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).

Eighth Circuit upholds preliminary injunction against alleged cybersquatter

The law firm of Faegre & Benson (“Faegre”) brought suit against defendant Purdy and related defendants for trademark infringement, cybersquatting and various state law claims resulting from the defendants’ registration of several domain names incorporating variations of Faegre’s firm name. The district court entered a preliminary injunction against the defendants on January 5, 2004.

The district court had enjoined the defendants from: (1) using domain names identical to or confusingly similar to Faegre’s marks unless the protest or critical commentary nature of the attached website was apparent from the domain name itself, (2) from using marks identical to or confusingly similar to Faegre’s marks, (3) from displaying any website whose appearance is identical or confusingly similar to the trade dress of Faegre’s website; and (4) from illegally appropriating Faegre names.

On appeal, the defendants argued that (1) the injunction was overbroad, (2) the websites were noncommercial and used to make critical comments about Faegre, (3) use of the domain names was not likely to cause confusion as to the sponsor of the sites, and (4) that the use of the domain names was protected by the First Amendment.

The court rejected each of these arguments by the defendants, and affirmed the district court’s entry of a temporary injunction. It held that defendants had not shown the district court abused its discretion in issuing the preliminary injunction.

Faegre & Benson, LLP v. Purdy, 2005 WL 742732 (8th Cir., April 4, 2005).

Noncommercial use of BOSLEY MEDICAL trademark as domain name does not constitute infringement

In a decision released April 4, 2005, the Ninth Circuit has affirmed the district court’s determination in Bosley Medical Institute, Inc. v. Kremer that the registration by defendant of the domain name bosleymedical.com did not constitute infringement of plaintiff’s BOSLEY MEDICAL trademark. The court remanded the matter for further proceedings, however, on plaintiff’s Anticybersquatting Consumer Protection Act (ACPA) claim, as the district court improperly required a showing of commercial use of the domain name as necessary to sustain an anticybersquatting claim.

Defendant Kremer was unhappy with the hair replacement services he received from Plaintiff Bosley, and registered the domain name bosleymedical.com in 2000. In 2001, he developed a site at that address which was critical of Bosley’s services, and included information about an investigation of Bosley that took place in 1996. The site linked to a “sister site,” bosleymedicalviolations.com, which contained links to a newsgroup, which in turn linked to certain of Bosley’s competitors. Kremer earned no revenue from the bosleymedical.com site.

Bosley filed suit alleging trademark infringement, dilution, and violations of the ACPA. The district court granted summary judgment on these claims, holding that Kremer’s use of the mark and the domain name were noncommercial in nature, thus there could be no recovery for either trademark infringement, dilution or cybersquatting. On appeal, the Ninth Circuit affirmed as to the claims for trademark infringement and dilution, but reversed and remanded as to the ACPA claim.

Bosley presented three arguments in support of its claim that Kremer’s use of the trademark in the domain name was commercial in nature, thus susceptible to liability for infringement and dilution.

First, it argued that the links on Kremer’s site leading to commercial sites made it commercial in nature. The court disagreed, noting that the only links from Kremer’s site led to other noncommercial sites which in turn linked to commercial sites. Such a “roundabout path to the advertising of others [was] too attenuated to render Kremer’s site commercial.”

Second, Bosley argued that Kremer had created his site as part of an extortion scheme in an attempt to profit from registering the domain name. The court rejected this argument as well. It determined that there was no evidence that Kremer had tried to sell the domain name itself.

Third, Bosley argued that Kremer’s use of the Bosley trademark was in connection with Bosley’s goods and services, inasmuch as Kremer prevented visitors to the website from obtaining Bosley’s goods and services. The court rejected this argument by holding that Kremer’s use of the Bosley mark was not in connection with the sale of goods or services, but was in connection with the expression of his opinion about Bosley’s goods or services. “Kremer’s use of the Bosley Medical Mark simply cannot mislead consumers into buying a competing product – no customer will mistakenly purchase a hair replacement service from Kremer under the belief that the service is being offered by Bosley.”

As for the ACPA claim, the court held that the lower court erred in granting summary judgment for Kremer, by improperly including the requirement that the domain name be used for commercial purposes. The court cited to the 2004 Eighth Circuit decision of Coca-Cola v. Purdy, 382 F.3d 774, noting that “the use of a domain name in connection with a site that makes a noncommercial or fair use of the mark does not necessarily mean that the domain name registrant lacked bad faith.” Because the district court in this case had granted summary judgment without allowing discovery on the issue of whether Kremer’s registration was made in bad faith, the Ninth Circuit sent it back to the district court for further proceedings.

Bosley Medical Institute, Inc. v. Kremer, No. 04-55962 (April 4, 2005).

Update: Professor Eric Goldman has reported on this case at the Technology & Marketing Law Blog.

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).

Court rejects request for permission to serve process by e-mail

In the case of Ehrenfeld v. Bin Mufouz, the U.S. District Court for the Southern District of New York has refused Ehrenfeld’s request to allow service of process on Bin Mufouz, a Saudi Arabian national, by e-mail. Although service of process by e-mail is permissible in certain circumstances, Ehrenfeld failed to show that in this case correspondence by e-mail would be reasonably calculated to notify Bin Mufouz of the action.

Ehrenfeld wrote a book about the evils of funding terrorism. Bin Mufouz, a resident of Saudi Arabia, took offense to statements Ehrenfeld made about him in the book and filed a defamation lawsuit in the U.K. Ehrenfeld never appeared in that action, and Bin Mufouz threatened to enforce a default judgment against Ehrenfeld.

In response to those threats, Ehrenfeld filed this suit in federal court in New York, seeking a declaratory judgment that Bin Mufouz could not enforce the U.K. default judgment against her. Being unable to obtain service of the complaint and summons, Ehrenfeld filed a motion for leave to obtain service by alternate means pursuant to Fed. R. Civ. P. 4(f)(3). Rule 4(f) provides for service on foreign individuals, and Rule 4(f)(3) specifically allows service by “means not prohibited by international agreement as may be directed by the court.”

The court noted that there is no international agreement addressing service of process on persons in Saudi Arabia. Thus, service could be made in any manner the court would approve. Ehrenfeld proposed various ways in which service might be made, including via e-mail to an address found on Bin Mufouz’s website.

The court refused to allow service of process by e-mail. It noted that “although courts have upheld service via e-mail, those cases involved e-mail addresses undisputedly connected to the defendants and that the defendants used for business purposes.” In this case, Ehrenfeld had not persuaded the court that Bin Mufouz maintains the website on which the e-mail address was found, that he checks that e-mail account, or that he would be likely to receive information transmitted to that e-mail address. The court found that the e-mail address was used only as an informal means of accepting requests for information rather than for receiving important business communications.

Ehrenfeld v. Bin Mufouz, 2005 WL 696769 (S.D.N.Y., March 23, 2005).

InternetCases.com Podcast — April 1, 2005

This week’s podcast discusses the Kentucky Court of Appeals case of Ross-Carter v. Commonwealth.

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