Internet Law Info Blog

Will Forcing Institutes of Higher Education to Guard Internet Networks Against Piracy Decrease the Rate of Illegal Downloading?

As the accessibility and knowledge of how to use technology has increased, so has the ability to take advantage of them. College students today have found loop holes in downloading files for free and this has caught the attention of entertainment industries. An excellent article Colleges and Universities Join Anti-Piracy Fight discusses how the Recording Industry of America (RIAA) and the Motion Picture Association of America (MPAA) have waged a battle on piracy for many years but finally urged for provisions to the Higher Education Opportunity Act of 2008 http://sciencetechlaw.healthreformwatch.com/2010/07/.

Aside from institution requirements and information on available grant programs, the Higher Education Opportunity Act of 2008 contained synopses of law provisions that would affect the higher education system. One of which focused on Copyright Infringement, which stated that institutions needed to “develop plans to detect and prevent unauthorized distribution of copyrighted material over campus networks”. It expanded to include all forms of intellectual property, including music and video files (http://www.cga.ct.gov/2008/rpt/2008-R-0470.htm).

Nonetheless, RIAA and MPAA continued to complain that piracy was an increasingly rapid problem. According to an analysis by the Institute for Policy Innovation, global music piracy was the direct source for $12.5 billion of economic losses and 71,060 U.S. job losses per year (http://www.riaa.com/faq.php). Furthermore, it was recorded that only 37% of acquired music by American consumers was paid for in 2009.  From these numbers, it was quite obvious that piracy had a negative impact on the music industry.

Since college students were/are some of the most avid music and media consumers in today’s society, clearly, some of the blame needed to be placed on the absence of stricktly enforced anti-piracy policies at universities and colleges.  As a result, entertainment industries wanted the provision to require universities and colleges to “implement at least one ‘technology based deterrent’ such as blocking file transfers, traffic shaping, or preventing access to peer-to-peer file transfer sites”. In the absence of that, it wanted to deny access to federal student financial aid.

The provision was made effective in 2010, and has received both positive and negative reviews. Some universities and colleges were able to successfully implement anti-piracy technology devises and have testified in having less copyright infringement notifications. On the other hand, the issue of piracy will always be a concern, as one cannot completely control the use of technology. To some, this new provision also seems to be just another tactic for entertainment industries to monopolize online music and media.

 

Does the Government Violate the 4th Amendment When it Obtains Evidence From a Suspect’s Facebook Page?

Does the 4^th Amendment protect information disseminated online? Can Facebook posts be used against defendants in a court of law?

The court in U.S. v. Joshua Meregildo WL 3264501 (S.D.N.Y. August 10, 2012), addressed whether the government violated the 4^th Amendment by obtaining evidence from a suspect’s Facebook page. In that case, the government applied for a search warrant for the contents of Melvin Colon’s (“Defendant”) Facebook account. The Magistrate Judge found probable cause and granted the warrant. The basis of the finding of probable cause derived from the contents of Defendant’s Facebook page.

It was significant that one of Defendant’s Facebook friends granted the government access to view Defendant’s page. Through that access, the government learned that Defendant posted messages regarding prior acts of violence and threatened new violence to rival gang members. Additionally, the government obtained evidence that Defendant posted messages seeking to maintain the loyalties of other alleged members of Defendant’s gangs. Defendant argued that the government violated his 4^th Amendment right to privacy by accessing his Facebook page.

In its decision, the Court began its analysis by noting that the 4^th Amendment guarantees that all people shall be “secure in their persons, houses, papers, and effects, against unreasonable searched and seizures.” U.S. CONST. amend. IV.

A person has a constitutionally protected reasonable expectation of privacy when;

• they have both a subjective expectation of privacy; and

• that expectation is one that society recognizes as reasonable.

The Court reasoned that generally people have a reasonable expectation of privacy in the contents of their home computers. But this expectation is not absolute, and may be extinguished when a computer user transmits information over the internet or by e-mail. When a social media user disseminates his posting and information to the public, the user is no longer protected by the 4^th Amendment. However, when users utilize secure privacy settings when posting on the internet, it reflects the user’s intent to preserve information as private and may be constitutionally protected.

In this case, since the defendant set his Facebook privacy settings to allow viewership of postings by friends, the government was allowed to access them through a cooperating witness who was one of those friends. Id. at 1-2. 

The Court explained that Defendant was in error when he held the belief that his Facebook profile was private to law enforcement officials. This is because Defendant did not have a justifiable belief that his friends would keep his profile private. Once he shared his posts with his friends, his friends had the right to share it with law enforcement officials. Therefore, Defendant’s legitimate expectation of privacy ended when he disseminated posts to his friends.

Accordingly, the Court held that the government did not violate his rights under the 4^th Amendment when it accessed Defendant’s Facebook profile through a cooperating witness.

Be very careful what you post on the internet; Information is unlikely considered private when it is on the internet. If you want to ensure your privacy, do not post your “private” information online for anyone to see. 

When Are Online Forum Selection Clauses Enforceable in New York?

Should a defendant, who uses the Internet to market and sell nationally, be able to restrict jurisdiction with the use of a forum selection clause (“FSC”)? On the other hand, should a plaintiff be able to drag an online company, that provides convenient and often times cheaper services, into court across the country?  

In Guillermo Jerez v. JD Closeouts, LLC, JD CLOSEOUTS.COM, Inc., 2012-22070 (District Court of Nassau County, First District, March 20, 2012),  the Court addressed the issue of whether FSCs are enforceable. In that case, the plaintiff, Guillermo Jerez “plaintiff”, brought suit against two Florida corporations; JD Closeouts, LLC and JD Closeouts.com, Inc. (collectively, “Defendants”). The plaintiff purchased several tube-socks from the defendants’ online company via the defendants’ website. Plaintiff claimed that the tubes-socks were “defective” and that the defendants’ refused to refund his money. The plaintiff filed suit in New York, the location where he accessed the Internet to purchase the socks and where the socks were shipped.  However, the defendants claimed that because there was an FSC in the terms and conditions of their website, the plaintiff was limited to suing in Nassau County, Florida.    

 In the decision, the Court provided the background law regarding how courts generally treat FSCs. They are presumptively valid in regard to online contract formation. However, FSCs need to be fair; online companies must provide notice of such a clause so that a reasonable person would be aware of the terms prior to entering into the agreement. Online companies need not negotiate online contracts with their users in order to be valid; they only need to provide reasonable notice of the terms.  Therefore, as long as a website’s FSC “is not unreasonably masked from the view of the prospective purchaser,” courts will hold FSCs enforceable.

In analyzing this requirement, the Court cited cases with contrary holdings. In Specht v. Netscape Communications Corp., the Court held that the plaintiff, a user who downloaded from the defendant’s website, was not put on reasonable notice of the contract terms. The Court explained that the terms were not reasonably communicated to the user because they were located on an “unexplored portion of the webpage” underneath the “download button.” Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002). However, in Caspi v. Microsoft Network, LLC., the Court held, the terms of a contract enforceable where the user of online software was required to click “I agree” or “ I don’t agree” before the use of the software. This required affirmative step, on the part of the user, provided reasonable notice of the terms of the agreement.

The Court, in JD Closeouts held that the defendants’ FSC was not enforceable.  The court based its decision on the fact that the defendants’ FSC was “buried” and “submerged” on the defendants’ webpage. The only way the plaintiff could have become aware of the FSC would be if, by chance, he happened to find it by clicking the “About  Us” tab. Online users are not expected to conduct a wild goose chase; searching every corner of a website for contractual obligations that will be imposed upon them by online companies.

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© 2012 Nissenbaum Law Group, LLC

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Does Selling a Grey Market Goods In New York Confer Individual Jurisdiction Over the Trademark Infringer?

In Chloe v. Queen Bee of Beverly Hills, L.L.C., No. 09-cv (2d Cir. Aug. 5, 2010), the court was presented with a novel issue: whether a New York court would have jurisdiction over a California resident who was alleged to have engaged in one act of trademark infringement by sale of product to a Bronx resident.

In that case, Simone Ubaldelli (“Simone”), a California resident, was the owner of a California company that sold knock-off Padington bags by Chloé . These bags were  misrepresented as being products manufactured by Chloé.  The issue was whether Simone could be sued as an individual in New York for trademark infringement by her company, Queen Bee.

The New York court determined that it had jurisdiction over Simone because, although the she had only engaged in one transaction with a New York resident, her company had made at least fifty (50) sales of merchandise in New York that infringed on Chloé’s trademark.  As a result, there were enough contacts such that suit could proceed against Simone individually.

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© 2012 Nissenbaum Law Group, LLC

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Is A Twitter Account A Trade Secret?

Businesses have long been able to protect their list of customers as a trade secret, keeping the information out of the hands of competitors. But should the list of customers in a business’ Twitter account be granted the same confidential protection?

The United States District Court for the Northern District considered this question in a recent case. PhoneDog v. Kravitz, 2011 U.S. Dist. LEXIS 129229 (N.D. Cal. Nov. 8, 2011). The plaintiff, PhoneDog, used a variety of social media – including Twitter – to share reviews of mobile products and services with its readers. The defendant, Noah Kravitz (“Kravitz”), was a product reviewer and video blogger for PhoneDog. The company permitted Kravitz to use the Twitter account “@PhoneDog_Noah.” Kravitz used the account to disseminate information and promote PhoneDog services on behalf of the company. He generated approximately 17,000 Twitter followers during the course of his employment. Kravitz used a password to access the account.

PhoneDog claimed that all of its “@PhoneDog_Name” Twitter accounts, as well as the passwords to those accounts, were proprietary, confidential information. When Kravitz ended his employment with PhoneDog in October 2010, the company asked him to stop using the Twitter account. However, Kravitz instead changed the name (or “handle”) of the account to “@noahkravitz” and continued to use it. PhoneDog, alleging that Kravitz’s behavior caused it to suffer at least $340,000 in damages, brought suit against Kravitz for misappropriation of a trade secret and three other claims. Kravitz filed a motion to dismiss the claims.

A motion to dismiss allows a court to terminate a lawsuit that fails to state a claim upon which the plaintiff can receive relief from the court. When considering a motion to dismiss, a court must accept all of the plaintiff’s allegations as true and construe them in the light that is most favorable to the plaintiff. Bell Atl. Corp. v. Twombly¸550 U.S. 544, 570 (2007). Kravitz argued the claim should be dismissed because neither the identity of the account followers or the password to the account constituted trade secrets. Under the California Civil Code, a trade secret is defined as information that:

1)      derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and

2)   is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

California Civil Code, sec. 3426.1(d)

Kravitz claimed the list of followers was not secret because the information was publicly available on Twitter. He also claimed that the password was not a trade secret because the password itself did not derive any actual or potential independent economic value. Kravitz also argued that PhoneDog failed to allege any act by him that would be considered misappropriation. Under the California Civil Code, misappropriation is defined as the:

1)      acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means;

 2)      disclosure or use of a trade secret of another without express or implied consent by a person who:

a)      used improper means to acquire the knowledge of the trade secret;

b)      at the time of disclosure of use, knew or had reason to know that his or her knowledge of the trade secret was:

i.)    derived from or through a person who had utilized improper means to acquire it;

ii.)   acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or

iii.)   derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use

c)      before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake

California Civil Code sec. 3426.1(b)

The Court found that Kravitz failed to show any basis for a dismissal of the misappropriation claims. The Court determined that PhoneDog described the subject matter of the trade secret with sufficient particularity and that Kravitz had refused to stop using the password and account despite the company’s requests. Additionally, the Court found that determining whether Kravitz’s behavior constituted misappropriation required consideration of evidence, and thus the claim could not be dismissed.

The future decisions in cases such as this will be very significant for businesses who use Twitter or similar social networking tools as a means of collecting a group of potential customers and establishing a professional relationship between them. It is yet another example of how traditional trade secret law will need to adapt to a world where the relationship between businesses and customers continues to operate more and more online and thus in a less confidential setting.

Comments/Questions: gdn@gdnlaw.com

© 2012 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.nonprofitlawinfoblog.com; www.franchiselawinfoblog.com; www.intellectualpropertylawinfoblog.com; www.commerciallitigationlawinfoblog.com; www.commercialrealestatelawinfoblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

 

 

Can Google Maps Be Sued For Invasion of Privacy?

Many Americans are able to go online, enter their address into Google and zoom-in on the ensuing map so closely that they can see an image of their own home. However, few Americans have asked whether Google is invading anyone’s privacy by providing this capability.  

In 2010, that question was proposed to the United States Court of Appeals for the Third Circuit. Boring v. Google Inc., 362 Fed. Appx. 273 (3d Cir. Pa. 2010). In 2008, a couple residing in Pennsylvania (“the Borings”) sued Google, claiming that the company’s “Street View” feature on Google Maps invaded their privacy. The Street View program allows users to see panoramic views of locations throughout the United States. To collect the images, Google attaches panoramic digital cameras to passenger cars and drives around cities photographing areas along streets and roads. Individuals are able to report and request the removal of inappropriate images they find on Street View.

The Borings, who live on a private road, claimed that their privacy interest was disregarded by Google when the company took photos of their property and made those photos available to the public. In addition to alleging that Google invaded their privacy, the Borings also asserted claims for trespass, injunctive relief, negligence and conversion. In February 2009, the United States District Court for the Western District of Pennsylvania granted Google’s motion to dismiss all of the Borings’ claims. The plaintiffs appealed.

Under Pennsylvania law, there are four tort actions for invasion of privacy:

1)      unreasonable intrusion upon the seclusion of another;

2)      appropriation of another’s name or likeness;

3)      unreasonable publicity given to another’s private life; and

4)      publicity that unreasonably places the other in a false light before the public.

Burger v. Blair Med. Assocs., Inc.¸ 600 Pa. 194, 964 A.2d 374, 367-77 (Pa. 2009).

The Court followed the District Court’s interpretation of the Borings’ complaint as asserting claims for intrusion upon seclusion and publicity to private life. Plaintiffs stating a claim for intrusion upon seclusion must allege conduct that:

1)      demonstrates an intentional intrusion upon the seclusion of their private concerns which was substantial and highly offensive to a reasonable person, and

2)      avers sufficient facts to establish that the information disclosed would have caused mental suffering, shame or humiliation to a person of ordinary sensibilities.

Pro Golf Mtg., Inc. v. Tribune Review Newspaper Co., 570 Pa. 242, 809 A.2d 243, 247 (Pa. 2002).

The Court upheld the District Court’s decision and determined that the Borings’ claim for intrusion upon seclusion failed because the alleged conduct would not be highly offensive to a person of ordinary sensibilities. Boring at 280. “No person of ordinary sensibilities would be shamed, humiliated, or have suffered mentally as a result of a vehicle entering into his or her ungated driveway and photographing the view from there.” Id. at 279. The Court also referred to an example included in the Restatement (Second) of Torts that “knocking on the door of a private residence [is] an example of conduct that would not be highly offensive to a person of ordinary sensibilities.” Id. The Court reasoned that Google’s actions of photographing an external view of the Borings’ home was arguably less intrusive than knocking on a door. “The existence of that image…does not in itself rise to a level of an intrusion that could reasonably be called highly offensive.” Id.  

The Court also agreed with the District Court’s decision that the Borings’ claim of publicizing private life failed. To state such a claim, a plaintiff must allege that the matter being publicized is:

1)      publicity

2)      given to private facts

3)      which would be highly offensive to a reasonable person, and

4)      is not something that is of legitimate concern to the public.

Harris v. Easton Pub. Co., 335 Pa. Super. 141, 483 A.2d 1377, 1384 (Pa. Super. Ct. 1984).

The Court determined that the Borings failed to allege sufficient facts to establish that the publicity given to them by Google’s actions would be highly offensive to a reasonable person. Boring at 280.

The Court’s decision suggests that attempts to sue Google for invasion of privacy over its use of residential images in its Google Map program are not likely to succeed. Courts could suggest that Google’s opt-out option provides a better route for residents who think that their privacy rights are being violated.  

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© 2012 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.nonprofitlawinfoblog.com; www.franchiselawinfoblog.com; www.intellectualpropertylawinfoblog.com; www.commerciallitigationlawinfoblog.com; www.commercialrealestatelawinfoblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com

 

 

Does the Computer Fraud and Abuse Act Extend To Workers Who Steal From Company Computers?

The Computer Fraud and Abuse Act (“CFAA”) was enacted in 1986, in part, to criminalize the act of knowingly accessing a protected computer with the intent to defraud. 18 U.S.C. § 1030. The statute was intended to target computer hackers, but could it also be used to find employees criminally liable for misappropriating confidential information on their employer’s computers? That was a question recently considered by the United States Court of Appeals for the Ninth Circuit. U.S. v. Nosal, 2012 U.S. App. LEXIS 7151 (9th Cir. Cal. Apr. 10, 2012).

The plaintiff, David Nosal (“Nosal”), was formerly an employee of the executive search firm Korn/Ferry. Shortly after leaving the company, he convinced a few of his former co-workers to join him in starting a business to compete with Korn/Ferry. The employees used their log-in information to download source lists as well as names and contact information from the company’s database. The information was then transferred to Nosal. Though the employees had authorization to access the database, they violated company policy by disclosing confidential information.

The government charged Nosal with, among other charges, violating the CFAA for aiding and abetting the Korn/Ferry employees in exceeding their authorized access with an intent to defraud. See § 1030(a)(4). Nosal filed a motion to dismiss the CFAA counts, arguing that the statute only targets hackers, not those who access a computer with authorization.

His argument was initially rejected by the United States District Court for the Northern District of California which was considering Nosal.   However, a subsequent Ninth Circuit opinion opted for narrow interpretation of the phrases “without authorization” and “exceeds authorized access” in the CFAA. See LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009). Under this decision, “[t]here is simply no way to read [the definition of ‘exceeds authorized access’] to incorporate corporate policies governing use of information unless the word alter is interpreted to mean misappropriate,” as “[s]uch an interpretation would defy the plain meaning of the word alter, as well as common sense.” Nosal at 4.  Basing its decision on LVRC, the Ninth Circuit Court of Appeals that was considering the appeal of Nosal reversed and dismissed the counts for failure to state an offense.

The CFAA defines “exceeds authorized access” as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” § 1030(a)(4). The government argued that the statute’s language could refer to someone who has unrestricted physical access to a computer, but is limited in the use to which he can put the information. On the other hand, Nosal argued that the statute could refer to one who is authorized to access only certain data but instead accesses – or “hacks” – data that he is not authorized to.

The Court opted to follow Nosal’s interpretation, finding that “[t]he government’s interpretation would transform the CFAA from an anti-hacking statute into an expansive misappropriation statute.” Id. at 7. It found that the language “without authorization” would apply to outside hackers, while the language “exceeds authorized access” would apply to inside hackers, concluding that such an interpretation would be “a perfectly plausible construction of the statutory language that maintains the CFAA’s focus on hacking rather than turning it into a sweeping Internet-policing mandate.” Id. at 10.

“We need not decide whether Congress could base criminal liability on violations of a company or website’s computer use restrictions. Instead, we hold that the phrase ‘exceeds authorized access’ in the CFAA does not extend to violations of use restrictions. If Congress wants to incorporate misappropriation liability into the CFAA, it must speak more clearly.” Id. 24-25.

The Court’s decision suggests that the CFAA might not be the statute to look to for businesses seeking to bring legal claims against former employers. 

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© 2012 Nissenbaum Law Group, LLC

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How Does LinkedIn Affect What Can And Cannot Be Considered A Trade Secret?

Employment agreements and other contracts have traditionally been drafted in a manner that prevents a former employee from sharing their former employer’s trade secrets and other confidential information with a new business. However, as professional social networking sites, such as LinkedIn, become more prevalent and users are more willing to share information on them, courts have begun to reconsider what type of corporate information should be considered confidential.

The United States District Court for the Eastern District of New York recently considered this problem. Sasqua Group, Inc. v. Courtney, 2010 U.S. Dist. LEXIS 93442 (E.D.N.Y. Aug. 2, 2010). The plaintiff, Sasqua Group (“Sasqua”), alleged that its former employer, defendant Lori Courtney (“Courtney”), provided her new employer with Sasqua’s confidential trade secrets, including its customer list. In its complaint, Sasqua asserted that their trade secrets included confidential, proprietary and competitively sensitive information about (a) its client contacts; (b) their individual profiles; (c) their hiring preferences; (d) their employment backgrounds; and (e) descriptions of previous interactions with client contacts. The company claimed that all of the information was kept in a central database and maintained by a computer technician. Sasqua also claimed that the information was not available from any public source and is not information that could be easily duplicated.

Under New York law, courts consider several factors in order to determine whether information constitutes a trade secret, including:

1)      the extent to which the information is known outside of the business;

2)      the extent to which the information is known by employees and others involved in the business;

3)      the extent of measures taken by the business to guard the secrecy of the information;

4)      the value of the information to the business and its competitors;

5)      the amount of effort or money expended by the business in developing the information; and

6)      the ease or difficulty with which the information could be properly acquired or duplicated by others.

Unisource Worldwide, Inc. v. Valenti, 196 F.Supp.2d 269, 278 (2002).

Additionally, “[a] customer list developed by a business through substantial effort and kept in confidence may be treated and protected at the owner’s instance against disclosure to a competition, provided the information it contains is not otherwise readily ascertainable.” Id. Knowledge of a customer’s needs and prices charged to that customer are also considered confidential.  In order to claim misappropriation of a trade secret, a plaintiff must prove that:

1)      it possessed a trade secret; and

2)      the defendant is using that trade secret in breach of an agreement, confidence, or duty, or as the result of discovery my improper means.

Computer Associates International, Inc. v. Bryan, 784 F. Supp. 982, 987 (E.D.N.Y. 1992).

Sasqua could not complete the first prong of this test because the Court did not find that its customer list was a trade secret. Courtney testified that the information could have been acquired through a series of Google searches as well as through professional networking sites such as Bloomberg and LinkedIn. The Court determined that, in earlier years, the information in Sasqua’s database might have been a protectable trade secret because greater time, energy and resources would have been needed to gather such detail. “However, for good or bad, the exponential proliferation of information made available through full-blown use of the Internet and the powerful tools it provides to access such information [today] is a very different story.” Sasqua at 63.

The Court’s decision in Sasqua may have a major impact on trade secret law. Traditional non-compete clauses may need to be revised and drafted in a way that grants protection over -- or at least accounts for -- information that might be available through social networking sites. 

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© 2012 Nissenbaum Law Group, LLC

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How Far Can a Long-Arm Statute Reach In Cases of Online Copyright Infringement?

Can a company that has an office in New York sue an Arizona company in the New York Courts solely on the basis that the Arizona company allegedly infringed upon the New York company’s copyright?

In a recent decision, the Court of Appeals of New York considered this question and answered in the affirmative, holding that the location of the copyright holder’s business is more determinative of where the lawsuit should be filed than the site of the alleged infringing action. Penguin Group (USA) Inc. v. American Buddha, 2011 NY Slip Op 2079 (N.Y. 2011).

The defendant, American Buddha, was an Oregon-based non-profit corporation with its principal place of business in Arizona. The company maintained the Ralph Nader Library website, which provided online access to classical literature and other works. Four of the works provided on the site had been published in print format by the plaintiff, Penguin Group (USA) Inc. (“Penguin”), which was based in New York. Penguin sued American Buddha in the United States District Court for the Southern District of New York, claiming that American Buddha uploaded unauthorized copies of four of Penguin’s books and, in doing so, violated Penguin’s copyrights.   

The District Court granted American Buddha’s motion to dismiss, finding that nothing made the suit amenable to jurisdiction in New York because the books were not copied there. Instead, they were (presumably) copied in Oregon and Arizona, the location of American Buddha’s servers.  Penguin appealed the decision.

The United States Court of Appeals for the Second Circuit certified to the Court of Appeals of New York the question of interpreting the scope of long-arm jurisdiction under CPLR 302(a)(3)(ii). It allows a court in New York to exercise personal jurisdiction over an out-of-state defendant when the nondomiciliary:

“(3) commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he…

(ii) expects or should reasonably expect the act to have consequences in the state and derive substantial revenue from interstate or international commerce.”

NY CLS CPLR Sec. 302.

This case involved downloading copyrighted material and allowing it to be available for public access online. Therefore, the Court focused on whether the site of injury refers to the location of the infringing action or the location of the principal place of business of the copyright holder.

The Court acknowledged that the question was more difficult because the alleged infringing behavior took place online. However, it found that “a New York copyright owner alleging infringement sustains an in-state injury pursuant to CLPR 302(a)(ii) when its printed literary work is uploaded without permission onto the Internet for public access.” Id. at 6. “The crux of Penguin’s copyright infringement claim is not merely the unlawful electronic copying or uploading for the four copyrighted books,” the Court held. “Rather, it is the intended consequence of those activities – the instantaneous availability of those copyrighted works on American Buddha’s Web sites for anyone, in New York or elsewhere, with an Internet connection to read and download the books free of charge.” Id. at 6.

Additionally, the Court held that infringing behavior harms a copyright holder in more ways than mere loss of revenue due to the unique bundle of rights granted to the holder. Infringement could diminish their incentive to want to continue to write and publish material, while also impairing their rights to reproduce and distribute copies by sale. As the Court determined, “[t]he injury to a New York copyright holder, while difficult to quantify, is not as remote as a purely indirect financial loss due to the broad spectrum of rights accorded by copyright law.” Id. at 8.

This decision is significant for the developing field of internet law because it notifies parties that their location or the location of their business assets will not shield them from being brought into other states if they are sued for illegally downloading copyrighted material. Those involved in activities that infringe – or even allegedly infringe – another party’s copyright may (under the right circumstances) be brought into the copyright holder’s domicile to defend themselves.  

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© 2011 Nissenbaum Law Group, LLC

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Can Anonymous Online Users Be Sued For Defamation?

Can the comments of anonymous online users provide the basis for a plaintiff’s defamation suit? If the users are expressing their opinion, the answer is probably no.

In Varrenti v. Gannett Co., Inc, the chief and three officers of the Brockport (N.Y.) Police Department sought to compel the Rochester Democrat & Chronicle to reveal the names and addresses of four anonymous individuals who had commented on two articles posted on the newspaper’s website between January 17 and January 20, 2011. Varrenti v. Gannett Co., Inc., 2011 NY Slip Op 21296 (N.Y. Sup. Ct. Aug. 3, 2011). The comments referred to the officers by nicknames and questioned the general effectiveness of the Village’s police department. The plaintiffs alleged that they were defamed by the anonymous defendants’ comments.

While the First Amendment protects anonymous speech, defamatory speech – whether by anonymous or identifiable sources, in print or online – is not protected. Id. at 6. However, as the Court discussed, “[e]xpressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action for defamation.” Id. Therefore, if the Court determined that the anonymous defendants were merely expressing their opinions, the comments could not be the subject of a defamation suit.

The question of whether a particular statement reflects an opinion or an objective fact is a question of law for the court to decide. In order to determine whether a statement is an opinion or fact, courts consider the following factors:

1)      Whether the specific language at issue has a precise meaning which is readily understood,

2)      Whether the statements are capable of being proven true or false, and

3)      Whether either the full context of the communication in which the statement appears or the broader social context and surrounding circumstances are such as to signal readers or listeners that what is being read or heard is likely to be opinion, not fact.

Id. at 7.

Courts place a particularly strong emphasis on the third factor, which requires “consider[ing] the content of the communication as a whole, as well as its tone and apparent purpose.” Id. This includes looking to the overall context in which the statements were made and determining “on that basis whether the reasonable reader would have believed that the challenged statements were conveying facts about the libel plaintiff.” Id. at 8.

In this case, the Court determined that the reasonable reader would interpret the statements as opinions of the anonymous defendants and, consequently, they could not be the subject of a defamation suit. “The tone of the comments was sarcastic, hyperbolic, and based on rumors that the anonymous posters heard around the Village of Brockport and about the Department,” the Court said. “Moreover, the apparent purpose of the comments made by the…defendants was to call for an investigation into the Department’s practices.” The Court’s finding was additionally influenced by the nature of the location in which the comments appeared: a message forum inviting readers to share their opinions on local news matters.

The Court’s decision grants strong protection for those posting critical commentary behind anonymous usernames. This decision is particularly significant for those who find themselves as the subject of criticism in online message boards. As long as opinions are deemed privileged, plaintiffs will struggle to recover on defamation grounds.

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© 2011 Nissenbaum Law Group, LLC

Please visit our website at www.gdnlaw.com and our other blogs at www.nissenbaumlawblog.com; www.foreclosuredefenselawblog.com; www.saleofbusinesslawblog.com; www.internetdefamationlawblog.com; www.constructionlawinfoblog.com; www.filmproductionlawblog.com; www.nonprofitlawinfoblog.com; www.franchiselawinfoblog.com; www.intellectualpropertylawinfoblog.com; www.commerciallitigationlawinfoblog.com; www.internetlawinfoblog.com; and www.njbusinesslawblog.com