Related Practices

E-Commerce Law Week, Issue 541

January 24, 2009

Facebook Alleges that Violation of its Terms of Use is a Computer Crime

Social networking website Facebook is seeking to use the anti-hacking provisions of the Computer Fraud and Abuse Act (CFAA) to go after a company that allegedly violated its Terms of Use.  Facebook's novel use of the CFAA may have been inspired by none other than the federal government.  As we previously reported, federal prosecutors last year criminally charged Lori Drew -- the Missouri mother whose used a fake MySpace profile to allegedly taunt a 13-year-old girl next door into committing suicide -- with violating the CFAA by obtaining information from MySpace in a manner that violated the site's terms of service.  While the U.S. District Court for the Central District of California considers Drew's motion for acquittal, the district court for California's Northern District will adjudicate Facebook's civil claim that Power Ventures, Inc., violated the CFAA by "scraping" the Facebook website for the information of Facebook users, in contravention of Facebook's Terms of Use.  If either the government or Facebook prevails, it could portend a much more expansive use of the CFAA by websites to enforce their terms of use. 

Court Adds to Division Over What Losses or Damages Are Compensable Under CFAA

Meanwhile, a recent ruling by a federal court in Georgia highlights the continued division in the courts over what sorts of damages are compensable under the CFAA.  In Andritz, Inc. v. Southern Maintenance Contractor, LLC, Andritz brought a CFAA claim against two of its former employees and their new employer, Southern Maintenance Contractor (SMC).  Andritz alleged that, during and after their employment by Andritz, the former employees used their access to Andritz's laptops and secure data network to provide SMC with “trade secrets and proprietary information.”  Andritz claimed that this conduct violated section (a)(4) of the CFAA, and that SMC’s use of this proprietary information to “poach Plaintiff’s customers and potential customers”  resulted in “a loss to Plaintiff exceeding $5,000.”  CFAA section (a)(4) bars access to a computer that is:  unauthorized or exceeds authorization; performed “knowingly and with intent to defraud”; and results in the perpetrator obtaining “anything of value.”  The defendants moved to dismiss, claiming that the Andritz had not alleged damage or loss within the meaning of the CFAA.  The court granted the motion to dismiss, finding that Congress had not intended revenue lost “due to unfair competition” to count as a “loss,” and that Andritz had not alleged any other form of “loss” or “damage” cognizable under the CFAA.

Court Rules Website Host Can Be Contributorily Liable for Trademark and Copyright Infringement

A federal court in California has ruled that a website hosting service can be held contributorily liable for allegedly infringing sales of knock-off Louis Vuitton goods that occurred on websites it hosted.  In Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., the famed luxury goods company sued Akanoc Solutions, Inc., Managed Solutions Group, Inc. (MSGI), and Steven Chen (owner and manager of Akanoc and MSGI), alleging that they "knowingly allowed and encouraged certain websites to use Defendants'  [Internet hosting] services for infringing Plaintiff's valid trademarks and copyrights."  Although the court granted the defendants' motion for summary judgment on Louis Vuitton's claims for vicarious copyright and trademark infringement, it denied their motion for summary judgment on Louis Vuitton's claims for contributory infringement, since Louis Vuitton had presented evidence suggesting that the defendants knew about the infringing websites but failed to take "simple measures" to shut them down.

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