California Case Sheds Light on Liability Issues from Use of Internet Bots to Gather Data

A recent California decision, Ticketmaster LLC v. Prestige Entmt Inc. (C.D.Cal 2018) pitted a website owner, Ticketmaster, against a company that used internet bots and other technical tricks to make massive purchases of tickets and then resell them for profit, something Ticketmaster strenuously wished to avoid.  On a motion to dismiss the complaint, the district court dismissed some claims by Ticketmaster but kept others. 

The decision teaches important lessons for companies whose websites contain large amounts of data or transactions to the public, but wish to keep competitors from extracting this data in mass amounts or engaging in mass transactions:

  • Adopt rigorous Terms of Use that prohibit bots, mass data extraction, or whatever other concerns one might have with competitors.
  • Include a license in the Terms of Use to all content and condition the license on adherence to the Terms of Use.
  •  Make rigorous use of technical measures (CAPTCHA, for example) to limit access to mass users, and prohibit circumvention in the Terms of Use.
  • Include liquidated damages provisions in the Terms of Use – but make sure they are reasonable both in the threshold where they kick in, and how they are calculated.
  • Most obviously, make sure that users must affirmatively agree to the Terms of Use – and record their assent to the Terms.

Fourth Circuit DMCA Case Teaches How to Ensure Immunity For Third Party Postings

A recent Fourth Circuit decision, BMG Rights Mgmt LLC v. Cox Communications Inc. (4th Cir. 2018) affirmed summary judgment that an internet service provider, an ISP, was not entitled to claim Digital Millenium Copyright Act (DMCA) immunity from copyright infringement for third-party postings through its service, opening up the company to massive copyright liability. 

A central part of the DMCA, a part of U.S. copyright law, is the exemption from direct and indirect liability of internet service providers and other intermediaries on the internet.

In Cox, the ISP had failed to implement a reasonable policy to remove repeat infringers, a condition of DMCA immunity, and so lost its immunity.

The Cox decision teaches several important lessons to companies who wish to use the DMCA to avoid copyright liability. 

It’s Time to Pay Closer Attention to Digital Millennium Copyright Act

The Digital Millennium Copyright Act (“DMCA”) was Congress’ attempt, almost six years ago, to protect authors and artists against hi-tech piracy.  The DMCA created new prohibitions against activities that facilitate copyright infringement.  Congress gave copyright holders a new weapon with which to go after would be transgressors.  The DMCA has broad application, from computer software, to digital movies and music, and affects both large corporate interests and individual users of digital content.

In Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178 (2004), the Federal Circuit proffered at least three significant interpretations of the DMCA:

  • Under the DMCA, the plaintiff has the burden of proving absence of license.
  • A claim for trafficking in circumvention technology must have a nexus with copyright-protected materials.
  • Contrary to a 2001 Second Circuit holding, the fair use doctrine applies to claims under the DMCA.

Each of these holdings can be significant to counseling clients about the impact of the DMCA.