Sign Up
Stay current with GH&R Newsletters. Click here to sign up.
E-Commerce News
Clickwrap Protection Won't Invoke Stored Communications Act Protection; Neiman Marcus Moves to Stop Cybersquatting/Trademark Dilution
October 24, 2006
CLICKWRAP PROTECTION WON'T INVOKE STORED COMMUNICATIONS ACT PROTECTION
When a Web site attempts to limit access only by means of a clickwrap contract, unauthorized visitors do not violate the federal Stored Communications Act ("SCA"), according to the United States Court of Appeals for the Eleventh Circuit.
Although the SCA prohibits unauthorized access of electronic communications, it does not forbid access to electronic communications that are "readily accessible to the general public." The question for the court then was whether the electronic communications here were "readily accessible to the general public", and thus outside the scope of the SCA.
The plaintiff in the case, Michael Snow, had set up a Web site, with an electronic bulletin board, as a private support group for individuals who were being sued by any corporate entity. According to Snow's complaint, DirecTV, two law firms, and 25 unknown individuals accessed his Web site's electronic bulletin board without authorization on multiple occasions. Snow contended that the unauthorized access violated the SCA.
Snow had set up his site so that, in order to gain access, visitors had to register and create a password. As part of the log in process, visitors had to affirm their non-association with DirecTV. Only after visitors clicked on a link reading, "I agree to these terms," were they allowed to enter into, view, and participate in the site's electronic bulletin board.
Snow apparently was shocked; shocked, that persons affiliated with Direc TV would agree to the terms despite their affiliation. In Snow's view, the clickwrap language made his site not readily accessible to the public, despite the fact that accessibility was just one mouse click away.
The court disagreed. In its view, to come under SCA protection, a Web site must be configured in some way so as to limit "ready access" by the general public, the court ruled. "If by simply clicking a hypertext link, after ignoring an express warning, on an otherwise publicly accessible webpage, one is liable under SCA, then the floodgates of litigation would open and the merely curious would be prosecuted," the court said. "We find no intent by Congress to so permit."
Because the court found that the electronic bulletin board was readily accessible by the public, it dismissed Snow's claims. In short, the SCA protects sites protected by a lock, but not sites protected by a "No trespassing" sign.
A federal trial court in Washington state is considering claims that a domain name registrar's practice of registering domains similar to famous marks - for the dual purpose of diverting Web traffic and to re-sell to others - not only violates trademark law, but is also guilty of cybersquatting.
The retailing giant Nieman Marcus recently filed the suit. According to the complaint, the defendant, Dotster, Inc., operated both as registrant and registrar for what the complaint called "Dotster Domain Names." Dotster's practice was to register and monitor traffic to numerous domain names. Dotster would then delete registrations with lower traffic and receive a refund of all registration fees.
Dotster registered several names that were confusingly similar to the marks belonging to Nieman Marcus, including bergdorfgoddman.com, bergmangoodman.com, emanmarcus.com, and neimanmaracus.com. According to the complaint, these domains infringed the plaintiffs' famous Neiman Marcus and Bergdorf Goodman marks.
The complaint alleges that when people inquired about the confusingly similar domain names, Dotster would falsely state that it was not the registrant, or owner, but merely the registrar, and that the names were available for sale.
The complaint contends that Dotster profited from the infringing domains. According to the complaint, the Web sites using the confusing domains contained hyperlinks featuring advertisements for goods and services "directly competitive with those sold or provided" by the plaintiffs, and Dotster got paid by the advertisers, search engines, or affiliate programs whenever visitors clicked on one or more of the displayed links or pop-ups.
Dotster also received revenue by posting a hyperlink entitled, "Offer to Buy This Domain" on the various Web sites employing the challenged domain names. Visitors clicking the link were routed to a Dotster e-mail account, which funneled payments to Dotster's PayPal account.
The complaint seeks an order to Dotster for corrective advertising to correct any consumer confusion, a disgorgement of profits, injunctive relief, treble damages and attorneys fees and costs.
Despite legislation and litigation, cybersquatting just won't seem to go away!
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.