Supreme Court clarifies basis for why copyright suits over unregistered works should be dismissed

March 3, 2010 | by Evan Brown | 2 Comments 
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Supreme Court overturns Second Circuit, holding that a copyright plaintiff’s failure to register the work before filing suit does not deprive the court of subject matter jurisdiction.

Reed Elsevier v. Muchnick, Slip. Op., 559 U.S. ___ (March 2, 2010) [View opinion here]

“Subject matter jurisdiction” refers to a court’s power to hear the matter before it. The Constitution sets out the general contours for the federal courts’ jurisdiction, and Congress enacts statutes that give more detail to this set of powers. Particular statutes can define whether the federal courts have subject matter jurisdiction over certain types of cases. For example, Congress has declared that the federal courts have exclusive jurisdiction over copyright cases (See 28 U.S.C. 1338).

If a court does not have subject matter jurisdiction over the type of matter before it, it has no power to adjudicate the case. So the question of whether subject matter jurisdiction exists is critical.

The Supreme Court just decided a case that deals with the scope of subject matter jurisdiction in copyright cases, and clarifies a notion that has been the subject of some uncertainty. The question the court decided was whether a federal court has subject matter jurisdiction over a copyright case when a work at issue is not the subject of a copyright registration.

Section 411(a) of the Copyright Act (at 17 U.S.C. 411(a)) provides, among other things, that “no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title.”

Some courts have held, and many litigants have argued, that this provision of Section 411 is a “jurisdictional prerequisite.” Said another way, some have argued that if the copyright plaintiff files suit without having secured a registration, the court is without subject matter jurisdiction over the case. In the case of Reed Elsevier, Inc. v. Muchnick, however, the Supreme Court held that Section 411 does not deprive the court of subject matter jurisdiction, but instead merely provides a “claim-processing rule,” akin to an element of the case.

The lower court proceedings

A group of freelance writers filed a class action copyright infringement case in federal court in New York. They settled the case and the judge approved the settlement. Some of the plaintiffs objected to the settlement on procedural grounds, and when the court entered final judgment, those objecting plaintiffs appealed to the Second Circuit. On its own motion, the Second Circuit raised the question of whether it had subject matter jurisdiction over the case, as some of the plaintiffs in the class had unregistered works.

The case took on a peculiar procedural aspect — neither side in the dispute argued that the federal court was without subject matter jurisdiction, but the Second Circuit decided anyway that it did not. (After all, subject matter jurisdiction pertains to the power of the court, not the rights of the parties, so parties cannot waive the absence of subject matter jurisdiction.) Concluding that it didn’t have jurisdiction, the Second Circuit reversed the approval of the settlement.

The defendants in the underlying case sought review with the Supreme Court, and the high court took on the case. It reversed the Second Circuit, holding that the court did indeed have jurisdiction, even though some of the plaintiffs’ copyrights at issue were unregistered.

The court’s holding

It is worth noting that this case does not address the bothersome question of whether Section 411 requires that a copyright plaintiff actually have a registration certificate in hand before filing the complaint, or whether he or she simply needs to have the application on file. The case also does not stand for the proposition that one can pursue copyright infringement litigation without having registered his or her copyright. A plaintiff without a registration will still lose, just for different reasons.

Justice Thomas wrote the majority opinion. He began the analysis by noting the court’s recent efforts to curtail “drive-by jurisdictional rulings,” which can “miss the critical differences between true jurisdictional conditions and nonjurisdictional limitations on causes of action.” It was with this eye toward careful analysis that the court looked to the present question.

The court reviewed the general approach it set out in the case of Arbaugh v. Y&H Corp., 546 U.S. 500 (2006) for distinguishing jurisdictional conditions from claim-processing requirements or elements of a claim, stating in part that “when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.” Said another way, if a statute somehow limits the way a case can be brought before federal court but doesn’t come out and say that it’s a limitation on subject matter jurisdiction, it should not be read as limiting jurisdiction. In this way, the court’s approach is to broaden federal jurisdiction.

In this case, the court found that Section 411(a) did not “clearly state” that the registration requirement is jurisdictional. Moreover, the section of federal law that provides for federal court jurisdiction in general (28 U.S.C. 1331) and federal jurisdiction over copyright claims (28 U.S.C. 1338) says nothing about a requirement that there be a registration before the court has subject matter jurisdiction. Furthermore, Section 411 provides on its face certain exceptions for the registration requirement (e.g., no registration is required for non-United States works). The court observed that “it would be at least unusual to ascribe jurisdictional signifcance to a condition subject to these sorts of exceptions.”

What does it mean?

The case actually addresses a rather nuanced point of copyright law. And the effect of the holding will not change the end results of cases brought in the future with the same facts — after all, a non-registering plaintiff will still lose either way, now just for a different reason. Motions to dismiss copyright complaints alleging infringement of unregistered works will clearly fall under Fed. R. Civ. P. 12(b)(6) (failure to state a claim) and not 12(b)(1) (lack of jurisdiction).

But the question of a federal court’s jurisdiction is of significant import, regardless of how nuanced the question is, or the lack of difference in practical effect. The question of whether a court should dismiss a case because it doesn’t have the power to hear it, as compared to dismissing it because the plaintiff has not jumped through the appropriate hoops, is an important one.

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Forwarder of defamatory email protected under Section 230

February 28, 2010 | by Evan Brown | 1 Comment 

Hung Tan Phan v. Lang Van Pham, — Cal.Rptr.3d —, 2010 WL 658244 (Cal.App. 4 Dist. Feb. 25, 2010)

Defendant, a veteran of the Vietnamese military, forwarded an email to some other Vietmamese veterans which apparently defamed another veteran. He didn’t just forward the email, though. He added some commentary at the beginning, which said (translated from the original Vietnamese):

Everything will come out to the daylight, I invite you and our classmates to read the following comments of Senior Duc (Duc Xuan Nguyen) President of the Federation of Associations of the Republic of Vietnam Navy and Merchant Marine.

The person who was the subject of the defamatory email sued the forwarder. The trial court dismissed the case, holding that the defendant was immune from liability under the Communications Decency Act at 47 U.S.C. 230.

That section gives immunity from suit to users and providers of interactive computer services who are distributing information provided by a third party. More than three years ago, in Barrett v. Rosenthal, the California Supreme Court held that Section 230 immunity applies to one who further distributes the contents of a defamatory email message.

The plaintiff sought review with the California Court of Appeal. The court affirmed.

The court looked to the Roommates.com case, to which it attributed a test that requires a defendant’s own acts to materially contribute to the illegality of the internet message for Section 230 immunity to be lost.

In this case, the court held that the introductory remarks did not meet the material contribution test articulated in Roommates.com. The court found that “[a]ll [the defendant] said was: The truth will come out in the end. What will be will be. Whatever.”

Email ribbon photo courtesy Flickr user Mzelle Biscotte under this Creative Commons License

File extensions cannot be trademarks

January 28, 2010 | by Evan Brown | 5 Comments 

Autodesk, Inc. v. Dassault Systemes Solidworks Corp., 2009 WL 5218009 (N.D. Cal. December 31, 2009)

One of the issues in the case of Autodesk, Inc. v. Dassault Systemes Solidworks was whether Autodesk could claim trademark rights and the letters “DWG”. The .dwg (“drawing”) file extension is the native file format for Autodesk’s flagship product AutoCAD.

File types

Plaintiff Autodesk moved for summary judgment on the trademark issue. The defendant pointed out that the trademark laws do not permit one to claim exclusive rights in trademarks that are merely functional.

During the hearing on the motion, the court asked Autodesk’s counsel to disavow any claim to trademark protection for the letters “DWG” when used for the file extension. Counsel did disavow such claim but held onto Autodesk’s argument that the letters could serve as a word mark to be used on packaging and advertising and marketing materials.

The Court agreed and sided with Autodesk and included in its order language that expressly stated “anyone in the world is free to use .dwg as a file extension as far as Autodesk is concerned.”

Autodesk filed a motion and asked the court to reconsider its holding, arguing that what Autodesk really meant when it disavowed the claim of exclusive rights was that anyone else could use the extension so long as the use was being made with Autodesk’s proprietary technology, or was interoperable with that technology.

The court rejected this argument holding:

File extensions are functional, and functional uses cannot be trademarked. To rule otherwise would invite a clog on commerce, given the millions of software applications. The limited universe of extension permutations would soon be encumbered with claimants and squatters purporting to own exclusive rights to file extensions.

The court went on to say there would be no consumer confusion because,

[T]he primary purpose of a file extension is to tell the computer the type of the file it is handling. A computer is not a consumer. Its “reading” of the file extension is not in connection with a commercial transaction. It doesn’t care who made the file format it is trying to read.

This isn’t the first time the question of whether machine perception of information has been held to not give rise to trademark protection. An analogous situation is the 1-800 Contacts v. WhenU decision in which the Second Circuit held that WhenU did not “use” another company’s trademarks within the meaning of the Lanham Act when it included trademarked terms in an unpublished directory that triggered delivery of contextually relevant advertising.

Wait just a second . . . isn’t online gambling illegal?

January 26, 2010 | by Evan Brown | 1 Comment 

Wong v. Partygaming Ltd., — F.3d —, 2009 WL 4893955 (6th Cir. December 21, 2009)

The Sixth Circuit’s recent opinion in the case of Wong v. Partygaming is interesting if you’re a civil procedure wonk and care about things like which law applies to determine the enforceability of forum selection clauses in website terms and conditions and what factors a court should consider when dismissing a case on the basis of forum non conveniens.

bling

The most intriguing part of the case, however, comes from Judge Merritt’s concurrence, in which he addresses the significance of the fact that the terms of service for an online gambling website are probably illegal.

The majority opinion painstakingly analyzed whether the district court abused its discretion in dismissing, of its own will (or “sua sponte” as stodgy lawyers like to say), the plaintiffs’ suit against an online gambling website. The plaintiffs had alleged that the site fraudulently misrepresented that there was no collusion among other online gamblers, and that the site did not target people with gambling problems. The website terms of service contained a forum selection clause naming Gibraltar as the jurisdiction in which disputes were to be heard.

The appellate court affirmed the lower court’s decision that the case should be dismissed and that Gibraltar (which follows English law) would be a suitable and not-too-inconvenient forum. But the majority opinion said nothing about the legality of online gaming.

That’s where Judge Merritt picked up in the concurrence. He agreed that the matter should have been dismissed in favor of it being heard in Gibraltar — that’s why he concurred and did not dissent. His reasoning differed from that of the majority.


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Judge Merritt observed that the plaintiffs’ logic was inconsistent. They had argued that Ohio law should apply to the terms of service. But under Ohio law (and federal statutes like RICO), the subject matter of the contract would probably have been illegal and therefore void. Not to mention the fact that the conduct could send the parties to jail.

The judge wrote that something analogous to the principle of lenity — and not necessarily a rigorous analysis of the forum selection clause and the doctrine of forum non conveniens — should underlie the dismissal of the lawsuit. Lenity requires that when the question of criminal liability is ambiguous, interpretation should be made in favor of the defendant (see McNally v. United States). Since online gambling presumably was not illegal under the law of Gibraltar, the more lenient stance would be to see the matter litigated there.

Bling photo courtesy Flickr user PhotoDu.de under this Creative Commons license.

Lawsuit against state officials for privacy violation moves forward

January 21, 2010 | by Evan Brown | 1 Comment 

Welch v. Theodorides-Bustle, — F.Supp.2d —, 2010 WL 22365 (N.D. Fla., January 5, 2010)

Plaintiff sued the Florida Department of Highway Safety and Motor Vehicles and a number of state officials for violation of the federal Driver’s Privacy Protection Act, 18 USC §2721-25. Plaintiff claimed that the defendants turned over a large amount of protected personal information to a private party, and that that party then further disclosed the information to another entity that published the information on the web.

Florida driver

As a result, the personal information of a number of Florida drivers became available for viewing online by anyone.

The defendants moved to dismiss the suit for failure to state a claim. The court denied the motion.

There is an exception to the Driver’s Privacy Protection Act’s prohibition on disclosure of personal information when the disclosure is made by a government agency “in carrying out [the agency's] functions.” The defendants did not deny that their conduct would violate the Act, but argued that the exception applied. The defendants essentially argued that the mere fact that the disclosure was made by a governmental entity made the disclosure to be automatically carried out in connection with that agency’s function.

The court rejected this ipse dixit assertion, holding that disclosure by a government agency being treated as automatically protected would accordingly make any violation of the Act by the government impossible.

Similarly, the court rejected the defendants’ argument that language in the contract with the entity to which the information had been provided rendered the disclosure proper. The receiving entity promised to use the information only for a proper purpose. But the self-serving recitals in that agreement, without specifying in detail what a proper purpose would be, would not bind third parties.

Alligator car photo courtesy Flickr user jeffdhartman under this Creative Commons license.

Court orders anonymous GQ blogger and accused hacker to be identified

January 19, 2010 | by Evan Brown | 3 Comments 

Advance Magazine Publishers v. Does 1-5, No. 09-10257 (S.D.N.Y. Dec. 22, 2009)

Someone accessing the Internet using an AT&T IP address hacked into Conde Nast’s computer system and acquired and published copies of editorial content and the images that were to be in the December 2009 issue of GQ. Those images were later published anonymously on a blog hosted by Google’s Blogger service.

masked cutie

Conde Nast sued in federal court alleging copyright infringement (for the posting of the content) and violation of the Computer Fraud and Abuse Act (for the unauthorized accessing of the Conde Nast servers). Since the identity of the person or persons committing these acts was not known, Conde Nast sued “John Does 1 through 5″. It then filed a motion with the court for permission to serve subpoenas on AT&T and Google to get information with which to give the defendants a name.

The court granted the motion and authorized the subpoenas.

Rule 26(d) requires that a party demonstrate good cause before expedited discovery will be permitted. In this case, Conde Nast gave four reasons supporting good cause:

  • It had sufficiently pled causes of action under the Copyright Act and the Computer Fraud and Abuse Act
  • AT&T’s server activity logs and Google’s registration data were at risk of being overwritten or purged
  • The scope of the information requested was appropriate — the only items being requested were those sufficient to name the defendants
  • Without the identifying information, the case would be at a standstill and Conde Nast might be left without a remedy

For these reasons the court ordered the anonymous participants to be unmasked.

Masked woman photo courtesy Flickr user Alaskan Dude under this Creative Commons license.

BitTorrent site liable for Grokster style inducement of copyright infringement

January 14, 2010 | by Evan Brown | 1 Comment 

Columbia Pictures v. Fung, No. 06-5578 (C.D. Cal. December 21, 2009).

This case came out three weeks ago, but it’s pretty significant and hasn’t gotten the coverage and analysis it deserves. Of course Professor Goldman covered it in a timely manner. But his blogging agility surpasses that of us mere mortals.

Fung and his company Isohunt Web Technolgies ran a number of popular BitTorrent sites where users could find and share torrent files that permitted the downloading of video files. [Here's how BitTorrent works.] Several Hollywood studios sued Fung and his company for copyright infringement over the operation of the sites and the activites of the sites’ users.

Ostriches don't actually put their head in the sand

The plaintiffs moved for summary judgment on the copyright claims. The court granted the motion.

The court based its ruling on a theory of “secondary liability” — that is, Fung and his company were liable for the copyright infringement (i.e., the distribution of copyrighted movies and TV shows) committed by users of the sites. More specifically, the court held that the defendants induced copyright infringement, citing to the 2005 U.S. Supreme Court decision in MGM v. Grokster.

The defendants’ inducement of copyright infringement

Under Grokster, “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

In this case, the court found numerous ways that the defendants had induced copyright infringement. Among the defendants’ activities that gave rise to secondary liability were:

  • Providing categories on the sites to assist users in locating and downloading currently-popular movies, and making express statements to third parties to encourage copyright infringement
  • Providing technical support to users who desired to download and view copyrighted materials.
  • Implementing technical features (such as crawling The Pirate Bay) to locate copyrighted material
  • Relying on an advertising based business model that benefitted from high volume traffic drawn by the availability of infringing material

Rejection of the defendants’ DMCA affirmative defense

The court rejected the defendants’ argument that the safe harbors of the Digital Millennium Copyright Act (DMCA) should shield the torrent sites form liability.

A service provider can sail its ship into a DMCA safe harbor if, among other things, it does not have actual knowledge of, or is not willfully blind to, infringing activities being undertaken through its system. Said another way, the limitation of liability afforded by the DMCA is lost if the provider becomes aware of a “red flag” from which infringing activity is apparent.

The court found that the defendants did not qualify for safe harbor protection because of the “overwhelming” evidence that the defendants knew of the infringing activity. The court borrowed from the Aimster case to state that the defendants would not have known of the infringement only if they engaged in an “ostrich-like refusal” to observe what was happening. That willful blindess would not serve as an excuse.

Ostrich photo courtesy of Flickr user Pedronet under this Creative Commons license.

How Section 230 is like arson laws when it comes to enjoining website operators

January 12, 2010 | by Evan Brown (@internetcases) | 9 Comments 

The case of Blockowicz v. Williams, — F.Supp.2d —, 2009 WL 4929111 (N.D. Ill. December 21, 2009), which I posted on last week is worthy of discussion in that it raises the question of whether website operators like Ripoff Report could get off too easily when they knowingly host harmful third party content. Immunity under 47 U.S.C. 230 is often criticized for going too far in shielding operators. Under Section 230, sites cannot be treated as the publisher or speaker of information provided by third party information content providers. This means that even when the site operator is put on notice of the content, it cannot face, for example, defamation liability for the continued availability of that content.

Don’t get me wrong — the Blockowicz case had nothing to do with Section 230. Although Ben Sheffner is routinely sharp in his legal analysis, I disagree with his assessment that Section 230 was the reason for the court’s decision. In the comments to Ben’s post that I just linked to, Ben gets into conversation with Ripoff Report’s general counsel, whom I believe correctly notes that the decision was not based on Section 230. Ben argues that had Section 230 not provided immunity, the plaintiffs would have been able to go after Ripoff Report directly, and therefore Section 230 is to blame. That’s kind of like saying if arson were legal, plaintiffs could just go burn down Ripoff Report’s datacenter. But you don’t hear anyone blaming arson laws for this decision.

Even though Section 230 didn’t form the basis of the court’s decision in favor of Ripoff Report, the notion of a website operator “acting in concert” with its users is intriguing. Clearly the policy of Section 230 is to place some distance, legally speaking, between site operator and producer of user-generated content. And the whole idea behind the requirement in copyright law that infringement must arise from a volitional act and not an automatic action of the system is a first cousin to this issue. See, e.g., Religious Tech. Center v. Netcom, 907 F.Supp. 1361, 1370 (N.D. Cal. 1995) (“[T]here should still be some element of volition or causation which is lacking where a defendant’s system is merely used to create a copy by a third party”).

For the web to continue to develop, we are going to need this continued protection of the intermediary. We’re going to see functions of the semantic web appear with more frequency in our everyday online lives. From a practical perspective, there will be even more distance — a continuing divergence between a provider’s will and the nature of the content. So as we get into the technologies that will make the web smarter, and our experience of it more robust and helpful, we’ll need notions of intermediary immunity more and not less.

That notion of an increasing need for intermediary immunity underscores how important it is that intermediaries act responsibly. No doubt people misunderstand the holdings of cases like this one. By refusing to voluntarily take down obviously defamatory material, and challenging a court order to do so, Ripoff Report puts a bad taste in everyone’s mouth. Sure there’s the First Amendment and all that, but where’s a sense of reasonable decency? Sure there’s the idea that free flowing information supports democracy and all that, but has anyone stopped to think what could happen when the politicians get involved again?

Do not taunt Happy Fun Ball

We are fortunate that Congress was as equinamimous and future-minded as it was in 1996 when it enacted the immunity provisions of Section 230. But results like the one in the Blockowicz case are going to be misunderstood. There’s a hue and cry already about this decision, in that it appears to leave no recourse. Section 230 wasn’t involved, but it still got the blame. Even the judge was “sympathetic to the [plaintiffs'] plight.”

So maybe we need, real quickly, another decision like the Roommates.com case, that reminds us that website operators don’t always get a free ride.

Injunction against defamatory content could not reach website owner

January 7, 2010 | by Evan Brown | 1 Comment 

Blockowicz v. Williams, — F.Supp.2d —, 2009 WL 4929111 (N.D. Ill. December 21, 2009)

(This is a case from last month that has already gotten some attention in the legal blogosphere, and is worth reporting on here in spite of the already-existing commentary.)

Plaintiffs sued two individual defendants for defamation over content those defendants posted online. The court entered an order of default after the defendants didn’t answer the complaint. The court also issued an injunction against the defendants, requiring them to take down the defamatory material.

grasping

When plaintiffs were unable to reach the defendants directly, they asked the websites on which the content was posted — MySpace, Facebook, Complaints Board and Ripoff Report — to remove the material.

All of the sites except Ripoff Report took down the defamatory content. Plaintiffs filed a motion with the court to get Ripoff Report to remove the material. Ripoff Report opposed the motion, arguing that Rule 65 (the federal rule pertaining to injunctions) did not give the court authority to bind Ripoff Report as a non-party. The court sided with Ripoff Report and denied the motion.

Federal Rule of Civil Procedure 65 states that injunctions bind the parties against whom they are issued as well as “other persons who are in active concert or participation with” those parties. In this case, the court looked to the Seventh Circuit opinion of S.E.C. v. Homa, 514 F.3d 674 (7th Cir. 2008) for guidance on the contours of Rule 65’s scope. Under Homa, a non-party can be bound by an injunction if it is “acting in concert” or is “legally identified” (like as an agent or employee) with the enjoined party.

Plaintiffs argued that Ripoff Report was acting in concert with the defamers. Plaintiffs looked to Ripoff Report’s terms of service, by which posters to the site give an exclusive copyright license to and agree to indemnify Ripoff Report. Those terms also state that Ripoff Report will not remove any content for any reason. Plaintiffs read this combination of terms to stand for some sort of arrangement whereby Ripoff Report agreed to be a safe haven for defamatory material.

The court rejected this argument, finding there was no evidence in the record that Ripoff Report intended to protect defamers. Moreover, there was no evidence that Ripoff Report had communicated with the defendants in any way since the entry of a permanent injunction, or otherwise worked to violate the earlier court order requiring defendants to remove the materials.

Other commentary on this case:

Grasping photo courtesy Flickr user Filmnut under this Creative Commons license.

Browsewrap website terms and conditions enforceable

January 5, 2010 | by Evan Brown | 2 Comments 

Major v. McAllister, — S.W.3d —, 2009 WL 4959941 (Mo. App. December 23, 2009)

The Missouri Court of Appeals has issued an opinion that reflects a realistic grasp of how people use the web, and also serves as a definitive nod to self-responsibility. The court refused to accept a website end user’s argument that she should not be bound by the website terms and conditions that were presented to her in the familiar “browsewrap” format.

Click

Ms. Major used a website called ServiceMagic to find some contractors to remodel her home in Springfield, Missouri. Each page she saw during the process had a link to the website terms and conditions. At the point where she submitted her contact information to facilitate the signup process, she was presented with a link to the website’s terms and conditions. We’ve all seen this countless times — the link read, “By submitting you agree to the Terms of Use.”

Major admitted she never clicked on the link and therefore never read the terms and conditions. But had she clicked through she would have read a forum selection clause providing that all suits against ServiceMagic would have to be brought in Denver, Colorado.

When Major sued ServiceMagic in Missouri state court, ServiceMagic moved to dismiss, citing the forum selection clause. The trial court granted the motion and Major sought review. On appeal, the court affirmed the dismissal.

Major relied heavily on Specht v. Netscape, 306 F.3d 17 (2d Cir. 2002). The court in Specht held that end users of Netscape’s website who downloaded a certain application were not bound by the terms and conditions accompanying that download because the terms were not visible on the screen without scrolling down to see them.

But in this case the court found the terms and conditions (including the forum selection clause) to be enforceable. In contrast to Specht, the ServiceMagic site did give immediately visible notice of the existence of the terms of the agreement. Even though one would have to click through to read the terms, the presence of the link was sufficient to place the website user on reasonable notice of the terms, and subsequent use by the end user manifested assent to those terms.

Click image courtesy Flickr user smemon87 under this Creative Commons license.

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