Padmapper Case: Craigslist Permitted to Proceed Against Republishers of Its Content

Court suggests a "click" could constitute a writing for purposes of granting an exclusive license

In Craigslist Inc. v. 3Taps Inc. et al., the U.S. District Court for the Northern District of California refused to dismiss many of the claims brought by Craiglist against several republishers of its user content based in part on its broad terms of use, turning on whether user content was exclusive to the online classified ad company. This case highlights the importance of carefully crafted language presented to users when accessing a website that can be used to support copyright, trademark and computer fraud claims against competitors.

Background

The corporate defendants, 3Taps Inc. (“3Taps”), Padmapper, Inc. (“Padmapper”), Discover Home Network, Inc. d/b/a Lovely (“Lovely”) all aggregate and republish advertisements from Craigslist. 3Taps markets an API that allows third parties to access and repurpose Craigslist content, alongside “craiggers.com,” which mirrors Craigslist posts. Padmapper provides real estate listings, largely culled from Craigslist, which are overlaid on a geographic map to users searching for a home. After receiving a cease and desist letter alleging that it copied content directly from Craigslist, Padmapper began obtaining Craigslist content from other parties including 3Taps. Lovely provides services that are similar to those offered by Padmapper.

After sending further cease and desists to 3Taps, Padmapper and Lovely stating they are “no longer authorized to access craigslist’s website or services for any reason, Craigslist filed a complaint against them alleging various federal and CA state law clams including trespass, copyright and trademark infringement and violations of the Computer Fraud and Abuse Act (“CFAA”) and its state law equivalent, California Penal code section 502.

3Taps and Lovely filed identical motions to dismiss the copyright infringement, CFAA and section 502 claims, with Padmapper joining and separately moving to dismiss the trademark, trespass and breach contract of claims, among others.

Analysis

CFAA and Section 502

The requirements of the CFAA and California section 502 are functionally identical, imposing criminal penalties on any person who “intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains… information from any protected computer” that is used “in or affecting interstate or foreign commerce or communication.” Craigslist alleged that the Defendants accessed its website and the “protected computers” that hosted it “without authorization or in excess of authorization of Craigslist’s Terms of Use (“TOU”).”

The scope of the CFAA in the Ninth Circuit was previously outlined in United States v. Nosal, holding the phrase “exceeds authorized access” as limited to violations on access to information, and not restrictions on its use. Here, the Court held that Craigslist’s TOU contained only “use” restrictions and not true “access” restrictions as the term is used in Nosal. The TOU did not govern who may access information, what information may be accessed, or the methods by which information may be accessed, all of which the Ninth Circuit suggested were more properly considered “access” restrictions under the CFAA.

Nonetheless, Craisglist‘s CFFA and 502 claims survived dismissal because the cease and desist letters specifically denied authorization to use its website “for any purposes” and Craiglist employed technological measures to block access from IP addresses associated with 3Taps. This was sufficient to constituted unauthorized access under the CFAA.

Copyright Infringement

Although Craigslist had obtained copyright registrations, the Defendants alleged that the Craigslist posts and compilations of user posts failed to meet the minimal level of originality required to be protectable. The Court disagreed and held that Craigslist’s individual posts are protectable, viewed in the light most favorable to non-movant Craigslist, as they possess a level of creativity “not so trivial as to be virtually nonexistent” and are sufficiently original to fall within the scope of copyright protection. The Court also held that its compilation of the posts displayed a minimal level of creativity because Craigslist decides “which categories to include and under what name.”

Next, the Court addressed the question of whether Craigslist had acquired a sufficient license or ownership interest to assert copyright over its individual posts as only the owner of an exclusive right under copyright is entitled to sue for infringement. Here, the court held that Craigslist acquired an exclusive license solely over posts submitted between July 16, 2012 and August 2012, during which time Craigslist presented users with a notice that “[c]licking ‘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.” For the remainder of the time period, the court held that the TOU did not give any indication of exclusivity, and stated that, arguably, the limited term of the “exclusivity license” confirmation statement suggested non-exclusivity outside that period. Moreover, the Court held that a phrase in the TOU reading “You expressly grant and assign to [Craigslist] all rights” related specifically to enforcement rights, not rights to the content of the posts. The Court granted Defendants’ Motions to Dismiss with respect to posts submitted before July 16, 2012 or after August 8, 2012.

In addition, the Court rejected Defendants’ argument that Craigslist cannot assert infringement of the user-created posts because Craigslist failed to list the authors of each post in its copyright registration applications. The Court stated that Craigslist’s registration of the compilation served to register component works to which Craigslist has an exclusive license despite the omission of author names, and stated that requiring Craigslist to list individual authors for tens of millions of works would be “inefficient.”

Trademark Claims and Dastar

Chief among other issues that the Court addressed was its holding that the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp did not preclude Craigslist’s Lanham Act and trademark Claims. In Dastar, a “reverse passing off” case, the Supreme Court held that Twentieth Century Fox could not bring a false designation of origin claim under Section 43(a) of the Lanham Act where Dastar had repackaged and sold as its own a now public domain Fox television series. The Supreme Court held that Dastar was, in fact, the “origin” of the physical videotapes it sold because under Section 43(a) “origin” refers to the producer of the tangible goods that are offered for sale and not to the author of any idea, concept or communication embodied in those goods.

The Court distinguished the Craigslist case from Dastar, where the plaintiffs were attempting to use trademark law to prosecute plagiarism of their creative work, and held that Dastar did not permit Padmapper to use Craigslist’s trademark in an allegedly misleading way simply because the mark is contained in copyrighted content. The court held that a plaintiff could seek both statutory damages under the Copyright Act and the Lanham Act where the defendant’s act simultaneously infringed the plaintiff’s copyright and its trademark. Further, the Court noted that Craigslist had alleged unauthorized use of its marks in contexts other than within copyrighted content.

Takeaways

While the court’s decision only permits Craigslist’s claims to proceed past the pleading stage, the most surprising element of the decision is its holding that a “click,” when accompanied by a suitably drafted notice, can constitute a signed writing for the purpose of granting an exclusive license. Section 204(a) of the Copyright Act requires a signed writing for any exclusive grant and while there are no specific language requirements under the Act, grants have traditionally been made by written agreements or letters. Only the copyright owner’s intent to transfer rights must be demonstrated. Whether a “Click wrap” agreement could constitute the intent to transfer exclusive rights under copyright has not been previously addressed. This court found that Craigslist’ confirmation notice that clicking “continue” to confirm that Craigslist is the exclusive licensee of the classifieds posted sufficient to infer that a Craigslist user would understand that this effected a transfer of exclusive rights.

Whether Craigslist will in fact be able to prove this intent as the case proceeds is uncertain. Would many Craigslist users believe that they were granting an exclusive right to Craigslist to use their classified postings and any accompanying photos – and legally enforce rights in such content – simply by clicking through a warning and uploading a classified ad? Users often automatically click through notices without reading and do not give the same weight to clicking a button as they do to writing their signature on a physical document, particularly as there is no opportunity to negotiate. You either agree to all terms and proceed or not use the service. In this case, by clicking through and uploading their content, users could place themselves in breach of Craigslist’s TOU by mirroring their same advertisement on another classified ad website. If followed by other courts, the Northern District’s line of analysis could have significant repercussions for users of social media, as well as sites such as Reddit that rely largely on user-generated content. It may be that users will object once they become aware of these “hidden” terms, similar to when Instagram changed its terms last year.

On the other hand, many websites and apps may conduct an audit of their terms and legal warnings in order to maximize their ability to protect and enforce their rights, particularly if they have knowledge that their data is being harvested and repurposed by third parties. Craigslist was limited to copyright claims for only a short period because its “confirmation” of ownership of exclusive rights was only posted for a short window of time.

As a side note, the decision also demonstrates the importance of using a well drafted cease and desist letter– Craigslist’s letter barring the Defendants from further access to its site was partially decisive on the CFAA issue.

The Northern District’s decision is also a warning to startup companies of all kinds. In addition to the need to audit and update privacy policies and terms of use to reflect the startup’s actual business practices (in contrast to copying and pasting from other sites, a behavior practiced by many startups), the decision highlights that companies must be careful when using data that originates with other entities. Here, Padmapper attempted to find a creative solution to accessing Craigslist data -one that backfired and left it facing costly litigation. As large platforms such as Craigslist, Facebook and Foursquare increasingly shut off access to their data and users to third parties, this decision demonstrates the problems startups can face in trying to circumvent such action.