By Tyler Lacey – Edited by Anthony Kammer
Federal Trade Commission v. Accusearch Inc., June 29, 2009, No. 08-8003
Slip Opinion

On June 29, 2009, the Tenth Circuit affirmed the Wyoming District Court, holding that Accursearch’s sale of private telephone records on its Abika.com website constituted an unfair practice in violation of the Federal Trade Commission Act (FTCA) and granted summary judgment for the Federal Trade Commission (FTC).

Dan Gooden of The Register provides an overview of the opinion. Eric Goldman criticizes the court’s opinion on his Technology & Marketing Law blog. Although Goldman doubts that “the literal holding of this case is all that troubling to most folks” he believes that the court “muddles the discussion” of each of the CDA immunity prongs.  In particular, Goldman believes that the court erred when it decided that “develop” was essentially synonymous with “publish” for the purposes of analyzing CDA immunity. Goldman describes the opinion as a “major carveback of [the CDA]’s coverage” and predicts problems for online retailers that republish third-party content.

The United States Court of Appeals for the Tenth Circuit held that Accusearch’s business could be considered “unfair” under § 5(a) of the FTCA, even if its behavior was not otherwise unlawful or contemplated by a specific law.  The court also held that Accusearch’s claimed defense under § 230(c)(1) of the Communications Decency Act (CDA) is not valid because Accusearch acted as an “information content provider” in selling the telephone records and is therefore not entitled to immunity under the CDA.

The Court ordered Accusearch to immediately cease selling telephone records and to disgorge nearly $200,000 in profits that it had gained by selling the records.  In holding that Accusearch’s CDA defense was invalid, the Court analyzed three limitations of CDA immunity: the immunized party must be (1) “a provider or user of an interactive computer service”; (2) acting as a “publisher or speaker”; and (3) providing information from “another information content provider.”  The court chose not to resolve the immunity question on either of the first two prongs, but instead employed a broad definition of the word “develop” to dissolve immunity using the third prong, holding that Accusearch was an “information content provider” because “confidential telephone information was exposed to public view through Abika.com.”

Accusearch ran the website Abika.com, which advertised that it could acquire “details of incoming or outgoing calls from any phone number, prepaid calling card or Internet Phone … for every country of the world.”  Accusearch stressed that its website merely provided “neutral tools” and that the data it sold was primarily provided by third-party researchers that were required by Accusearch to provide assurances that they would perform their work in accordance with applicable law.  In holding that Accusearch’s reliance on third-parties to acquire the data that it sold did not serve to limit its liability, the court found Accusearch’s “good faith” reliance on their supplier’s commitment to following the law remarkable.

Judge Tymkovich wrote a concurrence that disagreed with the majority’s “unnecessary extension of the CDA’s terms ‘responsible’ and ‘development.’”  The concurrence agreed that Accusearch should indeed have been held liable for violations of the FTCA, but argued that this liability should be based on Accusearch’s “unfair” conduct, rather the content that it published.  The concurrence sought to avoid the majority’s “amorphous” analysis of the three CDA immunity prongs altogether because liability could be found on grounds that did not involve the CDA.

This case develops new and broad interpretations of the factors that limit CDA immunity, potentially imposing liability on Internet publishers who may have previously believed that they were immune from FTCA liability by virtue of the CDA.  The holding calls into question whether providers of online bulletin boards, which the Court admits are the “prototypical service qualifying for this statutory immunity,” will continue to receive CDA immunity.

Golan v. Holder
D. of Colorado, April 3, 2009, No. 01-cv-01854-LTB
Memorandum Opinion (hosted by the Stanford Fair Use Project)

On April 3rd, the United States District Court for the District of Colorado granted plaintiff’s motion for summary judgment, upholding the First Amendment challenge to Section 514 of the Uruguay Round Agreements Act (URAA), codified in 17 U.S.C. §104A. The case was on remand from Golan v. Gonzales (10th Cir.), which instructed the District Court to evaluate the First Amendment implications of restoration.  Judge Lewis T. Babcock held that §104A, which restored copyright in certain foreign works that had previously fallen into the public domain, cannot survive First Amendment scrutiny.

The URAA restored the US copyrights of foreign authors whose works entered the public domain for any reason other than the expiration of a copyright term in the work’s country of origin. The Tenth Circuit determined that the law “altered the traditional contours of copyright protection” by restoring copyrights in works of foreign origin that were previously in the public domain in the United States and therefore the law was subject to First Amendment scrutiny. The court held that once the works entered the public domain, the plaintiffs acquired a vested interest in the speech. On remand, the District Court – which had previously upheld § 104A – held that this provision of the URAA violates the First Amendment insofar as it suppresses parties’ rights to continue using works they had exploited when those works were in the public domain.

According to Anthony Falzone of the Stanford Fair Use Project, which is litigating the dispute, this is “the first time a court has held any part of the Copyright Act violates the First Amendment.” The Technology & Marketing Law Blog provides an overview of the case.

Plaintiffs, who were artists or businesses that use works in the public domain, would be forced to either pay royalties or cease using the works entirely if copyrights are restored. They argued that removing these works from the public domain violates their First Amendment rights. The court determined that plaintiffs had, subject to constitutionally permissible restraints, a non-exclusive right to “unrestrained artistic use of these works” that was protected by the First Amendment.

The government defended the statute by arguing that restoration is required by Article 18 of the Berne Convention for the Protection of Literary and Artistic Works, which the US joined in 1988. The court held that although the treaty requires the restoration of copyrights to foreign authors, it allows individual countries to determine how to implement its protections, particularly with regard to “reliance parties” who have a vested interest in works that had become part of the public domain. The court found the government’s fears of retaliation by other countries for failing to restore the expired copyrights to be speculative and held that the significant First Amendment concerns outweighed any such potential fallout.

The parties agreed that the provision was a content-neutral regulation of speech, meaning it would be upheld if it advanced an important governmental interest and did not burden substantially more speech than necessary to further those interests (as opposed to the stricter test for content-specific regulations). The court acknowledged that compliance with an international treaty was an important government interest. However, the court found that the provision was “substantially broader than necessary” to serve that interest, and thus violated the plaintiffs’ First Amendment reliance interest on the public domain works.

By Nick Bramble

On September 5, the 10th Circuit handed down its opinion in Golan v. Gonzales, No. 05-1259 (10th Cir. Sept. 4, 2007). The court held that the implementation of the Berne Convention on Copyrights (the Uruguay Round Agreements Act § 514) may violate the 1st Amendment by removing some materials–books, films, and songs, mostly–from the public domain and placing them under copyright protection. Generally, the court’s ruling would expand the scope of 1st Amendment review when Congress acts to change copyright law. The court reasoned that if Congress alters the “traditional contours of copyright protection,” then its actions should be subject to strict or intermediate scrutiny. See Slip Op. 05-1259 at 16. The 10th Circuit concluded that URAA § 514 did alter these “traditional contours” by deviating from the “bedrock principle of copyright law that works in the public domain remain in the public domain.” Id. at 16-17. It remanded to the district court to determine whether § 514 was a content-based or content-neutral restriction on speech and to apply the necessary 1st Amendment review.

From the free culture side of the copyright debate, Jack Balkin celebrates the ruling but cautions that its overreliance on Eldred v. Ashcroft’s “traditional contours of copyright law” test might justify expansions of copyright law if it can be shown that new copyright laws “create differences only in degree rather than kind” and “are part of a gradual historical progression of increased copyright protection.” Larry Lessig weighs in on Golan’s relevance to his petition to the Supreme Court to grant review of Kahle v. Gonzales, a recent 9th Circuit ruling that looked less favorably on a similar constitutional challenge to copyright law. William Patry is far less enthusiastic, calling the ruling “the first vindication of an approach argued by Larry Lessig and colleagues that I had thought made no sense at all.”