Dastar case applied to dismiss suit against web developer

The U.S. District Court for the District of Maryland has dismissed a copyright infringement and Lanham Act suit against a web developer for using in her online portfolio work done for a previous employer. The court held that it was without subject matter jurisdiction to hear the case where the plaintiff had not obtained copyright registrations over the works in issue, and that Section 43(a) of the Lanham Act could not apply to cover an alleged misappropriation of the “idea, concept or communication” embodied in the works at issue.

On January 5, 2005, Robin Euler left her job as a senior graphic and web designer for Mays & Associates (“Mays”), a “Maryland based, full service web and print design, marketing and communications company.” She then set up shop on her own using the name Red Robin Design [www.redrobindesign.com]. On her new company’s website, Euler placed a portfolio of her work, which included websites and print advertisements she had designed while working for Mays.

On February 11, 2005, Mays filed applications with the U.S. Copyright Office, seeking to register its copyrights in the websites and brochures Euler was using in her portfolio. Three days later, Mays filed suit in federal court in Maryland, alleging copyright infringement, unfair competition under Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), and various state law claims. Euler moved to dismiss on the basis of lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. The court granted Euler’s motion and dismissed the case.

Euler’s motion was based on two principal arguments: (1) that the court was without subject matter jurisdiction over the copyright claim, as Mays had not yet received registrations at the time of suit, and (2) that Mays’s cause of action under Section 43(a) of the Lanham Act was preempted by copyright law as called for in the U.S. Supreme Court case of Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 123 S.Ct. 2041 (2003).

In ruling in favor of Euler’s motion on the subject matter jurisdiction issue, the court held that Section 411 of the Copyright Act (17 U.S.C. § 411) requires a plaintiff to have actually received copyright registrations for the works at issue before filing suit. The court looked to the “ordinary, contemporary, and common meaning” of the words in Section 411(a) to determine that Congress intended to require “something more than application for a copyright prior to filing suit.” Because Mays had only applied for copyright protection and had not yet received registrations, the court was without subject matter jurisdiction.

On the Section 43(a) issue, the court held that Euler’s use on the Red Robin site of work she had done while employed by Mays could not constitute a false designation of origin. The court noted that under Dastar, Section 43(a) does not cover “any idea, concept, or communication” embodied in goods (and presumably services) offered for sale. Any misappropriation or other wrongdoing in this context would be covered by copyright law.

Mays & Associates Inc. v. Euler, — F.Supp.2d —, 2005 WL 1172326 (D.Md. May 18, 2005).

Forum selection clause upheld in content scraping case

In the case of Cairo, Inc. v. CrossMedia Services, Inc., decided on April 1, 2005, the U.S. District Court for the Northern District of California has held that although a company using scrapers to gather content from a competitor’s website did not expressly assent to the website’s terms of use, the scrapers’ “repeated and automated” access to the site created imputed assent to the terms of service and the forum selection clause appearing therein.

Both parties to this case operate database-driven websites that users can access to get information about local retail sales. Soon after Cairo launched its site in late 2004, CrossMedia noticed that Cairo was “scraping” content and images from CrossMedia’s sites and implementing that material on Cairo’s sites. Cairo also created “deep links” in its site leading to pages within CrossMedia’s sites. According to CrossMedia, Cairo automatically accessed CrossMedia’s servers thousands of times each month to gather information.

CrossMedia sent a cease and desist letter to Cairo in November 2004. Soon thereafter, without waiting to be sued for infringement, Cairo filed the present case in federal court in California, asking for a declaratory judgment. Cairo sought a determination that, among other things, Cairo’s website did not infringe any of CrossMedia’s copyrights or trademarks.

Cairo is a California company and CrossMedia is located in Chicago. CrossMedia moved to dismiss the action, citing a forum selection clause appearing in the terms of service of its various websites. This forum selection clause stated that “[j]urisdiction for any claims arising under this Agreement shall lie exclusively with the state or federal courts in Chicago, Illinois where CrossMedia has its principal place of business.”

The court sided with CrossMedia by determining that the forum selection clause applied and dismissed the action.

Cairo had argued the action should not be dismissed because it had no agreement with CrossMedia. Cairo contended that it never assented to the websites’ terms of use, thus it was not bound by the forum selection clause.

The court found these arguments unpersuasive. It looked to the decision in Register.com v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) to determine that “when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes acceptance of the terms, which accordingly become binding on the offeree.” Cairo’s visits to CrossMedia’s sites with knowledge of the terms of use constituted acceptance of the terms.

Similarly, the court rejected Cairo’s argument that the Specht v. Netscape Comm. Corp. case (306 F.3d 17 (2d Cir. 2002)) should apply. In that case, the Second Circuit ruled that a click-wrap agreement did not bind the parties where users had to scroll down their screens without reason to do so in order to see the terms of the agreement. In the present case, the court found that Cairo had imputed knowledge of the terms of use through its “repeated and automated use” of CrossMedia’s sites. “[E]ven accepting Cairo’s allegation that it did not explicitly agree to [CrossMedia]’s Terms of Use, the Court finds that Cairo’s use of [the] web site under circumstances in which Cairo had actual or imputed knowledge of [the] terms effectively binds Cairo to [the] Terms of Use and the forum selection clause therein.”

Cairo, Inc. v. CrossMedia Services, Inc., 2005 WL 756610 (N.D. Cal., April 1, 2005).

See also Dix v. ICT Group, — P.3d —, 2005 WL 372483 (Ct. App. Wash., Feb. 17, 2005).

Web developer gave implied copyright license to clients; court awards summary judgment to defendants in infringement action

In the case of Attig v. DRG, Inc., the U.S. District Court for the Eastern District of Pennsylvania has held that former clients of a web developer had an implied, nonexclusive copyright license to copy and move to different servers two websites that plaintiff web developer created and hosted for them.

Late in 1999, plaintiff Attig, a website developer, entered into an agreement with defendants to update and host two of defendants’ websites. One of the individual defendants had created the original versions of these sites using a template. Attig agreed to give the sites a “facelift,” add some basic information, and arrange for hosting. Defendants paid each invoice in full for web development services that Attig sent them.

In 2003, the defendants hired a new technology consultant to assist them with their web development matters. During this process, the defendants switched to a different hosting provider. Attig filed suit, claiming that he owned the copyright in the websites, and alleged that the defendants infringed his copyright by moving the sites to a different web server. The defendants moved for summary judgment, and the court granted the defendants’ motion.

Defendants presented several arguments in favor of their motion for summary judgment. Among those arguments was that Attig, in creating and delivering the websites to defendants, granted them an irrevocable, nonexclusive implied license. The court agreed with this argument. The defendants’ conduct in copying the sites do a different server did not exceed this implied license, thus they could not be liable for copyright infringement.

The court noted that “a nonexclusive license arises where the creator of a work, at the defendant’s request, hands it over, intending that the defendant copy and distribute it.” This analysis (according to the Ninth Circuit decision in Effects Associates v. Cohen, 908 F.2d 555 which was relied upon by the court) requires a determination of whether (1) the licensee requests the creation of a work, (2) the licensor makes that particular work and delivers it to the licensee, and (3) the licensor intends that the licensee copy and distribute the work.

The court easily found that the first two prongs of the analysis were met. The third prong required more discussion, but ultimately the court found that Attig had intended that the defendants copy and use the websites. To make this determination, the court looked for guidance in the Southern District of New York case of Holtzbrinck Publishing Holdings, L.P. v. Vyne Communications, Inc., 2000 WL 502860. Of particular importance in that case was the common sense determination that a customer would not be willing to pay good and valuable consideration for a site that it could not use. In this case, Attig had placed a copyright notice on one of the sites he updated, attributing ownership to the one of the defendants. He also sent correspondence referring to the sites as belonging to defendants. The court found these facts to reveal Attig’s intent regarding ownership.

Attig v. DRG, Inc., 2005 WL 730681 (E.D.Penn., March 30, 2005).

Website not entitled to court finding that future uses of Eminem songs would be fair use

Shady Records, Inc. (“Shady”), filed suit against Source Enterprises, Inc. (“Source”) and others for copyright infringement arising from Source’s publication on its website of various songs by Marshall Mathers III (widely a/k/a “Eminem”). After a long process of litigation leading up to trial, Shady moved to voluntarily dismiss its claims of copyright infringement. Accordingly, the court dismissed the action with prejudice.

While most defendants would be fully satisfied by the plaintiff voluntarily withdrawing its claims and the court dismissing the action with prejudice, Source wanted some extra conditions imposed on the dismissal. One of the requested conditions was for the court to memorialize a finding that Source’s past use of the Eminem songs on its website was fair use. Furthermore, Source asked the court to determine that any future use of the Eminem songs would also constitute fair use.

The court declined to add these extra conditions to the dismissal order. It noted that Source “misconceive[d] the consequences of a successful result in this case.” Questions of fair use are highly fact-intensive, and the court held that “it would, indeed, be highly inappropriate . . to issue an advisory opinion about any particular hypothetical use of the material in the future. . . .” The dismissal with prejudice means that Shady is not entitled to any relief based on Source’s past actions. “That is the totality of the adjudication that defendants are entitled to, and that is what they will receive by the [dismissal of the action].”

Shady Records, Inc. v. Source Enterprises, Inc., 2005 WL 696795 (S.D.N.Y., March 23, 2005).

Electronic scans of National Geographic were proper revisions under Tasini standard

The Second Circuit has upheld the U.S. District Court for the Southern District of New York’s grant of summary judgment in favor of the National Geographic Society and related entities, holding that the creation and distribution of electronic versions of National Geographic did not infringe the copyrights of the contributing photographers and authors. Applying the standard set forth in New York Times v. Tasini, the court determined that the electronic version was a “privileged revision” under Section 201(c) of the Copyright Act.

In 1996, the National Geographic Society took each and every issue of National Geographic Magazine since 1888 and scanned them electronically, two pages at a time. The resulting images were placed on CD-ROMs and sold to the public. The compilation was called the Complete National Geographic.

The plaintiffs in this case, photographers and authors of numerous photos and articles that appeared in National Geographic over the years sued the National Geographic Society and related entities for copyright infringement. The plaintiffs alleged that the copyrights in their works were infringed when the works appeared in the Complete National Geographic.

Defendants argued that the electronic compilation did not infringe the plaintiffs’ copyrights because it was a privileged revision of a collective work as provided in Section 201(c) of the Copyright Act. The district court agreed with the defendants and granted summary judgment in their favor. The Second Circuit affirmed.

Section 101 of the Copyright Act defines a collective work as a “work, such as a periodical, issue, anthology, or encyclopedia in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole.”

An obvious example of a collective work is any magazine. The photographers that take the photos appearing in the magazine and the authors that pen the articles may own the copyrights in those individual works, but all the elements combined together give rise to a new work based on the way in which the elements are selected or arranged. The publisher of the magazine can own the copyright in the way the elements are selected or arranged, i.e., the collective work, while the copyrights in the individual works making up the magazine remain with the photographers and authors.

Section 201(c) of the Copyright Act sets forth how an owner of a copyright in a collective work may use the individual works. “[T]he owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing [a] contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series.”

In this case, the court employed the test set forth in the Supreme Court case of New York Times v. Tasini, 533 U.S. 483 (2001) to determine that the replication of the pages of the National Geographic magazine was acceptable under Section 201(c) of the Act, and thus did not give rise to copyright infringement. The Tasini case required an analysis of how the individual photos and articles were “presented to, and perceptible by” users of the electronic versions. Because the entire works were merely scanned as they appeared in the original print versions, the original context of the magazines was “omnipresent” in the electronic compilation. The court held that the electronic compilation was simply a new version of the magazine, and therefore privileged under Section 201(c) of the act.

Faulkner v. Mindscape Inc., — F.3d —-, 2005 WL 503652 (2d Cir., March 4, 2005).

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