DHI Group, Inc. v. Kent, No. 16-1670, 2017 WL 4837730 (S.D.
Tex. Oct. 26, 2017)
DHI and Oilpro compete in the market for websites for oil
and gas professionals that include job postings. DHI filed a lawsuit against
Oilpro and others asserting that the defendants hacked into their system, and
Oilpro counterclaimed for DHI’s alleged copying from Oilpro’s own website,
alleging multiple claims, which the court refused to dismiss on grounds that
give lots of leeway to website owners to make breach of contract, copyright,
CFAA, and DMCA claims.
Breach of contract: Oilpro had a browsewrap agreement on its
website, not requiring affirmative assent to access the website. To enforce a browsewrap, “it is necessary to
show the user had actual or constructive knowledge of the terms and conditions
to prove a valid contract exists between the user and the owner of the
website.” Oilpro plausibly alleged such knowledge by alleging that DHI “knew or
should have known that Oilpro’s Terms and Conditions prohibited this conduct
because [DHI’s] terms of use for [its] own website prohibit this same sort of
conduct.” This was enough, where both parties were “sophisticated businesses
that use browsewrap agreements on their websites.”
Copyright: DHI argued that Oilpro didn’t identify any
material, information, or work that was both subject to copyright protection
and actually copied by DHI. However, Oilpro alleged that it owned a valid
copyright to its website and that DHI accessed it and copied data, member
profiles, and other information from the website. Under the Twombly/Iqbal
plausibility standard, it was enough to plead that the entire Oilpro website
was an original work that includes a “distinctive page layout, design,
graphical elements, and organization of member profile pages....” and that DHI
“improperly downloaded data, member profiles, and other information from the
Oilpro Website” and “then published information from the Oilpro Website on a
website owned by DHI Group called Dice Open Web....” Since Oilpro alleged
ownership of the entire website, and that DHI published Oilpro’s copied
information on its own website, Oilpro stated a plausible claim for copyright
infringement. [No no no—owning the overall layout doesn’t mean owning
everything that might be copied. The
proper allegation would be that DHI copied copyrightable elements.] DHI’s objections to the Magistrate Judge’s
recommendation to deny its motion to dismiss the copyright infringement claim
is OVERRULED.
The court also denied DHI’s motion to dismiss Oilpro’s DMCA
counterclaim because it alleged that it “had technological measures in place,
including a robots.txt file, monitoring software, and firewall software, to
prevent automated technologies from accessing the website” and DHI “circumvented
these technological measures to access the Oilpro website and download material
that was then published on [DHI’s] own website.” Specifically, robots.txt was
plausibly a technological measure, as other cases have held. But note: The statute also requires that the
measure “[e]ffectively controls access to a work” defined as a measure that,
“in the ordinary course of its operation, require[ ] the application of
information, or a process of treatment, with the authority of the copyright
owner, to gain access to the work.” How does robots.txt require the application
of information to gain access, as opposed to provide extra information to
potential accessors?
Trademark infringement: Oilpro successfully alleged that it
had a protectable mark that DHI used to cause confusion about the
authorization/sponsorship of the DHI site.
[The court then proceeds to confuse nominative and descriptive fair use,
applying the standards for descriptive fair use.] DHI argued that it used
Oilpro’s mark to acknowledge Oilpro as the source of certain information, but
the fair use defense was not available on a motion to dismiss because the
complaint didn’t indicate on its face that DHI used the mark on its website in
good faith—which, of course, is not an element of a nominative fair use
defense.
CFAA and the coordinate state Texas Harmful Access by a
Computer (THACA): The court held that
Oilpro’s allegations of a knowing violation of the terms and conditions of the
website are sufficient to state a claim under both the CFAA and the THACA.
Misappropriation: Oilpro did enough by alleging that it
expended time, skill, and financial resources to create the website and
information on the website, that DHI wrongfully accessed the site without
authorization and obtained Oilpro’s data without having the expend the same
time, skill, and financial resources, that DHI was free-riding on Oilpro’s
investment, that Oilpro has had to expend even more time and resources because of
this alleged unfair competition, and that Oilpro has been and will continue to
be damaged by the misappropriation. [However, there seems to be a serious
copyright preemption problem with this misappropriation claim.]
Tortious interference: also ok.
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