E-Commerce Law Week, Issue 570

Argentine Court Holds Yahoo!, Google Liable for Defamatory Third-Party Content

They say a picture is worth a thousand words, but an Argentine court recently ruled that a picture can also be worth thousands of dollars in damages.  Virginia Da Cunha sued Yahoo! and Google for damages after photos of her that were posted on sex-trade websites, without her consent, appeared in the results of Internet searches for her name.  A civil court in Buenos Aires ruled for Da Cunha and awarded her $26,248 in damages, finding that the search engines actively amplified the harm of the defamatory third-party postings by making the sex-trade websites more accessible than they would otherwise be.  The court also held that neither company was doing enough to guard against such harm to individuals.

The Price of Rocking the KaZaA

A Massachusetts jury recently returned a $675,000 directed verdict against graduate student Joel Tenenbaum for sharing 30 music files via the peer-to-peer network KaZaA.  The jury’s decision came after two noteworthy rulings from the district court.  First, the court denied Tenenbaum’s fair use defense on the ground that it was “so broad that it would swallow the copyright protections that Congress has created.”  Second, the court granted the plaintiffs' motion for a directed verdict of infringement following the defendant's testimony openly admitting to downloading and distributing files in violation of the law.  This ruling shows that "Big Content" continues to go after little file-sharers to enforce their copyrights, despite making noises the last couple of years that it was rethinking that strategy.  It also shows the danger to defendants of relying on celebrity lawyers more interested in advancing a political cause than protecting their clients' interests.

Forcing Employee to Provide Access to Password-Protected Website Violates SCA

A recent jury verdict suggests that an employer that gains access to an employee's social networking site by pressuring the employee to provide it with credentials for access may thereby violate the Stored Communications Act.  In Pietrylo v. Hillstone Restaurant Group, several former employees of Houston’s restaurants in New Jersey alleged that Houston's owner, the Hillstone Restaurant Group, accessed without authorization the employees' private and password-protected MySpace group website -- used to make comments and jokes about Houston's management, customers, and customer service standards.  The employees were subsequently fired, and they then brought a wrongful termination suit claiming violations of their right to privacy, the Stored Communications Act (SCA) and a similar New Jersey statute, and other laws.  Last July, a federal court in New Jersey denied defendants' motion for summary judgment on the claims for violations of the SCA, the parallel state statute, and two invasion of privacy claims, finding that "testimony regarding whether [] consent was voluntary demonstrate[d] a material issue of disputed fact."  Notably, however, the court also concluded that if "consent was only given under duress, then the Defendants were not 'authorized' under the terms of the statute."  Last month, a jury found that Houston's "knowingly or intentionally or purposefully access[ed] [the site] without authorization" on five occasions, in violation of the SCA and the parallel New Jersey statute.  The jury also found the violations to be "malicious."

European Commission Proposes New Rules Governing Internet Retailers

Late last month, the European Commission issued a draft antitrust regulation and guidelines on distribution agreements between suppliers and retailers.  The proposal would replace existing rules, which exempt certain forms of distribution agreements from EU competition law, by May 2010.  The Commission proposes largely to renew these rules, including a rule allowing suppliers of luxury or "complex" goods to require their retailers to maintain a brick-and-mortar shop before engaging in online distribution.  But the proposal also regards other restrictions on online retailing with suspicion.   Companies may submit public comments until September 28.

Questions and comments about E-Commerce Law Week are always welcome.  Please send your feedback to Sally Albertazzie.