E-Commerce Law Week, Issue 466

Carolina Court Lays Down the Law on Chattel Rustling

Another court has ruled that the common law tort of trespass to chattels applies in the cyber realm.  In Burgess v. American Express Company Inc., a North Carolina court found that Burgess' allegations that advertisers had "damaged his computer and invaded his property" by using programs to "illegally place unwanted 'pop-up' advertisements on his computer" stated a "viable claim" for trespass to chattels.  The court noted that Burgess' amended complaint successfully alleged the two elements of trespass to chattels required under North Carolina common law:  "(1) actual or constructive possession of the ... goods in question at the time of the trespass; and (2) unauthorized, unlawful interference or dispossession of the property."  In denying a defendant's Motion for More Definite Statement, the court noted that although the defendant's desire for "additional details" about the alleged tort was "understandable," it was "more properly the subject of discovery."

Absent Other Notice, Revisions to a Contract Posted Online Are Not Binding

In the first U.S. appellate court decision to address the issue, the Ninth Circuit has ruled that a provider of long distance phone service may not change the terms of its service contract "by merely posting a revised contract on its website."  Since the provider did not show that it had given the subscriber any notice other than the posting, the Ninth Circuit struck down a lower court's order to compel arbitration based on a clause of the modified contract.  The court's ruling sets an important precedent, and highlights the importance of giving subscribers clear and prompt notice of all contractual revisions.

Court Affirms Nationwide Search Warrants for Electronically Stored Communications

A federal court in Arizona has concluded that section 2703(a) of the Stored Communications Act -- as amended by section 220 of the USA PATRIOT Act -- "authoriz[es] an out-of-district search warrant for the contents of electronically-stored communications."  The court noted that this was a matter of first impression in the Ninth Circuit.   In In the Matter of the Search of Yahoo! Incorporated, the government sought to obtain in Arizona a warrant for email content held by Yahoo! in California.  Since the email account in question was allegedly involved in the hacking of a government computer in Arizona, the court found that it had territorial jurisdiction and could therefore issue a warrant for the communications.

French Funny Man and Film Makers Give Kick in the Butt to European Content Providers

European courts continue to bring bad news to providers of Internet services.  In late June, the High Court of First Instance of Paris found in a summary judgment that social networking site MySpace is liable for infringing videos of French comedian Jean-Yves Lambert (aka "Lafesse," or "the Butt") posted by a MySpace user.  According to the court, MySpace was not only a host of the infringing videos (hosts are generally shielded from liability under Article 14 of the EU E-Commerce Directive), but also a publisher, since it structured the presentation of the videos, retained control over their posting and diffusion, and profited from the advertising displayed thereby.  And in early July, the same court found that video website DailyMotion is liable for clips of a French film that users posted to the site.  Although the court concluded that DailyMotion was not a publisher -- it noted that all video content was user-provided, and was not swayed by the fact that the site contained commercial advertising -- it nonetheless held that DailyMotion was liable as a hosting provider, since it knew that the infringing videos had been posted to its site.  Coupled with other recent rulings in Belgium and Germany (both of which we reported on earlier), these judgments suggest that Internet companies providing services in Europe may now face greater risks associated with illegal content posted on or passing through their services -- and possibly the duty to monitor their networks for such content.

German High Court Says eBay Must Remove Listings of Media Harmful to Young People

The German Federal Supreme Court (BGH) has ruled that German liability protections for Internet service providers do not absolve eBay of its duty to close auctions of media that it knows to be harmful to young people.  In a press release, the BGH said that eBay's auction platform created a danger that sellers would market media that could endanger young persons, whom the court deemed worthy of protection.  Accordingly, the court concluded that eBay must not only close objectionable listings it learns of, but also prevent further auctions of the identified media and monitor future sales by past purveyors of objectionable items.  However, the court stressed that its opinion should not be read as imposing unreasonable obligations that would threaten eBay's entire business model, and noted that implementing an effective age verification system would obviate eBay's responsibility to block listings.

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