The case is Williams v. MetroPCS Wireless, Inc., S.D. Fla, No. 1:09-cv-22890, Order (Jan. 5, 2010), a proposed class action against a pre-paid wireless phone carrier. The complaint alleged that MetroPCS marketed itself as a provider of unlimited nationwide coverage, but that in reality, its coverage reached less than half of the U.S. population and excluded 11 of the top 25 metropolitan areas. The complaint further alleged that MetroPCS offered flat rate plans in which customers were to pay by the month, not the minute, and were not required to sign a contract. However, lead plaintiff Marcia Williams claimed that after purchasing an unlimited $45/month plan, she was charged $225 for one month's service. The complaint sought equitable and declaratory relied, damages, attorneys' fees and a trial by jury.

MetroPCS contended that the allegations had no merit, and that Williams had entered into an arbitration agreement with MetroPCS, so the matter had to be settled in front of an arbitrator. According to MetroPCS . its standard business practice was to provide customers with several forms at the time service is initiated. These included an Agreement, a Start of Service Request Form and a Welcome Guide. The Welcome Guide referred customers to the MetroPCS website. At the footer of the website was a "Terms and Conditions" hyperlink that instructed users to review the Agreement. The Agreement contained an arbitration clause, requiring that claims or controversies relating to or arising out of the Agreement be resolved through individual binding arbitration.

MetroPCS claimed that under its standard business practices, Williams would have received these forms and hence had notice of the arbitration clause. However, MetroPCS was unable to provide testimony or other evidence showing that Williams actually received these forms.
Williams contended that she never received the Agreement or the Welcome Guide and never accessed MetroPCS's website. Williams further contended that the MetroPCS advertisements repeatedly stated that there was "no contract." One such advertisement allegedly featured a unicorn and a mermaid stating that no contract was required. Another commercial featured a contract being passed through an animated paper shredder and a drawing of a contract with a circle and diagonal line over it.

There is a liberal federal policy favoring enforcement of arbitration agreements. However, the policy only applies if the parties have actually entered into an agreement to arbitrate. Here there was no evidence that Williams had assented to the Agreement or its arbitration clause.

At the FTC's December 2009 privacy roundtable, panelists raised concerns that collection and third party use of browsing data invades private space by: (1) revealing a user's innermost thoughts, such as a search history that reflect a user's explorations of his sexual identity, (2) taking away a user's control over her identity, such as by broadcasting compromising photos of a user at a Cancun Spring Break party to a potential employer, (3) revealing sensitive identity or financial information that can be misused by third parties to perpetrate fraud, or (4) intruding on a user's seclusion by serving targeted ads during a browsing session that reveal that outsiders are listening in.

Survey data presented at the roundtable indicated that consumers are aware that information is being collected about them online and are uncomfortable with the idea that third parties are using this data. Alan Westin of a Columbia University stated that surveys indicate that "a majority ranging in numbers from low of 50% all the way up to 70% to 80% say they're uncomfortable with behavioral marketing and would want to have at a minimum a kind of notice, choice, security and ways of intervening that would give them some comfort if they were going to have their information tracked in that way."

A growing number of firms with online presences are offering users a chance to review the data being collected about them and to opt-out or the change the collection and use of that data. For example, Google's Dashboard and Ad Preferences Managers provide users with extensive details on the browsing history Google has collected about them. They also let users select or de-select ad categories they want served to them.

However, most users do not take advantage of these "notice and choice" systems. According to Google's head of U.S. public policy, Alan Davidson, Google gets "tens of thousands of unique visitors to these sites each week." However, "four times as many people who come as visitors to the site actually change their preferences rather than opting out. . . . [a]nd actually, ten times as many people actually do nothing." Rick Erwin of Experian Marketing Services stated that about 7200 consumers choose to opt-out of Experian's marketing data collection activities. Jennifer Barrrett from Acxiom stated that over the past ten years "about a half a million consumers" have asked to opt-out or correct information gathered by her site.

One explanation for the low level of consumer response to notice and choice systems is that these systems are simply too complex and confusing for consumers to navigate. Another explanation is that despite the survey data and a few incidents where use of private data led to personal woe, consumers are really not that concerned about the collection and use of their personal data.

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."

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 D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.

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).

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).

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).

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."

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.

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.

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 D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.

The U.S. Supreme Court has long recognized that anonymous speech is protected by the First Amendment. Talley v. California, 362 U.S. 60, 64 (1960). For example, in a case in which it invalidated an Ohio statute prohibiting anonymous political leafleting, the Court declared that "an author's decision to remain anonymous, like other decisions concerning omissions or additions to the content of a publication, is an aspect of speech protected by the First Amendment." McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 342 (1995).
The degree of protection provided speech is dependent, among other things, on its content.

Restrictions on the content of "core political speech" are subject to "exacting scrutiny" by the courts, and may only be upheld if they are "narrowly tailored to serve an overriding state interest." Id., 514 U.S. at 347. Core political speech encompasses "debate over the qualifications of candidates, discussion of governmental or political affairs, discussion of political campaigns, and advocacy of controversial points of view." Doe v. 2The Mart.com, Inc., 140 F.Supp.2d 1088, 1092 (W. D. Wash. 2001).

Restrictions on the content of non-core speech are subject to "normal strict scrutiny analysis." Id., 140 F.Supp.2d at 1093. Under strict scrutiny, the government must assert a significant and compelling government interest, and the court must decide whether the legislation is sufficiently narrowly tailored to serve that interest. People with Disabilities v. Herrera, 580 F. Supp. 2d 1195, 1215 (D.N.M. 2008). Non-core speech would include most blog posts criticizing individuals or private companies.

Courts around the U.S. impose widely varying standards when dealing with requests to unmask the identity of an anonymous blogger in defamation cases. On the lighter end of the scale, some courts require a plaintiff merely to show he has a good faith basis to contend that he may be the victim of actionable conduct. On the heavier end of the scale, other courts require a plaintiff to support his defamation claim with facts sufficient to defeat a summary judgment motion. Others impose procedural hurdles, such as requiring efforts to notify the anonymous poster that he is the subject of a subpoena so the he can oppose, and requiring the plaintiff to show that the information sought is directly relevant to the plaintiff's claims and unavailable from other sources. See our post of August 24, 2009.

To be liable for inducing copyright infringement, a defendant must have knowledge of another's infringement and undertake purposeful acts aimed at assisting and encouraging this infringement. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 936-37 (2005). This means that the plaintiff must first show that there has been an act of direct infringement by third parties. A&M Records, Inc. v. Napster, Inc., 219 F.3d 1004, 1013 (9th Cir. 2001). In the case of peer-to-peer filing sharing, infringement can occur both when a copyrighted work is uploaded (this violates the copyright holder's distribution right) and when it is downloaded (this violates the copyright holder's reproduction right). 17 U.S.C. §§ 106 (1), (3).

Here, for evidence that direct copyright infringement had occurred, Judge Wilson relied on a plaintiffs' expert who testified that 95% of the files available through Fung's sites were copyrighted. This evidence was corroborated by testimony from users who admitted downloading copyrighted material from Fung's sites. For evidence that infringement had occurred in the U.S., Judge Wilson relied on IP-address data which showed that infringing downloads took place in the U.S.

Fung argued that his sites' .torrent files were not directly involved in illegal downloads, but merely pointed users to tracker sites that were responsible to initiating the user downloads. (See discussion in our December 7, 2009 post). However, Judge Wilson found that when a user of a BitTorrent sites clicks on a "download torrent" button, this causes the downloading "of the actual content item referenced by the dot-torrent file" to occur, without any further action by the user. Even though in reality, the torrent file is directing the user's computer to a BitTorrent tracker and the content files are actually downloaded from third party users' computers, the user is effectively unaware of this. Judge Wilson stated: "dot-torrent files and content files are, for all practical purposes, synonymous. To conclude otherwise would be to elevate form over substance."

As evidence that Fung and his sites had induced this direct infringement, Judge Wilson cited material on Fung's websites that showed knowledge the sites were being used to download infringing material and that encouraged users to provide access to infringing material:

The CFAA was originally written as a criminal statute, and only secondarily extended to permit private claims. And, it imposes a series of hurdles -- in my view, small hurdles -- that must be crossed on civil claims. A recent dismissal of a CFAA class action suit provides an excellent guide to these minimum requirements. See Czech v. Wall Street on Demand, D. Minn., No. 0:09-cv-00180.

The defendant, Wall Street on Demand (WSOD) is a provider of financial information services sent via electronic text messaging to cell phones. The plaintiff, Czech, began receiving text messages from WSOD after she purchased a new cell phone. Czech claimed that she incurred fees and costs related to her receipt of these messages from her cell phone carrier. While Czech was able to get WSOD to stop sending these messages to her, she ultimately filed a class action lawsuit against WSOD claiming that by sending unwanted messages, it had violated CFAA. Her argument was that by sending unwanted messages, WSOD was using up some of the broadband "minutes" that she had purchased from her cell phone carrier.

To recover under CFAA, a plaintiff must meet three requirements:

• First, she must show that the defendant violated one of the prohibitions of CFAA,
• Second, she must show that she incurred "damage or loss" as a result of this violation, and
• Third, she must show that the defendant caused one of five specific types of harm enumerated in the Act.

The CFAA violation prong:

CFAA applies to all computers that are involved in interstate communication. This includes computers that are connected to the Internet, which means that the Act covers virtually all computers in use today. The Court in the Czech case held that the term "protected computer" would also apply to a cell phone. The most useful CFAA provisions prohibit:

• obtaining information via intentional unauthorized access to a computer,
• committing fraud via unauthorized access to a computer,
• knowingly or intentionally transmitting a program, information, a code or command to a computer that causes damage,
• intentionally accessing a computer without authorization and causing damage,
• trafficking in passwords or other information that can be used to access a computer,
• extorting money by threatening to cause damage to or obtain information from a computer.

See 18 U.S.C. § 1030(a).

Joel Tenenbaum was a sophomore at a small college in Baltimore. Like many other students, he used a number of music file-sharing services, including Kazaa, through which he shared songs with other users. In 2007, he was sued by Sony BMG and other recordings company for copyright infringement for sharing 30 songs. One of the defenses that Tenenbaum raised was fair use -- a defense which the Judge Gertner rejected in July 2009, shortly before the commencement of trial. As is well-known, trial did not turn out well for Tenenbaum, who was found liable for infringement and statutory damages of $675,000.

On December 7, 2009, Judge Gertner issued a lengthy opinion that provided the full justification for her earlier rejection of Tenenbaum's fair use defense. See Sony BMG Music Entertainment v. Tenenbaum, D. Mass., Memorandum and Order (Dec. 7, 2009). Judge Gertner began by agreeing with Tenenbaum that the Copyright Code does provide for a fair use defense that applies to all forms of copyrights. See 17 U.S.C. § 107. Judge Gertner noted that the fair use defense was developed by judges "who recognized that the monopoly rights protected by copyright were not absolute." Where a use did not injure the market for the original work, and advanced a public purpose, such as education or artistic innovation, it could be considered "fair" and not infringing.

When Congress codified the fair use doctrine in Section 107, it set out a list of four, non-exhaustive, factors that a court is require to determine whether a use is fair. These include: (1) the purpose and character of the use, including whether the use is commercial or for nonprofit educational purposes, (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and (4) the effect of the use on the potential market for or value of the copyrighted work. Courts have added several additional factors.

Purpose and character: Judge Gertner found that the key issue was whether the defendant's use of a work was "accompanied by any public benefit or transformative purpose." Tenenbaum argued that file-sharing provides a public benefit by increasing access to copyrighted works. Judge Gertner found that this public benefit was not sufficient, since "nearly every unauthorized reproduction or distribution increases access." For file-sharing to constitute a transformative use, it would need an effect similar to that held fair in the Betamax case -- permitting the use of a work in new way, rather than merely providing users with free copies of works that they could otherwise purchase.