Digital Media Lawyer Blog

Digital media law update: Despite the tremors caused by the Lenz case, a recent decision by a Wisconsin District Court shows that it can still be difficult to obtain a judgment holding a defendant liable for sending a false DMCA notice. See Third Education Group, Inc. v. Phelps, E.D.Wisc., No. 07-c-1094, Decision and Order Following Court Trial (November 25, 2009).

The Digital Millennium Copyright Act puts a powerful tool in the hands of a person who claims to be the owner of a copyright. Copyright law provides for six-figure statutory damages against an ISP who permits infringing material to reside on a site under its control after receiving notice of the presence of the material. However, the DMCA provides immunity from these civil damages if an ISP takes down such material in response to a notice from the putative owner of the copyright, and meets certain other tests. This provides a strong incentive for an ISP to reflexively take down infringing material -- such as by disabling an entire website -- upon receiving a DMCA takedown notice.

This puts serious weapon in the hands of the general public that can be used protect legitimate copyright interests -- or can be misused by someone who has no rights in material used by a competing business to get its site shut down.

To prevent abuse of the notice and take down system, Congress put two major protective measures into the DMCA: the counter-notice procedures in § 512(g) and the misrepresentation rule in § 512(f). Section 512(f) provides that a person who "knowingly" misrepresents that material on a site is infringing is liable for any damages, including attorneys fees, incurred by the alleged infringer."

It can be very hard to prove a knowing misrepresentation occurred. Courts interpreting this statute have generally found that to be liable, the person who sent a false DMCA notice must have lacked the honest belief that material was infringing. As stated by the 9th Circuit, "Congress's apparent intent [was] that the statute protect potential violators from subjectively improper actions by copyright owners." Rossi v. MPAA, 391 F.3d 1000, 1005 (9th Cir. 2004).

To determine whether the sender of a false DMCA notice had a good faith belief in the truth of the notice, courts do not limit themselves to the testimony of the sender. Rather, courts consider the information that the sender relied on. However, it doesn't take much evidence for the court to find that the author of a DMCA notice acted in good faith.

For example, the Rossi case concerned the website www.internetmovies.com, which Rossi described as an online magazine that provided visitors with a directory of websites containing information about movies. Rossi's site contained the words "Join to download full length movies online now!" In fact, users could actually download no movies through Rossi's site or through the links to which he referred users -- a fact that MPAA investigators missed because they never attempted to download any movies from Rossi's site.

However, the 9th Circuit stated that the sender of a DMCA takedown notice is not required to perform a "reasonable investigation" and "cannot be held liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake." Id. at 1005. Accordingly, the 9th Circuit found that the MPAA acted in subjective good faith because the language on Rossi's site "led the MPAA employees to conclude in good faith that motion pictures owned by MPAA members were available for immediate downloading from the website."

Continue reading "Third Education Group v. Phelps: DMCA Notice and Takedown Procedures Lightly Policed by Misrepresentation Rule" »

Digital media law update: The dominant understanding among U.S. Circuit Courts is that the Communications Decency Act is an immunity statute that protects an ISP from any kind of civil suit for publishing information from a third party. Among the Circuits that have adopted this position are the 1st, 3rd, 4th, and 10th. There have been some partial dissenters from this view, including the 7th and the 9th Circuits. See Chicago Lawyers' Committee for Civil Rights under the Law, Inc., 519 F.3d 666 (7th Cir 2008); Fair Housing Council of San Fernando Valley v. Roommates.com, LLC, 521 F.3d 1157 (9th Cir. 2008).

In a recent decision, the 4th Circuit has reaffirmed its position that the CDA provides ISPs with immunity from suit for information created and developed by third parties. See Nemet Chevrolet v. Consumeraffairs.com, 4th Cir., No. 08-2097 (Dec., 29. 2009).

According to the Court,

"This Circuit has recognized the 'obvious chilling effect' the 'specter of tort liability' would otherwise pose to interactive computer service providers given the 'prolific' nature of speech on the Internet . . . Section 230 immunity, like other forms of immunity, is generally accorded effect at the first logical point in the litigation process. As we have often explained in the qualified immunity context, immunity is an immunity from suit rather than a mere defense to liability: and 'it is effectively lost if a case is erroneously permitted to go to trial'. . . We thus aim 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." (emphasis added).

In the Nemet case, this meant that the Court resolved the question of §230 immunity in a 12(b)(6) motion to dismiss, which was filed at the outset of the case. The Court ultimately dismissed the claim, concluding that the factual allegations in the complaint could not plausibly support an inference that Consumeraffairs.com could be considered a creator of the defamatory posts in question.

Even Circuits that have dissented from a strict immunity interpretation of the CDA have also been willing to entertain such early motions to dismiss defamation suits. See Chicago Lawyers, 521 F.3d at 672 (affirming judgment on the pleadings based on a CDA immunity defense); Barnes v. Yahoo, 570 F.3d 1096 (9th Cir. 2009) (affirming motion to dismiss negligence claim based on CDA immunity defense). This suggests that the debate over whether the CDA is an "immunity" statute may be a bit of a tempest in a teapot without much practical effect on actual court decisions.

In any event, regardless the Circuit in which an Internet defamation claim is brought, plaintiffs with a colorable CDA defense are still advised to attempt to seek dismissal at the earliest stage in the litigation possible -- such as via an anti-SLAPP motion or motion to dismiss.

David Johnson's practice focuses on complex litigation and science, technology and health law. David can be contacted at (415) 399-6032 or DJohnson@ebglaw.com.

Communications Decency Act update: A New Jersey Superior Court judge recently evoked controversy among First Amendment and media law experts by ordering GoDaddy, Domains by Proxy, ASP.net and Verisign to "shut down and disable" three websites which published allegedly defamatory posts. See Apex Technology Group, Inc. v. Doe, N.J. Superior Ct., Law Division, Middlesex County, No. MID-L-7878-09, Order (Dec. 23, 2009). The preliminary injunction order was issued based on the plaintiffs' claim that it had been defamed by postings that appeared on the sites www.endh1b.com, www.itgrunt.com, and www.guestworkerfraud.com. The order also directed the three websites to take down the posts, as well.

No one on the defense side was represented at the preliminary injunction hearing. The court order also suggests that no one at the domain name registries/registrar/web hosting companies received notice of or were represented at the hearing. As a result, the order appears to be rife with substantive and procedural defects. (Not an unusual result when an order is issued without the benefit of defense counsel briefing).

But what about the substantive issue at stake in this order: What rights does a person who is the object of a defamatory Internet post have to get the post removed? Can the aggrieved seek an injunction against the author of the post? If she can't locate the author, who may be anonymous, does she have the right to get an injunction against the host of the website to get it removed?

In fact, the law is somewhat unsettled in this area, and the relief available may depend on the jurisdiction in which the plaintiff sues.

• The First Amendment to the U.S. Constitution bars injunctive relief, but only until a jury trial on whether the statement in question is defamatory has been conducted.

The First Amendment to the U.S. Constitution protects freedom of speech, but this protection is not unlimited. A series of U.S. Supreme Court decisions have held that a media outlet may be enjoined from further publication of a libelous statement. See Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations, 413 U.S. 376, 390 (1973). However, such an injunction may only be issued after a full jury determination that the statement is in fact defamatory. See Kramer v. Thompson, 947 F.2d 666, 676 n. 25 (3d. Cir. 1991) (summarizing cases).

Continue reading "Apex Technology v. Doe: May a Court Enter an Injunction Requiring an ISP to Take Down an Allegedly Defamatory Third Party Post?" »

Digital media law update: In a victory for new media rights, the U.S. Supreme Court held today that the Government may not prohibit corporations from making independent expenditures on media in support of political causes. This opinion invalidated a federal statute, 2 U.S.C. §441b, that prohibited corporations -- except those involved in traditional broadcast media -- from making independent expenditures to publicly advocate the election or defeat of a Federal candidate 30 days before a primary or 60 days before a general election. Citizens United v. FEC, 558 U.S.____ (2010). This ruling is important for the multitudes of businesses (like my own) who make direct expenditures on political advocacy through blogs and other forms of interactive media.

The Court's decision arose out of a controversy over the film Hillary: The Movie, a film criticizing Sen. Hillary Clinton, that nonprofit organization Citizens United wished to broadcast during the 2008 election season. Citizens United was concerned that the film and ads that supported it would be covered by §441b's ban on corporate-funded expenditures, so it filed a suit for declaratory and injunctive relief against the Federal Election Commission (FEC). A District of Columbia District Court three-judge panel denied Citizens United's petition for a preliminary injunction, holding that §441b was facially constitutional under Supreme Court precedent.

The Supreme Court has now overruled that District Court ruling. The opinion was written by the "centrist" Justice Kennedy, with concurrences by Justices Roberts, Alito, Scalia, and Thomas.

Justice Kennedy's opinion characterized §441b's prohibition on independent corporate expenditures as a "ban on speech." He noted that laws that burden political speech are subject to strict scrutiny, which requires the Government to prove that the restriction "furthers a compelling interest and is narrowly tailored to that interest." Few restrictions on speech have ever satisfied this test.

According to Kennedy, "the First Amendment stands against attempts to disfavor certain subjects or viewpoints," Indeed, "[s]peech restrictions based on the identity of the speaker are all too often simply a means of content control." This means that the Government cannot impose restrictions on certain disfavored speakers. That includes corporations, because "First Amendment protections extend to corporations." Political speech does not lose First Amendment protection "simply because its source is a corporation."

Kennedy admitted that since the latter part of the 19th Century, state and federal laws have imposed a ban on direct corporate contributions to candidates. However, laws prohibiting corporate expenditures for independent corporate advocacy were not enacted until 1947. Corporate expenditures that are made to candidates are different from independent expenditures, because donations made directly to candidates raise the possibility of corruption -- as held in Buckley v. Valeo, 424 U.S. 1, 47-48 (1976). As such, until 1990, the Supreme Court upheld laws restricting corporate donations to candidates, but struck down laws restrictions on corporate independent expenditures. See, e.g., First Nat. Bank of Boston v. Belotti, 435 U.S. 765, 784 (1978).

Continue reading "Citizens United v. Federal Election Commission (FEC): Supreme Court Ruling Is a Major Victory for New Media First Amendment Rights" »

Digital Media Law Update: The Internet world has long been abuzz about the Federal Communication Commission's (FCC) proposed new rules for net neutrality. The proposed rules, which were issued on October 22, 2009, would prohibit ISPs from discriminating against "lawful" content, applications and service, subject to the needs of "reasonable network management." The promulgation of these new rules was speeded by the FCC's 2008 actions against Comcast, which it accused of interfering with the transmission of BitTorrent files - a peer-to-peer file sharing protocol.

As the basis for its actions against Comcast, as well as its proposed rulemaking, the FCC cited its longstanding agency policies to encourage the development of broadband and promote the open and interconnected nature of the Internet. See, e.g., FCC, Notice of Proposed Rulemaking, FCC 09-93 (Oct. 22, 2009). However, the FCC is not a part of the legislative, but the executive branch of government. It is a creature of statute and has no power to regulate anything except as provided by Congress via statute.

Accordingly, Comcast filed an appeal against the FCC's actions against it, claiming that the FCC lacked jurisdiction -- i.e. -- statutory authority -- to regulate the Internet. See Comcast v. FCC, D.C. Cir, No. 08-1291. The FCC's briefs indicate that the basis for its claimed jurisdiction against Comcast is the same as the basis for its claimed right to promulgate its net neutrality rules. So, a ruling against the FCC in the Comcast case could well doom its proposed net neutrality rules, as well.

Reports from the D.C. Circuit's hearing of the Comcast appeal indicate that the Court viewed the FCC's jurisdictional claims with considerable skepticism. So how solid are the FCC's claims that it has the right to promulgate net neutrality rules?

By way of background, the federal statute the provides the FCC with its authority is the Telecommunications Act. The Act is subdivided into multiple sub-chapters or "Titles" that provide rules for specific communications technologies: Title II regulates common carriers (e.g., telephone companies), Title III regulates radio and Title V regulates cable. The Act states in broad terms that the FCC "shall execute and enforce the provisions of" the Telecommunications Act." 47 U.S.C. § 151.

The Internet uses telephone, cable and radio services which are subject to FCC regulation. However, at its heart, the Internet is a system of interconnected computers that is far broader than any of these communication services. Accordingly, since the 1970s, the FCC has recognized a distinction between computer processing services (including the Internet), and communications services (like telephone services) over which these computer processing services are carried. These separate classifications were incorporated by Congress into the 1996 Telecommunications Act -- which distinguishes between "information services" and "telecommunications services." Information services include "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications" -- the kinds of services provided via the Internet. 47 U.S.C. § 153(20). Telecommunications services include "transmission of information, without a change in its form or content" -- i.e., traditional telephone data services. 47 U.S.C. §§(43), (46).

This distinction makes a difference, because only providers of telecommunications services are considered "common carriers" and subject to Title II regulations. 47 U.S.C. § 153(44). See NCTA v. Brand X Internet Services, 545 U.S. 969 (2005). Among Title II regulations is a provision prohibiting common carriers from engaging in "any unjust or unreasonable discrimination" in services. 47 U.S.C. § 202(a).

Continue reading "Will Net Neutrality Stall-out?: Making Sense of the FCC's Grab for Jurisdiction over the Internet" »

Digital media law: Online contracts typically fall into two categories: clickwrap and browsewrap agreements. In clickwrap agreements, a user expressly indicates his/her assent to a website's terms of use by clicking on a button that says "I agree" or "OK." In browsewrap agreements, a user does not expressly indicate his/her assent by clicking on a button, but ostensibly indicates his/her assent to the site's terms of use in some other fashion - such as by submitting information or clicking other buttons.

Courts routinely enforce clickwrap agreements. See our post of November 13, 2009. However, the FTC has begin to subject such agreements to increased scrutiny and found some to be unfair where users were asked to register their assent to the agreement before being aware of all their terms. See our post of September 21, 2009. Courts often have difficulty enforcing browsewrap agreements for similar reasons -- because it is often difficult to demonstrate that the user ever read the terms of use or assented to them.

However, in recent case, a Missouri Court of Appeals upheld a browsewrap agreement - but one that verged on actually being a clickwrap agreement. The case, Major v. McCallister, Missouri Court of Appeals, No. CD29871 (Dec. 23, 2009), involved a website operated by ServiceMagic, which offered users free referrals to construction contractors.

A visitor to the ServiceMaster website first encountered several screens in which he/she inputted information about his/her remodeling project. Each of these pages contained a hyperlink to ServiceMaster's Terms of Use. A user was not required to click on the hyperlink or read the Terms of Use to proceed.

After the user entered his/her project information, the ServiceMaster site would produce a screen stating that the user had been matched to several contractors. The screen also contained space for the user to enter his/her contact information, followed by a "Submit for Matching Pros" button. Next to the button was a blue hyperlink to the website's Terms of Use and the statement "By submitting you agree to the Terms of Use."

Continue reading "Major v. McCallister: Browsewrap Agreement Upheld by Missouri Court of Appeals" »

The Computer Fraud and Abuse Act ("CFAA", 18 U.S.C. § 1030) has long caused knotty interpretive problems for the courts. This blog has frequently reported on a growing split between the federal courts over whether an employee who was authorized to use a company computer can be sued under CFAA if he accesses the computer to serve interests adverse to the company. The First and Seventh Circuits say "yes," while the Ninth Circuit and numerous district courts say "no." For more on this split see our post of November 16, 2009.

However, there is a second long-term federal court split regarding CFAA - whether CFAA permits suits for purely economic losses that are not accompanied by an interruption in service to the company computer system.

In Section 1030(g), CFAA provides that "[a]ny person who suffers damage or loss by reason of a violation of this section may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief." 18 U.S.C. 1030(g). CFAA defines "damage" as "any impairment to the integrity or availability of data, a program, a system, or information." Id. at § 1030(e)(8). CFAA defines "loss" as "any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring the data, program, system, or information to its condition prior to the offense, and any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." Id. at § 1030(e)(11).

Courts finding that economic losses not accompanied by an interruption in service are not actionable look at Section 1030(g) as specifying the types of harms for which CFAA provides a civil remedy - namely, "damage" and "loss" as those terms are defined in CFAA. CFAA's definition of damage doesn't mention economic losses and its definition of "loss" only includes "any revenue lost, cost incurred, or other consequential damages incurred because of interruption of service." See American Family Mutual Ins. Co. v. Rickman, 544 F.Supp.2d 766 (N.D. Ohio 2008); ES&H, Inc. v. Allied Safety Consultants, Inc., 2009 WL 2996340 (E.D. Tenn. 2009). See Fn 1.

Court finding that such losses are actionable have provided a variety of justifications for this position. The best argument I have seen is from a Louisiana District Court judge in Frees, Inc. v. MaMillian, W.D. La., No. 5:05-cv-01979 (Aug. 6, 2007). The judge reasoned that Section 1030(g) only provides a jurisdictional threshold that a civil litigant must jump over to obtain compensatory damages - it must have incurred "damage" or "loss" as defined by CFAA. But once it has leaped this hurdle, a litigant may recover any type of compensatory damages, including for economic losses. See Fn 2.

Continue reading "Remedpar v. Allparts: The Other CFAA Circuit Split - Is a Loss in Revenues that Is Not Accompanied by an Interruption in Service Actionable under CFAA?" »

Digital media law update: The U.S. has been in talks with the E.U., Japan, Canada and a number of other mostly developed nations since 2006 to develop the Anti-Counterfeiting Trade Agreement (ACTA). Several further rounds of ACTA negotiations have been scheduled, including meetings in Mexico this month and in Wellington, New Zealand in April 2010. Assuming an agreement is reached, ACTA, like any other international treaty, will have to be ratified to become U.S. law.

ACTA is supposed to provide international rules for enforcing a broad spectrum of intellectual property rights, including addressing Internet piracy. ACTA is not intended to affect the fundamental rights of the citizens of its signatories. However, virtually any law affecting the Internet has the potential to affect individual rights, such as freedom of expression and freedom of association.

ACTA negotiations have raised considerable concern among Internet access rights groups because the negotiations have been conducted in secret. A long list of industry "insiders" have been permitted to review drafts of ACTA documents -- including attorneys associated with Public Knowledge, a consumer rights advocacy group. However, they have been required to sign non-disclosure agreements that prohibit them from sharing what they have learned with the general public.

Despite the secrecy, a number of ACTA-related documents have been leaked to the public. A summary of the ACTA chapter dealing with the Internet was leaked in September 2009, and a set of comments by the E.U. regarding ACTA language proposed by the U.S. was leaked in October 2009. These documents suggest that ACTA is largely being modeled on the Digital Millennium Copyright Act and may not create the great threat to Internet access rights that some claim.

Among other provisions, current ACTA proposals would:

• Require member states to provide for third-party liability for ISPs: Third party liability appears to refer to liability for contributory infringement and for inducing infringement. These legal principles are already enshrined in current U.S. law, including the DMCA. The E.U. objected to this language -- but on the grounds that it went too far, because some E.U. member states do not permit civil liability for contributory copyright infringement. Rather, the E.U. indicated that it would prefer that the exact circumstances triggering liability be undefined, and that ACTA only provide for exemptions from civil liability.

Continue reading "Too Soon to Worry about the Anti-Counterfeiting Trade Agreement (ACTA)?" »

Communications Decency Act update: Plaintiffs seeking to get defamatory posts removed from an online website have often been stymied by the Communications Decency Act which protects the web host from suit for publishing third party posts. However, for some time, plaintiffs have been getting around this by seeking an injunction against the original author of the post and then asking the court to enforce this injunction against the website operator under Federal Rule of Civil Procedure 65. For more on this strategy, see Eric Goldman's blog post of November 10, 2009.

However in a December 21, 2009 ruling a federal judge in the Eastern District of Illinois ruled that this strategy violates federal law. See Blockowicz v. Williams, N.D. Ill., No. 1:09-cv-03955, Memorandum Opinion and Order.

The plaintiffs in this case brought a defamation against the defendants, Joseph Williams and Michelle Ramey, for statements published on various websites, including the Ripoff Report (www.ripoffreport.com). The defendants apparently never answered the complaint and the court entered a default judgment against them, requiring them to remove their defamatory postings from the websites. However, the plaintiffs were never able to contact the defendants, and the posts remained on-line.

The plaintiffs then filed a Motion for Third Party Enforcement of Injunction to force the operators of ripoffreport.com to remove the postings from their website. Ripoff Report refused to do so, claiming that the injunction order did not apply to it.

The Court agreed. Under Federal Rule of Civil Procedure 65, an injunction binds "not only the parties to the injunction but also nonparties who act with the named party." SEC v. Homa, 514 F.3d 661, 674 (7th Cir. 2008). Other case law indicates that this means that an injunction may bind third parties who are under the control of or who are represented by the defendant. However, it does not bind third parties who act independently and who rights have not been adjudicated.

In this case, the Court found that www.ripoffreport.com acted independently of the defendants. While ripoffreport.com published the defendants' defamatory statements, submission of defamatory statements to its website was against www.ripoffreport.com's Terms of Service. There was no evidence in the record that ripoffreport.com "intends to protect defamers and aid them in circumventing court orders." There was also no evidence that www.ripofferport.com had any contact with the defendants since the injunction was entered. In short, the Court found that www.ripoffreport.com's connection to the defendants was tenuous and insufficient to force its compliance with the injunction.

In conclusion, the Court stated that it was sympathetic to the plaintiffs' plight: "they find themselves the subject of defamatory attacks on the internet yet seemingly have no recourse to have those statements removed from the public view." But given the plaintiffs' strategy of attempting to enforce a third party injunction against an unrelated party, it had no choice.

Of course, there are other options for the plaintiffs: They could refocus their efforts on locating the original defendants, and getting them to act. In addition, the Ripoff Report might be willing to voluntarily take down the posts in question, if provided the right information.

David Johnson's practice focuses on complex litigation and science, technology and health law. David can be contacted at (415) 399-6032 or DJohnson@ebglaw.com.