Copyright Non-Preemptable Common Law Claims

As a general rule, the Copyright Act preempts state law claims (i) when the state law claim seeks to vindicate “legal or equitable rights that are equivalent” to one of the exclusive rights already protected by copyright law and (ii) where the particular work to which the state law claim is being applied falls within the type of works protected by the Copyright Act under Sections 102 and 103. See 17 U.S.C. § 301.

“Hot News” Misappropriation

There is an exception to the copyright rule of preemption that allows an individual to bring a state law misappropriation claim for “hot news.” National Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997); see also International News Serv. v. Associated Press, 248 U.S. 215 (1918). The elements central to such a claim are whether: (1) the plaintiff generates or collects information, at some cost or expense, (2) the value of the information is highly time sensitive, (3) the defendant’s use of the information constitutes free-riding on the plaintiff’s costly efforts to generate or collect it, (4) the defendant’s use of the information is in direct competition with a product or service offered by the plaintiff, and (5) the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the plaintiff’s incentive to produce the product that its existence or quality would be substantially threatened. In NBA v. Motorola, the court found that Motorola did not engage in unlawful misappropriation under its test. Critically absent from Motorola’s activities were a competitive effect on the NBA’s market and any showing of free riding on Motorola’s part.

Breach of Contract

1. Firoozye v. Earthlink Network, Inc., 153 F. Supp. 2d 1115 (N.D. Cal. 2001). Firoozye asserted several common law causes of action based upon Earthlink’s incorporation of plaintiff’s software into Earthlink version 5 without signing a license agreement that Earthlink had allegedly promised to sign. The court found that Firoozye‘s state law claims for breach of implied-in-fact contract, intentional and negligent misrepresentation and misappropriation of trade secrets were not preempted because each included an additional element and thus was not equivalent to a right protected by the Copyright Act. The court distinguished a breach of an implied-in-fact contract claim, which is not preempted, from an implied-in-law breach of contract claim, which is. A breach of an implied-in-fact contract would require a plaintiff to prove that a defendant had made an enforceable promise and breached that promise, an additional element not required in a claim for copyright infringement.
2. Bowers v. Baystate Techs., Inc., 320 F.3d 1317 (Fed. Cir. 2003). Plaintiff Bowers bundled his patented template with computer aided design software and sold it as “Designer’s Toolkit.” The kit came with a shrink wrap license prohibiting reverse engineering. Defendant, after obtaining copies of Bower’s kit, introduced a new and improved version of its own “Draft-Pak” software, which included many features of Bowers’ kit. Bowers filed suit alleging copyright infringement, patent infringement, and breach of contract. Applying First Circuit law, the Federal Circuit held that the shrink wrap license was not preempted by the Copyright Act because Bowers‘ breach of contract claim was “qualitatively different from copyright infringement” due to the “mutual assent and consideration required.” Id. at 1325 (citing ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. 1996)). Therefore, the license could prohibit reverse engineering, potentially permitted under the Copyright Act, for the computer program. See also Higher Gear Group, Inc. v. Rockenbach Chevrolet Sales, Inc., 223 F. Supp. 2d 953 (N.D. Ill. 2002).

Trespass

Causes of action under the Trespass to Chattels doctrine have arisen in copyright contexts.

1. eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058 (N.D. Cal. 2000). eBay successfully asserted a trespass claim under California law against an online auction aggregator. The court found that a state law trespass claim was not preempted by the Copyright Act. “In order not to be equivalent, the right under state law must have an extra element that changes the nature of the action so that it is qualitatively different from a copyright infringement claim.” Id. at 1072 (citation omitted). Since a trespass claim is based upon the right to exclude others from using personal property, the court determined that it was not “equivalent” to the rights protected by copyright. The court in the eBay case relied on the ancient tort of “trespass to chattels,” which is defined as “intentional interference with the possession of personal property [that] proximately cause[s] injury.” Id. at 1069. In order to prevail on a claim for trespass based on accessing a computer system, the plaintiff must establish that: (1) defendant intentionally and without authorization interfered with plaintiff’s possessory interest in the computer system; and (2) defendant’s unauthorized use proximately resulted in damage to plaintiff. Id. at 1069-70 (citing Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 4th 1559 (1996) (finding trespass where defendants accessed plaintiff’s computer system without authorization to make long-distance phone calls)). The court held that the crawling of eBay’s Web site by Bidder’s Edge was unauthorized because “eBay’s servers are private property, conditional access to which eBay grants the public.” Id. at 1070. The court also held that the crawling constituted unauthorized interference with eBay’s possession of its personal property. Although it acknowledged that eBay was unlikely to be able to show a “substantial” interference, the court held that the tort of trespass to chattels only requires conduct that consists of “intermeddling with or use of another’s personal property,” which need not constitute “substantial” interference. Finally, the court held that eBay was likely to be able to demonstrate damage–the final element of a trespass to chattels claim–because the crawling by Bidder’s Edge (which consisted of some 80,000 to 100,000 requests to eBay’s computer systems per day) “consume[s] at least a portion of plaintiff’s bandwidth and server capacity . . . necessarily compromising eBay’s ability to use that capacity for its own purposes.” Id. at 1071.
2. Register.com, Inc. v. Verio, Inc., 126 F. Supp. 2d 238 (S.D.N.Y. 2000). The court held that Register.com was entitled to an injunction to prevent Verio from crawling its Web site. Verio provides, among other things, Web hosting and development services. Verio used a search robot to automatically search on a daily basis Register.com’s publicly accessible database in order to obtain basic contact information for domain name registrants. Verio would then contact the new registrant by phone or email to advertise Verio’s services. The court held that Verio was on notice, through cease and desist letters and the filing of the lawsuit, that Register.com did not consent to Verio’s use of the search robot. Under New York law, because Verio was on notice that Register.com did not consent to its actions, it would be liable to Register.com for any damage to the chattel (defined as Register.com’s computer systems) caused by its unauthorized searches. Register.com submitted a declaration estimating that Verio’s searches resulted in a diminishment of 2.3 percent of Register.com’s system resources. Verio produced evidence to show that amount overestimated its effect on the system. The court concluded that even though Register.com was unable to directly measure the amount by which its systems capacity was reduced, Verio did not dispute that its search robot occupied some of Register.com’s systems capacity. Thus the fact that there was some unspecified impact was enough for the court to grant an injunction.
3. Oyster Software, Inc. v. Forms Processing, Inc., 2001 U.S. Dist. LEXIS 22520 (N.D. Cal. 2001). The court denied defendant’s motion for summary judgment on plaintiff’s claim for trespass for defendant’s copying of plaintiff’s meta-tags. Following eBay v. Bidder’s Edge Inc., 100 F. Supp. 2d 1058 (N.D. Cal. 2000), and distinguishing Ticketmaster Corp. v. Tickets.com, Inc., 2000 U.S. Dist. LEXIS 12987 (C.D. Cal. 2000), aff’d, 2001 U.S. App. LEXIS 1454 (9th Cir. 2001), the court determined that “defendant’s conduct was sufficient to establish a cause of action for trespass not because the interference [with plaintiff’s computer system] was ‘substantial’ but simply because defendant’s conduct amounted to ‘use’ of Plaintiff’s computer.” Id. at *40, quoting eBay, 100 F. Supp. 2d at 1070. But see Intel Corp. v. Hamidi, 30 Cal. 4th 1342 (2003) (rejecting application of trespass to chattels doctrine to mass emails sent to Intel by former employee where the court found there was no damage to the computer system as a result of the emails, and disapproving of 'Oyster Software’s reading of eBay as dispensing with the “actual injury” requirement under California law).
4. American Airlines, Inc. v. Farechase, Inc., Case No. 067-194022-02 (Tex. 67th Dist., Mar. 8, 2003). The court issued a preliminary injunction against defendant based on trespass to chattels and misappropriation. Defendant Farechase allegedly accessed and copied plaintiff’s site, AA.com, for American Airlines flight schedules, seat availability and fare information and sold software that allowed the retrieval of information from AA.com. The court enjoined Farechase from “accessing, using or scraping AA.com information” and from distributing software with those capabilities. See also Complaint, Homestore.com v. Bargain Network, docket number unavailable (S.D. Cal. Apr. 2002) (Plaintiff filed action alleging trespass, among other causes of action, based on defendant’s alleged collection and display of real estate listing information from plaintiff’s Web site for defendant’s own commercial site. Plaintiff also sought an injunction to prevent defendant from deep linking from defendant’s site to detailed real estate listings on plaintiff’s site. In July 2002, the parties reached a settlement whereby Bargain Network agreed to permanently refrain from collecting and displaying real estate information found on plaintiff’s site.).