During early 2003, unknown persons leaked or intercepted an archive containing thousands of emails exchanged between employees at Diebold, a company that makes e-voting machines. Some of the emails exposed e-voting insecurities, already the subject of considerable public controversy. To promote further public discussion, Plaintiffs Nelson Chu Pavlosky and Luke Thomas Smith, Swarthmore College students, and other individuals, reproduced the email archive on their websites, which in turn were linked to by additional sites. To prevent the public viewing the archive, Diebold sent cease and desist letters to multiple internet service providers (ISPs), including Swarthmore College, the non-profit Online Policy Group (“OPG”), and its upstream OSP, Hurricane Electric. Diebold claimed the emails were copyright protected and invoked the DMCA’s notice and take down procedures. 17 U.S.C. § 512. Swarthmore required Pavlosky and Smith to remove the archive from sites it hosted and Hurricane indicated it might terminate OPG’s service if a link to the archive was not removed from a site hosted by OPG. Pavlosky, Smith, and OPG subsequently brought suit alleging that Diebold had tortiously interfered with their contractual relations with their ISPs, misused copyright, and violated § 512(f) of the Copyright Act, which prohibits knowing and material misrepresentation under the DMCA that content is infringing. They requested damages, injunctive relief, and a declaratory judgment that publishing, cohosting, or providing services to websites that linked to the email archive were noninfringing.
Both sides brought motions for summary judgment. Because Diebold withdrew
its DMCA letters before judgment could be entered and represented that it would not send any more in relation to the archive, the court held that the plaintiffs’ claims for injunctive and declaratory relief were moot. It also concluded that plaintiffs had withdrawn their copyright misuse claim and that their tortious interference with contract claim was preempted by federal law
Turning to the remaining claim, knowing and material misrepresentation under
§ 512(f), the court held that publishing or hyperlinking to at least part of the archive was protected by the fair use doctrine due to its public interest importance, the lack of impact on its market value (Diebold had no intention to publish or sell it), and the transformative effect of using it for critical purposes. The court found that Diebold had sent the letters to suppress speech, not to vindicate legitimate copyright interests. In deciding whether Diebold’s conduct rose to the level of knowing and material misrepresentation, the court rejected that a type of preliminary injunction standard—likelihood of success on the merits—should apply as the plaintiffs had argued or that it need qualify as a Rule 11 violation (i.e., as “frivolous”) as Diebold had suggested. Instead the court relied on the plain meaning of the statutory language: “’Knowingly’ means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations. . . . ‘Material’ means that the misrepresentation affected the ISP’s response to a DMCA letter.” (12) Applying this standard, the court held that Diebold had knowingly ignored that “portions of the email archive clearly [were] subject to the fair use exception” and sent the letters anyway to suppress publication, resulting in removal of the archive and the present lawsuit. (12)
Before the court had an opportunity to decide to what monetary relief, including attorneys fees and costs, the plaintiffs were entitled, Diebold agreed to pay $125,000, which they accepted.
