this conferencebad behavior onlineis the logical consequences of 230's broad immunity. The statute enables websites to adopt policies that they will not police user content or retain server logs of user activity. These choices aren't a surprise or a per se abuse of the immunity; instead, they are the unavoidable implications of Congress' action.

We might question Congress' wisdom in adopting 230, but we should not diminish its potential importance to the Internet as we know it. [In Q&A, Chris Wolf asked about the comparative experience in countries that don't have such broad immunity. In those countries, we know that websites take down user content much more freely, and I believe that the most interesting UGC innovations are all taking place here in the US, not countries with more restrictive UGC liability.] I can, at most, only prove correlation and not causation, but I believe 230 is one of the main causal reasons why the Internet has succeeded so well.

When I speak around the country about 230, I often encounter folks who generally accept 230's immunity scope but want just one new exception, i.e., their pet topic. If everyone got their just one exception, the law would be eviscerated. (I said it would be Swiss-cheesed to death; maybe I should have said it would be overcome by a thousand duck bites). I'm not rejecting new exceptions categorically (they should be each considered on their own merits), but in aggregate 230's immunization benefits are actually quite precarious. I believe 230 works precisely because of its strength and simplicity, so adding more exceptions could significantly reduce its efficacy.

I concluded my remarks by observing that online harassment is a subspecies of bullying and incivil behavior in our society. While we can and should work to curb online harassment, I am more interested in addressing bullying and incivility in all its forms, wherever it takes place.

In this regard, I have been impressed by how my son's school is proactively addressing bullying. See more about this effort, called Project Cornerstone. The school is teaching kids not to bully or to tolerate being bullied, and the project gives bullied kids tools to go on the offensive against bullies. There's no guarantee that anti-bullying programs will work in the short or long run, but I remain hopeful that online harassment today partially reflects that many current Internet users never got any anti-bullying education. Perhaps, then, online harassment issues will naturally abate (without any regulatory intervention) as new generation of Internet users, better educated about bullying, come onto the Internet.

Following my remarks, we had more Q&A.

Paul Ohm Q: Some cyber folks argue against secondary liability because they believe that a victim can pursue a direct action, but Ed's talk suggests that user anonymity will continue to be possible.

Mary Anne Franks: civil rights isn't about individual claims because victims have to bear too high a burden to pursue claims. Instead, civil rights are about changing large-scale social norms. The goal is to achieve anti-discrimination by any means necessary. Thus, civil rights scholars have already discussed and concluded that it's appropriate to impose liability on intermediaries like employers and schools.

Danielle: intermediaries are the lowest cost avoiders.

James Grimmelmann: no, the harassers are the lowest cost avoiders. Civil rights folks would get more support from the Cyberlaw crowd if they focused their regulatory desires towards intermediaries who are in active concert with the bad actors.

Danielle's Wrap-Up

We all agree that:

* education can make a big difference
* online communities need to self-police
* there are numerous limits to using the law as a solution, including that lawsuits don't make sense and 230's immunity.

We don't agree on what to do next. There are First Amendment limits, and technology doesn't offer any panaceas.

Electronic Frontier Foundation (EFF), a non-profit group dedicated to defending the freedoms of individuals in the digital age, thinks the U.S. government may be violating the privacy of individuals who post content to Facebook and Twitter.

The organization has filed suit in San Francisco's U.S. District Court, Northern District, against the Department of Defense, the CIA, the Department of Homeland Security, the Department of Justice, the Department of the Treasury and the Office of the Director of National Intelligence in order to get information concerning the government's use of social-networking websites for investigative and data gathering purposes to help inform Congress and the public about the effect of such uses and purposes on citizens' privacy rights and associated legal protections.

According to the complaint, EFF is aware that the government is using content posted to social media sites in their investigations. After their initial requests for more information and documentation on the specific policies around these activities went unanswered, the EFF began seeking a court order to force the government's hand in full disclosure.

One of the incidents cited in the complaint was the widely publicized FBI search of an activist's home, which came after the man in question used radio scanners to post the movements of police on Twitter during the G-20 Summit.

From the complaint:

Although the Federal Government clearly uses social-networking websites to collect information, often for laudable reasons, it has not clarified the scope of its use of social-networking websites or disclosed what restrictions and oversight is in place to prevent abuse.

While it should come as no surprise that the government would be monitoring social media sites for information (earlier in the year the White House sought to hire a social media archivist, while the CIA invested in a social media monitoring firm), it does seem that the EFF has a valid complaint, and that the public should know the scope of the government's monitoring activities.

The full 8-page complaint is embedded below. We're curious to see how this all plays out, so we'll keep you posted on new developments.

[via Bloomberg]

Tags: EFF, lawsuit, social media monitoring, trending, Trending Stories, US Government

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.

eBay may have sold the majority of Skype earlier this month, but that may not matter if the two original founders of Skype get their way. They have just sued eBay and Skype's new investors for damages that they estimate total a rate of more than $75 million daily.

The case pits eBay against Joltid, which is owned by Skype's founders Janus Friis and Niklas Zennstrom. The issue is around a core piece of peer-to-peer technology utilized in Skype. Joltid seems to have the rights to it and has been seeking to yank the code since at least March. Now, they have filed an injunction and are seeking damages in U.S. District Court.

The lawsuit cites eBay, Silver Lake Partners, and its investment partners, who combined own the popular peer-to-peer calling service. The potential damages cited by the lawsuit are stunning, though. They claim that eBay's altering and misuse of their code could total to more than $75 million per day in damages, as each download of Skype is considered by them to be copyright infringement. If you do the math, that's over $27 billion per year. How they came up with that extraordinary number we cannot even begin to comprehend.

Apparently this is not all that unusual for the Skype founders, according to The New York Times, who reports that they've developed a reputation for litigation, stemming from three lawsuits they filed against an investment banker who represented them in the original Skype sale to eBay.

Tags: ebay, Skype

EU Opposition of Google's Settlement

Many voices in the EU complained at a hearing that the proposed settlement would give Google more power to exclusive rights to sell million of out-of-print works even though the copyrights are still valid. Not much of a surprise that Microsoft is backing the anti-Google settlement groups in the EU. Many groups in the EU feel that since they did not participate in the settlement that they were discriminated against.

What's Next in the Lawsuit?

Federal District Judge Denny Chin must now sort through the filings to try to determine if the proposed settlement properly protects the authors, or else the case may continue on to trial. Among other issues for Judge Chin to consider are antitrust concerns that Google's control over these works would give Google too much market power. There are many antitrust issues on the horizon for Google it seems with many opponents, not just with books but more broadly in the entire space known as eCommerce. Stay tuned as we see Google and eCommerce evolve.

But first lawsuits first.

Advertise.com, which was purchased by ABCsearch.com earlier this year and rebranded as such a few months ago, is a variation on AOL-owned Advertising.com, the beleaguered Internet company claims. In legalese, that translates as follows:

Advertise.com recently commenced use of the virtually identical and confusingly similar designation Advertise.com and design in connection with the same and complimentary services as those offered by Plaintiffs under their federally-registered Advertising.com name and marks and their Ad.com name and marks.

Update: looks like Advertise.com sued AOL first (August 17, 2009)

A search of the USPTO database shows that AOL does in fact have three registered trademarks for Advertising.com, but all are design trademarks, which means they stand little chance of exercising trademark rights over something as generic as the domain name advertise.com. Granted, the logo looks vaguely similar, but virtually identical and confusing' it ain't.

Note that AOL doesn't even effectively market Advertising.com as a business unit anymore - although it may soon recommence doing just that - and redirects the domain name to its Platform-A website instead (AOL rebranded it to the name of this whole-owned subsidiary in April last year and now prefers AOL Advertising as the overarching denominator).

So why would anyone confuse Advertise.com for an AOL property? It just doesn't make any sense to try and claim ownership over any domain name with a variation on the word advertising' in it. What's next? Ads.com? Advertisement.com? In the court documents, embedded below, AOL even boasts the fact that Advertise.com has only about 25,000 unique visitors per month, so what's really at stake here?

The second case is even more bizarre: although often used in its communication, Ad.com is apparently not a trademark owned by AOL, although the company has filed an application for it in the past. But that domain name is actually owned by a Marcos Guillen, who recently sold it to Directi and Skenzo for $1.4 million. Well, almost sold it, because the deal fell through after all, according to industry watchers due to the fact that the mark has not yet acquired distinctiveness for any of the applicants - including AOL - following a recent examination. Guillen has now filed a lawsuit against Directi and Skenzo for backing out of its auction purchase of Ad.com, seeking $1.4 million, prejudgment interest, and/or damages according to proof.

Aol

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In a cease-and-desist letter Williams sent to Hachette Book Group, he provided comparisons from the two books of a wedding, a sex-on-the-beach episode and a passage where a human-turned-vampire describes the wrenching change.

As another instance of similarities, Williams pointed out that characters in both books call their wives "love."

"I think the fans have to read both books and make up their own mind, like a judge is going to have to," Williams said.

It's been a long road to get here. Schoemaker originally filed suit against Farrell last April, when Farrell used Schoemaker's trademarked term Shoemoney in his ad copy a breach of Google's terms of service. The case was interesting not just because of Schoemaker's notoriety, but because Farrell is an employee working out of Google's New York office. Given his position, it was feasible that Farrell had used his access at Google to somehow bypass the system's trademark filters (among other things), though Google denied this and attributed the fault to human error.

Farrell subsequently filed an affadavit stating he didn't know that the term was trademarked and blamed a failure of Google's text filters. In June, Farrell then went on to counter-sue Schoemaker for defamation. Farrell dropped half of the counter-suit a month ago, and soon thereafter approached Schoemaker about a settlement.

Yesterday, Schoemaker posted the following to his blog:

For those that have been following my lawsuit against the Farrells, there have been several developments. A few weeks ago, after originally withdrawing half of their defamation lawsuit against me, the Farrells withdrew the other half and completely abandoned their counter-suit against me. I was then approached about the possibility of accepting a settlement offer in exchange for me dismissing my trademark infringement case against the Farrells. Unfortunately, I'm not allowed to write about the nature of the settlement talks or the amount of money that was offered because the settlement offers that were made required confidentiality.
I can say that my lawsuit against the Farrells was settled. This has been a real educational experience for me. I was looking forward to getting my day in court, but I can also say that I am very happy with the final result. There is not a whole lot more I am allowed to discuss.

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• 7,130,389: Digital notification and response system
• 7,496,183: Method for providing digital notification
• 7,519,165: Method for providing digital notification and receiving responses

Manhattan-based Art Capital Group says Leibovitz borrowed the money last year because she was in dire financial straits due to unpaid bills, mortgage payments and tax liens.

The breach of contract lawsuit, filed Wednesday in Manhattan state Supreme Court, says that in return Leibovitz granted Art Capital the right to sell all of her photographs, plus her homes in Manhattan and upstate New York.

The lawsuit says Leibovitz and her associates are now trying to ignore their obligations.

A spokesman for Leibovitz denies the allegations.

Matthew Hiltzik says the suit is part of Art Capital's "continued harassment."

If you haven't heard the story yet, a Chicago real estate company called Horizon Realty Group filed a lawsuit against one of its tenants on Monday. She apparently made a snarky remark on Twitter, claiming that the company didn't care about mold in her apartment.

Horizon is suing her for libel, looking for $50,000 in damages to their reputation.

She only had about 20 followers, so this looked like a pretty harsh David and Goliath story. Unfortunately, Horizon's legal and PR teams forgot what happened to Goliath.

By Tuesday afternoon, the story of Horizon's lawsuit had hit trending topics on Twitter. Which means that a peevish remark made in front of 20 people has now found its way to hundreds of thousands.

That megaphone is a lot more powerful than you think it is

Think you just have 20 followers? Think again. Your tweets are findable both on Twitter search and Google. And it's a routine practice for any smart company to look for its name regularly using both services.

Think the customer who just infuriated you has just 20 followers? Think again. Angry tenant Amanda Bonnen's megaphone was tiny, but the social web can't resist a juicy story. And the social web really can't resist a juicy Twitter story.

It's not about what you think is fair

Horizon Realty might be the most loveable, fair, decent and true company in the world. Right now, their name recognition has about as much appeal as Saddam Hussein. With mold.

Whether fair or not, Horizon has made a worldwide name for itself virtually instantly, connecting its brand with callous disregard for its tenants, or worse.

(Yes, there is such a thing as bad publicity. This is what it looks like.)

Do social media users read all the facts carefully before flaming? Of course they don't. Are there dozens of inaccurate accusations about Horizon flying around Twitter at the moment?

Absolutely.

Is that fair? No. Then again, filing a $50,000 lawsuit against a customer for a snarky remark made to a friend isn't going to strike many as entirely reasonable either.

The Meatball Sundae has no mercy

Horizon's Jeffrey Michael, trying to explain his position to the Sun-Times, said that Horizon has a good reputation to protect. His company says they can prove there wasn't any mold in Bonnen's apartment, and they couldn't let Bonnen bad-mouth them. So they took a traditional route. (Although it would have been somewhat more traditional to ask her to remove the remark before filing the lawsuit.)

A year and a half ago, in a post about Seth Godin's book Meatball Sundae, I wrote about my take on a nice little company called Kryptonite Locks.

Kryptonite got knocked down hard when they tried to play by old communication rules in a new communication environment. They hadn't actually done anything wrong, but they looked clueless, unfeeling, and arrogant.

You don't get to play by the old rules any more, and it doesn't matter what business you're in. You don't get the old privilege of anonymity. You don't get to bury your story on page 47.

There is no more page 47. Every story is somebody's page 1.

As a matter of fact, it isn't your story any more. It belongs to everyone, and they'll do what they please with it.

If you want to influence the conversation, you've actually got to get into the conversation. Respectfully. Meaningfully. Just because that's a social media clich doesn't mean you get to ignore it and hope it goes away.

The one-to-a-jillion aspect of social media means that any of us can hit the equivalent of the front page of the New York Times at any time. All that has to happen is that we find ourselves in the middle of a really interesting story.

So what's the story about you going to be?

(And if you work for a company, be sure and warn your legal team about Twitter users. You don't want to mess with those people we're crazy.)

About the Author: Sonia Simone is Senior Editor of Copyblogger and the founder of Remarkable Communication. She also offers a pretty darned good free class on email marketing.

Horizon argues that Bonnen libeled the company with her May 12th tweet, which read in part Who said sleeping in a moldy apartment was bad for you? Horizon Realty thinks it's okay.

Bonnen's alleged twitter account, abonnen, is no longer active. But, based on information in Google's cache, it appears that Bonnen had 22 followers.

The statements are obviously false, and it's our intention to prove that, said Horizon's Jeffrey Michael. We're a sue first, ask questions later kind of an organization. Michael added that the company has a good reputation it wants to preserve.

Sue First, Ask Questions Later

Horizon may be breaking new ground in public relations with its response.

By suing Bonnen for $50,000 over a tweet that was probably seen by a fraction of abonnen's 22 followers, the company is bringing Bonnen's complaint to tens of thousands of readers on Twitter, in blogs and in news stories that the situation will generate.

Instead of preserving the company's good reputation, Horizon Realty is establishing itself as a sue first, ask questions later kind of company.

The kind of company that will sue you for $50,000 if you have something bad to say about one of their apartments.

If Horizon's lawsuit goes forward, fixing the damage it will do to the company's reputation will take a lot more than $50,000.

Horizon's response looks like a textbook case of what not to do when faced with a new media PR problem. What do you think the right response would have been?

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Horizon argues that Bonnen libeled the company with her May 12th tweet, which read in part Who said sleeping in a moldy apartment was bad for you? Horizon Realty thinks it's okay.

Bonnen's alleged twitter account, abonnen, is no longer active. But, based on information in Google's cache, it appears that Bonnen had 22 followers.

The statements are obviously false, and it's our intention to prove that, said Horizon's Jeffrey Michael. We're a sue first, ask questions later kind of an organization. Michael added that the company has a good reputation it wants to preserve.

Sue First, Ask Questions Later

Horizon may be breaking new ground in public relations with its response.

By suing Bonnen for $50,000 over a tweet that was probably seen by a fraction of abonnen's 22 followers, the company is bringing Bonnen's complaint to tens of thousands of readers on Twitter, in blogs and in news stories that the situation will generate.

Instead of preserving the company's good reputation, Horizon Realty is establishing itself as a sue first, ask questions later kind of company.

The kind of company that will sue you for $50,000 if you have something bad to say about one of their apartments.

If Horizon's lawsuit goes forward, fixing the damage it will do to the company's reputation will take a lot more than $50,000.

Horizon's response looks like a textbook case of what not to do when faced with a new media PR problem. What do you think the right response would have been?

Retired NYPD sergeant Dexter Brown was shot in the 1998 incident and sued the city and police department. It was revealed recently in court papers that the shooter, Det. Luis Lopez, was assisting in the arrest at a Brooklyn crack house. The city Law Department says the shooting was accidental and did not admit wrongdoing.

Brown walks with a cane and suffers chronic pain from damage caused by the shooting. The 45-year-old is retired on disability and cannot work. Brown says he feels vindicated his story came out. The settlement was reached Monday, as the trial was to begin.

Sony was supposed to win this. The company made magnetic tape out of like paper and mud back in the 1940s, turned out a "pocketable" transistor radio in the 1950s, and invented the "portable" television by 1960. They had their first video tape recorder by 1963. They weren't the only ones, but they were among the first and best.

The so-called VTR business had a rocky start. The things were hulking bastards, with huge price tags and poor recording capability.

A company called Ampex put out the first "home entertainment" VTR in 1963, only it cost $30,000 in the Neiman Marcus Christmas catalog, and was nicknamed Grant's Tomb because the product manager who thought it up was going to be shoved inside by the company's accountants. (He would have fit, too, the thing was so big.) Sony comes along in the middle of that decade and puts out a $1,200 "portable" VTR that came with a leatherette case and its own TV. It still weighed 65 pounds.

The worst part about these 1960s VTRs was that they were basically reel-to-reelyou had to thread your own 1-inch videotape through spools and stuff, and by the end of the decade, a one-hour spool of tape was like 8 inches in diameter. Can you imagine your TiVo needing 180 spools of videotape to get the job done?

As Sony toiled on the videotape problem, Matsushitawho we now call Panasonicand its independent subsidiary JVC weren't really standing out in the VTR business. Let's say this: Nobody would have guessed they'd be able to overthrow Sony and kick mecha ass within the decade.

However, these guys were among the biggest manufacturers, dwarfing Sony many times over. Matsushita, known for efficiency, not innovation, tended to focus on big boring appliancesTVs, refrigerators, air conditionerswith a smaller team, branded Technics, devoted to dominating the hi-fi realm. JVC was all about TVs and audio gear, and had decent video know-how.

It was Sony who solved the reel-to-reel problem withta daaa!a video cassette. It was called U-Matic, and at 3/4" thick, it was smaller than the earlier formats, but still a bit of a chunkster. Since video was a bit of a Wild West, Sony felt like it needed partners to firmly establish a format, and to avoid a format war. It asked Matsushita and JVC, who said "yes" as long as Sony adopted some changes. They key here: The partnership included a deal where everybody shared all the patents. Turns out, probably not the smartest move by Sony.

Sony was right to form a posse, though. Every single electronics maker in Japan, Europe and America was trying to build a video recorder. Some American firms were obsessed with lasers (though ironically it would later be the Dutch and Japanese firms who actually put lasers to good use); other American firms were jazzed about microfilm...for video. None of them had success. Before we get on with the story, here's a list of totally failed video players and recorders:

Matsushita VX-100 and VX-2000
Matsushita AutoVision
Toshiba/Sanyo V-Cord
Ampex InstaVision
MCA DiscoVision/Magnavox Magnavision
CBS Electronic Video Recording
RCA HoloTape
Sears/Cartridge Television Cartrivision

See what I mean? A friggin' mess it was.

Part of the problem was the message. Nobody knew what the hell this was all about. Sony wasn't just a pioneer in the technology, they thought hard about how to explain why you totally desperately want something bad. At one point, Sony hired Bela Lugosi to dress up one last time as Dracula, and explain that, since he worked nights, he needed to catch up on primetime shows when he got home. Get it? Vampiresthey're out killing people when Barney Miller is playing! It was a good bit, and there were a lot more like it. Little by little, the public caught on to what VCRs were for.

Anyway, U-Matic, launched in 1971, wasn't a runaway success, either, but it was the bestselling video recorder to date, and the first successful VCR. In the realm of pro video, it was hot. Sony cashed in by steering from the home market to the businesses but JVC, who kept trying to pitch it for home use, got hosed. Like villains in some Shakespearean play, Matsushita and JVC kinda lurked in the background, planning for the next round when they might one-up that little charmer, Sony. The name of their plot? Video Home System, which you and I call VHS.

Sony was naive. Like, crazy naive. In 1974, it asked Matsushita and JVC to partner up again, this time on a fully baked format called Betamax. They weren't asking for intellectual collaboration, just a deal to make and sell the things. It was a nice system, with really small tapes, but the problem was, the tapes only recorded for an hour. Sony was like, "That's not a problem," but everyone else was like, "Yes, it is." The would-be partners dragged their heels suspiciously, not signing any deals. Sony kinda thought that was weird, but went ahead and launched the one-hour Betamax box in 1975.

Big mistake.

Not long after Sony went into wide release with the one-hour Betamax, JVC pulled a two-hour VHS out of its butt. And in time for Christmas 1976 no less. Sony had another flash of naivete when it pressed on with the one-hour system for a while, even though it had a two-hour system in the works. In that gap, JVC and its big poppa Matsushita scored sales and recognition.

Some people say Betamax was "better" but that depends on many factors, and could very well be an urban myth. The technologies were so close Sony's own chairman called VHS a copy of Betamax. What may have looked good in one system with certain settings might not look as good on another with different settings. And by some accounts, Betamax's more moving parts meant they were more expensive to manufacture and more costly to maintain and repair. It's not an open-and-shut case of quantity vs. quality. Either way you look at it, there are compromises.

By this point, it wasn't just some anything-goes contest with a million formats. By 1976, all those above had died or were dying. In Japan, there were just two choices. The Japanese government told everyone to sort it out. Hitachi, Mitsubishi and Sharp joined Team VHS, but didn't really move forward.

In February 1977, Sony grabbed Toshiba and Sanyo, and then signed the American powerhouse brand Zenith up for an order of Sony-made Betamaxes with the Zenith name on them. Was it going to happen for Betamax after all? Seemed like they'd finally drawn at least a few good cards from the deck.

Sony might not have been totally screwed at that moment, but there were two American powerhouses, and the other one, RCA, was undecided. Ironically, the fate of the Japanese VCR industry relied on how well it could handle the most American of sports: Football. In other words, now that both players could manage two hours of recording time, what RCA wanted was enough recording time to capture a gamethree hours would do.

What transpired next is unclear. Even though, at the time, both technologies were limited to two-hour capacity, Matsushita pledged to make RCA tape machines that could record for four hours.

Was this a lie? Was it vaporware? Whatever the deal, JVC engineers pulled off a four-hour capacity six weeks later, and RCA agreed to buy 55,000 machines that year, and up to a million more in the next three years. Better yet, RCA's SelectaVision VHS decks would cost $300 less than the two-hour Betamaxes, at $1000 a pop.

Although Betamax hung on for a bit longer, that, boys and girls, was the end of the competition. In 1979, Sony market share tilted downward, and by 1980, the jig was up for those poor bastards.

Note: I recognize that there are other issues that might have come into play here, including Universal's lawsuit of Sony, which lead to today's Supreme Court definition of fair-use copyright law, and the fact that some studios, including Warner, began squeezing movies onto videotape early, with varying degrees of success. However, I contend that none of that changed the outcomethe war above was fought between Sony and Matsushita, and Matsushita won.

SOURCES:
Fast Forward: Hollywood, The Japanese, and the VCR Wars - James Lardner (Special thanks to you, Jim, for chatting me through some of this)
Sony - John Nathan
The History of Television - Albert Abramson
Sony History - Sony Global Website
Made in Japan - Akio Morita
Quest for Prosperity - Konosuke Matsushita
[PDF] Case Report on Betamax - Verardi et al
"Why VHS was better than Betamax" - Guardian UK - Jack Schofield

Gizmodo '79 is a week-long celebration of gadgets and geekdom 30 years ago, as the analog age gave way to the digital, and most of our favorite toys were just being born.

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.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

I stand by what I said. They did copy my song but I don't think they did it on purpose. I can understand why they got so upset because they probably don't even realise they have done it. It happens all the time. I have even copied myself without knowing I have done it. I'll write down what I think is a new melody and then listen back to it and realise it's the same as something I have already done. It's just one of those things and I don't want them to think I'm angry with them. I'd love to sit down and have a cup of tea with them and let them know it's ok.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

Solid Host, NL v. NameCheap, Inc., 2:08-cv-05414-MMM-E (C.D. Cal. May 19, 2009)

Facts

This case involves an alleged domain name theft. Solid Host is a web host and initial owner of the domain name solidhost.com, which it registered through eNom in 2004. Solid Host claims that in 2008, a security breach at eNom allowed an unknown interloper (Doe) to steal the domain name and move the registration to NameCheap. Doe also acquired NameCheap's "WhoisGuard" service, a domain name proxy service that masked Doe's contact information in the Whois database. Solid Host contacted Doe and sought the domain name; Doe asked for $12,000, and Solid Host took a pass. Instead, Solid Host demanded that NameCheap hand back the domain name and identify Doe, but Doe claimed that he had bought the domain name legitimately. NameCheap, apparently feeling like the cheese in a sandwich, demurred to Solid Host's requests. Solid Host then got a TRO ordering NameCheap to transfer the name and reveal Doe's identity, both of which occurred. For unclear reasons, Solid Host hasn't amended the complaint to name the Doe, but it is proceeding against NameCheap on various claims, including an Anti-Cybersquatting Consumer Protection Act (ACPA) claim.

The Opinion

Who is the Registrant?

My understanding of domain name proxy services is that the service acts as the legal registrant, thus supplying its contact information, but it registers the domain name for the benefit of its customer, making the customer the beneficial registrant. An analogy: a bank may take legal title of a property as part of securing a loan on the property, but the borrower retains beneficial title to the property.

So, for purposes of the ACPA, is the proxy service the registrant of the domain name? ICANN's agreement with registrars seemingly contemplates this characterization in Section 3.7.7.3 of its Registrar Agreement, which says A Registered Name Holder licensing use of a Registered Name according to this provision shall accept liability for harm caused by wrongful use of the Registered Name, unless it promptly discloses the identity of the licensee to a party providing the Registered Name Holder reasonable evidence of actionable harm. However, it's not clear to me that a proxy service licenses the domain name, especially if you accept my lender-borrower analogy above. Alternatively, if the proxy service is the agent of the customer, the licensing analogy also breaks down.

Whether the proxy service is the registrant matters a great deal to the legal outcome, and unfortunately, the court's analysis of this important question was cursory, muddled, and possibly internally inconsistent.

In this case, the court's inquiry is made more difficult by the fact that NameCheap acted as both the registrar and the proxy service provider. As a registrar, an ACPA claim against NameCheap should be squarely preempted by the domain name registry/registrar safe harbor enacted as part of the ACPA (15 U.S.C. 1114(2)(D)). For example, 1114(2)(D)(iii) says:

A domain name registrar, a domain name registry, or other domain name registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name

(This provision only moots damages, not an injunction, but since Solid Host has the domain name back in its possession, damages seem like the only remaining issue).

The court concludes that NameCheap is not eligible for the domain name registrar safe harbor because NameCheap is the domain name registrant. It says, "NameCheap is, by virtue of the anonymity service it provides, the registrant of a domain name that allegedly infringes Sold [sic] Host's trademark." Thus, NameCheap is ineligible for the registrar safe harbor, which applies only when the registrar acts as a registrar.

But, having rejected the domain name registrar safe harbor because NameCheap was the domain name registrant, the court then inconsistently says that NameCheap is not the registrant for purposes of the prima facie ACPA claim. Instead, for ACPA purposes the court treats Doe as the registrant, leaving NameCheap exposed to a possible secondary ACPA liability claim. (The court acknowledges that NameCheap would defeat a direct ACPA claim because NameCheap did not have any bad faith intent to profit from the domain name. Offering the proxy service wasn't enough to qualify as a bad faith intent to profit).

Wait a minutehow can NameCheap simultaneously be both the registrant (no safe harbor) but not the registrant (thus, subjected to a secondary claim)? The court does not acknowledge or explain this apparent inconsistency.

Contributory Cybersquatting

Courts have rarely discussed a contributory ACPA claim. The only one cited by the court was a 2001 case (the Ford Motors vs. Greatdomains.com case) and I can't think of any others. Perhaps this isn't surprising because (1) as the Greatdomains.com case indicated, a contributory ACPA claim is available "in only exceptional circumstances," and (2) registrars are the most likely targets of a contributory ACPA claim, and the domain name registrar safe harbor effectively eliminates their contributory ACPA liability.

Adopting the analysis in the Greatdomains.com case, this court equates contributory ACPA liabilty with the Ninth Circuit's 1999 Lockheed standard for online contributory trademark infringement (as opposed to ACPA liability), which requires that "a plaintiff must prove that the defendant had knowledge and [d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff's mark.'"

So how did NameCheap have the requisite control over Doe's instrumentalities? Good question. The court tosses out this gem: NameCheap was "the cyber-landlord of the internet real estate stolen by Doe." WHAT??? The court continues:

NameCheap's anonymity service was central to Doe's cybersquatting scheme. If NameCheap had returned the domain name to Solid Host, Doe's illegal activity would have ceased.

The second sentence is true with respect to NameCheap, but it is also true of every registrar for every domain name they register--and we know from the 1999 Lockheed case that registrars lack control over the instrumentalities of their registrants. So the proxy service seems to make a legal difference, but how does the proxy service evidence NameCheap's greater control over the registrant's instrumentalities? I think something is amiss here.

To complete the prima facie contributory ACPA claim, in addition to control, Solid Host must show that NameCheap has the requisite knowledge of Doe's ACPA violation. The court sets a high scienter bar--mere notice from an aggrieved party isn't enough--but the court conclusorily says that the complaint alleged enough knowledge to survive the motion to dismiss.

Why This is a Troubling Ruling

As I trust is clear, I think the court's analysis is questionable at best. I'm also troubled about the normative implications. Most obviously, this case could portend the deminse of domain name proxy services. Read literally, every proxy service is exposed to potential contributory ACPA liability for every domain name it services. I can't imagine proxy service providers will be excited about that liability exposure, and some may choose to exit the business.

If proxy services evaporate, domain name registrants will have a tougher time maintaining their privacy. This could affect at least two groups. First, businesses seeking to register domain names for unlaunched new brands often want to procure the new brand's domain names without publicly announcing their intentions through the Whois database. (Of course, some businesses register such domain name through agents or shell companies, but at a much greater expense than a proxy service). Second, gripers, whistleblowers, critics and others may want to use proxy services to make it harder for their targets to unmask their identities. This ruling jeopardizes the potential privacy options available to both groups.

I'm also troubled by this ruling's narrow reading of the domain name registrar safe harbors. There haven't been many cases interpreting those safe harbors, and this case might influence other courts to read them narrowly.

A Mini-Trend of Lawsuits Against Registrars

I've noticed a small but troubling increase in lawsuits against domain name registrars in the past few months. In addition to this case, see the Vulcan Golf v. Google lawsuit (which named some registrars as defendants), OnlineNIC cases, Philbrick v. eNom and uBid v. GoDaddy. Personally, I believe this litigation trend mirrors the expansion of new and legally untested non-registration services offered by registrars. I explored this issue with Elliot Noss of Tucows in the most recent installment of TWiL (worth listening to, IMO). Discussing the uBid lawsuit, Elliott explained how registrars monetize dropped domain names before being returned to the available pool of unregistered domain names. The delay is putatively for the benefit of customers who mistakenly let a registration lapse; but this also has the happy (?) by-product of letting registrars create new ad inventory that they are monetizing.

In the past, a lot of the legal attention regarding domain names has focused on trademark owners vs. registrants. From my perspective, those lawsuits are becoming pass. The real litigation growth industry appears to be trademark owner vs. registrar lawsuits over new registrar service offerings that trademark owners don't like. Rulings like this one, with a broad reading of contributory ACPA liability and a narrow reading of the domain name registrar safe harbor, raise the specter that registrars may find more legal trouble than they anticipated.

The lawsuit was filed on behalf of the FSF by attorneys for the Software Freedom Law Center. The SFLC is the "enforcement arm" of the FSF, a law firm formed for the specific purpose of providing legal services for open source developers seeking to enforce the provisions of open source licenses. Prof. Eben Moglen is the chairman and one of the directors of the firm.

This was not the first lawsuit filed by the SFLC, but it is notable in that some of the underlying code which is alleged to have been infringed was authored by none other than Richard Stallman, the founder of the Free Software Foundation and a first-line mover and shaker in the open source movement. According to the Copyright Office public catalog, Stallman is an author of code covered by registration No. TX 2-084-819, one of the registrations enumerated in the complaint against Cisco. The record shows that the copyright was assigned to the Free Software Foundation.

There has as yet been no announcement of the settlement from the FSF or the SFLC, and the docket in the district court does not reveal the terms of the settlement, only an order dismissing the action with prejudice and without costs. Some past settlements of similar actions announced by the SFLC have included not only an agreement on the part of the defendant to provide the source code as required by the GNU GPL, but also an agreement to appoint an Open Source Compliance Officer to monitor compliance with GPL licenses, an agreement to undertake "substantial efforts" to notify those to whom products were distributed of their right to receive the source code, and payment of undisclosed financial consideration.

The Scranton Times, LP v. Wilkes-Barre Publishing Co., 3:08-cv-02135-ARC (M.D. Pa. March 6, 2009)

Oh man, how bad is it in the newspaper business? Rather than investing in building new and sustainable business models and relationships with their subscribers, newspapers are like dinosaurs trying to eat each other while the temperature rises. However, instead of eating each other, the dinosaurs are suing each other, squandering their valuable capital on low-merit newspaper v. newspaper lawsuits, such as the GateHouse v. NYT lawsuit over the republication of headlines.

Today's lawsuit is even more scoffable. The Scranton Times is suing the Wilkes-Barre newspaper for republishing obituary notices in its Scranton edition that were initially published in the Scranton Times. But the Scranton Times has a problem--funeral homes typically write and submit the obituary notices, so the Scranton Times has no copyright interest in the notices. Undeterred, the Scranton Times sued the Wilkes-Barre paper for a bunch of junky unfair competition-style claims in Pennsylvania state court.

This ruling deals with the Wilkes-Barre defendant trying to remove the case to federal court by showing that there is a federal question of whether the junky claims are preempted by federal copyright law.

The most interesting discussion relates to the hot news misappropriation doctrine. I just discussed the doctrine last month in the AP v. All Headlines News case, where the SDNY said that the AP's hot news claim against an online aggregator/syndicator survived a motion to dismiss. I've seen some breathy law firm announcements that this ruling revitalized the hot news doctrine, but not so fast, guys. Here, the court says that the obituary notices fail to qualify as hot news, and therefore the misappropriation claim is preempted by copyright law.

In particular, the court says that obituary notices can qualify as time-sensitive information, such as timing of memorial services. Further, even though the newspaper doesn't write the obituary notices, the court says that the newspaper bore all of the costs of collecting and distributing the notices, and the rival paper free-rode on those investments. However, the court said that the Scranton Times had failed to show that the free-riding would threaten the Scranton Times' publication of obituary notices. Thus, the hot news claim failed.

The court looks at the copyright preemption of other junky unfair competition claims, holding that the unfair competition claim was really a reverse passing off claim, which was preempted, as was the tortious interference and unjust enrichment claims. Oddly, the court said that the conversion claim wasn't preempted by copyright law, even though the only "converted" assets would be copyrighted intangible material (the obituary notices).

So a few of the junky claims survive the copyright preemption analysis, but there isn't much hope for this lawsuit. Then again, unless the Scranton Times realizes that fighting a rear-guard action against its competition does nothing to improve its future business prospects in a market disintegrating around it, there isn't much hope for the paper either.

HT: Tom O'Toole

Finkel v. Facebook, Inc., 102578-09 (N.Y. Supreme Ct. complaint filed Feb. 24, 2009).

A New York teenager has sued Facebook and four Facebook users (plus their parents) for allegedly defamatory content posted in a private Facebook group called "90 Cents Short of a Dollar."

This case fits neatly with other legal battles over "cyber-bullying" (whatever that means), such as the AutoAdmit lawsuits, the Sandler case and the Lori Drew case. (For another recent and troubling example of cyber-bullying that I read just this morning, see Wolfe v. Fayetteville, Arkansas School Dist., 2009 WL 485400 (W.D. Ark. Feb. 26, 2009)).

In this case, the plaintiff's school peers said some not-nice things about her in a private Facebook page. The Newsday article has some more color about the sour relationships between Finkel and the defendants. The plaintiff claims that the posts meant that "the plaintiff was a woman of dubious morals, dubious sexual character, having engaged in bestiality, an 'I V drug user' as well as having contracted the H.I.V. virus and AIDS."

With respect to the claim against Facebook, this lawsuit is unquestionably DOA. Frankly, I'm not sure why the plaintiff bothered to sue Facebook. Facebook is completely immunized per 47 USC 230, and this should be an easy dismissal. The complaint didn't even try to do anything fancy to get around 230; in fact, the complaint alleges that Facebook "published" the content, the absolutely wrong allegation to make if you're trying to bypass 230. I think it significantly detracts from the sympathy we might otherwise feel for plaintiff for her to have futilely dragged Facebook into the lawsuit. And, it ensures there will be at least one aggressive defendant in the lawsuit.

With respect to the school peers' liability, this case raises some interesting and complex questions. First, and most obviously, how did the plaintiff get a copy of the private group's postings? This reminds me a little of the Washingtonienne case, although access to Cutler's blog wasn't technologically restricted like it was in Facebook.

Side note: the republication of the private group's posts in this complaint reminds us once again that we always have to be prepared for our digital words to show up on the front page of a national newspaper. In particular, including the transcript to the complaint without a protective order was an aggressive move; I suspect other people reading the transcript for the first time will not be happy.

Second, there were only 6 group members listed on the exhibit, which means the total universe of listeners for any defamatory statement was 5 other folks (the person posting the statement doesn't count). This may severely circumscribe any damages. Third, given that this group of 6 presumably represented a social clique with its own norms and mores, it's entirely possible that the small universe of readers completely understood that superficially factual statement weren't really factual and were never intended to be. In this respect, I'm reminded a little of the DiMeo v. Max case, where the judge adjusted the evaluative standards to reflect the fact that message boards fostered a laxer conversation, and readers understood that. A quick perusal of the posts suggests that all of them clearly were utter nonsense and, I suspect, fully understood by all readers to be inane and meaningless chatter. Finally, the posts apparently never referred to the plaintiff by name, although this may be irrelevant if everyone knew who was being discussed.

The lawsuit also goes after the students' parents. Among other things, to try to establish liability, the complaint alleges that the parents negligently supervised their children. I'd gladly write a $100 check today if the plaintiff or her lawyers could articulate a foolproof way that parents can use to prevent high schoolers from doing stupid things on Facebook (without denying them access to Facebook altogether).

From my perspective, going to court over this matter was not a good decision. Nevertheless, I remain troubled by the examples of mean behavior among students that I'm seeing in the alerts I'm getting. For example, the Wolfe and Sandler cases I mention above are absolutely horrifying. Even though I graduated high school nearly 25 years ago, reading about meanness among high schoolers still gives me the shakes, reminding me how bad high school can be! And it weighs heavily on my mind as a parent. However, I can't imagine any legal solution that will make people be less mean to each other.

In Ecommerce Innovations, L.L.C. v. Does 1-10, No. MC-08-93 (D. Ariz. Feb. 10, 2009) a judge that previously issued an order compelling compliance with the third-party subpoena to Xcentric has refused to reconsider that ruling, finding that the plaintiff had made out a prima facie case of defamation against the anonymous posters and thus was entitled to the identifying information from Xcentric. The court cited e.g., Best Western International v. Doe, 2006 WL 1091695 (D. Ariz. July 25, 2006) and Mobilisa, Inc. v. Doe, 170 P.3d 712 (Ariz. Ct. App. 2007). However, the court also concluded that there were "serious questions" concerning the standard to be applied in discovering the identities of anonymous Internet posters, and whether the evidence in the case meets that standard. Consequently, the court stayed its order compelling compliance in order to allow Xcentric to appeal to the Ninth Circuit.

It will be interesting to see if the Ninth Circuit chooses to take the appeal, and whether, if it does, Judge Kozinski is on the panel. That's a bit of a long shot, considering the number of judges in the Ninth Circuit. But it would certainly heighten interest in the case, at least for followers of CDA Section 230 jurisprudence. Judge Kozinski authored the panel opinion (now superseded by the en banc ruling) in Fair Housing Council v. Roommate.com. Judge Kozinski's panel opinion posed a scenario in which allegations of egregious conduct on the part of a service provider might not fall within the protection of CDA Section 230 immunity. Some have speculated that Judge Kozinski's hypothetical referred to the Ripoff Report site, although the court in yet another Ripoff Report-favorable CDA Section 230 ruling rejected the comparison. See Whitney Information Network, Inc. v. Xcentric Ventures, (M.D. Fla. Feb. 15, 2008).

But of course the more important fact is that if the appeal is filed and then allowed, the Ninth Circuit will have the opportunity to rule on the standard to be applied in cases involving discovery request directed at obtaining the identity of anonymous posters.

According to the docket in the underlying litigation (Ecommerce Innovations, Inc. v. Does 1-10,Case No. CV08-04596 (C.D. Cal.), as of March 2, Xcentric had not filed its appeal in the Ninth Circuit.

Appellee Smith was an operator under two joint operating agreements (JOAs) governing exploration and production on an oil and gas lease known as the Bloomberg lease. Chevron was a non-operating interest owner under the JOAs.

In accordance with the JOAs, in May and June of 2004 Smith notified the non-operating interest owners of its proposal to drill four more wells on the lease. Under the JOAs, the non-operating interest owners then had 30 days to notify Smith whether they wanted to participate in the cost of the proposed operations.

On June 17, 2004, Chevron notified Smith that it didn't want to participate. By then, all the other non-operating interest owners had notified Smith that they wanted to participate. But on June 24, 2004, still less than 30 days after Chevron had received Smith's notice, Chevron attempted to revoke its previous notice. Smith declined to accept Chevron's revocation.

So what was at issue in the litigation was whether the notice period ended once each non-operating interest owner notified Smith of its decision or whether the notice period continued for 30 days, leaving open the possibility of a change of heart on the part of a non-operating interest owner.

The court held that the notice period ended once each non-operating interest owner had notified Smith of its decision; in a dissenting opinion, one judge disagreed. I'll let you read the opinion and dissent (or this ContractsProf Blog post) if you want the gory details, but for our purposes, suffice to say that the JOAs weren't sufficiently clear one way or the other. Here's the main language at issue:

1. Proposed Operations: Should any party hereto desire to drill any well on the Contract Area other than the [initial well], . . . the party desiring to drill . . . such a well shall give the other parties written notice of the proposed operation, specifying the work to be performed, the location, proposed depth, objective formation and the estimated cost of the operation. The parties receiving such a notice shall have thirty (30) days after receipt of the notice within which to notify the party wishing to do the work whether they elect to participate in the cost of the proposed operation. . . . Failure of a party receiving such notice to reply within the period above fixed shall constitute an election by that party not to participate in the cost of the proposed operation.

The moral of this story for the drafter is that when drafting a set of such procedures, ask yourself what might happen at every step and address all reasonable eventualities. That makes such provisions a drag to draft, but not as much of a drag as a lawsuit that arises because you failed to address a given eventuality.

By the way, the dissent said that the JOA language was ambiguous. That's consistent with the tendency of courts to use the word ambiguous too loosely. That's something I discuss in chapter 6 of MSCD and in this March 2008 blog post. To my mind, the language at issue wasn't ambiguousit was just insufficiently specific.

My thanks to the indefatigable Steven Sholk for letting me know about this case.