Why Adversarial Hearings Are Important: Rulings Change When The Other Side Is Heard

from the let-them-be-heard dept

We already wrote about the judge's ruling saying that Chitika was not liable for running ads on a site that linked to some allegedly infringing material, but there was a separate point brought out by the case -- and by Eric Goldman's analysis, that I wanted to highlight. As we noted, in that case, a court said that Chitika shouldn't be liable, because it was unaware of the infringement. But, the thing is, this is the second ruling in this case. The original ruling, back in January was different. It ordered the ad networks Chitika and Clicksor to freeze all money for the site and stop serving ads. But all of that was done without Chitika's participation in the case. In other words, no adversarial hearing.

Once Chitika got involved, the ruling flipped almost entirely. Or, as Goldman summarizes:

But hold on a second. The court's January order was based on ex parte proceedings. Chitika subsequently showed up to contest the case, and surprise! The court reaches a different result after adversarial proceedings. Let's hear it for due process!!! YEAH!

We hear all the time from defenders of ICE domain seizures and SOPA/PIPA that there is due process "because there's a judge involved." But that's not due process. If one of the key parties impacted by the lawsuit is not heard from it's not due process at all. True due process means you hear from those actually impacted. And, as we see in this case, it can make a pretty big difference.

Filed Under: adversarial hearings, due process, pipa, protect ip, sopa
Companies: chitika, clicksor, elsevier, john wiley

Publishers Can't Just Blame Ad Network For Having Ads On A Site That Links To Infringing Content

from the properly-applying-liability dept

As we've seen in some cases, there is a belief among some that many of the worst provisions in SOPA already exist under US copyright law. The latest story involves publishers Elsevier and John Wiley going after ad networks Chitika and Clicksor, because their ads showed up on a site that linked to (but did not host) some content that allegedly infringed. We mentioned this case earlier in the year, but the latest ruling is at least a slight limit on this attempt at what appears to be fourth party liability, rather than third party liability. Note the distance. Someone puts up a website with some infringing content. Someone else links to that content. Someone else provides advertising on that site that links... and the copyright holder claims the advertiser is liable? Huh?

The ruling does go against the publishers here, but only because they failed to first send a notice alerting Chitika, so the court said that Chitika didn't know that the content was infringing:

Plaintiffs do not allege facts showing that Chitika was familiar with the content of the Pharmatext website, or knew (or had reason to know) that such content was infringing. Thus, plaintiffs fail to support with plausible facts their conclusory allegations that Chitika “must have had knowledge” of the alleged infringement of plaintiffs’ books...and that Chitika “plac[ed] ads on the Pharmatext site because [it] believe[d] that Pharmatext users – in other words, people seeking to obtain pirated copies of copyrighted books – are a target audience for particular advertisers.”

Of course, as Eric Goldman notes in his analysis (linked above), this suggests that if Elsevier had sent notice, then it might have a claim... and suddenly we're back in SOPA territory, since that has a notice provision for advertisers.

There is also some discussion in the case of whether or not US jurisdiction is proper, seeing as the site was directed at users in India. Elsevier claimed that because its investigators downloaded the content in the US, that means it's proper to apply US laws, but the court isn't entirely sure of that:

While it appears that Chitika may eventually be entitled to judgment on this ground (that is, plaintiffs’ failure to allege any act of direct infringement occurring entirely within the United States), factual issues involving the structure of the Internet and the locus of the infringing activity remain (Where did the copying take place? Where are the third-party websites and servers, from which unauthorized copies of plaintiffs’ books were downloaded?). These issues preclude the granting of the motion on this ground.

Of course, even pre-SOPA, the Justice Department and ICE like to claim that any .com or .org is automatically subject to US jurisdiction. Either way, it's a reminder that even without SOPA or PIPA in place, the courts may be creating very similar caselaw anyway. That's pretty scary.

Especially when it comes to such fourth party, or tertiary liability, since it seems positively crazy to think that someone so disconnected from any law breaking might be legally liable for it. Again, as Goldman notes:

Notice that this court totally sidestepped (or missed?) the tertiary liability aspect of this case--that Chitika was a support provider to a site that only provided links to allegedly infringing files. To me, it would be entirely appropriate for the court to say that any tertiary player categorically lacks the ability to materially contribute to infringing activity. Otherwise, once we start doing a dragnet for service providers to service providers to infringers, the universe of potential defendants grows to a ridiculous size.

If anything this is why we should be creating further safe harbors for parties, not decimating them with things like SOPA and PIPA.

Filed Under: ad networks, fourth party liability, secondary liability, sopa, tertiary liability, third party liability
Companies: chitika, clicksor, elsevier, john wiley

Third Parties Increasingly Targeted In Infringement Cases

from the getting-out-of-control dept

We've seen, lately, that the entertainment industry has been targeting third parties for liability. For years, they've talked about making ISPs more "liable" for infringement, but now they're extending that web in potentially problematic ways. Of course, this is a lot of what the whole COICA debate is about. Part of the way COICA works is by extending liability to third parties -- ISPs, advertising partners, domain registrars, payment processors -- if they don't cut off all services to those accused of infringement (often without any adversarial hearing). But in some cases, they're already targeting those third parties, and two separate stories on TorrentFreak demonstrate that.

The first involves Liberty Media suing Paypal along with Hotfile (and 1,000 John Does) for alleged infringement. Hotfile is a cyberlocker, which has plenty of perfectly legitimate uses, but is also frequently used for infringement. Liberty Media walks through a complex set of relationships, which it seems to interpret in the most nefarious way possible. For example:

"Demonstrating that Defendant Hotfile.com is aware of the illegality of its conduct, it offers two methods for download services. For its first option, Defendant Hotfile.com permits its partners to download a stolen movie at a very slow transfer speed for no charge. The other option allows users to pay a premium to download the movie ten times faster."

It certainly sounds bad when you put it like that, but of course, plenty of file storage/file transfer sites offer tiered packages that involve paying for faster transfer rates. That, in no way, demonstrates awareness of illegal content. I'm not saying Hotfile isn't potentially liable, but claiming the tiered pricing is evidence of that seems strange.

But it seems even worse that Liberty is suing PayPal as well -- and I would bet that PayPal will quickly file to be dismissed from the case, as an unrelated third party, or one protected by safe harbors. It's going to be quite a stretch for Liberty to prove that Paypal is somehow liable for the actions not just of a company that uses Paypal, but the users of that company. It's fourth or fifth party liability, rather than third party liability.

The other story involves a case that's a bit further along, where a judge has ordered a preliminary injunction against two ad providers and a domain registrar over a website that allegedly hosts infringing scans of various books. Since the holder of the domain is kept private via eNom's Whois Privacy Protection Service, the court ordered eNom to reveal the identity of the domain owner and to "disable the website." The judge also ordered the two ad networks -- Clicksor and Chitika -- to stop working with the site.

While I could see suing the John Does behind the site, and then working to get a subpoena to identify the real parties behind the alleged infringement, directly suing these three companies seems like a huge stretch, and it's disappointing that the judge rushed to issue the injunction so quickly. The original complaint (pointed out by Eric Goldman, makes some ridiculously broad claims about third party liability.

This is unfortunate, but not a surprise. We've been warning for the better part of a decade the problems with third party liability. Those who benefit from it will always push to stretch it to dump liability on third parties who had absolutely nothing to do with the actual infringement, and often had no idea that any infringement was going on. These payment companies, ad networks and registrars are quite far removed from any actual infringement. As noted above, they're barely "third parties" at all, as they're really fourth or fifth parties, so far removed from the actual infringement as to make these legal actions really quite questionable. It's hard to see how anyone can reasonably argue that a registrar or a payment processor or an ad network should somehow be liable for actions done by the users of a site that they work with. If this continues it will severely stifle many of these activities, as payment providers and ad networks won't do business with all sorts of perfectly legitimate sites, just to avoid the liability of being blamed for the actions of someone two steps removed.

Filed Under: secondary liability, third party liability
Companies: chitika, clicksor, enom, hotfile, liberty media, paypal