Friday, October 27, 2017

Website copying allegations allow potpourri of claims

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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