Decline and fall of the dumb copyright trick

Dusk, One Penn PlazaOne of the dumbest things people — overlawyered, and, sadly, mainly professionally-licensed people — have tried to do to avoid negative online reviews is to find ways of claiming some kind of copyright in any review posted by a former client, then suing the negative reviewer for copyright infringement.  Eric Goldman has a nice survey of that business here, in a post that happens to also be about the case that is the focus of this post.

This nasty, cynical approach was dumb on day one and, finally, the courts are catching up with the level of dumbness.  Pamela Chestek, the opposite of dumb, explores a recent First Circuit ruling in a post at Property, Intangible appropriately titled, “Not What Copyright is For.”  As usual, Pamela lays it out perfectly:

previously wrote about a puzzling case, Small Justice LLC v. Xcentric Ventures L.L.C., with the defendant better know as Ripoff Report. The First Circuit has now grappled with it, although based on a revised district court opinion amended with a highly consequential footnote.

To distill it down as much as possible, a lawyer, Goren, got a bad review on Ripoff Report written by one DuPont. Goren went to state court where DuPont defaulted and Goren had the court assign the copyright in DuPont’s postings to him. Goren then assigned the copyright to Small Justice and sued Ripoff Report for defamation and related claims, as well as for a declaration of copyright ownership and copyright infringement. I’m writing only about the copyright part of the case; you can read about the Section 230 part of the case here.

The various opinions are about what kind of ownership interest Ripoff Report has in the post.

It’s a great post, and you have to read it in full because Pamela makes an important point about the divisibility, vel non, of rights in the copyright of a work that certainly would have evaded me and, perhaps evaded the district court in the case.  The money graf, for immediate purposes however — i.e., the dumb-dumb part — is this:

The First Circuit, quoting the district court, summarizes the original holding:

First, the District Court concluded that the plaintiffs’ copyright infringement claim failed because the District Court determined that DuPont had “transferred copyright ownership to Xcentric by means of an enforceable browsewrap agreement.” According to the District Court, DuPont made that transfer pursuant to the Ripoff Report’s terms and conditions, which provided, in part, that a user of the site agreed to “grant … to Xcentric an irrevocable, perpetual, fully-paid, worldwide exclusive license to use, copy, perform, display and distribute” the user’s posting.

The district court, apparently sua sponteinvited the parties to comment on a new proposed footnote, although advising that “the judgment would not change.” The footnote, which was ultimately added as note 4 to the concluding sentence of Section V.A on page 11,1 says:

Even if 17 U.S.C. § 204, D. 64 at 9, 21 n. 22, applies, the ultimate result here is the same. Section 204 provides that the transfer of a copyright is achieved only with an affirmative action on the part of the transferor, stating that “[a] transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or note or memorandum of transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” 17 U.S.C. § 204. Assuming a written and signed conveyance was required here, the browsewrap agreement was insufficient because it did not require the user’s affirmative assent, instead relying on the user’s use of the ROR as an expression of assent.  . . .  Under this scenario, Xcentric is not the owner of the copyright to the Reports, but it may display them in perpetuity. Accordingly, summary judgment still enters in Xcentric’s favor.

So with a footnote, the district court went from Xcentric as owner of the full copyright to a nonexclusive license.

Alone together, Bryant ParkFollowing so far?  Now, as the Court of Appeals notes:

In the subsequently appended footnote, the District Court did not separately address the plaintiffs’ declaratory judgment claim, wherein the plaintiffs sought to have Small Justice declared the owner of the copyright, presumably because the District Court’s ruling granting summary judgment regarding copyright infringement obviated the need to resolve that issue.

Presumably, and just as well. So, now take a breath:

On appeal the First Circuit affirmed the copyright claims. As to the copyright infringement claim, Small Justice didn’t argue on appeal that Xcentric’s publication was outside the scope of the nonexclusive license, but rather there was no nonexclusive license because (i) there was no consideration for it or (ii) it was unenforceable on public policy grounds, because posts might be libel per se yet Ripoff Report promises not to remove them.

As to consideration, that was Ripoff Report’s publication of the post. The public policy argument was WTF: “[T]he 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.”

Right.

Figures of justice, Bergen County CourthouseIn other words, that’s not what copyright is for.  And now to make this post triple hearsay, here’s an excerpt from a post by Eric Goldman that Pamela links to and cites at length:

We have been covering this case for years (since 2013!). My blog poston Goren’s initial complaint. Venkat’s post on the initial district court ruling. My post on a subsequent district court ruling. . . .

Even among the many cases we’ve blogged, this case stands out as particularly noteworthy because it exposes an ugly interface between copyright and reputation management. Goren didn’t want copyright ownership to “promote the progress of science.” Like the doctors in Medical Justice’s decrepit program to pre-acquire the copyrights to unwritten reviews of their patients, the real goal of copyright ownership was to suppress the content. To me, this turns copyright law on its head, by making our society dumber, not smarter. Jessica Silbey and I are co-authoring a paper on how and why copyright has emerged as a reputation management tool of choice, and the paper prominently features this case as an example. The fact that the appeals court reached a satisfying outcome is nice. However, the fact it took four years of litigation to reach this result, when most defendants would have given up long ago, is symptomatic of copyright law’s overreach. We need to build industrial-grade doctrines in copyright law to prevent its misuse as a reputation management tool.

Yes.

And now a few thoughts from your blogger over here on this page.

I spent many years representing another gripe site, PissedConsumer.com.  Unlike Ripoff Report, it has a procedure that permits anyone who posted a review to take it down if he could authenticate the whole business.

Washington Street, NewarkNonetheless, PissedConsumer was sued all over the country under spurious claims of trademark infringement, which were nothing more or less than proxies for unwinnable defamation claims.  We took care of these claims with consistently good results, but doing so cost a lot of money and, ultimately, cost one of the site’s owners his day job.  These cases were sad examples of the misuse of trademark law — which some judges got immediately, others got expansively (and expensively) and others didn’t get all that clearly.

Indeed, I developed a bit of a side specialty representing plain-vanilla review websites sued under less creatively creepy, but still “making us dumber” copyright claims by listees that simply didn’t want empirical information about them — including media they had published and made available for embedding on YouTube — available in readily-comparable form.

Trademark lawyer Ron ColemanThen there was the infamous Roca Labs case against PissedConsumer — the one that ended up resulting in one of the site owner’s disemployment, basically by way of a defamatory doxxing through Roca Labs’ desperately unethical counsel. It was premised on the claim that the site was tortiously interfering with the unenforceable contract rights between the fraudulent snake-oil company’s customers and itself that purported to make it impossible for anyone to publish negative reviews.  You’d think that would have been the high-water mark in this business… but no, evidently not.  It rolls on and on.

The courts, if Congress won’t — and it won’t — should do more to clean this mess up and shut down these phony trademark and copyright claims up front and with sanctions.  The only consolation, which Eric Goldman averts to in the 2013 post linked to above, is the Streisand Effect — which, it appears Richard Goren was trying to avoid when he formed Small Justice as an entity to manage this litigation.

Western Kentucky cloud and skyIt failed.

Look, people are being defamed every day on the Internet.  Anonymity, jurisdictional reach, litigation costs, the virtual impossibility of succeeding on a defamation claim under the best of circumstances and the viral damage done even when success is achieved make defamation law not-the-solution for it.  I never denied that this is a real problem without a great solution.

But there’s no insoluble problem so bad it can’t be made worse by lawyers and lawsuits.  This nonsense has got to stop.

Ron Coleman

I write this blog.

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