Executive order to clarify Section 230: a summary

Section 230 executive order

Late yesterday President Trump took steps to make good on his promise to regulate online platforms like Twitter and Facebook. He released a draft executive order to that end. You can read the actual draft executive order. Here is a summary of the key points. The draft order:

  • States that it is the policy of the U.S. to foster clear, nondiscriminatory ground rules promoting free and open debate on the Internet. It is the policy of the U.S. that the scope of Section 230 immunity should be clarified.
  • Argues that a platform becomes a “publisher or speaker” of content, and therefore not subject to Section 230 immunity, when it does not act in good faith to to restrict access to content (in accordance with Section 230(c)(2) that it considers to be “obscene, lewd, lascivious, filthy, excessively violent, harassing or otherwise objectionable.” The executive order argues that Section 230 “does not extend to deceptive or pretextual actions restricting online content or actions inconsistent with an online platform’s terms of service.”
  • Orders the Secretary of Commerce to petition the FCC, requesting that the FCC propose regulations to clarify the conditions around a platform’s “good faith” when restricting access or availability of content. In particuar, the requested rules would examine whether the action was, among other things, deceptive, pretextual, inconsistent with the provider’s terms of service, the product of unreasoned explanation, or without meaningful opportunity to be heard.
  • Directs each federal executive department and agency to review its advertising and marketing spending on online platforms. Each is to provide a report in 30 days on: amount spent, which platforms supported, any viewpoint-based restrictions of the platform, assessment whether the platform is appropriate, and statutory authority available to restrict advertising on platforms not deemed appropriate.
  • States that it is the policy of the U.S. that “large social media platforms, such as Twitter and Facebook, as the functional equivalent of a traditional public forum, should not infringe on protected speech”.
  • Re-establishes the White House “Tech Bias Reporting Tool” that allows Americans to report incidents of online censorship. These complaints are to be forwarded to the DoJ and the FTC.
  • Directs the FTC to “consider” taking action against entities covered by Section 230 who restrict speech in ways that do not align with those entities’ public representations about those practices.
  • Directs the FTC to develop a publicly-available report describing complaints of activity of Twitter and other “large internet platforms” that may violate the law in ways that implicate the policy that these are public fora and should not infringe on protected speech.
  • Establishes a working group with states’ attorneys general regarding enforcement of state statutes prohibiting online platforms from engaging in unfair and deceptive acts and practices. 
  • This working group is also to collect publicly available information for the creation and monitoring of user watch lists, based on their interactions with content and other users (likes, follows, time spent). This working group is also to monitor users based on their activity “off the platform”. (It is not clear whether that means “off the internet” or “on other online places”.)

Smartphone user gave consent by website registration to receive texts

consent by website registration

Plaintiff sued defendant alleging defendant sent unsolicited text messages that violated the Telephone Consumer Protection Act (TCPA). Defendant moved for summary judgment. The court granted the motion. It found that plaintiff expressly gave consent by website registration to receive the text messages when she signed up for defendant’s services. This was a significant win for defendant because the TCPA provides for stiff penalties. 

Consent by website registration

Plaintiff used her smartphone to sign up for defendant’s food delivery services. When she registered, she left checked a box opting in to receive text messages. She also provided her cell phone number.

Defense of express consent

Defendant raised the affirmative defense of express consent as an affirmative defense. Plaintiff claimed the signup process did not include a clear and conspicuous disclosure that she would receive text messages. The court rejected defendant’s arguments. It found that the website disclosure was clear and conspicuous.

Pre-checked box was okay

And the court rejected plaintiff’s argument that the pre-checked box opting in was no a valid electronic signature. The court recognized, among other things, that smartphones are a pervasive part of daily life, and a significant majority of American adults own smartphones. It also noted that it should consider the perspective of a reasonably prudent smartphone user. On these facts, the court found that the phone disclosure reasonably conveyed that registering an account with the phone communications box checked would indicate consent to phone communications regarding advertising.

Lundbom v. Schwans Home Service, Inc., 2020 WL 2736419 (D. Oregon, May 26, 2020)

See also: Browsewrap enforceable: hyperlinked terms on defendant’s website gave reasonable notice

About the author: Evan Brown is a technology and intellectual property attorney helping clients with a variety of online issues. Call him at (630) 362-7237 or send email to ebrown@internetcases.com. Follow on Twitter and Instagram

Statements of work: three key ideas

A statement of work – often called an “SOW” –  is an important part of a technology contract. Here are three things to keep in mind when you are drafting and negotiating one.

Accurately define the services

The first thing to keep in mind when negotiating an SOW is to accurately and comprehensively define the scope of services. This benefits both the customer and the vendor. The vendor will know the SOW sets out a finite task list. That will help avoid scope creep.  The customer can look at the statement of work and see whether the deliverables match the agreed-upon specifications.

Leave the legal language alone

The second thing to keep in mind when drafting an SOW is to focus on the technical, business and commercial issues, leaving the legal issues in the body of the agreement untouched. That way you don’t unwittingly affect the risk profile of the overall engagement.

statements of work

You will amend the statement  of work

The third thing to keep in mind is to recognize that you are likely going to amend the statement of work, or enter into subsequent statements of work. So you should use a good form  that will enable you to add on these subsequent documents. 

See also: Using new employer’s credentials to copy former employer’s technology did not violate Computer Fraud and Abuse Act

Independent contractor agreements: common mistakes to avoid

A lot of companies bring on independent contractors to develop content. They may be photographers, designers, writers, consultants, etc. who sign independent contractor agreements. Here are three common mistakes that you should not make if you are hiring an independent contractor.

Intellectual property ownership mistakes in independent contractor agreements

The first common mistake is to leave out language that ensures you as the hiring party own the intellectual property in the deliverables. Did you know that unless the contract specifically says otherwise, the independent contractor will retain ownership of the copyright in the deliverables? Many companies have been surprised to learn, after spending a lot of money on an independent contractor, that they do not own the rights in the content they thought they had paid for.

The agreement should have a work made for hire provision. And since the definition of work made for hire is specific, some things that the contractor may do will not qualify as work made for hire. So the agreement should also say that to the extent the deliverables are not work made for hire, the independent contractor assigns the intellectual property to the party that hired it.

independent contractor agreement

Confidential information mistakes

The second common mistake that you should avoid in engaging with an independent contractor is being vague or loose when it comes to confidentiality. The independent contractor could learn a lot about your business – its vendors, its customers, its plans, and how the company operates. The confidentiality provision should adequately restrict how the independent contractor discloses that information or uses it outside of the engagement with the company. If not, that information may lose its trade secret protection. Or the contractor could take the information it learns about your company and use it while working for one of your competitors.

Indemnification mistakes

A third common mistake that you should avoid in independent contractor agreements is being silent on defense and indemnification. If a third party sues you over something that the independent contractor has done, you would likely want to look to the independent contractor to pick up the costs of defense and pay the amount of any judgment that results. Say, for example, the independent contractor copies a photograph from somewhere else and then provides that to you as his or her original work. If the true owner of the copyright in that work sues you for using the photo, it is only fair that you can turn to the contractor for relief. The agreement should say that.

See also: Independent contractor’s email was key factor in finding he had apparent authority to bind principal

About the author: Evan Brown is a technology and intellectual property attorney in Chicago. Follow him on Twitter and Instagram. Subscribe to his YouTube channel. 

Working without a signed contract – a good idea for vendors?

As a technology vendor, you may be eager to get that new customer relationship started. Don’t let that tempt you to get underway without taking care of the details first. Technology vendors should avoid working without a signed contract. Here are three reasons why.

Working without a signed contract makes it harder to deal with overly-needy customers.

Working without a signed contract makes it hard to deal with overly-needy customers. Say you have entered into an arrangement where you are going to provide support and maintenance services. You get into the relationship on a handshake basis, and after a few months, the continues making requests, never satisfied, and always wanting services performed “on the cheap”.  You finally recognize  this business relationship is not bearing fruit and that you need to walk away. If there is no written contract in place making clear the conditions under which you as the vendor can terminate the relationship, when you try to disengage from this customer, you might run into trouble. 

A situation like this happened recently in a case that came from Kansas (Straightline HDD Inc. v. Smart E-Solutions, Inc., 2020 WL 2296941 (Ct. App. Kansas, May 8, 2020). In that situation, the parties litigated for several years over the question of whether there was an implied contract for the defendant software reseller to continue to provide support to its customer (with whom it did not have a signed contract). 

The trial court found that defendant had to provide some value for the software customer. Fortunately, the appellate court overturned that on appeal, finding that there really was no implied contract, so the reseller was able to separate from that needy customer. In that situation, the reseller ultimately avoided liability. But it is unfortunate that the parties spent all those years and all those resources litigating the issue. If there had been a written contract in place from the beginning of the relationship, there would have been more clarity and there wouldn’t have been those issues to litigate. The parties could have handled the situation much more quickly and efficiently. 

Having no signed contract means missing out on protective contract provisions. 

A technology vendor should not want to start work before it has a signed written contract because that written contract that was not signed should protect the vendor. For example, you want to make sure that the agreement has the appropriate disclaimers of warranty. A vendor does not want to promise that the technology solution is going to solve all the world’s problems. There should be  certain express warranties, and that is all.

Another kind of provision that you  want to make sure is in the agreement is a limitation of liability. Let’s say you as the vendor are only getting a small amount of revenue from this engagement with the customer.  If the technology solution fails for some reason – maybe even through no fault of yours – and the customer suffers millions of dollars worth of damage or business loss or some other form of consequential damage, you want to  make sure that you are not on the hook for that just. It does not make sense for a vendor to enter into an arrangement where it is only going to get a little bit of revenue while at the same time putting the company on the line with the exposure to potentially large damages.

Going without a signed contract makes it more difficult to get paid.

A third reason for having that written contract in place before you start doing the work is so that you will get paid.  The contract should be clear on how much customer will pay, what the payment is for, and when the payment is due. If it does not, do not be surprised if your customer remembers differently about cost, deadlines and specifications. 

Working without a signed contract is not good for technology vendors.

See also:

Software development breach of contract lawsuit moves forward

About the author: Evan Brown is a technology and intellectual property attorney in Chicago. Follow him on Twitter and Instagram, connect on LinkedIn and subscribe to his YouTube channel for videos on interesting topics about law and technology. 

Three ways trade secrets can be more powerful than copyright

Copyrights and patents and trademarks usually come to mind when thinking about intellectual property. But trade secrets are a critically important and very useful form of intellectual property and are often overlooked. Here are three ways that trade secrets can be more powerful than copyright.

Three ways trade secrets can be more powerful than copyright

1 – Trade secrets protect ideas and facts (while copyright does not).

Something qualifies as a trade secret if it (1) has economic value because it is secret, and (2) has been the subject of efforts to keep it secret. So a trade secret can be an intangible idea – like the knowledge of how to do something. Or it can be a set of facts, like a list of customers. Copyright wouldn’t protect either of these things – ideas or facts – because copyright covers creative expression. You can’t look to copyright to stop others from using ideas you have or lists of facts you compile. But trade secrets, on the other hand, might cover you.

2 – You don’t have to register trade secrets.

Let me try to clarify one thing really quickly – you don’t have to register copyrights either to own them. But you do have to register that copyright if you need to sue anyone for infringement. With trade secrets, there’s not even any such thing as registration. You have trade secrets from possessing valuable information that you have actually kept secret. That’s it.

3 – Trade secrets can last forever.

Copyright lasts a long time, but trade secrets can last even longer. When an employee of a company creates a copyrighted work, the rights last for 95 years. But there is no expiration date for trade secrets. For as long as a company keeps its valuable trade secret information secret, it’s protected by trade secrets law.

Other ways?

There are other ways trade secrets are more powerful than copyright. Can you think of any? Leave a comment here or take to Twitter (I’m @internetcases there). 

See also: 

Question of who owns source code proceeds to trial in trade secrets case

Instagram’s terms of service gave ability to embed photo

Embedding Instagram photos on website not infringement
Be sure to follow @internetcases on Instagram. 

Plaintiff – a professional photographer – sued website Mashable and Mashable’s owner after the website used HTML Instagram provides to embed one of plaintiff’s photos on Mashable. Defendants moved to dismiss, claiming they had rights to embed the photo under Instagram’s terms of service. The court agreed and dismissed the copyright infringement claim. Embedding Instagram photos on the website was not infringement. 

Mashable embedded anyway 

Before the dispute began, Mashable had first tried getting a license from plaintiff to use one of her photographs is a story about female photographers. It offered plaintiff $50 for the rights, but plaintiff refused. A few days later, Mashable used Instagram’s embed code to display the image on Mashable anyway.  

Was this a server test question? 

The embed code on Mashable caused the image to appear when one would visit the Mashable page by pulling the image data off of the Instagram server. Other cases have referred to this and similar technologies as “inline linking”. Almost 13 years ago, in the case of Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), the Ninth Circuit indicated strongly that inline linking did not cause copyright infringement problems because  the process did not involve making a copy of the image, but instead just called it from the original server. From this notion came the “server test” articulated in that case.  

A few months before the Perfect 10 v. Amazon decision, a district court in Texas (in the case of Live Nation Motor Sports, Inc. v. Davis, 2006 WL 3616983 (N.D.Tex., December 11, 2006)) had stopped a website owner from pulling in audio data from another server and appearing to stream it from his website. 

And just a couple of years ago, another court in the same district as this case involving Instagram declined to adopt the Ninth Circuit’s “server test,” instead finding that embedding an image of Tom Brady in a tweet on a website was an unauthorized infringement of that plaintiff photographer’s right under the Copyright Act to display the photo. See Goldman v. Breitbart News Network, LLC, 302 F.Supp.3d 585 (S.D.N.Y. 2018). 

Embedding Instagram photos on website was not infringement because of license

Though the underlying conduct in this case was very similar to that in Goldman v. Breitbart, the court’s decision here did not even cite that opinion. And it did not need to because the legal basis on which it decided this case was different.  

In this case, the court held that when plaintiff signed up for Instagram, she granted Instagram the right to allow others (via sublicensing) to embed photos that plaintiff uploaded and made publicly available. Even though plaintiff never directly authorized Mashable to use her photo, Mashable was granted rights via Instagram to embed the photo, Instagram having gotten the ability to grant those rights to Mashable from plaintiff when she agreed to Instagram’s terms of use.  

The message for Instagram users – your photos may end up on websites 

The simple message for users of Instagram (and there are a lot of them) is to be aware that by uploading photos to Instagram and making them publicly available, you are authorizing Instagram to let others display those photos on third party websites. Posting to Instagram and making photos publicly viewable is, quite possibly, posting them to be viewed by a much wider audience than the Instagram community.  Under the rule of this case, 
embedding Instagram photos on a website is not infringement. 

Sinclair v. Ziff Davis, LLC 2020 WL 1847841 (S.D.N.Y., April 13, 2020) 

Finding out who infringed copyright – identifying infringers

Need information about finding out who infringed your copyright? This video may provide some guidance. 

Copyright owners of video and photos may find their works have been copied and posted somewhere else online and therefore need to take action for copyright infringement. But the first challenge may be to identify who the unknown defendant is. This video discusses (1) filing a copyright infringement case in federal court, (2) showing good cause for early discovery to identify the unknown alleged infringer, and (3) sending subpoenas.  Finding out who infringed copyright can be a difficult task. 

The federal courts have exclusive jurisdiction for copyright infringement cases. That means a state court will not be able to hear a copyright infringement matter. A copyright infringement case filed in state court will get dismissed because state courts cannot hear cases that are exclusively the subject of federal jurisdiction.

When a party has filed suit, it usually knows who the defendant is. But sometimes it is necessary to file suits against “John Doe” defendants. In the online copyright infringement context, the copyright owner will need to take early discovery. This requires persuading the federal judge that good cause exists for taking early discovery. To show good cause, a party will need to show that an actual person has infringed, that it has taken as many steps possible to unmask the anonymous copyright infringer, and that its copyright infringement case is strong enough to survive a motion for summary judgment. 

Once these things are shown, the court will allow the plaintiff to send subpoenas to the host of the infringing content and to the internet service providers associated with the IP address that uploaded the copyright infringing content. Then, if the plaintiff is successful in unmasking the unknown defendant, the copyright infringement case can actually begin .

More information: Identifying unknown online copyright infringers: court gives guidance

finding out who infringed copyright

Identifying unknown online copyright infringers: guidance

unmasking online copyright infringers

A recent case addressed the problem of identifying unknown online copyright infringers. Plaintiff sued some unknown “John Doe” defendants who infringed plaintiff’s copyrights. To keep the lawsuit moving forward, plaintiff needed to serve the complaint on the defendants. But this presented a challenge, since plaintiff did not know to whom it should deliver the documents. So plaintiff filed a motion with the court, asking for permission to send interrogatories and to take depositions that would help unmask the anonymous infringers. Plaintiffs sought to get information from parties including PayPal, Cloudflare and various domain name registrars. The court’s response provides guidance to parties seeking to learn the identities of unknown parties.

To identify unknown online copyright infringers: early discovery

The rules of procedure in federal court do not permit discovery requests until the parties have had an initial conference with each other. But they cannot have that conference if the defendant is unknown. So the plaintiff needs to send discovery requests earlier than what the rules generally allow. It needs the court’s permission to do so.

A court will not permit early discovery in every instance. But courts have made exceptions, permitting limited discovery after a plaintiff files the complaint to permit the plaintiff to learn the identifying facts necessary to permit service on the defendant. Courts allow these requests upon a showing of good cause.

What constitutes good cause for early discovery?

This court applied the three part test for good cause set out more than 20 years ago in the case of Columbia Ins. Co. v. Seescandy.com, 185 F.R.D. 573 (N.D. Cal. 1999). The party seeking early discovery should be able to:

  • Identify the missing party with sufficient specificity such that the court can determine that the defendant is a real person or entity who could be sued in federal court;
  • Identify all previous steps taken to locate the elusive defendant; and
  • Establish to the court’s satisfaction that the suit against defendant could withstand a motion to dismiss.

Early discovery was appropriate in this case

Under the first prong of the test, the court found that plaintiff identified the missing parties with as much clarity as possible. Plaintiff stated that those missing parties were persons or entities, and that those parties had been observed and documented as infringing on plaintiff’s copyrights. Thus, as real persons or entities, those Doe parties could be sued in federal court.

As for the second prong, the only information plaintiff had regarding the defendants was the existence of accounts relating to the operations of the defendants’ websites. Therefore, there were no other measures plaintiff could take to identify the defendants other than to obtain their identifying information from the parties from whom it was sought.

Finally, on the third prong, for identifying unknown copyright infingers, the court found that plaintiff had pled the required elements of direct and contributory copyright infringement. Plaintiff claimed (1) it owned and had registered the copyrighted work at issue in the case; (2) defendants knew of the infringing activity and were conscious of their infringement; and (3) defendants actively participated in this infringement by inducing, causing and contributing to the infringement of plaintiff’s copyrighted work. Since plaintiff had alleged each of these elements properly, this cause of action could withstand a motion to dismiss.

MG Premium Ltd. v. Does, 2020 WL 1675741 (W.D. Wash. April 6, 2020)

Related: 

Domain disputes under federal law can be inefficient

A recent case from a federal court in Kentucky shows why the Anticybersquatting Consumer Protection Act (15 U.S.C. 1125(d) – the “ACPA”) can be – compared to the Uniform Domain Name Dispute Resolution Policy (“UDRP”) – a relatively inefficient way of resolving domain name disputes under federal law.  

domain disputes under federal law

Defendant was an infringer

Here is a quick rundown of the facts. Defendant owned a business directly competitive to plaintiff ServPro. Plaintiff had used its mark and trade dress since the 1960’s. Defendant set up a website using plaintiff’s color scheme, bought Google AdWords triggering ads showing plaintiff’s mark, and registered a domain name identical to plaintiff’s mark – servpro.click. These facts supported the court’s entry of summary judgment in plaintiff’s favor on the question of trademark infringement. But the ACPA claim got the  court got hung up because of some hard-to-believe facts the defendant put forward.  

What the ACPA requires

The ACPA requires a plaintiff to prove bad faith intent to profit from the disputed domain name. And it gives courts a list of nine things that a court can consider in determining this bad faith. In other words, this list is not the be-all and end-all guide for determining ACPA bad faith. Here are the nine things a court should consider in resolving domain name disputes under federal law: 

  • (I) the trademark or other intellectual property rights of the person, if any, in the domain name; 
  • (II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person; 
  • (III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services; 
  • (IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name; 
  • (V) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; 
  • (VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct; 
  • (VII) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct; 
  • (VIII) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and 
  • (IX) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of [the Lanham Act]. 

The court’s decision on cybersquatting

The court found that factors I through IV and IX weighed in plaintiff’s favor. But the court found there to be a genuine issue as to factor V and denied summary judgment. It found that defendant had an intent to divert plaintiff’s customers. 

Defendant asserted he did not purchase the servpro.click domain name intending to divert customers from plaintiff for defendant’s gain. Instead, he alleged that he registered the domain name to collect information and perform analytical research for running Google AdWords. He also alleged that the website the domain name pointed to did not advertise that it was ServPro. And the contact information on the website pointed to his personal cellphone. He alleged that when answering calls made to that number, he identified himself as affiliated with his company and never identified himself as affiliated with plaintiff. 

The court probably had difficulty denying summary judgment 
in a situation where the facts alleged are so hard to believe. A court’s role at the summary judgment stage, however, is not to weigh the evidence, but merely to determine whether there is a factual issue for trial. The time for really ascertaining the truth of defendant’s assertions will come later.  

Was the ACPA too cumbersome for this case?

In any event, these flimsy arguments remaining alive far into expensive litigation underscores how domain disputes under federal law are more cumbersome . The marshaling of evidence, briefing and argument in federal court can easily rack up six-figures in attorney’s fees and costs. Even after that effort, the summary judgment standard provides little assurance a party arguing against thin facts will get relief. Had the parties resolved this dispute under the UDRP and not the ACPA, plaintiff’s arguments would have had more success.  

ServPro Intellectual Property, Inc. v. Blanton, 2020 WL 1666121 (W.D. Ky. April 3, 2020) 

Related:

« Older posts

© 2020 internetcases

Theme by Anders NorenUp ↑