Craigslist's Terms of Use Don't Support Copyright or CFAA Claims: ND Cal.

Practical Law Legal Update 8-527-5306 (Approx. 6 pages)

Craigslist's Terms of Use Don't Support Copyright or CFAA Claims: ND Cal.

by PLC Intellectual Property & Technology

Background

In Craigslist, Inc. v. 3Taps, Inc., Craigslist, Inc. brought seventeen claims against 3Taps, Inc., Padmapper, Inc. and two other defendants, alleging that the defendants improperly harvested and reproduced the contents of Craigslist's website. Specifically, Craigslist alleged:

The defendants aggregate and republish ads from Craigslist.
Defendant 3Taps copies all content posted on the Craigslist website and markets a Craigslist API that allows third parties to access large amounts of content from Craigslist.
3Taps also operates a website that replicates the entire Craigslist website.
Defendant Padmapper initially copied ads and other listings directly from Craigslist but, after receiving Craigslist's cease and desist letter, began obtaining these listings from other parties, including 3Taps.

Craigslist sent cease and desist letters to the defendants notifying them they were no longer authorized to access Craigslist's website or services. In July 2012, Craigslist filed suit against the defendants alleging, among other causes of action, claims for:

Violations of the Computer Fraud and Abuse Act (CFAA) and its California statutory counterpart.
Direct and contributory copyright infringement.
Breach of contract.
Federal trademark infringement, dilution, cyberpiracy and false designation of origin.
Trespass to chattel and civil conspiracy under California common law.

The four defendants filed various motions to dismiss, including:

3Taps' motions to dismiss Craigslist's claims of copyright infringement and violations of the CFAA and the correlative California statute.
Padmapper's motions to dismiss Craigslist's claims of trespass, trademark infringement, breach of contract and civil conspiracy.

Outcome

In its April 29, 2013 opinion, the US District Court for the Northern District of California:

Granted in part defendants' motions to dismiss Craigslist's copyright infringement claims.
Granted Padmapper's motion to dismiss Craigslist's claim of civil conspiracy.
Denied the defendants' motions to dismiss Craigslist's CFAA, trademark and other claims.

Craigslist's CFAA Claim

3Taps moved to dismiss Craigslist's CFAA cause of action and the corresponding California state law claim. In considering this motion, the court emphasized the US Court of Appeals for the Ninth Circuit's ruling in United States v. Nosal. Under Nosal, the CFAA bars the unauthorized access to a computer to obtain information and not the unauthorized use of information lawfully obtained. Citing conflicting precedents, the court expressly declined to decide whether CFAA liability could be premised on violations of contractual (rather than technological) restrictions, like Craigslist's website's terms of use. However, the court deemed the resolution of this issue unnecessary because it found that Craigslist's terms of use only restricted the purposes for which users may access the website, which, according to the Nosal decision, is a use-, and not an access-, based restriction.

The district court ruled, therefore, that the website terms of use, as framed by Craigslist, could not serve as proper grounds for a CFAA claim. In so deciding, the court noted that, to be actionable, website terms of use restrictions would have to be directed to factors like:

The type of information accessed.
The persons who may access it.
The methods by which the information may be accessed.

The court also raised, sua sponte, the issue as to whether the general public availability of the information on Craigslist's site placed the defendants' accessing of that information outside the CFAA's protective scope. Observing that, in Nosal, the Ninth Circuit had the opportunity but declined to distinguish between publicly and privately available information, the court reluctantly assumed that the CFAA's broad language prohibits unauthorized access to computer-stored public information. The court ruled, therefore, that the CFAA applies to public information accessed from Craigslist's website. Citing Craigslist's allegation that the defendants continued to obtain access to the website after Craigslist, both by its cease and desist letters and technological blocking measures, the court ruled that Craigslist properly stated a CFAA claim of unauthorized access and denied the defendants' motions to dismiss this CFAA claim.

Craigslist's Copyright Claims

Craigslist Held Valid Copyrights in its Website Compilations

3Taps and Padmapper moved to dismiss Craigslist's direct and contributory copyright infringement claims, arguing that Craigslist does not own a valid copyright in the ads users post on its website. Craigslist argued that it holds copyrights in the compilation of these user-created works and that its website's terms of use grant Craigslist an exclusive license to the individual user posts.

The court first considered whether the individual ads were subject to copyright protection and whether Craigslist could hold copyrights in its compilation of these works. The court ruled that user-created posts, which feature a title, description and other relevant details about the user's requests or offerings, satisfied the minimal level of creative originality required to merit copyright protection.

The court similarly ruled that Craigslist exercised sufficient originality in its selection or arrangement of these listings to satisfy the constitutional minimum for copyright protection and, therefore, denied defendants' motion to dismiss Craigslist's copyright claims on grounds of non-copyrightability.

The court further concluded that Craigslist's failure to name the authors of individual posts in Craigslist's applications to register its compilations with the Copyright Office did not invalidate these compilations' copyright registrations.

Craigslist Did Not Have an Exclusive License in Most User-generated Content

The court next considered whether Craigslist had acquired an interest in the user-created posts sufficient to establish its standing to sue for copyright infringement. Craigslist argued that under its terms of use, users expressly assign to Craigslist exclusive rights and causes of action to enforce the users' copyrights. Rejecting this argument, the court noted that under Silvers v. Sony Pictures Entertainment, Inc., only the copyright owner is entitled to sue for infringement. Therefore, at a minimum, to have standing to sue the defendants for copyright infringement, Craigslist was required to obtain an exclusive license to its users' postings in writing from these postings' respective authors.

The court determined that Craigslist obtained the required exclusive license rights solely during a two-week period in July and August, 2012, during which it added a clickwrap confirmation screen requiring users to agree that Craigslist was the exclusive licensee of their posted content. However, the court concluded that the wording of Craigslist's terms of use before and after this two-week period was insufficient to give Craigslist an exclusive license to its users' posts and, therefore, granted defendants' motion to dismiss Craigslist's copyright claims concerning user content posted outside the specified two-week period.

The Copyright Act Does Not Preempt Craigslist's Breach of Contract Claims

Padmapper argued that the Copyright Act preempts Craigslist's claims that Padmapper breached Craigslist's terms of use governing access to and permissible uses of the website. The court acknowledged that the Copyright Act preempts non-copyright claims that are based solely on the unauthorized reproduction of copyrightable subject matter, but pointed out that Craigslist's terms of use include website use restrictions that are beyond the protections afforded by copyrights. Because Craigslist's terms of use include these non-copyright-equivalent, "extra elements," the court held that the Copyright Act did not preempt Craigslist's breach of contract claims.

Craigslist's Trademark Claims

Padmapper further argued that Craigslist's trademark claims were precluded by Dastar Corp. v. Twentieth Century Fox Film Corp. In Dastar, the US Supreme Court held that Twentieth Century Fox could not bring a false designation of origin claim under Section 43(a) of the Lanham Act for Dastar's repackaging and sale, under Dastar's own name, of a Fox television series that had passed into the public domain because:

The phrase "origin of goods" in Section 43(a) refers to the producer of the tangible goods offered for sale, and not, in the case of creative works, these goods' author.
Dastar was, in fact, the producer of the physical videotapes.
Dastar did not, therefore, falsely designate the origin of videotapes branded and sold under its own name.

Here, in contrast, Craigslist did not claim that the defendants used their own trademarks, but rather, the Craigslist mark, to identify the defendants' products and falsely pass off these products as being provided or endorsed by Craigslist. The court held that these allegations properly state non-preempted Lanham Act claims because:

The Copyright Act provides no recourse for Craigslist to prevent others from trading on its name and mark.
Craigslist's trademark claims were not subsumed by its copyright claims because they centered on the altogether different alleged harms of consumer confusion and injury to the reputation and value of Craigslist and its mark.
Craigslist's trademark claims did not raise the spectre of perpetual copyright protection for its works because:
- they concerned the defendants' marking their goods and services in a manner alleged to be likely to cause confusion with the goods and services of Craigslist;
- they were not merely a surrogate for Craigslist's exclusive copyrights in its website's content.

The court therefore denied Padmapper's motion to dismiss Craigslist's Lanham Act and state law trademark claims.

Craigslist's Trespass to Chattel Claims

Padmapper also moved to dismiss Craigslist's claim of trespass to chattel, arguing that Craigslist knows it failed to plead the type and level of injury required to state this common law claim. Rejecting this argument, the court concluded it was plausible to find that the defendants' unauthorized access to and interference with Craigslist's systems, website and servers could have diverted Craigslist's computing resources and impaired the website's and server's functionality. The court therefore denied Padmapper's motion to dismiss the trespass claim, noting that the question of actual injury was a question of fact more appropriate for summary judgment or trial.

Craigslist's Civil Conspiracy Claims

Lastly, the court granted Padmapper's motion to dismiss Craigslist's claims that Padmapper conspired with 3Taps to commit trespass, breach of contract and misappropriation by unlawfully copying Craigslist's ads and displaying them on Padmapper's website. In support of this ruling, the court reasoned that Craigslist had alleged no more than a buyer-seller relationship between Padmapper and 3Taps, which does not, without more, allege the mutual intent to aid in the commission of wrongful activity required to state a claim of civil conspiracy under California law.

Practical Implications

The Craigslist decision counsels that:

To serve as the basis for a CFAA claim, website terms of use must clearly deny the user's computer access to the information on the site, and not merely its use of this information for designated purposes. This may be achieved, for example, by expressly denying named competitors and other individually-named users or classes of users authorization to access the site's information.
Unless and until the federal appellate courts rule otherwise, obtaining unauthorized computer access to information otherwise made publicly available on a website may violate the CFAA.
Website owners seeking to sue for copyright infringement of user-posted content must be sure to obtain, in writing, an exclusive license or assignment of the copyrights in this content (although the Copyright Act's writing requirement may be satisfied by a properly worded exclusive click-wrap license).
The rule of Dastar, which preempts trademark claims that assert rights equivalent to copyrights, does not apply where the act of alleged infringement is the alleged infringer's use of the plaintiff's mark or a mark confusingly similar to the plaintiff's mark, rather than the use of its own mark to identify the plaintiff's creative product.

Craigslist's Terms of Use Don't Support Copyright or CFAA Claims: ND Cal. | Practical Law