Thursday, November 16, 2017

On the website Ripoff Report, a forum for complaints

Small Justice v. XCentric, 873 F.3d 313 (CA1 2017) explores an interesting attempted use of copyright law.

The beginning of the decision describes the features of "Ripoff Report."

Xcentric operates a website called the Ripoff Report. The website's purpose is to permit consumers "to post free complaints, called 'reports,' about companies and individuals whom [sic] they feel have wronged them in some manner." The website works as follows for one who wishes to post a report on it.

Before submitting a report to be posted on the website, the would-be poster must click through a series of screens. Those screens ask the user to describe and to categorize the nature of the complaint that the user wishes to post as a report.

Ultimately, a user attempting to post a report encounters a final screen that is captioned, "Submit your Report." Below that caption is a text box. That text box is separately captioned, "Terms and Conditions," and contains a vertical scroll bar on the right side. Without employing the vertical scroll bar, a user who encounters this screen can see the very beginning -- but only the very beginning -- of what is a longer list of terms and conditions.

One of the "Terms and Conditions" -- which, according to the District Court, is "not visible unless a user employs the scroll bar" -- provides: "[b]y posting information or content [*4] to any public area of [the Ripoff Report], you automatically grant, and you represent and warrant that you have the right to grant, to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute such information and content . . . ." As the District Court noted, in order to post a report, a user is not required to click on a box indicating that the user has read and agreed to the text set forth in the text box captioned, "Terms and Conditions."

Underneath the text box captioned "Terms and Conditions," there is additional text that appears without any caption above it. As is relevant here, at the time in question, that text stated:

By posting this report/rebuttal, I attest this report is valid. I am giving Rip-off Report irrevocable rights to post it on the website. I acknowledge that once I post my report, it will not be removed, even at my request. Of course, I can always update my report to reflect new developments by clicking on UPDATE.
Adjacent to this text is a check box. The parties agree that, to submit a report to be posted on the website, a user of the Ripoff Report must click on this check box. The user must then click [*5] on the "continue" button at the bottom of the same screen.

And, as to the parties:

Several years ago, Goren was the subject of two negative reports that had been posted on the Ripoff Report. The person who posted the two reports, DuPont, had been the defendant in a lawsuit in which Goren was representing a party suing DuPont. In the two postings, DuPont leveled a number of criticisms regarding Goren's character and conduct.

In response, Goren filed suit in Massachusetts state court, under Massachusetts state law, for libel and intentional interference with prospective contractual relations. Goren sought both money damages and injunctive relief in the form of an order "enjoining [DuPont] from continuing to publish" the reports that DuPont had posted.

DuPont did not defend the lawsuit, and Goren, after first voluntarily dismissing those counts of the state court complaint that sought money damages, successfully obtained a default judgment. The state court granted Goren certain equitable relief in connection with that [**1309] default judgment. Specifically, the state court enjoined DuPont from "continuing to publish or republish" the two reports that DuPont had posted. The state court also transferred to Goren "all rights [*6] in and to ownership of the copyright" for each of the two reports that DuPont had posted. Finally, the state court appointed Goren as DuPont's attorney-in-fact in order to "execute and deliver a conveyance, transfer, and assignment of all rights in and to ownership" of DuPont's copyright in each posting to Goren. Thereafter, Goren assigned to himself the copyright in the reports that DuPont had posted, which Goren then assigned to Small Justice.


The plaintiffs next proceeded to file this lawsuit in federal court in Massachusetts against Xcentric, the owner of the Ripoff Report. As amended, the plaintiffs' complaint claimed, with respect to copyright law, a right to a declaration of Small Justice's ownership of the copyright to the two reports that DuPont had posted, and copyright infringement. The amended complaint also made claims under Massachusetts state law for libel, intentional interference with prospective contractual relations, and violations of chapter 93A.

As a first point:

The plaintiffs appear to concede that the Ripoff Report qualifies as an ICS under § 230 and, thus, that Xcentric enjoys immunity under that section from claims that would treat it "as the publisher [*17] or speaker of any information provided by another [ICP]," 47 U.S.C. § 230(c)(1). See Klayman v. Zuckerberg, 753 F.3d 1354, 1358, 410 U.S. App. D.C. 187 (D.C. Cir. 2014) "[A] website does not create or develop content when it merely provides a neutral means by which third parties can post information of their own independent choosing online."). However, the plaintiffs contend that Xcentric may not claim CDA immunity under § 230 because the plaintiffs contend that those postings do not constitute "information provided by another [ICP]." 47 U.S.C. § 230(c)(1).


As we explained in Lycos, immunity [*18] under § 230 should be "broadly construed." 478 F.3d at 418-19. In fact, we noted there that Congress has expressed a "policy choice . . . not to deter harmful online speech through the . . . route of imposing tort liability on companies that serve as intermediaries for other parties' potentially injurious messages." Id. at 418(quoting Zeran v. Am. Online, Inc., 129 F.3d 327, 330-31 (4th Cir. 1997))(omissions in original). Given that legislative policy choice, we do not see how we can construe the CDA's definition of an ICP -- which provides that an ICP is a "person or entity that is responsible . . . for the creation or development of information[,]" 47 U.S.C. § 230(f)(3) -- to encompass Xcentric in this case.

Such a construction of this statutory definition of an ICP would flout Congress's intent by wrongly preventing an ICS like Xcentric from claiming immunity. Lycos, 478 F.3d at 418. As the plaintiffs recognize, Xcentric did not alter the content of the information DuPont posted such that Xcentric could be said to have been "responsible for . . . creat[ing] or develop[ing]" that content by reason of having actually authored it, whether in whole or in part. In addition, as the District Court found, nothing in the amended complaint indicates that Xcentric, simply by holding itself out as the copyright holder of the postings or by directing [*19] search engines to cache DuPont's postings on their websites, "specifically encourage[d]" the content set forth in DuPont's postings.

In fact, a sister circuit has rejected the view that an ICS, by merely providing such direction to search engines with respect to information the ICS has not altered, becomes an ICP of that information. See Kimzey v. Yelp! Inc., 836 F.3d 1263, 1270-71 (9th Cir. 2016) ("Yelp is not liable for disseminating . . . [user-generated] content in essentially the same format to a search engine, as this action does not change the origin of the third-party content." (citing Ascentive, LLC v. Op. Corp., 842 F. Supp. 2d 450, 476 (E.D.N.Y. 2011))); see also Ayyadurai v. Floor64, Inc., No. 17-10011-FDS, 2017 U.S. Dist. LEXIS 144030, 2017 WL 3896668, *17 (D. Mass. Sept. 6, 2017) (analyzing cases from other circuits which determined that "republishing and commenting upon user generated content, does not constitute 'creation or development.'" (citation omitted)). And we do not see why that conclusion should differ if the ICS also represents that it holds the copyright. Nor are we aware of any precedent that requires a contrary conclusion. Accordingly, we affirm the District Court's ruling on the motion to dismiss.

As to copyright issues:

The District Court concluded that "DuPont conveyed a nonexclusive, irrevocable license to Xcentric to display the [two postings]" when DuPont clicked the check box next to the accompanying text stating that a user who posts on the Ripoff Report agrees to give an "irrevocable right[]" to Xcentric to display his postings on the Ripoff Report website. As a result, the District Court held, even if Xcentric was not "the owner of the copyright to [DuPont's postings]," Xcentric could nevertheless "display them in perpetuity" without infringing DuPont's copyright.

In arguing otherwise, the plaintiffs do not dispute that in the case. "[u]ses of the copyrighted work that stay within the scope of a nonexclusive license are [*21] immunized from infringement suits." John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d 26, 40 (1st Cir. 2003) (citing Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998)). The plaintiffs also do not contend, at least in their opening brief, that Xcentric exceeded the scope of the nonexclusive license, insofar as Xcentric had that license.11 Instead, the plaintiffs contend that Xcentric did not obtain a valid nonexclusive license to display DuPont's postings for two reasons.

Footnote 11

11 In their reply brief, for the first time, the plaintiffs argue the scope of the nonexclusive license was only "to post [the defamatory report] on the website" and that Xcentric exceeded that scope of the license by "add[ing] its notice of copyright ownership to each report, tag[ging] the report with codes and instructions to allow Google and other third-party search engines to index and also to display copies of it extrinsic to the website." But, .arguments developed for the first time in a reply brief are waived. See Braintree Labs., Inc. v. Citigroup Glob. Markets Inc., 622 F.3d 36, 44 (1st Cir. 2010) (finding waived an argument cursorily mentioned in appellant's opening brief, as even "[t]he slight development in the reply brief does nothing to help matters, as arguments raised there for the first time come too late to be preserved on appeal").

End Footnote 11

First, the plaintiffs argue that Xcentric offered no consideration for the irrevocable nonexclusive license that the District Court ruled Xcentric had been given by DuPont. The plaintiffs thus argue that, in consequence, no valid contract existed that could have conveyed the license to Xcentric. In support of this contention, the plaintiffs point to the website's terms and conditions, which the plaintiffs contend were "subject to change by Xcentric, at any time" and without notice to DuPont, and that "it is undisputed that Xcentric [has redacted information] from posted reports and has removed reports upon the request of the author." The plaintiffs thus argue that the only possible promises that Xcentric made to give something in consideration for the license were "illusory" and, thus, in fact "Xcentric promised nothing" [*22] and, therefore, "gave no consideration."

The problem with this argument, however, is that, even if consideration is necessary in order for a party to grant an irrevocable nonexclusive license, see 3 Nimmer on Copyright § 10.03 (Rev. ed. 2017)(explaining that "consideration is necessary to render a nonexclusive license irrevocable"), performance can itself constitute consideration sufficient to establish a binding contract. And, in this case, the plaintiffs concede that Xcentric did actually post the reports at issue. Thus, given that performance, the plaintiffs offer no authority or persuasive argument as to why there is insufficient consideration for the conveyance of the irrevocable nonexclusive license in this case. See 3 Williston on Contracts § 7:15 (4th ed. 2008) ("[T]hat the purported consideration is invalid will not cause a subsequent performance to be likewise invalid . . . . [A] performance which has been rendered needs no consideration though the promise to give it originally did. Since the performance has been rendered . . . and . . . received as the consideration for the promise, the promise thereby becomes binding.").

Second, the plaintiffs contend that the irrevocable nonexclusive license is unenforceable on public policy grounds. The plaintiffs' argument here is that Xcentric's promise not to remove any postings -- even if the postings are libelous -- is contrary to the public policy "against per se libel." But, while the plaintiffs contend that there is a "strong public policy against per se libel[,]" the plaintiffs offer no basis for concluding that this public policy provides a reason to hold the nonexclusive license itself invalid. The fact that one holds such a license does not in and of itself protect one from liability for libeling another. Furthermore, even assuming that DuPont's postings were per se libelous, no aspect of copyright law protects the holder of such a license from liability for libel, and nothing in the District Court's opinion suggests otherwise. Thus, the plaintiffs' assertion that there is a public policy against per se libel fails to show that this nonexclusive license may not be enforced.

There remains only the other copyright claim to address: the declaratory judgment claim in which the plaintiffs argue the copyright to DuPont's two postings belongs to Small Justice and not to Xcentric. The plaintiffs contend that the District Court erred insofar as it granted summary judgment to Xcentric on the ground that Xcentric had acquired the copyright to each of DuPont's postings.12 But the plaintiffs advance this argument only in connection with their claim that there was no agreement that ever effected a valid transfer of copyright and, thus, that DuPont and not Xcentric "retained ownership of the exclusive rights of copyright to the defamatory postings".13 We thus deemed waived any independent contention that the District Court erred in not issuing a ruling as to whether Small Justice validly holds copyright to DuPont's postings. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990). And, therefore, we need not consider this issue further.14

Footnotes 12-14

12 In light of the District Court's subsequently appended footnote, it is not clear that the District Court actually issued a ruling as to whether Small Justice, in fact, holds the copyright to DuPont's postings. Rather, the District Court appears to have concluded only that Xcentric is not the copyright holder.

13 The plaintiffs' only request for a declaration of ownership in their amended complaint was a request for a declaration confirming Small Justice's ownership of the copyright to each of the two posts at issue. After the District Court's summary judgment ruling and appended footnote issued, DuPont moved to further amend the complaint to include a request for a declaration that DuPont owned the copyright for each of the postings or, alternatively, a declaration that the nonexclusive license DuPont allegedly granted Xcentric was unenforceable as contrary to public policy. The District Court denied DuPont's motion, as judgment had already entered and DuPont failed to provide an adequate reason for his delay in seeking the amendment, which was prejudicial to Xcentric, "given that the Plaintiffs were aware of the facts underlying their claim when they filed their first two complaints." The plaintiffs did not appeal the denial of the motion to amend.

14 We thus need not address the question of whether the Massachusetts state court decision violated Rule 54(c) of the Massachusetts Rules of Civil Procedure, which requires that "[a] judgment by default shall not be different in kind from . . . that prayed from in the demand for judgment," nor whether that court's judgment transferring DuPont's copyright to Goren pursuant to a default judgment is a valid transfer of copyright under 17 U.S.C. § 201(e). We likewise need not address whether a browsewrap agreement may satisfy the writing requirement in 17 U.S.C. § 204.


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