Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

2024 Recap: Ten Lords A-Leaping!

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In a little-noticed decision, Matter of Noel v. Maria, Support Magistrate Gregory L. Gliedman—a Staten Island, New York family court official—recently permitted a father seeking to modify his child support payments to serve process on the child’s mother by sending her a digital copy of the summons and petition through her Facebook account.Magistrate Gliedman’s decision struck us at Socially Aware—where we follow such developments closely—as a groundbreaking move. We are unaware of any published U.S. court opinion permitting a plaintiff to serve process on a domestic, U.S.-based defendant through a Facebook account.As we addressed in a 2012 Socially Aware blog post, in Fortunato v. Chase Bank a federal district court in Manhattan held that Chase Bank could not rely on Facebook to serve a third-party defendant.While the same federal district court subsequently allowed the FTC to serve defendants through Facebook in FTC v. PCCare247, the service at issue in that case concerned documents other than the summons and complaint, and the defendants were two India-based entities and three India-based individuals who had already appeared through counsel and shown themselves to be on notice of the lawsuit.Other cases authorizing service via social media have been similarly limited in scope. For example, in WhosHere v. Orun, the U.S. District Court for the Eastern District of Virginia allowed service via social media on a defendant who allegedly resided in Turkey. In Mpafe v. Mpafe, a Minnesota family court authorized the service of divorce proceedings on a defendant by “Facebook, Myspace or any other social networking site” where the defendant was believed to have left the country.Further, the court in FTC v. PCCare247 permitted Facebook service only as a backstop to service by regular email, and specified that Facebook service alone might not satisfy due process because—as the court understood it—“anyone can make a Facebook profile using real, fake, or incomplete information, and thus, there is no way for the Court to confirm whether the [party] the investigator found is in fact the third-party Defendant to be served.”Of course, Facebook has been well known for requiring use of one’s real name in opening a Facebook account. And although Facebook recently modified its real-name policy to accommodate stage names, Facebook remains strongly opposed to fake accounts. That being said, Facebook has acknowledged that many unauthorized accounts exist on its platform.Moreover, with over 1.5 billion users, it’s not uncommon for people sharing the same or similar names to be mistaken for one another on Facebook; if you can accidentally send a friend request to a stranger who happens to share a name with a childhood classmate, could you end up serving process on the wrong person via a Facebook message?And although a 2013 study revealed that smartphone users access their Facebook accounts an average of 14 times a day (!), might there be people out there who have a Facebook account but rarely if ever check it? Of course, this particular concern may be overcome by showing that a defendant is actively using his or her Facebook account; indeed, in Matter of Noel v. Maria, the father presented evidence that the mother had recently “liked” photos posted to another Facebook page, indicating that the mother was in fact an active Facebook user.In any event, Magistrate Gliedman’s decision represents a significant milestone, and deserves greater attention and discussion. As Facebook and other social media practices become ever more deeply integrated into our lives, expect to see other judges and magistrates exploring—and perhaps even expanding—the circumstances under which service of process via a social media channel is deemed appropriate.

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New York Family Court Magistrate Allows Unprecedented Service of Process via Facebook; Will Others Follow?

New York Family Court Magistrate Allows Unprecedented Service of Process via Facebook; Will Others Follow?

In a little-noticed decision, Matter of Noel v. Maria, Support Magistrate Gregory L. Gliedman—a Staten Island, New York family court official—recently permitted

In 2012, the National Labor Relations Board (NLRB or the “Board”) found a “courtesy” policy unlawful. Since then, the NLRB has continued to create more and more tension between the National Labor Relations Act (NLRA or the “Act”) and employers’ legitimate interests in maintaining and enforcing workplace guidelines governing courtesy in a nondiscriminatory fashion.This article focuses on the maintenance and enforcement of courtesy and civility rules. In these cases, the Board has taken extreme positions that increasingly ignore competing interests and obligations of employers. Among the obligations that can conflict with Section 7 in this context, employers must protect their employees from harassment, including on the basis of sex and race, by disciplining employees making harassing comments and engaging in harassing behavior and by maintaining civil workplaces that are not conducive to harassment. Employers also have a legitimate interest in maintaining a civil workplace simply to promote employee productivity and job satisfaction, as well as ensuring appropriate levels of customer service.The Framework: Regulating Workplace Rules Under the NLRA Employees have the right to engage in concerted activity under Section 7 of the NLRA. Concerted activity is activity undertaken for the employees’ mutual aid and protection, including, for example, discussing the terms and conditions of employment, such as wages, policies, and workplace treatment. Under Section 8(a)(1) of the Act, it is an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.”Under the general framework of the Act, the National Labor Relations Board regulates employer maintenance and enforcement of generally applicable workplace rules in several ways.First, an employer commits an unfair labor practice, under Section 8(a)(1), if it maintains a rule that would reasonably tend to chill employees in the exercise of their Section 7 rights. If it expressly restricts Section 7 activity, the rule is unlawful. Further, if it does not expressly restrict Section 7 activity, the rule is still unlawful under Lutheran Heritage Village if “(1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.” In reading the rule, the Board should “refrain from reading particular phrases in isolation.” Similarly, the Board should not seek out “arguable ambiguity . . . through parsing the language of the rule, viewing [a] phrase . . . in isolation, and attributing to the [employer] an intent to interfere with employee rights.” Lafayette Park Hotel.Second, employers may not discipline employees for engaging in protected activity. In the event that “the very conduct for which employees are disciplined is itself protected concerted activity,” then the discipline violates Section 8(a)(1) regardless of the employer’s motive or a showing of animus. Burnup & Sims, Inc. Similarly, if an employee violates a workplace rule and is disciplined, the discipline is unlawful if the employee “violated the rule by (1) engaging in protected conduct or (2) engaging in conduct that otherwise implicates the concerns underlying Section 7 of the Act.” Continental Group, Inc.Workplace Conduct: Courtesy and ProfessionalismThe cases that likely demonstrate the biggest gap between the single-minded ideals espoused by the Board and the practicalities of managing a workforce are the Board’s decisions in the areas of civility and professionalism. In these cases, the Board would hamstring employers’ ability to govern basic workplace conduct, like requiring courtesy toward other employees or customers, or prohibiting or punishing profanity, threats, and abusive language. The cases create friction between the Act and employers’ need to maintain civility in the workplace—which in turn makes preventing harassment and ensuring employee satisfaction and productivity more difficult.Drafting Courtesy RulesThe Board has invalidated a number of rules that are unquestionably implemented for the purpose of ensuring a well-managed, strife-free workplace. Importantly, it is not relevant in these cases whether the rule at issue was implemented for an improper purpose or even whether the rule has been applied to activity that is actually protected by the Act; the only question is whether an employee would read the rule as prohibiting protected conduct. Unfortunately, the Board has concluded that the aspirational language of courtesy rules is often vague and over broad—frequently noting the lack of definitions of vague terms—and therefore would be read by employees to prohibit protected conduct, such as being critical of their pay or other conditions of work, co-workers, or their employer.In the first of a string of cases involving courtesy, the Board invalidated a “Courtesy” policy in Karl Knauz Motors, 358 NLRB No. 164 (2012) (likely to be treated as persuasive authority after Noel Canning). Although precedent dictates that the Board read the rule as a whole, the Board here tortuously parsed this rule to find that it violated the Act.The full policy at issue provided as follows:Courtesy: Courtesy is the responsibility of every employee. Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.The majority concluded that the Courtesy rule was unlawful because, notwithstanding the title or first two sentences of the rule, “employees would reasonably construe its broad prohibition against ‘disrespectful’ conduct and ‘language which injures the image or reputation of the Dealership’ as encompassing Section 7 activity.”For similar reasons, the Board has invalidated rules that prohibit employees from being discourteous, even to guests. In First Transit, Inc., the Board invalidated a bus company’s rule that prohibits “[d]iscourteous or inappropriate attitude or behavior to passengers, other employees, or members of the public. Disorderly conduct during working hours.” The Board focused on the phrase relating to employees, and struck down the entire rule, finding it similar to a rule found unlawful in a previous Board decision prohibiting the “inability or unwillingness to work harmoniously with other employees.”In another case brought by a former Hooters waitress, Hoot Wing, LLC & Ontario Wings, LLC, an administrative law judge (ALJ) of the NLRB invalidated two policies that including obligations to be respectful. Specifically, two rules prohibited the following disrespectful conduct:Disrespect to our guests including discussing tips, profanity or negative comments or actions.Insubordination to a manager or lack of respect and cooperation with fellow employees or guestsThe ALJ concluded that both rules were vague and over broad. The portion of the rule prohibiting the discussion of tips violated the employees’ rights to discuss wages with non-employees. The remainder of the rule (“Disrespect to our guests including . . . profanity or negative comments or actions”) was “over broad and unqualified” in part because no examples of the prohibited conduct were included. The rule prohibiting insubordination was likewise over broad as it did not define “insubordination,” “lack of respect,” or “cooperation.”Similarly, in Laurus Technical Institute, the Board also recently invalidated several rules that prohibited gossip and negativity. The first rule prohibited “gossip,” stated that gossip “is an activity that can drain, corrupt, distract and down-shift the company’s productivity, moral, and overall satisfaction,” and defined gossip as follows:(1) Talking about a person’s personal life when they are not present(2) Talking about a person’s professional life without his/her supervisor present(3) Negative, or untrue, or disparaging comments or criticisms of another person or persons(4) Creating, sharing, or repeating information that can injure a person’s credibility or reputation(5) Creating, sharing, or repeating a rumor about another person(6) Creating, sharing or repeating a rumor that is overheard or hearsayThe second company’s rule stated “We will not engage in or listen to negativity or gossip” and also had a rule that stated “We will represent Hills & Dales [General Hospital] in the community in a positive and professional manner in every opportunity.”In both cases, the Board concluded that the quoted rules were over broad and could be interpreted by reasonable employees as infringing on their right to discuss the terms and conditions of employment. In the former case, an employee was reinstated with back pay after she was terminated for, among other things, violating the rule.In slightly better news, this May, in First Transit, Inc., the Board has finally found a floor: Employers may, at least, prohibit employees from using “Profane or abusive language where the language is uncivil, insulting, contemptuous, vicious, or malicious.”Enforcing Courtesy RulesIt is not just the maintenance of courtesy rules that can get employers into trouble. If a rule is over broad and an employee is terminated for violating that rule, the Board may order reinstatement of the employee with back pay. And a few cases demonstrate that the Board is equally aggressive in cases challenging enforcement of workplace rules as in maintenance cases. These cases clearly illustrate the tension between the NLRA and other workplace laws and interests that require a certain level of decorum be maintained in the workplace.Even though employers can at least theoretically maintain rules prohibiting profane speech (see above), they may not be able to terminate employees who violate the rule. Repeatedly the Board has sided with employees who use profane speech or improper gestures, when it concludes the employee was engaging in protected conduct at the time. (Remember: This Board takes a very broad view of what is protected.) Two recent decisions illustrate the issue:First, on remand from the Second Circuit, the Board found that Starbucks unlawfully terminated an employee after he engaged in a heated dispute with his manager in which he used many expletives—in front of customers. Originally, the Board approved of the employee’s conduct, and Starbucks appealed. The Second Circuit remanded, noting “We think the analysis of [the Board] improperly disregarded the entirely legitimate concern of an employer not to tolerate employee outbursts containing obscenities in the presence of customers.” On remand, the Board did not take this admonishment to heart, and again sided with the employee.Second, the Board likewise condoned an employee’s conduct in Plaza Auto Center, Inc. when he cursed at his supervisor, calling him a “f***ing mother f***er” and a “f***ing crook,” among other profanities. He also told the supervisor that if he was terminated, the supervisor “would regret it.” As a result of this meeting, the employee was terminated, and on review the Board concluded that the employer violated the Act in so doing. Although the supervisor stated he took the statement that he “would regret it” as a physical threat, the Board did not credit that testimony, since the employee did not display any physical signs of a threat. Ultimately, the Board concluded that the statements to the supervisor were not so egregious as to lose the protection of the Act. The dissent objected that the conduct was not protected, and noted “It is entirely reasonable, and to a great extent legally necessary, for many employers to insist that employees engage each other with civility rather than personally directed ‘f-bombs,’ even on matters where opinions differ sharply and emotions flare.”In another surprising case, the Board condoned cursing and language that had female employees submitting written complaints. In Fresenius USA Manufacturing, Inc., 358 NLRB No. 138 (2012), an employee, Kevin “Dale” Grosso, anonymously wrote “vulgar, offensive, and, in isolation, possibly threatening statements on several union newsletters left in an employee break room” with the intent of encouraging union support in an upcoming decertification election. Specifically, Grosso wrote the following three notes on September 10, 2009:“Dear Pussies, Please Read!”“Hey cat food lovers, how’s your income doing?”“Warehouse workers, RIP.”Female employees complained about the statements. There were 12 employees in the warehouse unit, five of whom were female. Upon learning of the statements, several female warehouse employees complained on multiple occasions about the notes, claiming they were vulgar, offensive, and threatening. In response to the complaints, the company promised to investigate the statements and, in response to their safety concerns, the manager reminded female employees that the company maintained security cameras and he himself stayed late to ensure that they left safely. Ultimately, the female employees memorialized their complaints in written statements.The company investigated under its anti-harassment policy, requiring management to investigate and respond to complaints of harassment and, if harassment has occurred, to administer corrective action. After ultimately concluding that he wrote the statements, Fresenius terminated Grosso’s employment.The Board concluded that in writing those statements, Grosso was engaging in protected activity as he was seeking to encourage other employees to vote for the union. Accordingly, the termination violated the Act because he was terminated for engaging in protected concerted activity, notwithstanding the fact that he also violated the company’s nondiscriminatory policy and that female employees took offense and reported the conduct in written complaints.One Board member dissented vigorously, expressing the view—likely shared by many employers—that the majority’s approach improperly insulates employees from discipline for misconduct:I specifically dispute their implication that greater latitude must be accorded to misconduct occurring in the course of organizational activity than for other Section 7 activity, that profanity in the course of labor relations is the presumptive and permissible norm in any workplace, that remarks by one employee to another which would be unprotected on the shop floor should be protected if made in the breakroom, that comments which coworkers reasonably view as harassing and sexually insulting are not disruptive of productivity, and that threatening speech alone cannot warrant loss of statutory protection. Taken as a whole, these pronouncements confer on employees engaged in Section 7 activity a degree of insulation from discipline for misconduct that the Act neither requires nor warrants.Employer Next StepsIt is likely that the Courts of Appeal will be reviewing some of these cases and issues, so the above may not be the final word on courtesy under the NLRA. And while the decisions remain in place, some competing interests in the workplace, like preventing sexual harassment, may continue to trump the Board’s interpretation. Accordingly, it may not be possible to fully harmonize the NLRA, as interpreted in the above cases, with other workplace obligations and interests. Should employers feel inclined, there are some steps to take to bring policies in closer alignment with the NLRA, while not ignoring other workplace obligations. As an initial matter, employers should take some time to look over their policies to determine whether their workplace rules can be revised to minimize friction with the National Labor Relations Act, while still maintaining rules that are necessary for a courteous and lawful workplace. Importantly, the Board’s focus recently is on terms that it considers vague and ambiguous, so carefully crafted rules that define possibly ambiguous terms to give examples of prohibited conduct and to exclude protected conduct are more likely to pass muster. In addition, there is now some authority that “savings clauses”—that state that the rule is not intended to interfere with Section 7 rights—can help. These clauses should be drafted with a lay person in mind, meaning that a reference to the National Labor Relations Act will not be sufficient. Instead, the savings clause should describe the concerted activity that is implicated by the rule but that is not intended to be prohibited.Finally, before enforcing one of these rules, take a another look at the underlying conduct to determine whether it is likely to be considered protected under the Act, even if it clearly violates the workplace rule. Unfortunately, that may not end the matter as other laws, including discrimination and harassment laws, should be considered before taking action before applying the NLRA.

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The Death of Courtesy and Civility Under the National Labor Relations Act

The Death of Courtesy and Civility Under the National Labor Relations Act

In 2012, the National Labor Relations Board (NLRB or the “Board”) found a “courtesy” policy unlawful. Since then, the NLRB has continued to create more and more

In <a href="http://cdn.ca9.uscourts.gov/datastore/opinions/2014/08/18/12-56628.pdf" target="_blank" rel="noopener">Kevin Khoa Nguyen v. Barnes & Noble Inc.</a>, 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bind a consumer to an arbitration clause found in an online terms of use agreement not affirmatively “click accepted” by the consumer but readily accessible through a hyperlink at the bottom left of each page on the subject website.The case arose from a “fire sale” by defendant Barnes & Noble of certain discontinued Hewlett Packard TouchPads. Plaintiff Nguyen had ordered two of the TouchPads, but received a notice from Barnes & Noble the following day that his order had been cancelled due to unexpectedly high demand. Nguyen sued Barnes & Noble in California Superior Court on behalf of himself and a putative class, arguing that he was forced to buy a more expensive tablet instead.Barnes & Noble, after removing the suit to federal court, moved to compel arbitration under the Federal Arbitration Act, arguing that, by using the Barnes & Noble website, Nguyen had agreed to an arbitration clause contained in Barnes & Noble’s Terms of Use. Nguyen responded that he could not be bound to the arbitration clause because he had no notice of and did not consent to the Terms of Use. Barnes & Noble countered that the placement of the Terms of Use hyperlink on its website had given Nguyen constructive notice of the arbitration clause.The district court agreed with Nguyen, Barnes & Noble appealed, and the Ninth Circuit affirmed.We have previously surveyed the law in this area <a href="http://www.sociallyawareblog.com/2012/11/01/thats-a-wrap-nguyen-v-barnes-noble/" target="_blank" rel="noopener">here</a> (regarding the Nguyen district court decision) and <a href="http://www.sociallyawareblog.com/2012/02/21/click-accept-arbitration-enforcing-arbitration-provisions-in-online-terms-of-service/" target="_blank" rel="noopener">here</a> (regarding other decisions involving online arbitration clauses). The Ninth Circuit’s opinion in Nguyen is generally consistent with the existing caselaw, which suggests that, absent evidence of affirmative consent, courts are reluctant to find that parties—especially consumers—are bound by arbitration clauses contained in online terms of use agreements.In Nguyen, it was established that Barnes & Noble made available a hyperlink to its Terms of Use at the bottom left corner of each page on its website. Further, on each page of the website’s online checkout process, Barnes & Noble presented, underlined and in green type, a hyperlink to its Terms of Use. However, it was apparently undisputed that Nguyen had neither clicked on the Terms of Use hyperlink nor actually read the Terms of Use.To determine whether a valid arbitration clause exists, <a href="https://supreme.justia.com/cases/federal/us/514/938/case.html" target="_blank" rel="noopener">courts apply ordinary state law principles of contract formation</a>. Interestingly, in Nguyen, the Ninth Circuit applied New York law as provided in the Barnes & Noble Terms of Use even though the question was whether such Terms of Use were a valid agreement in the first instance. The Ninth Circuit noted, however, that its analysis would be the same under California law as under New York law.Applying New York law, the Ninth Circuit examined the law of “clickwrap” and “browsewrap” agreements and commented that “[t]he defining feature of browsewrap agreements is that the user can continue to use the website or other services without visiting the page hosting the browsewrap agreement or even knowing that such a web page exists.” Thus, the Ninth Circuit observed, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of the website’s terms and conditions.The Ninth Circuit noted that courts have consistently enforced browsewrap agreements where the user had actual notice of the agreement but pointed out that courts are more willing to enforce browsewrap agreements where the browsewrap agreement resembles a clickwrap agreement, i.e., where the user is required to affirmatively acknowledge the agreement in some way.The Ninth Circuit further stated that where, as in the case of Nguyen, no evidence exists that the user had any knowledge of a browsewrap agreement, the validity of such agreement turns on whether the disclosure of the agreement on the website is sufficient to put a reasonably prudent user on notice of the terms and conditions of such agreement. This inquiry turns on the design and content of the website. Where the link to the terms of use is hidden at the bottom of the page or tucked away in obscure corners of the website, notice is not sufficient.The Ninth Circuit’s analysis in Nguyen relies heavily on the Second Circuit’s decision in <a href="http://cyber.law.harvard.edu/stjohns/Specht_v_Netscape.pdf" target="_blank" rel="noopener">Specht v. Netscape Communications Corp.</a>, 306 F.3d 17 (2d Cir. 2002), in which the Second Circuit had rejected an arbitration clause in a terms of use agreement for inadequate notice. The Ninth Circuit acknowledged that Barnes & Noble’s placement of the link to its Terms of Use at the bottom left of every page and also close to the buttons a user must click to complete a transaction distinguished the case from Specht, in which the link at issue was on a submerged screen that could not be seen unless the user scrolled past the button that initiated the relevant transaction. However, the Ninth Circuit held that the proximity or conspicuousness of the hyperlink alone was not enough to give rise to constructive notice. Rather, the Ninth Circuit said, the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.What then must a website owner do to provide the requisite notice? A clear manifestation of consent is the safest way to ensure enforceability—for example, by requiring the user to check an unchecked box before allowing the user to complete a transaction.The Ninth Circuit also suggests in Nguyen that a clear textual notice on the website that continued use will act as a manifestation of the user’s intent to be bound by the terms of use may also result in an effective agreement.It also noted in a footnote that the standard may be higher where agreements are being enforced against consumers than against business entities.In any event, Nguyen is a wake-up call for website operators for whom it is critical that an arbitration clause embedded in their website terms of use is enforceable; serious consideration needs to be given to how best to strengthen the enforceability of such clause in the wake of the Ninth Circuit’s decision.More generally, Nguyen is a reminder for all website operators that those ubiquitous browsewrap terms of use—found on nearly every website big and small across the entire span of the Internet—have serious limitations as a tool for legally binding site visitors and mitigating risks.

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To Click or Not to Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

To Click or Not to Click? Ninth Circuit Rejects Browsewrap Arbitration Clause

In Kevin Khoa Nguyen v. Barnes & Noble Inc., 2014 U.S. App. LEXIS 15868 (9th Cir. 2014), decided on August 18, 2014, the Ninth Circuit rejected an attempt to bi

A federal district court broke new social media law ground in August 2014 when it held in favor of the cable network Black Entertainment Television (BET) in a suit brought by the founder of an unofficial Facebook fan page for one of the network’s television shows. In holding that BET acted lawfully when it asked Facebook to transfer the fan-created page’s “likes” to a BET-sponsored page, the U.S. District Court for the Southern District of Florida established important precedent: The only individual who can possibly claim to own a “like” on a Facebook page is the individual user responsible for it.BackgroundInsurance agent Stacey Mattocks was so devoted to the television series The Game that she created an unofficial Facebook fan page for the show in 2008. By the time BET acquired the rights to The Game from the CW Network in 2009, Mattocks’ fan page had garnered a huge following, and BET—<a href="http://www.mediabistro.com/prnewser/bet-lawsuit-raises-the-question-who-owns-a-facebook-fan-page_b68706" target="_blank" rel="noopener">reportedly</a> having failed to attract similar support for the show’s official fan page—wanted to capitalize on the social media audience that Mattocks had amassed.Thus began a series of negotiations between Mattocks and BET, with Mattocks at one point managing the page for the Viacom-owned cable channel for $30 an hour. During Mattocks’ tenure in that part-time position, BET provided her with exclusive content to post on the Facebook page and began displaying its trademark and logos on it. The page’s following grew from two million to more than six million fans.At this point, in early 2011, Mattocks and BET entered into a letter agreement granting BET administrative access to the Facebook page and the right to post content on it in exchange for the network’s promise not to change Mattocks’ administrative rights to the page. But Mattocks broke the agreement in 2012 when, after refusing <a href="http://www.hollywoodreporter.com/thr-esq/bet-wins-legal-war-tv-726594" target="_blank" rel="noopener">a reported $85,000 annual salary offer</a> from BET, she cut off the network’s control of the Facebook page and informed BET that she would maintain that restriction until the parties reached “an amicable and mutually beneficial resolution” concerning her employment.BET reacted to being cut off by asking Facebook to “migrate” the page’s fans to a BET-sponsored page. After determining that the BET-sponsored page officially represented The Game’s brand owner, Facebook complied. Twitter also complied with BET’s separate request to disable The Game Twitter account that Mattocks maintained.Mattocks filed suit in the U.S. District Court for the Southern District of Florida, alleging that BET tortiously interfered with Mattocks’ contractual relationships with Facebook and Twitter; breached its letter agreement with Mattocks; breached a duty of good faith and fair dealing with Mattocks; and converted a business interest that Mattocks had in the page. In late August 2014, the court held that BET was entitled to summary judgment on all of Mattocks’ claims.The Dismissal of the Conversion ClaimIn his <a href="https://www.docketalarm.com/cases/Florida_Southern_District_Court/0--13-cv-61582/Mattocks_v._Black_Entertainment_Television_LLC/101/" target="_blank" rel="noopener">opinion</a>, Judge James Cohn set out the case’s most significant holding—that Mattocks couldn’t establish a property interest in the “likes” on the Facebook page that she maintained for The Game—in the context of dismissing Mattocks’ conversion claim. To prove a conversion claim under Florida law, Judge Cohn stated that “a plaintiff must offer facts sufficient to show ownership of the subject property.” Mattocks couldn’t establish that she owns a property interest in the “likes” on The Game’s Facebook page, Judge Cohn held, because of “the tenuous relationship between ‘likes’ on a Facebook page and the creator of the page,” as is evidenced by the fact that a Facebook user always maintains the ability to revoke a “like” by clicking an “unlike” button.The court further opined that—based on <a href="http://scholar.google.com/scholar_case?case=11461417238704949436&hl=en&as_sdt=6&as_vis=1&oi=scholarr" target="_blank" rel="noopener">a case</a> holding that a public employee’s “like” of a political-campaign page constitutes a protected form of free speech—“if anyone can be deemed to own the ‘likes’ on a page, it is the individual users responsible for them.”The Opinion’s Impact on BusinessesThe Mattocks v. Black Entm’t case highlights the need for a company to have appropriate agreements in place with its employees and contractors who manage social media accounts for the company’s brands.Such agreements ideally should set out the company’s ownership of the applicable social media accounts (although remember to review the terms of use for the relevant social media platforms to ensure consistency with respect to account ownership status); ensure account passwords are controlled by company; and address the consequences of the employee’s or consultant’s possible termination.Regarding account passwords, be wary of vesting full administrative access to a company social media account in a single employee; by providing for shared administrative access, a company increases the likelihood of maintaining access to such account even if one of the company’s social media managers is terminated. And, of course, a company should change its account passwords after ending its relationship with any employee or contractor who had been provided with access to such passwords. (For other risk-reduction tips on this subject, please see our earlier article, “Ownership of Business-Related Social Media Accounts,” located <a href="/topics/ownership-of-business-related-social-media-accounts-2" target="_self" rel="noopener">here</a>.)

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She Liked It. She Really, Really Liked It: Federal District Court Holds Facebook Fan Page Manager Doesn’t Own “Likes”

She Liked It. She Really, Really Liked It: Federal District Court Holds Facebook Fan Page Manager Doesn’t Own “Likes”

A federal district court broke new social media law ground in August 2014 when it held in favor of the cable network Black Entertainment Television (BET) in a s

“Web scraping” or “web harvesting”—the practice of extracting large amounts of data from publicly available websites using automated “bots” or “spiders”—accounted for 18% of site visitors and 23% of all Internet traffic in 2013. Websites targeted by scrapers may incur damages resulting from, among other things, increased bandwidth usage, network crashes, the need to employ anti-spam and filtering technology, user complaints, reputational damage and costs of mitigation that may be incurred when scrapers spam users, or worse, steal their personal data.Though sometimes difficult to combat, scraping is quite easy to perform. A simple online search will return a large number of scraping programs, both <a href="http://scraping.pro/software-for-web-scraping/">proprietary</a> and <a href="http://scrapy.org/">open source</a>, as well as <a href="http://blog.hartleybrody.com/web-scraping/">D.I.Y. tutorials</a>. Of course, scraping can be beneficial in some cases. Companies with limited resources may use scraping to access large amounts of data, spurring innovation and allowing such companies to identify and fill areas of consumer demand. For example, <a href="https://www.mint.com/">Mint.com</a> reportedly used screen scraping to aggregate information from bank websites, which allowed users to track their spending and finances. Unfortunately, not all scrapers use their powers for good. In one case on which we <a href="https://www.sociallyawareblog.com/2014/04/10/jerked-around-did-the-ftcs-jerk-com-complaint-just-turn-api-terms-into-federal-law/">previously reported</a>, the operators of the website <a href="http://jerk.com/">Jerk.com</a> allegedly scraped personal information from Facebook to create profiles labeling people “Jerk” or “not a Jerk.” According to the <a href="http://www.ftc.gov/news-events/press-releases/2014/04/ftc-charges-operators-jerkcom-website-deceiving-consumers">Federal Trade Commission</a> (FTC), over 73 million victims, including children, were falsely told they could revise their profiles by paying $30 to the website.Website operators have asserted various claims against scrapers, including <a href="http://www.internetlibrary.com/pdf/Ticketmaster-Tickets.com-SJ-Motion.pdf">copyright claims</a>, <a href="http://law.justia.com/cases/federal/district-courts/FSupp2/100/1058/2478126/">trespass to chattels claims</a> and <a href="http://law.justia.com/cases/federal/appellate-courts/F3/356/393/539823/">contract claims</a> based on allegations that scrapers violated the websites’ terms of use. This article, however, focuses on another tool that website operators have used to combat scraping: the federal <a href="http://www.law.cornell.edu/uscode/text/18/1030">Computer Fraud and Abuse Act</a> (CFAA).The CFAA imposes liability on “whoever…<a href="http://www.law.cornell.edu/uscode/text/18/1030">intentionally accesses a computer without authorization or exceeds authorized access</a>, and thereby obtains…information from any protected computer…” While the CFAA is primarily a criminal statute, it also provides for a civil remedy where a plaintiff suffers more than $5,000 in aggregate losses during any one-year period arising from a violation of the CFAA. For large website operators asserting CFAA claims against scrapers, the $5000 damages requirement has not proven to be a difficult obstacle to overcome. For example, in CollegeSource, Inc. v. AcademyOne, Inc., the District Court for the Eastern District of Pennsylvania found that the plaintiff’s cost of initiating an internal investigation of the defendant’s website, hiring a computer expert to analyze the scope of the defendant’s actions and implementing increased security measures were well in excess of $5,000. Similarly, in <a href="https://www.eff.org/files/filenode/facebook_power_order.pdf">Facebook, Inc. v. Power Ventures, Inc.</a>, the District Court for the Northern District of California found that the plaintiff’s expenditures made in response to defendant’s specific acts, which included three to four days of engineering time, $75,000 in outside counsel costs and the costs of responding to a minimum of 60,000 instances of spamming by defendant, were well in excess of the statutory threshold. The more difficult question is whether scraping violates the CFAA at all.The CFAA was originally intended as an anti-hacking statute and its application to scraping—which, after all, usually involves accessing publicly-available data on a publicly-available website—is not always a foregone conclusion. Does a scraper access a website “without authorization” or “exceed authorized access” when it harvests publicly available data on a publicly available website? Plaintiffs often argue that scrapers act without authorization because the websites’ online terms of use prohibit scraping and/or prohibit the scrapers’ use of the data that they harvest. As discussed below, such claims have met with success in some cases, but courts have been less willing to find a CFAA violation in other scraping cases.In <a href="https://h2o.law.harvard.edu/collages/41836">Cvent, Inc. v. Eventbrite</a>, Cvent sued Eventbrite for scraping Cvent’s website to obtain venue information and using the information in Eventbrite’s “Venue Directory.” Cvent claimed that this was a violation of the CFAA because Cvent’s terms of use specifically stated that such activities were unauthorized. The District Court for the Eastern District of Virginia held that Eventbrite’s actions did not constitute “hacking” in violation of the CFAA because the information was publicly available; Cvent’s website did not require any login, password or other individualized grant of access; and Cvent’s terms of use were difficult to locate. Therefore, the court granted Eventbrite’s motion to dismiss, concluding that Eventbrite was authorized to access the information on Cvent’s website, and that the mere allegation that Eventbrite used the information inappropriately was not grounds for relief under the CFAA.Power Ventures, the defendant in Facebook, Inc. v. Power Ventures, Inc., operated a social media account integration site. As part of a promotion to gain new members, Power Ventures provided users with a list of their Facebook friends, which Power Ventures obtained through scraping the Facebook website, and asked users to select friends to invite to use the Power Ventures site. Facebook notified Power Ventures that its access was unauthorized and blocked Power Ventures’ IP addresses. However, Power Ventures’ scraping technology was designed to circumvent such technological measures and the scraping continued. The District Court for the Northern District of California held that Power Ventures’ accessing of Facebook was without authorization and violated the CFAA and accordingly, granted summary judgment to Facebook on the CFAA claim.CollegeSource, the plaintiff in CollegeSource, Inc. v. AcademyOne, Inc., maintained an archive of college course catalogs in PDF format and a hyperlink service called CataLink, both of which it made available to paying subscribers. AcademyOne, a CollegeSource subscriber, hired a third party to download college catalogs directly from college websites in order to compile a course description database. However, the third party instead copied some of the PDF documents from CollegeSource through CataLink. AcademyOne removed the CollegeSource documents from its system after receiving a cease and desist letter from CollegeSource, but CollegeSource nonetheless proceeded to bring a number of claims against AcademyOne, including CFAA claims based on the argument that AcademyOne accessed the documents without authorization and exceeded authorized access. The court held, however, that AcademyOne did not access the documents without authorization because those documents were available to the general public. CollegeSource’s argument that AcademyOne exceeded authorized access was based on AcademyOne’s alleged violation of CollegeSource’s terms of use. The Court acknowledged that accessing a website in violation of the applicable terms of use has been held to support a CFAA claim in some cases, but was unconvinced by CollegeSource’s argument here because CollegeSource’s subscription agreement did not cover CataLink. Accordingly, the court granted summary judgment to AcademyOne on the CFAA claims. In <a href="http://www.volokh.com/wp-content/uploads/2013/08/Order-Denying-Renewed-Motion-to-Dismiss.pdf">Craigslist Inc. v. 3Taps Inc.</a>, 3Taps allegedly scraped Craigslist’s website and republished Craigslist ads on its own site, craiggers.com.  In response, Craigslist sent 3Taps a cease and desist letter revoking 3Taps’s authorization to access Craigslist’s website for any purpose, and reconfigured the website to block 3Taps.  When 3Taps allegedly continued its scraping activities by using different IP addresses and proxy servers to conceal its identity, Craigslist brought suit under the CFAA.  Even though Craigslist’s website was publicly available, the District Court for the Northern District of California declined to grant 3Taps’ motion to dismiss the CFAA claim.  According to the court, while Craigslist may have granted the world permission to access its website, it retained the power to revoke that permission on a case-by-case basis, a power it exercised when it sent the cease and desist letter and blocked 3Taps’s IP addresses. Therefore, 3Taps’ continued access was without authorization. The court also rejected 3Taps’ attempt to invoke the Ninth Circuit’s decision in United States v. Nosal.  In Nosal, the Ninth Circuit had held that an employee’s use of information in violation of an employer’s policies did not constitute a CFAA violation where the employee’s initial access to the employer’s computer system was authorized.  The court in 3Tap’s concluded, however, that the “calculus is different where a user is altogether banned from accessing a website,” as was the case with 3Taps.Fidlar, the plaintiff in <a href="http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1565&context=historical">Fidlar Technologies v. LPS Real Estate Data Solutions, Inc.</a>, provides its Laredo program to governmental agencies, such as county clerks’ offices, which use Laredo to make public records available for viewing over the Internet. Laredo prevents users from downloading or electronically capturing the documents they view. Users who want a copy of a public record must pay the county a print fee. LPS, a real estate analytics company, contracted with many counties to access their public records using Laredo, but used a scraping program to capture documents electronically without paying any fees. Fidlar sued LPS for violating section 1030(a)(5)(A) of the CFAA, which imposes liability on anyone who “…knowingly causes the transmission of a program, code, or command, and as a result…<a href="http://www.law.cornell.edu/uscode/text/18/1030">intentionally causes damage without authorization, to a protected computer</a>.” The District Court for the Central District of Illinois denied LPS’s motion to dismiss the CFAA claim, holding that Fidlar’s complaint properly alleged that LPS undertook intentional actions that, among other elements of damage, compromised the integrity of Laredo.In light of the cases discussed above, it seems that plaintiffs are likely to have more success asserting CFAA claims against scrapers where they clearly and unambiguously revoke authorization to access their websites and take affirmative steps to block the scrapers, as in 3Taps and Power Ventures. In contrast, when the scraper ceases scraping after access is revoked and takes remedial action, as in CollegeSource, courts may be less willing to impose CFAA liability. As seen in Cvent, a mere terms of use violation, particularly where the scraper may not have actual notice of the terms of use, may not support a CFAA claim. Whether the scraper is simply using software to collect publicly available information more efficiently or to do something else—such as to avoid paying fees for the information, as seen in Fidlar—may also be relevant. In any event, in an era when data is expensive to collect, valuable to have and cheap to take, the CFAA, when properly used, remains a viable tool to combat scrapers.

Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.

Aaron Rubin

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Data for the Taking: Using the Computer Fraud and Abuse Act to Combat Web Scraping

Data for the Taking: Using the Computer Fraud and Abuse Act to Combat Web Scraping

“Web scraping” or “web harvesting”—the practice of extracting large amounts of data from publicly available websites using automated “bots” or “spiders”—account

In a closely watched case, the U.S. Supreme Court ruled today in a 6-3 decision that Aereo’s Internet streaming service engages in unauthorized public performances of broadcast television programs in violation of the Copyright Act, reversing the Second Circuit’s decision in American Broadcasting Companies, Inc. v. Aereo, Inc. (No. 13-461).In ruling against Aereo, the Court sought to limit its decision to Aereo’s service—which the Court considered to be “equivalent” to that of a traditional cable company—and noted that it was not addressing the legality of cloud storage lockers, remote-storage DVRs and other emerging technologies.  But the Court’s interpretation of the public performance right in the context of Aereo’s technology will nevertheless influence future decisions on whether the transmission of content using other technology constitutes copyright infringement.BackgroundAereo provides broadcast television streaming and recording services to its subscribers, who can watch selected programming on various Internet-connected devices, including smart televisions, computers, mobile phones and tablets.  Aereo provides its service through individual, “dime-sized” antennas that pick up local television broadcast signals and transmit those signals to an Aereo server where individual copies of programs embedded in such signals are created and saved to the directories of those subscribers who want to view such programs.  A subscriber can then watch the selected program nearly live (subject to a brief time delay from the recording) or later from the recording.  No two users share the same antenna at the same time, nor do any users share access to the same stored copy of a program.In 2012, various broadcasting companies sued Aereo for copyright infringement in the Southern District of New York, claiming, among other things, that Aereo’s transmission of the plaintiffs’ copyrighted content to Aereo’s subscribers violated the copyright owners’ exclusive right to publicly perform those works.  That public performance right, codified in the 1976 Copyright Act, includes (1) any performance at a place open to the public or any gathering with a substantial number of people outside the “normal circle of family and social acquaintances,” and (2) the transmission of a performance to the public, whether or not those members of the public receive it in the same location and at the same time.  This latter provision, commonly referred to as the “Transmit Clause,” was added to the Copyright Act by Congress in part to overturn earlier Supreme Court decisions that had allowed cable companies to retransmit broadcast television signals without compensating copyright owners.The district court denied the broadcast companies’ preliminary injunction requests, finding that, based on Second Circuit precedent, Aereo’s transmissions were unlikely to constitute public performances.  The Second Circuit affirmed the decision, relying on that court’s earlier decision in Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”), which found that a cable company’s remote-storage DVR system did not run afoul of the public performance right because each transmission emanated from a unique copy of a program that was sent only to an individual user.  The Second Circuit held that Aereo does not engage in public performances because, as in Cablevision, Aereo’s system makes unique copies of every recording, and each transmission of a program to a customer is generated from that customer’s unique copy.  The Supreme Court’s RulingThe Supreme Court addressed two questions regarding the public performance right: (1) Does Aereo “perform” a copyrighted work? (2) Is that performance “public”?  The answer to both questions, according to the Court, is yes.PerformanceThe Court held that Aereo’s service does “perform” audiovisual works under the Copyright Act’s definition of that term, which is to “show [the audiovisual work’s] images in any sequence or make the sounds accompanying it audible.”  According to the Court, under this definition, “both the broadcaster and the viewer of a television program ‘perform.’”  (Op. at 7.)  The Court (contrary to the Second Circuit and the dissent) disagreed with Aereo’s argument that it was simply a supplier of equipment that allows users to perform content, and that it did not itself perform such content.  Instead, the Court determined that Aereo was essentially no different in substance than a traditional cable company, to which Congress expressly intended to have the public performance right apply.The technological difference between Aereo and traditional cable systems at issue when the Transmit Clause was enacted—that the latter systems transmitted content constantly while Aereo’s system remains inert until a subscriber indicates that she wants to watch a program—was insignificant to the Court.  “Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here. . . . [T]he many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.  We conclude that Aereo is not just an equipment supplier and that Aereo ‘perform[s].’”  (Op. at 10.)PublicThe Court also held that Aereo transmits its performance of the copyrighted works to the public.  An entity transmits a performance if it “communicate[s] by any device or process whereby images or sounds are received beyond the place from which they are sent.”  (Op. at 11.)  Although initially only an assumed definition for the purposes of evaluating Aereo’s argument, the Court appeared to accept the definition that transmitting an audiovisual performance requires communicating “contemporaneously perceptible images and sounds of a work.”  Because Aereo’s service satisfied this definition, the Court went on to note that the Transmit Clause of the Copyright Act contemplates that an entity can transmit a performance “through one or several transmissions, where the performance is of the same work.”  Accordingly, the Court concluded that “when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.”  (Op. at 14.)That transmission is also public because Aereo communicates “the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.”  (Op. at 14.)  Although not cited in the Court’s opinion, a similar circumstance involving transmission of content to people who were “unrelated and unknown to each other” was found to be a public performance in On Command Video Corp. v. Columbia Pictures Industries, 777 F. Supp. 787 (N.D. Cal. 1991), which established that electronic delivery of a movie video tape signal to a single hotel room, pursuant to a system consisting of a computer program, a sophisticated electronic switch and a bank of video cassette players, was a public performance under the Copyright Act.The fact that the Aereo service involves individual recordings for each subscriber that plays each recording only to its designated subscriber is, according to the Court, just the “behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens” but “do not render Aereo’s commercial objectives any different from that of cable companies” or “significantly alter the viewing experience of Aereo’s subscribers.”  (Op. at 12.)Again the Court explained that Aereo was conceptually no different than a cable company.  “In terms of the Act’s purposes, these differences do not distinguish Aereo’s system from cable systems, which do perform ‘publicly.’  Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter?”  (Op. at 12.)The Court ultimately held that:  “Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service.  We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act.”  (Op. at 17.)Attempts to Avoid the CloudThe Court expressly dismissed concerns over how its decision will affect other areas of technology, and stated that it did not see this dispute as a cloud or remote storage case, but rather, a cable company “equivalent” situation.  (Op. at 16.)Indeed, the Court specifically stated that it did not believe its “limited holding” would “discourage” or “control the emergence or use of different kinds of technologies.”  The Court even laid out areas that its decision did not reach, including “whether different kinds of providers in different contexts also ‘perform’” and “whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyright works, such as the remote storage of content,” and encouraged entities concerned about these areas to “seek action from Congress.”  (Op. at 16-17.)  Notably, however, the Court did hold that “an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to ‘the public’”—a seeming nod to the validity of cloud locker services (at least where users are storing authorized copies of works in their lockers).  (Op. at 15.)  Moreover, the Court stated that “[a]n entity does not transmit to the public if it does not transmit to a substantial number of people outside of a family and its social circle.”  (Op. at 15-16.)Regardless, any evaluation of whether the transmission of content—whether by new or existing technology—violates the public performance right will have to be viewed under the language of the Aereo decision.  For example, while the Second Circuit’s Cablevision decision is not expressly overruled or even examined in the Aereo decision, any future determination as whether remote-storage DVR technology violates the public performance right would likely first be analyzed under Aereo—not Cablevision, at least outside of the Second Circuit.  And, within the Second Circuit, one envisions a lively, ongoing debate as to what extent Cablevision dealt with transmissions to individuals in their capacities as owners or possessors of the products at issue, which, as noted above, the Supreme Court viewed as a situation left unaffected by its Aereo ruling.Finally, while Aereo’s service was likened to a cable system, Aereo—and perhaps other technology comparable to Aereo’s—is not a cable system under any other definition, including Section 111 of the Copyright Act governing secondary transmissions of broadcast programming by cable systems.  Therefore, an open issue is what effect the Aereo decision will have on the future of these types of cable-esque services, such as Aereo, assuming they want to continue to operate, and particularly whether they will attempt to license from the copyright owners the content that these services seek to distribute.

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Supreme Court Stifles Aereo, but Tries to Keep the Cloud Away

Supreme Court Stifles Aereo, but Tries to Keep the Cloud Away

In a closely watched case, the U.S. Supreme Court ruled today in a 6-3 decision that Aereo’s Internet streaming service engages in unauthorized public performan

The safe harbor provisions in <a href="http://www.law.cornell.edu/uscode/text/17/512" target="_blank" rel="noopener">§ 512(c) of the Digital Millennium Copyright Act (DMCA)</a> provide a mechanism that insulates online service providers from monetary damages for infringing materials posted or stored by their users.  To receive this protection, service providers must designate an agent to receive notice of claims of infringement with the Copyright Office and publicly post the agent’s contact information on the website.  A recent case in the Northern District of California, Oppenheimer v. Allvoices, Inc., examined whether service providers can avail themselves of the § 512(c) safe harbor for infringing acts that precede designation of such an agent.<a href="http://www.allvoices.com/" target="_blank" rel="noopener">Allvoices</a> is an online service provider that maintains a community-driven platform for the exchange of ideas as well as graphical, written, and audio content.  Allvoices provides users with financial incentives to upload content to the site, and treats such users as “citizen journalists” and independent contractors.  While it began providing access to contributor content in 2008, Allvoices did not designate its DMCA agent until March 2011.The plaintiff, <a href="http://www.performanceimpressions.com/" target="_blank" rel="noopener">David Oppenheimer</a>, is a professional photographer whose photographs were posted on Allvoices’s website by contributors in January 2011.  Oppenheimer learned that his photographs had been posted on the Allvoices website in February 2011, prior to Allvoices’s DMCA agent designation.  Oppenheimer sent a cease and desist letter to Allvoices in August 2011, several months after Allvoices designated its DMCA agent.  While Allvoices eventually removed the photographs, Oppenheimer alleged that Allvoices failed to reply to his cease and desist letter and failed to terminate the accounts of repeat infringers, as required by the DMCA. Allvoices argued that it was entitled to the protection of the § 512(c) safe harbor for all alleged infringements, not just infringement occurring after it had designated its DMCA agent.  Allvoices did not cite any authority for this position, but maintained that, because the DMCA does not expressly carve out or preserve liability for pre-designation infringement, Congress had intended for the safe harbor to apply to such infringement.The court rejected Allvoices’s argument and held that, under the plain language of the DMCA, an online service provider may invoke the § 512(c) safe harbor only if it has registered a DMCA agent with the Copyright Office.  According to the court, designation of an agent is a “predicate, express condition” for application of the safe harbors, so Allvoices could not avail itself of the safe harbors with respect to infringement that occurred prior to designation.  The court cited two previous Northern District of California cases that came to similar conclusions, Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. and Nat’l Photo Group, LLC v. Allvoices, Inc. (note that Allvoices was also a defendant in the latter case).  On the merits, the court held that Oppenheimer sufficiently alleged claims of direct, contributory, and vicarious infringement to overcome Allvoices’s motion to dismiss those claims.A question remains regarding the period of time during which Allvoices may be liable for infringement of Oppenheimer’s photographs.  Specifically, the court did not address whether Allvoices’s potential liability is limited to the period during which the photographs were posted on Allvoices’s website prior to the date that Allvoices designated its DMCA agent with the Copyright Office.  Regardless, the message is clear: online service providers should designate a DMCA agent with the Copyright Office as early as possible in order to obtain the protection of the applicable DMCA safe harbors.

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Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent

Court Holds That DMCA Safe Harbor Does Not Extend to Infringement Prior to Designation of Agent

The safe harbor provisions in § 512(c) of the Digital Millennium Copyright Act (DMCA) provide a mechanism that insulates online service providers from monetary 

In recent weeks, numerous businesses have received letters asserting that their websites are not accessible to persons with disabilities, in violation of the Americans with Disabilities Act and California’s Unruh Act. These letters threaten litigation and warn of large penalty claims under the Unruh Act.  What these letters do not report is that California courts have repeatedly rejected claims that the ADA and Unruh require accessible websites, including a recent dismissal order from Judge David Carter of the Central District of California.In Jancik v. Redbox, plaintiff claimed that Redbox Digital’s online streaming video service violated the law by not being accessible to deaf consumers. The court rejected the claim, finding that “Redbox Digital’s website, which offers Redbox Instant, is not a ‘place of public accommodation.’ (Jancik, Slip Op. at p. 11.) The court followed up by holding that Jancik’s Unruh Act claims cannot proceed separately from his ADA claim. (Id. at p. 12.) This decision followed an earlier decision in Cullen v. Netflix dismissing ADA and Unruh Act claims on identical grounds.In light of these decisions, website operators need not fall prey to demand letters threatening action without immediate payment of penalties and attorney’s fees. Existing law does not support the claims.While Ninth Circuit law does not presently allow a claim, website accessibility remains a hot topic among governmental regulators, disability access advocates, and plaintiffs’ counsel. Just recently, the Department of Justice announced that long-delayed regulations phasing in standards for websites would be delayed until, at least, next March. Those delays, however, have not prevented the law from evolving rapidly and applicable standards may be different outside California and the Ninth Circuit. Understanding where the law is and where it is likely to move will allow companies to make better decisions about their investments in websites and mobile applications. As one of the leaders in understanding and addressing accessibility issues in the digital world, we can help guide you through the complex and evolving landscape.

Websites Hit With Demand Letters on Accessibility Issues Despite Courts’ Rejection of Claim