Bulk of Craigslist Suit Against 3Taps Intact; Scope of Copyright Claims Drastically Slashed

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By Tamlin H. Bason

Craigslist's trademark infringement, breach of contract, and Computer Fraud and Abuse Act claims against services that allegedly scraped user-generated content from Craigslist's local classified ads and redistributed the data through their own proprietary systems survived dismissal, after an April 30 ruling by the U.S. District Court for the Northern District of California (Craigslist Inc. v. 3Taps Inc., N.D. Cal., No. 3:12-cv-03816-CRB, 4/30/13).

The breach of contract claim was not pre-empted by the Copyright Act, the court said, because the breach claims alleged “extra elements” that were beyond the scope of the Copyright Act. The court also determined that Craigslist's Lanham Act claims did not overlap with its copyright claims, and therefore those claims were not precluded by the Supreme Court's Dastar decision.

The court did, however, dismiss all copyright infringement claims that fell outside of a three-week period during which Craigslist temporarily changed its terms of use in order to acquire an exclusive license to user posts. The fact that Craigslist changed its TOU to explicitly acquire an exclusive license in these posts suggested that it had recognized that it had lacked an exclusive license in all posts made before and after that three week period, the court said.

Accordingly, Craigslist could not sustain copyright infringement claims on user content that was posted anytime outside that narrow time frame, the court said. 

Use of Craigslist Ads Prompts Lawsuit

Craigslist, based in San Francisco, asserted in a complaint that one if its most valuable and distinctive features was the fact that it allowed users to post classified ads, often of a highly personal nature, in unique local marketplaces suited for basic necessities such as employment, relationships, and housing (146 PTD, 7/31/12). It did this, it said, without exposing the posters to third-party ads and marketing.

An amended complaint asserted 17 causes of action against three companies--3Taps Inc., Padmapper Inc., and Discover Home Network Inc. d/b/a Lovely--and one individual, Brian R. Niessen, who was affiliated with 3Taps.

According to the amended complaint, visitors to the Craigslist website are granted access to and use of the data subject to the Craigslist terms of use, one of which prohibits “copying, aggregation, display, distribution, performance or derivative use.” In violation of this TOU provision, 3Taps scrapes “tens of millions” of Craigslist postings and makes the data indiscriminately available through an application programming interface “to all manner of for-profit entities to copy, repurpose, redisplay, redistribute, surround with advertisements, expose to non-local audiences, subject to marketing come-ons, disturb with unsolicited communications, and otherwise exploit commercially,” the complaint said.

By mining Craigslist's content in this manner, 3Taps was engaging in copyright infringement and was also violating the Computer Fraud and Abuse Act, the complaint alleged.

Moreover, the complaint alleged, 3Taps's “Craiggers” website infringed Craigslist's registered mark, and the website facilitated national searches of Craigslist's local content, “undermining the essential locality of craigslist community sites.”

PadMapper and Lovely used the content aggregated by 3Taps to allow users to search apartment listings from Craigslist and other services by location, price, and apartment size on a Google map.

3Taps filed a 75-page answer and counterclaim in September (186 PTD, 9/26/12). The counterclaim asserted three antitrust violations under the Sherman Antitrust Act, a state law unfair competition claim, and a claim for interference with economic advantage.

3Taps further argued that it could not have violated Craigslist's terms of use because it acquires its content not from Craigslist directly but from cached copies of the Craigslist website that can be found on search engines like Google “that have already properly and lawfully received, aggregated, and indexed the public data.”

Thus, while the terms of use did prohibit the types of scraping activities outlined in the complaint, Craigslist “itself makes the content of user postings available to select 'intermediaries,' such as Google, Yahoo, and Microsoft's Bing,” 3Taps pointed out. It thus denied the breach of contract claim in its entirety.

The corporate defendants moved to dismiss the copyright, trademark, breach of contract, and CFAA claims. 

Posts Copyrightable, Craigslist Not Exclusive Licensee

The defendants raised two primary arguments with respect to Craigslist's copyright claims.

First, 3Taps argued that neither the individual user posts nor Craigslist's compilation of those posts warranted copyright protection. Second, 3Taps argued that Craisglist was not the exclusive licensee of user-created content, and thus it lacked standing to seek redress for the alleged infringement of that content.

Judge Charles R. Breyer swiftly rejected the first argument. Quoting from Feist Publications Inc. v. Rural Telephone Service Co. Inc., 499 U.S. 340, 18 U.S.P.Q.2d 1275 (1991), the court said that the individual user posts “have a level of creativity that is not 'so trivial as to be virtually nonexistent,' and thus are sufficiently 'original' to fall within the scope of copyright protection.”

Compilations of those individual posts are also copyrightable, the court said. Looking again to Feist, which held that when it comes to compilations for factual information, the underlying facts cannot be protected, but a “particular selection or arrangement” of those facts might be, the court determined that Craigslist's arrangement of the individual posts displayed a sufficient level of creativity to make the compilations copyrightable.

The court then turned to 3Taps's argument that Craigslist was not the exclusive licensee of the individual posts.

Under Section 501(b) of the Copyright Act, only the “legal or beneficial owner of an exclusive right under a copyright” may bring an infringement action.

Just days before filing the instant lawsuit, on July 16, 2012, Craigslist changed its terms of use in order to comply with the Copyright Act's exclusivity requirement. Specifically, Craigslist changed its former TOU, which had stated that it “does not claim ownership of content that its users post,” to the following:

Clicking “Continue” confirms that craigslist is the exclusive licensee of this content, with the exclusive right to enforce copyrights against anyone copying, republishing, distributing or preparing derivative works without its consent.

This new provision was short lived and on Aug. 8 it was repealed by Craigslist. 3Taps, noting that the provision coincided with the instant proceeding, argued that the provision was “a sham.” In a footnote, the court said that even if the TOU changes were motivated by the lawsuit there was no authority to suggest that such motivation “would change the legal effect of the licenses granted during this period.”

The court concluded that the short-lived TOU provision in fact granted Craigslist an exclusive license to user posts made during that time period. The court accordingly declined to dismiss copyright claims based on posts made between July 16 and Aug. 8.

“However, Craigslist's license to user-created posts submittedoutside of that time period was not exclusive, and Craigslist therefore cannot sue for infringement of such posts,” the court said.

An older version of the TOU explicitly stated that Craigslist reserved a non-exclusive license, and thus, Craigslist argued, the pre-July 16 and post-Aug. 8 TOU imply exclusivity.

“[B]ut that argument cuts just as well the other way--Craigslist apparently appreciated the significance of the exclusivity distinction, yet declined to state that the license was exclusive,” the court said.

The court granted the defendants' motion to dismiss all copyright claims based on user posts that were submitted before July 16, 2012, and after Aug. 8, 2012. 

Breach Claim Not Pre-Empted

The court did not address the defendants' argument that they were not bound by the Craigslist TOU. Instead, the court considered 3Taps's argument that the breach claim was premised solely on the defendants' alleged use of Craigslist's copyrighted content, and therefore, according to 3Taps, was preempted by the Copyright Act.

Quoting from Montz v. Pilgrim Films & Television Inc., 649 F.3d 975, 98 U.S.P.Q.2d 1569 (9th Cir. 2011) (en banc) (89 PTD, 5/9/11), the court said, “Contract claims generally survive preemption because they require proof of … an extra element [such as] agreement of payment for use.”

If Craigslist's breach claim sought redress only for the defendants' alleged copying and reproduction of Craigslist's content then perhaps it would be preempted by the Copyright Act, the court said. However, “the contract that Craigslist alleges here involves a number of 'extra element[s]' not merely 'equivalent to' rights under the Copyright Act,” the court said, again quoting Montz.

The court said:

The relevant provisions of the TOU do not merely prohibit copying or reusing content, but rather include accessing the website for inappropriate purposes, using the website to develop computer programs and services that interact with Craigslist, and circumventing technological measures intended to restrict access to the website.

These allegations contain “extra elements” that take the breach of contract claim beyond the scope of the Copyright Act, the court said. Accordingly, the breach claim is not preempted, the court held. 

Dastar Not Applicable

In Dastar v. Twentieth Century Fox Film Corp., 539 U.S. 23, 66 U.S.P.Q.2d 1641 (2003) (106 PTD, 6/3/03), the Supreme Court rejected a plaintiff's use of a trademark infringement action to extend copyright or patent rights beyond their expiration. Specifically, Dastar held that Section 43(a) of the Lanham Act does not prevent the uncredited copying of a work whose copyright has expired.

Similar to that case, Craigslist was asserting a false designation of origin claim under Section 43(a) of the Lanham Act solely to prevent the defendants from using Craigslist's content, the defendants argued. The court disagreed, distinguishing Dastar from this case.

Dastar concerned “reverse passing off,” or a defendant's attempt to pass off a plaintiff's content as its own, the court noted. Conversely, in this case Craigslist alleges that the defendants are using its marks in order to suggest that their products are provided or endorsed by Craigslist.

“This sort of allegation--a regular 'passing off' claim--does not raise the 'perpetual patent and copyright' concerns that the Supreme Court identified in Dastar … because it relates to Defendants' content, not Craigslist's,” the court said. 

CFAA Claim Also Proceeds

The court also declined to dismiss Craigslist's Computer Fraud and Abuse Act claim. The CFAA, 18 U.S.C. § 1030(a)(2), establishes a civil remedy against a person who “exceeds authorized access” to a computer to obtain information from a protected computer.

The court noted that United States v. Nosal, 676 F.3d 854 (9th Cir. 2012) (en banc), clarified that the phrase “exceeds authorized access” applies only “to violations of restrictions of access to information, and not to restrictions on its use.”

The court said that it was unclear if Craigslist's TOU sought to restrict access to information, or if instead it sought only to restrict the use of the information. However, the court said that it was immaterial because Craigslist claimed that it sent the defendants cease-and-desist letters denying authorization to Craigslist's website “for any purposes.”

Craigslist argued that the defendants continued to use the content even after receiving the letters.

Moreover, the defendants had circumvented the technological protections measures Craigslist put in place to block the defendants' access to the website, Craigslist alleged.

These allegations “constitute[] unauthorized access under the statute,” the court said.

Craigslist was represented by Bobbie Jean Wilson of Perkins Coie, San Francisco. 3Taps was represented by Allen Ruby of Skadden Arps Slate Meagher & Flom, Palo Alto, Caif. Padmapper was represented by Venkat Balasubramani of Focal, Seattle. Lovely was represented by Christopher J. Bakes of Locke Lord, Seattle.

By Tamlin H. Bason

Text is available at http://www.bloomberglaw.com/public/document/Craigslist_Inc_v_3Taps_Inc_et_al_Docket_No_312cv03816_ND_Cal_Jul_.

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