Friday, January 28, 2005

Jay Monahan from eBay Speaks

Jay Monahan, Deputy General Counsel for eBay and primary IP counsel for the company, followed Prof. Mark Lemley. A copy of his slides from the presentation are posted here.

His first discussion concerned the problems that eBay has with automated robotic access to the eBay system, and how that has a direct economic impact on eBay users because of slow-downs on the eBay systems. The primary 'weapons' that they have been using are
  1. Technology -- helps, but not a panacea. IP addresses are easily changed, robots are getting better at hiding themselves, and the bot users are smart. There are some successes at using rate limiting filters, and GIF blocking (the fuzzy little pictures you see on a sign-up screen -- bots can't read them very well).
  2. Breach of Contract -- To get any account, one must agree upon a user agreement. This has been their best tool to date.
  3. Statutory -- The federal CFAA has been somewhat useful, given that it has a fairly broad definition of damages that trigger the law (but still need to meet the $5000 threshhold). There are state statutes that parallel the federal act -- in particular, California Penal Code Section 502(c), which has a much lower threshhold of entry, and allows for attorney fees as well (and there is a civil action under the statute as well).
  4. Common Law Trespass to Chattels -- the primary case is eBay v. Bidder's Edge. Court found that use of capacity and THREAT of future harm was adequate. eBay given an injunction. This line of analysis has been followed by others. vs Verio 356 F.3d 393 (2nd Cir 2004); Ticketmaster v (2004 L.L> 21406289 ( C.D. Cal) (court determined that there was insufficient showing of damage, using Bidder's Edge analysis); Intel v. Hamidi (30 Cal. 4th 1342 (2003).
The second primary issue Jay discussed is users who offer infringing items on the eBay system. eBay takes some actions to reduce the problem, but it does not purport to be an expert. There is less certainty in Europe. In the USA, the DMCA takedown process has been used frequently and successfully by eBay -- they have started actively monitoring their own site to police as well, but there is some discussion of how this alters the risk scenario. The company has set up a detailed process and procedure to deal with takedown demands.

Jay also discussed eBay's experience in the Hendrickson cases. An author complained about eBay's sale of unauthorized copies of a documentary about the Manson family. eBay agreed to follow its take down policy, but they asked the author to identify the infringing goods. The author refused and said it was eBay's obligation to find the infringing goods. The court ruled in eBay's favor and held that eBay wasn't required to monitor, the act of monitoring wouldn't expose eBay to liability, and that eBay was entitled to DMCA immunity. Hendrickson also sued eBay for Lanham Act violations alleging trade dress infringement. The court held that the sole remedy for the alleged claims was an injunction and because eBay had already removed the infirnging items, there was no need for court action.

Jay's presentation then routed through a summary of the recent history of DMCA cases, including Ellison v. AOL, and Corbis v. Amazon (December 21, 2004, DC WD Wash.).

The third problem is based on how eBay users can give each other ratings as sellers and buyers. The targets of these ratings will sometimes feel they have been defamed in the process, and will sometimes attach eBay for their damages. The Communications Decency Act 47 U.S.C. Section 230(c)(1) has been eBay's primary tool in this arena. In Stoner v. eBay -- a plaintiff sought damages on behalf of an uncovered class of all of humanity over eBay's alleged assistance in infringements of Led Zeppelin recordings -- the court tossed the case on CDA grounds. In Grace v. eBay, the California local court gave eBay a good CDA analysis, but the Court of Appeals gave an unfavorable reading of the CDA -- the Cal. Sup. Ct then de-published the Court of Appeals decision, so the issue has been left open.

The defamation concerns get more twists and turns once the defamed party comes from outside the USA. eBay has created a form 'remarkably similar' to a DMCA takedown notice, and has offered this mechanism to its non-USA users to ask for a takedown. So far, the process has worked well for the company.

The fourth issue for eBay is how users of their affiliate company PayPal will use the PayPal service to accept payments for illegal products. The Perfect 10 v Visa case (Dec 3, 2004 USDC N.D. Cal) has decided that Visa's connection to the allegedly infringing site was "too attenuated" to pose liability on Visa's part acting solely as a credit card merchant. Not enough to just show economic influence" over the infringer.

The fifth issue discussed was how competing auction sites use the "bay" phrase, and eBay's successes in that area. These are typically litigated under traditional trademark infringement tools.

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