Monday, October 29, 2012

OK for defendant to copy stuff plaintiff doesn't own; also keyword ads ok

CollegeSource, Inc. v. AcademyOne, Inc., 2012 WL 5269213 (E.D. Pa.)

Earlier district court opinion discussed here.  The parties compete to provide online college transfer services, serving schools and individual students seeking to transfer credits from one school to another.  CollegeSource accused AcademyOne of republishing course catalogs and course information digitized and maintained by CollegeSource.  The court granted AcademyOne’s motion for summary judgment on CollegeSource’s claims, which the court divided as follows:

(1) Course collection efforts: CollegeSource offered subscription access to its archive to PDF digital course catalogs; student users could download a free trial with access to up to 3 catalogs.  A separate subscription product, TES, was an online database of courses and other course equivalency-related data culled from CollegeSource's library of course catalogs, primarily marketed to institutions seeking to facilitate the transfer of credits from one school to another.  And CataLink aided schools in distributing course catalogs efficiently: “CollegeSource provides subscribing schools with a URL hyperlink to CollegeSource's archive of that school's digital course catalogs, which can then be inserted and displayed on the school's home page.”  CataLink was not a subscriber service, and users would go to CollegeSource’s website without being told they were leaving a school’s site.

CollegeSource repopulated its catalogs yearly, by contacting individual colleges and requesting copies.  If the catalogs were in electronic form, CollegeSource converted them to PDFs. If not, CollegeSource scanned them, used optical character recognition software, and converted them to PDFs.  Course data was also entered into the TES course database, and some of the catalogs went into CataLink.  CollegeSource inserted a uniform cover page/splash page including the CollegeSource logo on each catalog it converted to PDF.  On the inside cover of each catalog, CollegeSource inserted “Copyright & Disclaimer Information”:

While CollegeSource, Inc. and Career Guidance Foundation provides information as a service to the public, copyright is retained on all digital catalogs. This means you may NOT:

• distribute the digital catalog files to others,

• “mirror” or include this material on an internet (or intranet) server, or

• modify or re-use the files

without the express written consent of CollegeSource, Inc. and Career Guidance Foundation and the appropriate school.

So, basically, copyfraud.  (Nice use of the passive voice there, too!)  CollegeSource’s website had a “Copyright and Disclaimer” link that said the same thing.

CollegeSource Online and TES also required users to agree that anything they get from the services is CollegeSource’s and that they can’t reuse it without permission.  Subscription users encountered sign-in boxes and pop-up forms with links to these terms, but users of CataLink would not encounter this agreement, though the Copyright and Disclaimer page was still present in the catalog.

AcademyOne sought to populate its own database; when CollegeSource denied it a license, it turned to Chinese company to pull PDF or HTML college catalogs directly from those colleges’ sites.  About half of the 4000 schools targeted used PDFs, which had to be converted and processed to get into AcademyOne’s database.  The Chinese  company downloaded over 18,000 PDF files.  Between 2005 and 2007, several AcademyOne employees registered for free trial subscriptions to CollegeSource online.  When AcademyOne launched its sites, which provided free access to its course description database, about 2000 of the PDFs were included. CollegeSource discovered that about 680 had been copied from CollegeSource servers; the Chinese company later identified 783 out of the 18,000 as CollegeSource PDFs.  They had all been obtained through CataLink (there was no evidence of any “breach” of CollegeSource’s servers); presently, over 1700 CollegeSource PDFs are publicly available through college websites using CataLink.  CollegeSource was aware of this practice and permitted it.

CollegeSource sent a C&D letter asserting copyright and trademark infringement.  AcademyOne disabled links on its site allowing access to all PDF catalogs (which meant that someone who’d saved the URL of a catalog could still access it) and initiated an internal investigation.  AcademyOne ultimately removed all PDF catalogs from its servers, but didn’t delete the course descriptions it had copied from CollegeSource PDFs.  Eventually, it began repopulating its database in a new manner, removing all course descriptions derived from PDF catalogs—whether from CollegeSource or not—from its database.

CollegeSource spent a lot of employee hours dealing with this horrible, competitive behavior; it hired a computer expert and increased security measures on its catalogs, such as “seeding,” “salting,” and “watermarking.”  (So, doubling down on the copyfraud?)

(2) Starting in 2007, AcademyOne bought “college,” “college source,” “career guidance,” and “career guidance foundation” from Google’s AdWords and similar search engine services.  The resulting ads used phrases such as “College Transfer Help” or “Find Transfer Information” and used the URL “,” not AcademyOne.  Different search engines displayed the ads differently: AOL displayed ads above organic results, shaded in a different color, and marked them “Sponsored Links.”  Google used “Sponsored Links” to the right of organic results. “nestled” ads within organic results under a small “Sponsored Results” banner.

(3) AcademyOne also applied to register as a service mark; it was registered on the Supplemental Register in 2010.  AcademyOne represented a first use date of December 1, 2005, but record evidence suggested that first use was sometime after March 2007.  AcademyOne also didn’t disclose to the PTO that an Eastern District of Pennsylvania decision had held that CollegeSource’s did not infringe on the trademark.  CollegeSource argued that this undisclosed evidence justified cancellation of the claimed mark.

(4) As for the false advertising claims, they came from two sets of public statements: AcademyOne’s correspondence with public colleges and its representations on its website about the accuracy of its course database.  In 2010, AcademyOne’s CEO sent letters to a number of public colleges requesting information under state freedom of information laws.  He told them that CollegeSource had filed “copyright claims” in federal court, requested copies of correspondence between the institution and CollegeSource relating to any “ownership and control [by CollegeSource] of your Institution's digital catalog and the course descriptions therein,” stated that “CollegeSource claims control of the digital catlogs that they collect, even if it resides on your website,” and claimed that CollegeSource's assertions of ownership “attempt to preclude AcademyOne and other software providers from providing automated student transfer systems ....” 

The CEO, a nonlawyer, testified that he used “copyright claim” “generally and not as a reference to a specific cause of action.”  (When news outlets report that Tim Tebow has “copyrighted,” “patented,” and “trademarked” Tebowing, choosing their terms randomly as far as I can tell, I find it hard to blame him; harder given CollegeSource’s own claims.)  He also testified that he’d been told that a specific person related to CollegeSource had told members of the industry that CollegeSource intended to sue any other developers who copied course descriptions or engaged in similar conduct.  

As a result of these letters, some schools contacted CollegeSource and expressed concern. (As well they should have!)  One client pulled its catalogs from CollegeSource's databases.

On AcademyOne’s, AcademyOne stated that its database was “published annually” with “current course offerings,” was the “most comprehensive database of current course offerings possible,” was not “outdated,” and was “reliable, accurate, and up-to-date.” CollegeSource argued that these statements were false and misleading, pointing to an entry for Bergen Community College which appeared to be derived from a 2006–2007 catalog, not from the current catalog.

Turning to the law: the court rejected AcademyOne’s argument that CollegeSource’s breach of contract claim was equivalent to copyright rights and thus preempted.  The existence of a contract or agreement provided an extra element.  Some courts have held that a promise to refrain from exercising copyright rights was not enough to avoid preemption, but the promise here was to make only personal use of the documents, which was “sufficiently distinct” from copyright to avoid preemption.

There were two separate contract claims: one based on the “Copyright and Disclaimer” notice, and one based on the subscription agreement.  AcademyOne won both.  Contract formation requires mutual understanding: both parties must be aware of the contractual nature of a document.  The notice on the second page of the PDF “does not contain any of the essential elements of contract formation. It does not state what exactly is being offered; that users should agree to its terms in a particular manner; or that users will obtain any sort of consideration in exchange for their assent.”  Further, it wasn’t obvious that the notices related to contract as opposed to copyright.  The title suggested that they were telling the user about copyright rights, and the language reinfored that inference.  “A reasonable party reading the documents would not be aware of the contractual nature of the documents.”  There was no contract formed, and thus no contract breached.

As for the subscription agreement, CollegeSource didn’t provide any evidence that AcademyOne breached it by improperly obtaining CollegeSource data through its subscriptions.  That is, there was no evidence that AcademyOne’s actions as a subscriber—while logged in under a trial subscription—violated the terms.   CollegeSource argued that the agreement covered AcademyOne’s subsequent access to CollegeSource documents through CataLink because the agreement told subscribers that restrictions apply to all of CollegeSource's “other electronic services,” and that CataLink was an electronic service because it was comprised of CollegeSource's information from CollegeSource's server.

Again, looking at the parties’ intent, this didn’t work.  Other uses of the term “Service” in the agreement clearly didn’t apply to CataLink (e.g., username requirements and CollegeSource’s ability to cut off an individual user’s access to “Services,” when CollegeSource apparently couldn’t block a user from CataLink).  A subscriber was unlikely even to know that a CataLink document came from CollegeSource, since it would be accessed from a third party’s website via a redirect. 

With the contract claim gone, the unjust enrichment claim failed—it was preempted by §301 of the Copyright Act, lacking an extra element beyond copying/display.  “[M]isrepresentation, or taking in an underhanded way,” didn’t count as an extra element.

The CFAA claim also failed, though there was sufficient evidence of loss, because there was no evidence of unauthorized access, or access exceeding authorization, to CollegeSource computers.  As noted above, the evidence only supported a claim that AcademyOne got to CollegeSource files via CataLink, and that didn’t violate the CFAA.  The documents were available to the general public, and AcademyOne was under no obligation to abide by any terms of use, so its access was neither without authorization nor in excess of its authorization.  CollegeSource argued that it didn’t want to allow competitive uses, but that went to use, not access.  “AcademyOne, as a member of the public, would have had authorization if it had used the data for non-commercial related purposes; by CollegeSource's account, it is only because AcademyOne's use was inappropriate that it became unauthorized. The argument is insufficient to support a CFAA claim.”

Now, the Lanham Act/keyword ad claims: the likely confusion factors applied, but the Third Circuit has noted that “economic reality and common sense require that some of the Lapp factors be analyzed differently” depending on the type of claim at issue. Thus, the court here looked to Network Automation’s treatment of AdWords (a term which here means all keyword ads; insert your own commentary).  The most relevant factors are (1) the strength of the mark, (2) evidence of actual confusion, (3) types of goods and degree of care likely to be exercised by the typical purchaser, and (4) the labeling and appearance of the advertisements.

CollegeSource’s marks were both suggestive and commercially strong, with hundreds of thousands of dollars in advertising over 18 years.  (Really?  That’s commercial strength?)  This favored CollegeSource, since a consumer searching for a generic term is more likely to be searching for a product category.  (Which the 9th Circuit knew about consumers because … never mind.)

There was little evidence of actual confusion.  The record contained evidence of 65 relevant clicks (I expect Eric Goldman will comment on this part!): “instances in which Internet users searched for CollegeSource, were presented with AcademyOne's advertisements, and clicked to AcademyOne's website.”  All these clicks occurred in June 2009, but the challenged practice had been going on for years.  “Even assuming that all clicks resulted from consumer confusion and not legitimate advertising diversion or in anticipation of litigation, CollegeSource's evidence of actual confusion is sparse.”  This weighed in favor of AcademyOne.

For AdWords, the real key factor is what consumers see on the screen, including labeling and overall appearance.  Even if the ads don’t clearly identify a source, clear labels for sponsored links decrease the likelihood of confusion, and those were present here.  Also, AcademyOne didn’t use CollegeSource’s marks in the ads themselves, only as triggers.  This also weighed in favor of AcademyOne.

Consumer care/attention also favored AcademyOne.  Internet users generally are becoming more accustomed to trial and error and to the practices of search engines.  Specifically, consumers looking for college transfer information “are likely to practice diligence in their research.… Given the importance of their inquiries, they have an incentive to be discerning about the search results they choose to trust.”  CollegeSource argued that, since both parties provide free services, consumers’ level of care would be low, but it wasn’t clear that consumers would be looking exclusively for free services; CollegeSource provides paid services as well.

As for the other factors, the degree of similarity between the owner’s mark and the allegedly infringing mark didn’t favor either party in the context of AdWords, since it was relevant “when a consumer confronts two different trademarks and, due to their similarity, has trouble distinguishing between the two,” but, with AdWords, “the consumer enters one trademark as a search term and sees a sponsored link that displays neither.”  On intent, the court distinguished between using a trademark to mislead consumers and using it to truthfully inform them of their choices.  There was no evidence of an intent to confuse, even though AcademyOne knew about CollegeSource; it might just as well have been trying to give consumers a choice.

Similar marketing channels are less important when those channels are “less obscure,” as in the internet.  Anyway, CollegeSource had never used AdWords, instead using print materials, trade shows, and conferences.  Similarity in targeted consumers and in products/services favored CollegeSource, but the court gave these minimal weight in the overall context.  Summary judgment for AcademyOne.

Further, CollegeSource lacked standing to seek declaratory judgment of trademark invalidity.  CollegeSource’s supposition that the supplemental registration might eventually move to the Principal Register, and its past fight with AcademyOne (resolved in CollegeSource’s favor), were insufficient to give it a real present interest.

For its false advertising claim, the only fact offered to falsify AcademyOne’s claim that its database was “published annually” with “current course offerings,” the “most comprehensive database of current course offerings possible,” not “outdated,” and “reliable, accurate, and up-to-date,” was a single course description that CollegeSource claimed was from a 2006–07 catalog. That wasn’t enough to establish that the description was out of date or not current; there was no evidence about whether Bergen Community College was still offering the course, with or without the same description.  It was possible that the information was still current.  Nor was failure to provide dates when descriptions were last modified misleading.

As for the freedom of information act letters, the court had earlier denied a preliminary injunction because the statements weren’t literally false and hadn’t sufficiently been shown to be misleading to the intended audience.  The description of the lawsuit as a “copyright” suit wasn’t literally false, given that the reference was meant to refer to CollegeSource's Copyright Notice and Disclaimer, not to a legal cause of action. The CEO’s “understanding of the situation, and his subsequent statement to that effect, were reasonable and cannot be considered literally false.”  (Ordinarily intent doesn’t matter to Lanham Act claims, but statements about legal meaning are often treated differently.)  CollegeSource introduced evidence that an attorney might have had a role in drafting the letter, but that didn’t change the court’s conclusion.

CollegeSource argued that since it was only suing AcademyOne, the claim that CollegeSource was attempting to exclude other developers was literally false.  But, given the CEO’s testimony, this claim was “not unambiguously false given the fact that CollegeSource's founder may have threatened other developers with suit.”  (Hey, isn’t that hearsay?  It may well be admissible for the CEO’s state of mind, which of course isn’t relevant, but how is it admissible evidence that there actually were threats of suit?  I think this false advertising claim is bogus for plenty of other reasons, not least because CollegeSource’s claims to own the content of college course catalogs made it perfectly obvious that it would threaten other software developers as well, but I think this rationale skips some necessary steps.)

And no reasonable jury could find the statement that “CollegeSource claims control of the digital catalogs they collect, even if they reside on your website,” unambiguously false.  Given CollegeSource’s claims in this very lawsuit, the statement was “at least ambiguous, if not true.”  (I’d have gone with “unambiguously true,” myself.)

Nor could CollegeSource show misleadingness.  The fact that schools expressed concerns, and that one pulled its catalogs from CollegeSource databases, was insufficient to show a tendency to deceive a substantial portion of the intended audience.  (Because the basic claim was true.)

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