Digital Media Lawyer Blog

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.

On December 17, we reported on the Convertino case in which a judge found that the attorney-client privilege was not waived for emails exchanged on an employer's network, even though the employer had access to them. It did not take long to find a case with virtually identical circumstances in which a Court reached the exact opposite result - a ruling that the privilege had been waived. This was a really bad result for the employee, because it meant that those emails could be used against her in court. See Alamar Ranch, LLC v. County of Boise, D. Idaho, No. 1:09-cv-00004, Memorandum Decision and Order (Nov. 2, 2009).

This case concerns a challenge of Boise County's denial of a permit for Alamar to construct a home for troubled youth. As part of this action, Alamar subpoenaed the records of Jeri Kirkpatrick, an opponent of the project, as well as those of her employer, the Idaho Housing and Finance Association (IHFA), to obtain emails that Kirkpatrick had sent or received through her work email address. IHFA produced the emails, which were stored on its servers.

Kirkpatrick objected that the emails were protected under the attorney-client privilege. Alamar countered that IHFA's employee policies stated that IHFA "reserved and intends to exercise the right to review, audit, intercept, access and disclose all messages created, received or sent over the e-mail system for any purpose." Kirkpatrick responded that she was unaware that her emails had ever been monitored - although she was aware of another IHFA case where monitoring had occurred.

The Idaho Court concluded that the attorney-client privilege for the emails had been waived. According to the Court, the case presented "a simple scenario where the IHFA put all employees- including Kirkpatrick -- on notice their emails would (1) become IHFA's property, (2) be monitored, stored, accessed and disclosed by IHFA, and (3) should not be assumed to be confidential." While Kirkpatrick stated she was not aware of any company monitoring, her bare assertion was insufficient to support a claim for nonwaiver. Rather, "It is unreasonable for any employee in this technological age - particularly an employee receiving the notice Kirkpatrick received - to believe her emails, sent directly from her company's email address over its computers, would not be stored by the company and made available for retrieval."

The Court found that the privilege also had been waived for emails her attorney sent to her company email address. The Court reasoned that "there is no question that her address - "Jeri@IHFA.org" - clearly put [her attorney] on notice that he was using her work e-mail address. Employer monitoring of work-based emails is so ubiquitous that [her attorney] should have been aware that the IHFA would be monitoring, accessing and retrieving e-mails sent to that address."

On the other hand, the Court found that the privilege was not waived for emails sent by other clients of Kirkpatrick's attorney to her attorney, and which copied Kirkpatrick at her work address. The Court reasoned that "laypersons are simply not on 'high alert'" for privilege issues as attorneys "must be", and would have reasonably assumed that they were having a confidential conversation with counsel.

The take-away from this case is the same as in Convertino. Employees should be very wary about making confidential communications to their attorneys from their employers' email systems. Many courts will find that privileges have been waived for emails sent over a system over which an employer has retained a right of access. So if an employee is truly concerned about maintaining the privilege, he/she should send all email communications to his/her attorney from a private email account.

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.

Digital media law update: On December 10, 2009, a federal judge in the District of Columbia upheld the attorney-client privilege for an employee's emails to his attorney, even though his employer had access to them. The attorney-client privilege generally only exists for private communications between a client and his lawyer, not to communications to which uninvolved third parties have access. Here, the judge concluded that the privilege applied largely because the client was not aware that his employer had access to the emails.

The case is Convertino v. U.S. Dept. of Justice, D.D.C., No. 1:04-cv-00236. The plaintiff, Convertino, claims that the DOJ improperly disclosed information about him the Detroit Free Press, in contravention of the Privacy Act. To prove his case, Convertino served a discovery request on the DOJ seeking production of some 736 documents.

36 of these documents were emails between DOJ employee Jonathan Tukel to his personal attorney. Tukel had originally been a named defendant in the case and had retained an outside attorney to defend him. Tukel sent the emails to his attorney from his work computer at the DOJ - and the DOJ later obtained them from its email server.

The Court noted that under federal rules, a client can be found to have waived his right to the attorney-client privilege if he made an otherwise confidential communication in the presence of a third party, or if he disclosed it to a third party. See FRE 502(b). However, there is no waiver if the disclosure was inadvertent.

When dealing with communications made using equipment controlled by third parties, such as an employer-provided email system, the question of privilege "comes down to whether the intent to communicate in confidence was objectively reasonable." To make this determination, courts look at factors such as (1) does the corporation maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee's computer or e-mail, (3) do third parties have a right of access to the computer or e-mails, and (4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?" [citing In re Asia Global Crossing, Ltd., 322 B.R. 247, 258 (S.D.N.Y. 2005)].

Here, the Court found that Tukel's expectation of privacy was reasonable: The DOJ does not ban personal use of company e-mail. Although the DOJ has access to personal email sent by its employees, Tukel was unaware that the DOJ would regularly access and save emails from his account. Tukel also worked to keep his emails private by deleting them as the came into his account - unaware that they were still on the DOJ servers.

While the result turned out well for Tukel here, employees everywhere should be wary about communicating with counsel via their employer's email system. If Tukel had been informed that the DOJ regularly accessed employee emails, and/or had the technical sophistication to realize that deleted emails were still on the company servers, the Court might have found that his privilege had been waived.

Of course, the obvious way that an employee can avoid trouble like Tukel's is simply to use a personal email account from a home computer to send confidential communications to counsel.

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.

Digital media law update: In a twist on an old story, a judge in the Eastern District of Missouri has dismissed a data breach class action because the named plaintiff was unable to plead that he had suffered any injury other than an increased risk of identify theft. This case is somewhat unique, because the Court dismissed the case on standing grounds, even though it found that the lead plaintiff had pled sufficient facts for a breach of contract action. This result is at odds with many recent cases which tend to find that an increased risk of identity theft is sufficient to confer standing.

Express Scripts provides prescription management services for employee benefit plans. In October 2008, Express Scripts received an anonymous letter demanding money. The letter writer claimed that it had obtained critical personal identifying information for millions of Express scripts members and threatened to reveal this information if Express Scripts didn't pay up. The letter included details on 75 Express Scripts members, including names, dates of birth, Social Security numbers and prescription data.

In 2009, lead plaintiff John Amburgy filed a consumer class action against Express Scripts. Amburgy alleged that Express Scripts had failed to maintain adequate security measures and that this had led to the data breach. Amburg claimed that as a result of Express Scripts' breach of duty, Amburgy and other plan members had been exposed to "increased risk of becoming victims of identity theft crimes, fraud, abuse and extortion." Amburgy did not allege that he and other class members had actually suffered identity theft losses, but merely that they had incurred costs for credit monitoring to prevent such losses. The complaint sought damages from Express Scripts under negligence, breach of contract, and state consumer statute theories.

The Court rejected these claims on "standing" grounds. According to U.S. Supreme Court precedent, to have standing to bring a case before a federal court, a plaintiff must show that he has suffered "injury-in-fact." Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). This can be either an injury he has already sustained or is in immediate danger of sustaining.

Continue reading "Amburgy v. Express Scripts: Why a Missouri Court Held that an Increased Risk of Identity Theft Is Insufficient to Confer Standing in a Data Breach Case" »

Web sites can be accessed virtually everywhere. A frequent worry of website operators is that a court in some distant state will find that it has personal jurisdiction over them and force them to defend a suit far from home. While it often seems that courts are biased towards assuming jurisdiction over defendants, two recent cases dealing with personal jurisdiction over alleged typo-squatters show that there are true limits:

In Ubid, Inc. v. The GoDaddy Group, Inc., N.D. Ill., No. 1:09-cv-02123, an Illinois District Court found that it lacked personal jurisdiction over an Arizona corporation for alleged typosquatting which affected a Chicago business. On the other hand, in Weather Underground, Inc. v. Navigation Catalyst Systems, Inc., E.D. Mich., No. 2:09-cv-10756, a Michigan District Court found that it had personal jurisdiction over a defendant for alleged typosquatting that affected a Michigan resident, even though the defendant was a Delaware corporation.

What led to these different results?

Whether a court may assume personal jurisdiction over a non-resident defendant depends on the amount of contact the defendant has with the state. If a defendant has "continuous and systematic contacts" with the state, a court may assume "general jurisdiction" over it, regardless of its contacts with the state for the transaction at issue in the case. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984). Even where such systematic contacts are lacking, a court may assume "specific jurisdiction" over the defendant for the transaction at issue in the suit, if the suit arises out of the defendant's intentional contacts with the state. Id.

In both Ubid and Weather Underground, the courts found that the defendants lacked sufficient contacts with the "forum state" -- the state where the court was located -- for general jurisdiction. The Weather Underground case wasn't close, since defendant Navigation's sole contacts with Michigan had been the sale of eight domain names to Michigan residents over a period of 3 years. The Ubid case was harder: GoDaddy derived 3% of its revenues from Illinois, regularly conducted business with Illinois customers, placed advertisements in Illinois as part of national ad campaigns and sponsored race drivers at Illinois venues. Nevertheless, because all of these activities lacked an "Illinois-specific focus," the court found that they would not support a finding of general jurisdiction.

However, the courts reached opposite conclusions on specific jurisdiction.

Continue reading "Ubid v. Godaddy and Weather Underground v. Navigation Catalyst: How the "Effects Test" Drove the Courts to Opposite Rulings on Personal Jurisdiction" »

Digital media law update: Corporate officers and directors of corporations that are caught up in malfeasance often hope that their peripheral roles will exempt them from prosecution. However, even if you were "just" the CFO, CIO, or other non-controlling executive, the fact that you were not the guiding hand behind a corporate misdeed will not protect you from prosecution if you were aware of the illegal conduct and were able to do something to prevent it from occurring. For example, in a recent FTC action against two firms involved in a massive "scareware" scheme, a federal judge held that an officer and financial manager at the firms could be individually prosecuted, because by virtue of his alleged position and level of involvement in firm management it was likely that he was aware of and participated in the firms' alleged unfair business practices.

The case is FTC v. Innovative Marketing, District of Maryland, Case No. 1:08-cv-03233. The FTC complaint alleges that the corporate defendants, Innovative Marketing, Inc. and ByteHosting Internet Services, conducted a massive "scareware" scheme that marketed computer software using deceptive advertising. In a "scareware" scam, an Internet company sends false security or privacy warnings to consumers for the purpose of selling software to fix the imagined problems. The FTC's "unfair business practices" claim also named several of the companies' officers and directors whom the FTC alleged participated in or directed the scareware scheme. Among these officers and directors was Marc D'Souza, whom the FTC identified as a corporate officer of the defendants who handled their finances -- apparently, something like a CFO.

D'Souza filed a motion to dismiss, arguing that the FTC's claims against him didn't state a plausible case against him. Judge Richard Bennett disagreed.

Once the FTC establishes corporate liability for unfair business practices, individual defendants can also be held liable if: (1) they had some knowledge of the corporation's unfair practices, and (2) they either participated directly in the practices or acts OR had the authority to control them. FTC v. Amy Travel Service, Inc., 875 F.2d 564, 573 (7th Cir. 1989). Judge Bennett found that the FTC's complaint had satisfied both the knowledge and control/participation prongs.

The words "authority" and "control" are the types of terms that can be subject to a very broad interpretation. In many cases, if an officer/director has the authority to exert some level of control over company policy or is actively involved in the company's business affairs, this can lead to the inference that the officer/director had the authority to control the unfair practices in question. Id. at 573.

Continue reading "FTC v. Innovative Marketing: When Is an Officer or Director Personally Liable if a Corporation Engages in Unfair Business Practices?" »

New York trial courts seem to be confused over which of the several prevailing standards for uncovering the identity of an anonymous blogger should be followed by New York courts. In the Liskula Cohen case, a New York County judge imposed a "light" standard, and merely required the plaintiff to show that her motion would survive a motion to dismiss. However, in another recent case, involving former Congressman Richard Ottinger, a Westchester County judge applied a much heavier standard, and required the plaintiff to provide evidence to support each of the elements of his defamation claims, to the extent such evidence was under his control See In re Ottinger & Ottinger, Supreme Court of the State of New York, County of Westchester, IAS Part, Index No. 08-03892 (July 1 2008). (Thanks to Wendy Davis, editor of the Daily Online Examiner, for telling me about the Ottinger case).

Trial courts around the U.S. vary greatly on the standards they impose on plaintiffs seeking to uncover the identity of an anonymous author of a web post. On the light end of the scale, some merely require a plaintiff to show that his/her complaint against the unknown blogger would pass a motion to dismiss. On the heavy end, others require a plaintiff to provide evidence for every element of his/her claims against the blogger -- a virtual impossibility in many cases. As a alternative to these extremes, some courts have adopted a middle path and require a plaintiff to provide evidence in support of claims to the extent that such evidence is within the plaintiff's control. Many courts also require a plaintiff seeking an order to uncover an anonymous blogger's identity to take steps to notify the anonymous of the action.

In the Ottinger case, the judge adopted a blend of the heavy and moderate positions. The Ottingers are both long-time New York politicos. Richard Ottinger is a former U.S. Congressman from the State of New York. His wife, June Ottinger, served as a Trustee for the Village of Mamaroneck and chairman of the Harbor and Coastal Zone Management Commission (the "Commission"). In 2007, the Ottingers applied for building permits and approvals from several Village boards to renovate their home. One of the boards they applied to was the Commission, of which June was Chairman at the time -- although she did not participate in the consideration of the building permit.

Some of the Ottingers' neighbors and local activists began attending public meetings at which their permit applications were being discussed. One such neighbor and activist, Suzanne McCrory, became convinced that the Village was giving the Ottingers favorable treatment. She filed a petition challenging their permits. She also spoke at a televised meeting in which she stated that the confirming deed for the Ottinger property was "invalid' and "fraudulent."

Shortly thereafter, an anonymous blogger posted a forum on LoHud.com, a public forum section of the online version of the local newspaper -- The Journal News -- entitled "The Sounds of Silence." In this forum he posted comments suggesting that the Ottingers' deed was fraudulent, and that the Ottingers had used political pressure and bribery to get permits for their renovation project. Here is an example of one of the posts:

"THEY PAID THE RIGHT PEOPLE OFF! They started off with taking care of the Mayor, everybody knows that. I would guess the Building Inspector and Zoning Board were not forgotten in their largesse. The Ottingers have been very generous in greasing the wheels of corruption. With the news of the fraudulent deed they submitted it becomes quite clear that they must have taken care of the surveyor and the prior owner of the property, under they are two of the dumbest people on earth!"

Continue reading "Ottinger v. Tiekert: New York Trial Courts Are Split on the Burdens to Be Imposed on a Plaintiff Seeking to Uncover the Identity of an Anonymous Blogger" »

Digital media law: Startling high damage awards in a number of recent copyright, trademark and cybersquatting cases are often the result of simple math. Plaintiffs in these cases have the right to demand an award of statutory damages in lieu of proving actual damages. In each case, the amount of damages is tied to the number of copyrighted works or trademarks infringed, or the number of infringing domain names. It is very common for juries or judges to make per violation awards of $50,000 to $1,000,000 and more. Where a defendant has committed infringements of multiple works or marks, using simple math, it is quite easy to get to damage awards in the tens of millions of dollars -- regardless of the actual harm suffered by the plaintiff or the profits earned by the defendant.

Here is the short and skinny law on these types of statutory damages:

• The Copyright Act provides for a minimum statutory award of $750 and a maximum of $30,000 for each copyright infringed. If the plaintiff proves that the infringement was willful, the maximum damage award is raised to $150,000. 17 U.S.C. § 504(c)(1), (2).

• The Lanham Act provides for statutory damages in trademark cases involving "counterfeit marks" of not less than $1,000 or more than $200,000 per counterfeit mark per type of good or services sold, offered for sale or distributed. The maximum is raised to $2,000,000 for willful infringement. 15 U.S.C. § 1117(c).

• The Anti-Cybersquatting Protection Act permits statutory damage awards of not less than $1,000 and not more than $100,000 per domain name. 15 U.S.C. § 1117(d). Courts take factors such as willfulness into account in determining the appropriate amount of statutory damages.

In all three cases, the plaintiff may elect an award of statutory damages, in lieu of actual damages, at any time before entry of final judgment.

Here are some recent examples of how the "math" of statutory damages has played out:

• Microsoft Corp. v. McGee, 490 F.Supp.2d 874 (S.D. Ohio 2007):
Microsoft brought this copyright and trademark infringement suit against the operator of the Computerme.net website, which sold and installed a variety of Microsoft software products. According to Microsoft, in August 2006 the defendant sold a counterfeit copy of Office 2000 Pro to a Microsoft investigator. Microsoft ultimately sued for infringement of five of its trademarks and seven of its copyrights. The defendant defaulted and Microsoft sought an award of statutory damages.

The Court found that the defendant had acted willfully because it had failed to respond to Microsoft's demand letters and had defaulted at trial. However, because Microsoft had only requested the maximum amount of non-willful damages for trademark and copyright infringement, the Court awarded just that: $30,000 each for the 7 copyrights infringed ($210,000) and $100,000 each for the 5 trademarks infringed ($500,000) -- a total of $710,000.

Continue reading "Akanoc, OnlineNIC and Computerme : Suits Involving Multiple Copyright, Trademark or Cybersquatting Claims Provide Opportunities for Startling Statutory Damage Awards" »

Internet jurisdiction: Newcomers to digital media cases are often astounded at the ease at which the 9th Circuit is willing to find personal jurisdiction in a plaintiff's home court over a defendant from a foreign (out-of-state or out-of-country) jurisdiction. However, in a recent non-unanimous ruling, in which it found the jurisdiction was proper in the Northern District of California over a website operator whose passive website solely targeted Southern California residents, the 9th Circuit appears to have clearly strayed off track. See Brayton Purcell LLP v. Recordon & Recordon, __ F.3d __, 2009 WL 2383035 (9th Cir. Aug. 5, 2009).

The plaintiff in the case, Brayton Purcell, is located in a rustic, "country" setting near Novato, California. However, it is one of the largest asbestos case plaintiffs law firms in the state. I successfully defended two or three of their cases myself in Los Angeles County Superior Court a few years back. In addition to cranking out asbestos cases, Brayton Purcell also bills itself as a specialist in elder abuse law, and created a website for this practice area, which it copyrighted in 2002.

In 2004, the defendant, Recordon & Recordon, a two-person law shop in San Diego, set up a non-interactive website which advertised its elder law expertise to persons in Southern California. According to the Court, the Recordon site "consisted entirely of material copied verbatim from, and without attribution to, Brayton Purcell's own website." Brayton Purcell discovered the site and sued for copyright infringement.

California has four judicial districts. Novato is in the Northern District, San Diego is in the Southern District. Brayton Purcell filed its suit in the Northern District. Recordon & Recordon filed a motion to dismiss for improper venue, which the District Court denied. Recordon & Recordon appealed to the 9th Circuit.

Under federal rules, venue for a case is proper "in the district where the defendant resides or his agent resides or may be found." 28 U.S.C. § 1400(a). This means that venue is proper in any judicial district in which the defendant would be subject to personal jurisdiction, if the district were a separate state. So while the 9th Circuit's was technically considering a motion to dismiss for improper venue, its ruling also affects 9th Circuit standards for asserting personal jurisdiction, as well.

Under U.S. Supreme Court precedent, for a court to exercise personal jurisdiction over a nonresident defendant, the defendant must have "minimum contacts" with the judicial forum selected by the plaintiff (here the judicial district) such that the exercise of jurisdiction does not "offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Where a defendant has "continuous and systematic business contacts" with the forum, then a court can exercise what is called "general jurisdiction" over him, regardless of the events at issue in the case. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984).

Continue reading "Brayton Purcell v. Recordon & Recordon: 9th Circuit Decision on Personal Jurisdiction and Venue in Passive Internet Website Case Goes Off-Track" »

There are many hurdles to recovering damages when a third party makes a defamatory post about you or your business on an interactive website. The Communications Decency Act generally shields the site that published the third-party post itself, which means that you will have to sue the original author. If the poster was anonymous, you will have discover his identity before your suit can get off the ground. While some web hosts will disclose the identity of an anonymous poster in response to a simple request or a subpoena, others will not do so without a court order.

A court order is often not easy to get.

Anonymous speech has played a critical role in furthering the American democracy. Thomas Paine was able to publish his Common Sense which urged Americans to revolution, without fear of personal reprisal, because he was able to publish it anonymously. The Federalist Papers were also published anonymously. Given this heritage, the U.S. Supreme Court has repeatedly found that the right to speak anonymously is protected by the First Amendment. See, e.g., McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 341-42 (1995).

The amount of First Amendment protection offered to anonymous speech, like all other protected speech, varies with the class of speech involved. For example, where disclosure of a speaker's identity would chill his ability to exercise his political rights, the U.S. Supreme Court has absolutely refused to permit disclosure of his identity. NAACP v. Alabama, 357 U.S. 449, 462; 78 S.Ct. 1163, 1171, 2 L.Ed.2d 1488 (1958); Talley v. California, 362 U.S. 60, 80 S.Ct. 536, 4 L.Ed.2d 559 (1960). On the other hand, the Court has found that defamatory and libelous speech gets no Constitutional protection. Chaplinsky v. New Hampshire, 315 U.S. 568, 571 (1942).

While courts permit disclosure of an alleged defamer's identity, a court faced with a complaint that accuses an anonymous speaker of engaging in defamation faces a "chicken and the egg" dilemma. If trial proves that the speaker is liable for defamation, then his anonymity was not entitled to First Amendment protection and should be disclosed. If trial proves that the speaker is not liable for defamation, then his anonymity was entitled to First Amendment and should not be disclosed. However, disclosure of a speaker's identity is generally required for a court to determine whether his words were defamatory. In other words, you have to disclose his identity to determine whether his identity should be disclosed.

For example, proving a cause of action for defamation often requires showing that the speaker acted with malice. To show malice, a plaintiff must have evidence that the speaker made his defamatory statements intending or knowing that they would cause harm to the plaintiff, or that he made his statements without a reasonable basis for believing that they were true. Such evidence of a defendant's mental state can generally only be provided to a court after the speaker has been identified and discovery of his purposes and of the facts available to him at the time he spoke has been obtained.

Continue reading "Solers, Inc. v. Doe & In re Liskula Cohen: Hurdles to Uncovering the Identity of an Anonymous Internet Poster Vary Greatly throughout the U.S." »

Many blog sites on the Internet are devoted to complaints or criticism of the practices of businesses and their executives. For example, we recently blogged about a site that critiques the practices of beauty company Mary Kay, Inc. -- www.pinklighthouse.com. Another site focuses on critiques of Starbucks' operations --starbucksgossip.typepad.com. The authors of such blogs or websites frequently worry that their posts could subject them to ruinous liability for defamation, trademark infringement (for use of the company name), or copyright infringement (for reprinting company materials).

However, a recent decision by a District Court in the Northern District of California illustrates the protections the law affords attack blogs from such claims. In 2006, Robert Delsman, Jr., a former General Electric employee, submitted a claim for disability benefits to the firm that handled such claims for GE -- Sedgwick Claims Management, Inc. Sedgwick is managed by David North (CEO) and Paul Posey (COO). Delsman grew dissatisfied with Sedgwick's handling of his case and began to express his views about Sedgwick, North and Posey in a blog and a postcard mailing campaign called "Operation Going Postcard."

The blog, which is currently hosted at http://www.gesupplydiscrimination.com/, accused Sedgwick of wrongfully denying benefits to claimants, violating various laws, and accused Sedgwick and its "minions" (which it termed "Sedgthugs") of having committed "Sedgcrimes."
Delsman also took two copyrighted photos of North and Poser and superimposed them on "WANTED" postcards, some of which he "morphed" to look like pictures of Adolph Hitler and Heinrich Himmler. The postcards contained messages next to the photos such as this: "WANTED FOR HUMAN RIGHTS VIOLATIONS. . . Have you been threatened by this man or his minions? The time for change is at hand!" On the reverse side, they read: "Have you been terrorized, threatened or lied to by Sedgwick Claims Management Services? The time to act is now! Report these despicable activities to the US Department of Justice and the Attorney General in your state. Sedgwick CMS can be stopped peacefully and purposefully if enough people act now! Get informed!"

That's strong stuff!

Sedgwick filed suit against Delsman seeking to stop his damaging campaign. It claims included copyright infringement, for his use of the photos, and the usual panoply of defamation-related claims, including libel and interference with prospective business advantage. See Sedgwick Claims Management Services, Inc. v. Delsman, U.S.D.C. Northern District of California, Case No. C 09-1468 SBA, Order Granting Defendant's Motion to Dismiss (July 16, 2009).

There is nothing wrong with the types of claims Sedgwick brought. I have successfully brought them myself on behalf of defamed plaintiffs. However, the circumstances have to be right. The reality is that the First Amendment protects a lot of damaging speech.

Continue reading "Attack Blog's Salvos against Corporation and Blogger's Use of Copyrighted Photos in Parodies of Management Deemed Non-Actionable by California District Court" »

On July 30, 2009, two customers filed a class action suit in a Seattle federal court over Amazon.com's remote deletion of copies of George Orwell's 1984 from their Kindle "Devices." (Fn1) The suit alleges that in its Terms of Use, Amazon.com provided that customers were granted the "right to keep a permanent copy" of content obtained from Amazon, and "to view, use, and display such Digital Content an unlimited number of times . . ." Amazon.com's deletion of their copies of 1984 violated these promises. The plaintiffs have alleged several legal theories against Amazon.com, including breach of the Terms of Use, damaging the plaintiffs' computers in violation of CFAA, trespass to chattels (the plaintiffs' Kindle Devices), conversion (of the deleted material) and other grounds.

While Amazon.com has yet to file a response, provisions in its Terms of Use for the Kindle provide clues as to how it may proceed.

As widely commented on in the press and by other bloggers, Amazon's Kindle electronic book reading device represents a significant departure from the way that book content has previously been distributed. For printed books, once the publisher sells the book, it is practically impossible for the publisher to exert significant control what happens to the individual copies of the book. The publisher has no ability to obtain royalties except from the first purchaser. The publisher has no real ability to prevent users from making copies of books to share with others. Moreover, if the publisher mistakenly sells content for which it has not secured the copyrights, it is virtually impossible for it to retrieve the books and minimize the damages. (Fn2)

Amazon.com's Terms of Use for the Kindle attempt to change all of that. While Amazon.com's Kindle webpages often use the term "buy" or "bought" in connection with books offered on the site, its "clickwrap" Terms of Use paint a different picture.

On one hand, some of the provisions in the Terms of Use, make a Kindle book transaction look like the traditional purchase of a book. According to the Terms of Use, "[u[pon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times . . ."

However, the provisions that immediately follow limit those rights. According to the Terms of Use, a customer has the right to keep and view this Digital Content ". . . solely on the Device or an authorized by Amazon as part of the Service and solely for your personal, non-commercial use." In other words, the user has lost the traditional book buyer's rights transfer the content to others, or to use the content for whatever non-infringing purpose he or she desires. (Fn3) The Terms of Use further restrict traditional book purchaser's powers by providing that "[y]ou may not use the Device, the Service or the Digital Content for any illegal purpose."

Continue reading "The Kindle Content Deletion Flap: Predictions on how Amazon.com Will Respond to the Newly-Filed Class Action" »

Power.com is a social networking aggregator, boasting over 5 million users in India and Brazil, that launched business in the U.S. in November 2008. It permits users to simultaneously log-in to multiple social networking sites, such as Myspace and Facebook and instant messaging sites, such as Twitter.

While some website operators might consider this service as free advertising, other might see it as posing the danger of supplanting the websites it aggregates. In fact, Power.com has already drawn significant lawsuit fire. In December 2008, shortly after the site premiered, Power.com was sued by Facebook. (Facebook, Inc. v. Power Ventures, Inc., et al., U.S.D.C., Northern District of California, Case No. C 08-5780).

Facebook claimed that Power.com was circumventing Facebook's protocols for accessing its information, infringing on Facebook's trademark, and inducing Facebook users to provide them with email addresses of Facebook contacts for the purposes of sending commercial messages that it falsely stated came from "The Facebook Team." Facebook brought claims against Power.com under numerous legal theories, including violation of the CAN-SPAM act (15 USC §7701), copyright and trademark infringement, violation of the Digital Millennium Copyright Act and violation of California's unfair competition law.

In response, Power.com brought a motion to dismiss/motion for more definite statement -challenging the sufficiency of the allegations in the complaint. However, the bar to survive such a motion in Federal court is not very high. Under Federal rules, a plaintiff generally does not have to be specific about the facts that underlie the claims he brings in a lawsuit. Federal courts deem it sufficient that the complaint merely contain sufficient facts to give the defendant "fair notice" of the nature of the claim and its basis. The courts rely on discovery and law and summary judgment to weed out unmeritorious claims. The main exception to this rule is for claims alleging fraud. For these claims, the complaint must state what the fraudulent representations were, who said them and where and when.

These rules largely dictated the outcome here. After Facebook filed its opposition, Power.com actually withdrew its motion as to the CAN-SPAM claims. According to Power.com's reply brief, this did not amount to a concession that the claims had merit, but merely that Facebook had met the pleading standards for these claims.

Continue reading "Facebook Suit Against Social Networking Aggregator Power.com Survives Initial Court Test" »

The clickware or browseware on many websites contain clauses permitting the operator to unilaterally change the terms of use. For example, a number of websites that I reviewed recently, and that offer services throughout the U.S. or North America, contain clauses along these lines:

"We may amend, modify or update these terms of use at our sole discretion, and all users
shall be bound by any such amendment, modification or update. We may, but are under no
obligation, to provide notice of any amendment, modification or update of these terms of use."

Are clauses like this enforceable? The answer is . . . it depends.

On one hand, many website customers would argue that because this kind of clause gives so much discretion over the terms of the contract to the website operator, there really has been no agreement at all -- no meeting of the minds as to the terms of the contract. Others would argue that because the website owner can modify his obligations at will, the website owner has offered by real "consideration", so the contract is illusory.

California courts have held that such discretion does not necessarily make a contract invalid, because it is assumed that the party with the discretionary power -- in this case, the website operator -- has a duty to exercise its discretion in good faith and in accordance with fair dealing. So even if the agreement permits a material term, like the price, to be modified, as long as the actual modification that is made is reasonable or in proportion to some objective standard, the right to modify will generally be upheld. (fn1) For example, California courts have upheld contracts in which banks have reserved the right to increase interest rates on a loan, as long as the increases that were actually imposed were determined to be reasonable. (fn2)

However, in many cases, website operators have attempted to insert entirely new terms in later versions of an agreement that were not present at the time that the customer used a website or agreed to its contractual terms. I have seen cases where subsequent terms of use added such items as arbitration clauses (fn3), forum selection clauses (fn4), choice of law clauses (fn5), or attorneys fees' (fn6) provisions.

Some California cases have held that such added terms may not be enforceable -- despite the presence of a unilateral modification clause. Here are some examples:

Continue reading "Can a Clause Permitting a Website Operator to Unilaterally Change the Terms of the Website User Agreement Be Enforced?" »

Since entering its discovery phase, formal courtroom proceedings in Viacom's copyright infringement suit against YouTube and Google have substantially quieted down. Press reports suggest that the lull in public proceedings may be due to settlement efforts. However, the nature of this case suggests that the parties' discovery burdens could be substantial and causing a slowdown.

Viacom's claim in this suit is that YouTube had permitted over 150,000 clips of Viacom-owned content, such as clips from "SpongeBob SquarePants", "SouthPark" or "The Daily Show with Jon Stewart" to be uploaded and viewed by users. According to Viacom's complaint, its copyrighted material has been viewed on YouTube "an astounding 1.5 billion times." Raising both direct and indirect infringement theories, Viacom claimed that YouTube had created an environment that "promotes" and "induces" copyright infringement.

YouTube and Google's primary response was that their actions were protected by the Digital Millennium Copyright Act (DMCA). According to YouTube's Answer, "YouTube . . . fulfills its end of the DMCA bargain, and indeed goes far beyond its legal obligations in assisting content owners to protect their works."

In two recent suits, a similar internet file-sharing service, Veoh, has prevailed at summary judgment using the DMCA safe-harbor defense that the infringing material was "information residing on systems or networks at direction of users." 17 U.S.C. §512(c); see IO Group, Inc. v. Veoh Networks, Inc., 586 F.Supp.2d 1132 (N.D. Cal. 2008); UMG Recordings, Inc. v. Veoh Networks, Inc., 2008 WL 5423841 (C.D.Cal. 2008). YouTube may also prevail in its case against Viacom. However, this does not mean that sailing will be smooth for YouTube.

Continue reading "Controlling Discovery in Digital Media Cases: Lessons from the Viacom Suit Against YouTube/Google" »

A recent ruling shows how easy it can be for a company that markets its services via a website to find itself a defendant in a United States federal court. In a trademark infringement case brought over competing claims to the "LifeAlert" trademark, a federal judge ruled on December 29, 2008, that the Canadian defendant could be sued in a California federal court. (fn1) This was despite the fact that the defendant, which marketed living will products and services over the Internet, had no physical presence in California and had never completed any transactions with a California resident via its website. (fn2)

The standard rules for determining whether a court has jurisdiction over a website operator

In general, a court can only exercise jurisdiction over a defendant, if the defendant has the requisite "minimum" level of "contacts" with the particular state in which the court sits. (fn3) Foreign or out-of-state website operators may never have any physical contacts with the state in question. So in cases involving website operators, judges instead use a "sliding scale" analysis, and look at the nature and extent of the commercial activity that the defendant conducts over the Internet with the state where the court sits. (fn4)

At one end of this sliding scale are passive websites, that only make information available to those who are interested in it. Such websites cannot be sued in every state that information from the site is accessed -- but may have to be sued in their home state or country. At the other end of the scale are interactive websites through which the defendant knowingly conducts regular business with the state in question. These clearly can justify a court in that state's exercise of jurisdiction. (fn5) In the LifeAlert case, because the defendant had not engaged in commercial transactions with anyone in California, under these rules, the court found that an exercise of jurisdiction over the defendant would have been inappropriate.

The broader jurisdictional rules applied to foreign defendants

Instead, the court in the LifeAlert case found that jurisdiction was appropriate by resorting to two lesser-known rules. First, the judge applied a rule that effectively only applies to foreign defendants -- Federal Rule of Procedure 4(k)(2). Under this rule, a federal court can assert jurisdiction over a defendant if: (i) the case involves a cause of action based on federal law; (ii) no other state court of general jurisdiction in the U.S. has jurisdiction over the defendant, and (iii) the judge finds that the defendant has sufficient nationwide contacts with the U.S.

Continue reading "Recent Federal Court Ruling Would Make It Easy to Sue Foreign Website Operators in U.S. Courts" »