Packets: Vol. 1, No. 1 - September 22, 2003

On-line Application of Vermont “harmful to minors” Law Violates First Amendment and Dormant Commerce Clause

American Booksellers addresses the ability of states to regulate on-line transmission of sexually explicit material to minors. The case raises the specific question whether a state statute that limits electronic distribution of sexually explicit material—though it requires knowledge by the distributor that the recipient is a minor—nonetheless violates the First Amendment and dormant Commerce Clause. At stake is a recently enacted Vermont Statute, 13 V.S.A. § 2802(a), that prohibits electronic distribution of sexually explicit material deemed “harmful to minors” when the distribution occurs “outside the presence of a minor” but with “actual knowledge” by the distributor that the recipient is a minor. Plaintiffs Sexual Health Network, Inc., a for-profit corporation distributing sexuality-related information through its website, and American Civil Liberties Union of Vermont, whose website contains links to websites with sex-related information, filed suit against Vermont’s Governor, Attorney General and various State’s Attorneys to enjoin enforcement of 13 V.S.A. § 2802(a). The case was heard by the Second Circuit on appeal from a decision for plaintiffs at the District Court for the District of Vermont.

Fight Over the Applicability of GLBA Privacy Provisions to Lawyers to Continue

The Gramm-Leach Blilely Act (GLBA) was passed by Congress in November 1999. The Act encourages affiliations between financial institutions that would facilitate the sharing of consumer’s personal information. As a result, the GLBA also contains privacy provisions applicable to “financial institutions” that give consumers the power to decide whether financial institutions can disclose their personal information. The Federal Trade Commission (FTC) issued an Opinion Letter stating that these privacy provisions are applicable to practicing attorneys who engage in certain financial activities. According to the FTC, attorneys who provide real estate settlement, tax-planning, or tax-preparation services are “financial institutions” under the meaning of the GLBA. In response to this decision, the New York State Bar Association (NYSBA) and the American Bar Association (ABA) brought forth an action in the District Court of the District of Columbia alleging that the FTC’s decision should be set aside pursuant to the Administrative Procedure Act (APA). They claimed that the FTC’s action was (1) “in excess of statutory jurisdiction, authority, or limitations, or short of statutory right,” 5 U.S.C. §706(2)(C) and (2) “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” 5 U.S.C. §706(2)(A). The FTC filed a Motion to Dismiss the complaints for failure to state claims upon which relief can be granted under Fed. R. Civ. P. 12(b)(6). Upon examination of the issues, the court held that the plaintiffs’ allegations are of merit and denied the motion to dismiss the claims.

Ninth Circuit Derives Personal Jurisdiction from Internet, Catalog Sales

The Ninth Circuit Court of Appeals has held that L.L. Bean's Internet, catalog, and mail-order retail operations are sufficient to support personal jurisdiction in California, even though the company has no physical presence in the state. The court held that L.L. Bean's marketing and retail activities, combined with the "virtual store" found on its web site, created a "consistent and substantial pattern of business relations" in California, sufficient to confer personal jurisdiction over the Maine-based company. Defendant Gator.com is a software and advertising company whose program monitors Internet users' web surfing and displays pop-up windows when users visit certain web sites. When users visited L.L. Bean's web site, Gator's program displayed a pop-up. In March 2001, L.L. Bean sent Gator a cease-and-desist letter demanding that Gator stop its program from displaying pop-up windows on L.L. Bean's web site offering coupons for Eddie Bauer, an L.L. Bean competitor.

Wine-by-Mail Ban Struck Down Under Dormant Commerce Clause

The Sixth Circuit considered whether the dormant Commerce Clause prevented the state of Michigan from treating in-state and out-of-state wineries differently with respect to home delivery of wine. The case was originally brought as a civil rights action by wine connoisseurs, wine journalists, and a small California winery in the Eastern District federal court of Michigan. The district court ruled against the plaintiffs, granting summary judgment for the state. The plaintiffs’ motion to reconsider on evidence grounds was denied. The summary judgment ruling was appealed to the Sixth Circuit Court of Appeals.

Ninth Circuit Rules Online Matchmaking Service Statutorily Immune for Identity Theft of TV Actress

In what it called a case of “cruel and sadistic identity theft,” the Ninth Circuit ruled that an online matchmaking service, Matchmaker.com was statutorily immune from tort liability when a third party used the service to impersonate an actress. This impersonation resulted in sexual harassment of the actress that caused her to live in various hotels with her son for months given fear of her family’s safety.Actress Christianne Carafano, seen on TV shows General Hospital and Star Trek: Deep Space Nine under the name Chase Masterson, sued Matchmaker.com for invasion of privacy, misappropriation of the right of publicity, defamation, and negligence in California state court. Matchmaker.com removed the case to federal court in the Central District of California.

In this case, an unknown person located in Berlin impersonated the actress by submitting a profile that provided access to the actress’s name, home address, and phone number. In this profile, the unknown person also answered the Matchmaker.com questionnaire with sexually suggestive answers like “looking for a one-night stand” to the question, “Why did you call?” In the essay portion of the profile questionnaire, the impersonator stated that Carafano “liked sort of be[]ing controlled by a man, in and out of bed.”

Carafano soon after received two sexually explicit voice-mail messages, one highly threatening and sexually explicit fax that included a threat to harm her son, and fan letters expressing concern that the actress was giving out her home address while at the same time expressing interest in meeting her. Fearful, Carafano stayed in hotels with her son away from her home for several months.

The district court granted Matchmaker.com’s motion for summary judgment on all Carafano’s claims. Carafano v. Metrosplash.com, Inc., 207 F.Supp.2d 1055 (C.D. Cal. 2002). In its opinion, the lower court held that while Matchmaker.com was not immune from liability under 47 U.S.C. §230(c)(1) since the company provided part of the content to Carafano’s impersonated profile, Carafano nevertheless failed to demonstrate that Matchmaker.com was in fact liable.

Although the Ninth Circuit affirmed the district court ruling in favor of Matchmaker.com, it did so on different grounds. Central to its holding was the Ninth Circuit’s interpretation of the Communications Decency Act, 47 U.S.C. §230(c)(1). Passed in 1996, Congress declared it the “policy of the United States” to “promote the continued development of the Internet and other interactive computer services,” “to preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services,” and to “remove disincentives for the development and utilization of blocking and filtering technologies.” 47 U.S.C. §230(b)(1), (2), (4). As a result, the act immunizes interactive computer services from tort liability for the actions of its third party users. Information content providers, those that create or develop material for the internet, are not immune. In Carafano, the Ninth Circuit continued to follow the lead of other circuits, which have interpreted “interactive computer services” broadly and “information content providers” narrowly in order to achieve Congress’ goals to develop internet growth.

Given this, the Ninth Circuit held – contrary to the district court – that Matchmaker.com did not provide any content to the fake member profile at issue. While the Ninth Circuit agreed that interactive computer services can simultaneously be information content providers, it found that in for Matchmaker.com, this was not the case. The Circuit court based its rationale on its recent decision in Batzel v. Smith. 333 F.3d 1018 (9th Cir. 2003). In Batzel, the Circuit Court found that the publisher of an online newsletter was not a interactive content provider subject to tort liability under 47 U.S.C. §230(c)(1) when it selected and edited a potentially defamatory e-mail published in the newsletter. The court found that selecting and editing another’s e-mail for publication did not constitute “creation or development” of the e-mail within the definition of “information content provider.” Here, the court held that, like Batzel, Matchmaker.com merely facilitated the creation of the profile when it provided a questionnaire and a set of multiple choice, pre-prepared answers. This did not constitute creation or development.

Further, the Ninth Circuit also cited a California state court decision, Gentry v. Ebay, Inc. 121 Cal. Rptr 2d. 703 (Cal. Ct. App. 2002). The Ninth Circuit held that like Ebay’s merchant rating system, Matchmaker.com simply “compiled false or misleading content created by third parties.” The Circuit court stated the questionnaire and pre-prepared responses were designed to facilitate data management, which is necessary for the continued development of the internet, one of Congress’ intentions when it passed §230.

Finally, the Ninth Circuit concluded that even if Matchmaker.com was an “information content provider” as well as a “interactive service provider,” Matchmaker.com would still be immune since Matchmaker.com did not create or develop the particular information at issue in this case. It held that the third party user’s responses to the Matchmaker.com profile were only tenuously related to the questions asked in the questionnaire.

Court Denies Verizon’s Motion to Quash RIAA’s Subpoena and Motion to Stay Pending Appeal.

The Recording Industry Association of America (RIAA) served two separate subpoenas, both under the Digital Millennium Copyright Act (DMCA), on Verizon Internet Services, seeking the identities of two of Verizon’s anonymous users. Both users allegedly made copyrighted music available for download over the Internet. Verizon attempted to quash both subpoenas, or in the alternative to stay enforcement pending appeal. The DC District Court denied Verizon’s claims and its request for a stay.Verizon claimed that § 512(h) of the DMCA, which allows copyright owners to request that a district court clerk issue a subpoena to a service provider for the name of an alleged copyright infringer, violates Article III of the U.S. Constitution by authorizing federal courts to enforce a subpoena without any pending case or controversy. Verizon also claimed that § 512(h) violates the First Amendment rights of Internet users by depriving them of their constitutional right to anonymity without providing sufficient procedural safeguards.

Stay of New FCC Ownership Rules

The Prometheus Radio Project is an unincorporated organization whose goal is to provide support for the creation of low-power, non-commercial radio stations. Prometheus is represented in this case by the Media Access Project. Under 47 U.S.C. §402(a) and 28 U.S.C. §§2342-2344, litigation regarding FCC orders is filed in the U.S. Court of Appeals.The FCC order in question, Broadcast Ownership Rules, Cross-Ownership of Broadcast Stations of 2002 Biennial Regulatory Review, 68 Fed. Reg. 46,286 (August 5, 2003) (to be codified at 47 C.F.R. pt. 73), eliminates rules against ownership of both newspapers and broadcast outlets or both radio and television outlets in the same market. It also increases the number of television stations a single entity may own in a single market and nationwide. Furthermore, the order changes the way radio stations are counted, for the first time including noncommercial stations when counting the stations in a market for the purpose of computing ownership caps. Prometheus alleges that the order is “arbitrary and capricious in numerous respects” and that the commission violated statutory public notice requirements.

Ninth Circuit Court of Appeals: Stored Communications Act and Computer Fraud and Abuse Act Provide Cause of Action for Plaintiff

The Ninth Circuit held that plaintiffs whose private e-mail messages were disclosed under a “patently unlawful” subpoena could sue the defendant who issued the subpoena and his lawyer under the federal Stored Communications Act (18 U.S.C. § 2701 et seq.) and the Computer Fraud and Abuse Act (18 U.S.C. §1030) The court held that the federal Wiretap Act (18 USC §2511 et. seq.) does not apply to such a case because it does not cover stored e-mails. This case arose during a civil discovery proceeding when the defendant subpoenaed the plaintiffs’ Internet service provider for all e-mails ever sent and received by anyone at the plaintiffs’ company. Before officers of the company became aware of the subpoena, the service provider disclosed a number of responsive e-mails unrelated to the litigation, including some that were personal and/or privileged. Upon request by officers of the company, the trial court quashed the subpoena and awarded sanctions against the defendant. The court declared the subpoena “massively overbroad” and “patently unlawful,” reflecting both “bad faith” and “at least gross negligence.” Officers and employees of the company whose private messages had been disclosed then re-sued the defendant and the defendant’s lawyer under the Stored Communications Act, the Computer Fraud and Abuse Act, the Wiretap Act, and related state statutes.

Free Speech Challenge to Trade Secret Injunction Rejected in California DeCSS Case

In October 1999, Andrew Bunner posted DeCSS—code that can be used to defeat CSS copy protection on DVDs—on his website, and the DVD Copy Control Association (“DVD CCA”) sent notice demanding that he remove it. When Bunner refused, DVD CCA filed an action for injunctive relief, alleging misappropriation of trade secrets under California Civil Code Section 3426.1. (No damages were sought.) The trial court denied DVD CCA a temporary restraining order, but subsequently enjoined Bunner from posting DeCSS or related information on his website. It refused to enjoin Bunner from linking to other websites that contained DeCSS or related information because such an order was “overbroad and extremely burdensome.” Bunner appealed, claiming that the preliminary injunction violated his federal and state constitutional free speech rights. The California Court of Appeals found that the injunction constituted invalid prior restraint on “pure speech”—the code—and distinguished Bunner’s case from other trade secret misappropriation cases involving “the actual use of a secret or the breach of a contractual obligation.” The appeals court further found inapplicable cases granting injunctive relief under copyright law.

Court Strikes Infringement Action against Pop-ups’ Provider

WhenU.com’s pop-up advertising software typically comes bundled with free downloadable software. The pop-up advertising software resides on the user’s computer, and has an algorithm that uses the user’s Internet activity to decide what pop-up advertisements should appear.U-Haul, aggrieved by WhenU.com’s display of pop-up advertisements for U-Haul’s competitors on top of U-Haul’s website, sued, claiming trademark and copyright infringement. WhenU.com moved for summary judgment, and the court granted the motion, holding that such pop-up advertising does not infringe U-Haul’s trademarks and copyrights: “WhenU’s pop-up advertisement software resides in individual computers as a result of the invitation and consent of the individual computer user, and thus, the advertisements do not use, alter or interfere with U-Haul’s trademarks and copyrights.”

 

Vol. 1, No. 1 - September 22, 2003
· On-line Application of Vermont “harmful to minors” Law Violates First Amendment and Dormant Commerce Clause
· Fight Over the Applicability of GLBA Privacy Provisions to Lawyers to Continue
· Ninth Circuit Derives Personal Jurisdiction from Internet, Catalog Sales
· Wine-by-Mail Ban Struck Down Under Dormant Commerce Clause
· Ninth Circuit Rules Online Matchmaking Service Statutorily Immune for Identity Theft of TV Actress
· Court Denies Verizon’s Motion to Quash RIAA’s Subpoena and Motion to Stay Pending Appeal
· Stay of New FCC Ownership Rules · Ninth Circuit Court of Appeals: Stored Communications Act and Computer Fraud and Abuse Act Provide Cause of Action for Plaintiff
· Free Speech Challenge to Trade Secret Injunction Rejected in California DeCSS Case
· Court Strikes Infringement Action against Pop-ups’ Provider
· FORDWORLD.COM Registrant, Held in Violation of ACPA
· Summary Judgment Denied in DMCA Garage Door Opener Case
· Actual Damages Denied for Overseas Copyright Infringement
· Ninth Circuit Overturns Denial of Attorneys’ Fees in Copyright Case