Transcript Slide 1

Key Issues in Negotiating Web Site
Development Agreements;
Reducing Risks From User Posted
Content
Katharine Rowe
Smith, Gambrell & Russell, LLP
50 North Laura Street, Suite 2600
Jacksonville, Florida 32202
(904) 598-6112
Copyright 2009 Smith Gambrell
[email protected]
& Russell, LLP
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Key Issues in Negotiating Web Site
Development Agreements
Specifications
Should be attached to the agreement.
Where not yet known, should be first deliverable.
Rights in Deliverables
Physical deliverables
Film, photos, media
Intangible rights in deliverables
Copyright, patent rights, trade secrets
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Acquisition of Intangible Rights in Deliverables and
Third Party Material
Work for Hire, Assignment or License
Copyright – Work for Hire 17 U.S.C. §201(b)
Employees/scope of employment/no agreement
otherwise
Independent contractors/written agreement/states work for
hire/9 permitted categories
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Assignments
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Must be in writing
Suggestion - even where copyright rights are being secured from
an independent contractor as work for hire, include language of
assignment
Licenses
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Non exclusive/exclusive
Address rights, usage, territory and term
Address assignment of license
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Address need to modify
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Allocating ownership
What must the client own?
What must the developer own?
Will a license do?
Consider:
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Client Material (everything provided by client)
Customer/Site data
Developer Pre-Existing Work
Developer Tools
Custom Work
Client modifications to site deliverables
Specifications
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Third Party Material
Sites are comprised of a variety of content and
components
Much comes from third party sources
Client needs to know
what is being included in a deliverable
on what terms
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Source Code
Ability to modify
Delivered with each deliverable?
Escrow – release provisions
Acceptance Process
Developer Testing
Client Testing
Acceptance Criteria
Acceptance/Rejection
Limited Warranties for Programming
Conformance with Specifications, bugs and defects
Often limited time period
Often limited to fix or replace or refund remedy
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Infringement Indemnification
Limited remedy for infringement claims
Balance of risks
Defend, replace, get license, or refund
Costs of securing replacement programming
Consider third party material
Where is site being built?
Security of servers and data
Consider regular deliveries
Change Orders and Additional Work
Process is important
Ties to all other provisions
Establish billing rates for additional work
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Maintenance
Term
Cost
Renewals
Increases
Service standards
Remedies for failures, what constitutes breach
Trigger of source code release
Ability to terminate
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Hosting
Establish service standards
Up time
Times for scheduled maintenance
Security
Termination
Transition
Site Operations
Who controls site content (DMCA functions for example)
Customer service
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Termination and Transition Issues
Effect on rights if before completion
Ability to assign rights and licenses
Access to deliverables
Assistance with transition
Source code or knowledge
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Domain Names
Ownership of registration
Limitation of Liability
Common
Limits on consequential, indirect etc.
Typical carve-outs – indemnity, breach of
confidentiality
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Some Other Issues
Budgets, Payment, Method of Charges
Developer credits
Hardware requirements
Deliverables
Disclaimers
Documentation and Training
Confidentiality of Client Information and User Data
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Reducing the Risks of User Posted Content
What is User Posted Content?
Users interact and post their views, experiences, advice, betrayals,
triumphs, frustrations, lives
Twitter, You Tube, MySpace, most sites want the user to be engaged
Originally just chat rooms, bulletin boards, now the explosion of social
networking
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What are common risks of User Posted Content?
Defamation
Copyright infringement
Trademark Infringement
Unfair competition, False Advertising
Right of Publicity Misappropriation
Invasion of Privacy
Child pornography, obscenity
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How Does A Service Provider or Web Site Operator
Reduce Risk?
Recognize available statutory protections under U.S. law
and comply therewith:
The Digital Millennium Copyright Act (copyright)
The Communications Decency Act (defamation and
other torts, not intellectual property)
Tell users what they can and cannot post
Include in terms of use releases, assignments, licenses and
indemnities from users in an enforceable agreement
Use available automatic screening technologies and services
Develop reasonable and prudent policies with respect to screening,
editing and take downs and comply therewith
Train staff
Insurance
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Digital Millennium Copyright Act (“DMCA”)
17 U.S.C. § 512
Safe Harbor From Copyright Infringement
Protects against monetary liability for claims of copyright
infringement, whether direct, vicarious, or contributory
Enacted in 1998:
to balance protection for copyright owners and to limit liability
for Internet service providers
needed to attract the substantial investments necessary to
continue the expansion of the Internet
The DMCA provides four safe harbors for service providers to protect
them from monetary liability for their activities related to 1) transitory
digital network communication; 2) system caching; 3) information
residing on systems or networks at the direction of user; and 4)
information location tools.
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Definition of Service Provider:
With respect to the third and fourth safe harbors, service
providers are defined broadly to include:
“any provider of “online services or network access, or the operator of
facilities therefor,” and including any entity providing “digital
online communications, between or among points specified
by a user, of material of the user’s choosing, without
modification to the content of the material as set or received.”
This definition has been interpreted to include many of sites and online
services, including Amazon and eBay and including sites with more
traditional chat room and bulletin board areas.
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All service providers who wish to be
eligible for any of the four safe harbors
must:
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adopt and reasonably implement, and inform its service users of, a
policy that provides for the termination in appropriate circumstances
of users who “are repeat infringers”; and
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accommodate and not interfere with standard technical measures
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Third Safe Harbor – Information Residing on
Systems or Networks at Direction of Users.
The third safe harbor (17 U.S.C. § 512(c)) is the provision that service
providers have looked to for protection from liability for user posted
content. It provides:
A service provider shall not be liable for monetary relief, or, except
as provided in subsection (j), for injunctive or other equitable relief,
for infringement of copyright by reason of the storage at the
direction of a user of material that resides on a system or
network controlled or operated by or for the service provider, if the
service provider –
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A. (i) does not have actual knowledge that the material or an
activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or
circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to
remove, or disable access to, the material;
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B. does not receive a financial benefit directly attributable to the
infringing activity, in a case in which the service provider has the right
and ability to control such activity; and
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C. upon notification of claimed infringement [as described in the
section detailing the required form and contents of a notice of
infringement] responds expeditiously to remove, or disable access to,
the material that is claimed to be infringing or to be the subject of
infringing activity.”
17 U.S.C. § 512 (c)
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Additional Requirements
In addition, in order to be eligible for the third safe harbor, the
service provider must also:
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Designate an agent to receive notices of claimed
infringement, post the information on the web site, and
provide the agent’s name and contact information to the
Copyright Office. 17 U.S.C. § 512 (c)(3)
and
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Implement a Notice and Take-Down Procedure.
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Notice and Take-Down Procedure
Upon receipt of a Notice of Claimed Infringement, the service provider
must expeditiously take down the material; and
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take reasonable steps to promptly notify the user that posted the
material that the material has been removed; and
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upon receipt of a Counter Notification, promptly provide the complaining
party with a copy of the Counter Notification, and inform the
complainant that it will repost the material again in 10 business days;
and
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replace or repost the material that it took down between 10-14 business
days following receipt of the Counter Notification, unless the Designated
Agent receives notice from the complainant that the complainant has
filed a court action seeking to restrain the user from infringing.
17 U.S.C. §512 (g)
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Notices of Claimed Infringement. Must be in writing and sent
Designated Agent. Must include:
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Electronic signature of person authorized to act for the owner of
the infringed work
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Identification of the copyright work that has been infringed
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Identification of the infringing material that is infringing, and
information reasonably sufficient to permit the service provider to
locate the material
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Contact information for the complaining party
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Statement that complaining party has good faith belief that the
complained of use is not authorized by the copyright owner
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Statement that the information in the notice is accurate and, upon
penalties of perjury, that the complaining party is authorized to
act on behalf of the copyright owner or owner of the exclusive
right that has been infringed
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Counter Notification under DMCA. Must be in writing and
sent to Designated Agent. Must include:
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A physical or electronic signature of the user
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Identification of the material that has been removed and the
location at which the material appeared before it was removed
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A statement under penalties of perjury that the user has a good
faith belief that the material was removed as a result of mistake or
misidentification of the material to be removed
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The user’s name, address and telephone number and a
statement that the subscriber consents to the jurisdiction of the
federal District Court for the judicial district in which the address is
located
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Recent Key Cases
Perfect 10, Inc. v. CCBill, LLC 488 F.3d 1102 (9th Cir. 2007), cert
denied 128 S.Ct. 709 (2007)
IO Group, Inc. v. Veoh Networks, Inc. 586 F. Supp. 2d 1132
(N.D.Ca. 2008)
UMG Recordings, Inc. v. Veoh Networks, Inc. CV 07-5744
September 11, 2009
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Summary. To be eligible for the DMCA safe harbor from
infringement claims due to user posted content:
1. The service provider must accommodate and not interfere
with standard technical measures.
What does this mean?
2. The service provider must adopt, implement and inform its
users of its policy to terminate in appropriate circumstances
those users who are repeat infringers.
What does this mean?
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3. The material in question on the site must be there “by reason of
the storage at the direction of the user.”
What does this mean?
4. The service provider must act expeditiously to remove material that
may be infringing once the service provider has actual knowledge that
the material is infringing or is aware of facts and circumstances from
which the infringing activity is apparent.
What does this mean?
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5. The service provider must not receive a financial benefit directly
attributable to the infringing activity in a case where the service
provider has the right and ability to control such activity.
What does this mean?
6. The service provider must register its Designated Agent
with the U.S. Copyright Office, keep that information up to date,
and post the name and contact information of the agent on the
service provider’s web site.
How is this done?
See copyright.gov.
Keep the information current.
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7. Upon receipt of a Notice of Claimed Infringement, the service
provider should:
take the complained about material down;
notify the user who posted the material;
if the user who posted the material delivers a Counter
Notification, then the service provider must deliver it to the
complainant and inform the complainant that the service
provider will repost the material in 10 days; and
unless the complainant files suit within 10-14 days thereafter,
the service provider must repost the material.
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Defamation and other torts arising from material
posted by users.
Communications Decency Act (“CDA”) 47 USC
§230.
Enacted in response to a state court decision Stratton Oakmont,
Inc. v. Prodigy Services Co, Inc. 1995 WL 323710 (N.Y.Sup.Ct. May
24, 1995) which held that a provider of an online messaging board
could be liable for defamatory statements posted by third party
users of the service. The New York court had ruled that the board
operator became a “publisher” when it deleted some distasteful third
party postings and thus was liable as a publisher for the defamatory
postings it failed to remove. The decision was criticized for
penalizing online service providers for voluntarily trying to keep their
services free of unacceptable material.
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47 U.S.C. §230 of the Communications Decency Act (“CDA”) was
enacted in 1996 to, among other purposes:
(i)
(ii)
(iii)
promote the continued development of the Internet and other
interactive computer service;
remove disincentives for the development and utilization of blocking
and filtering technologies that empower parents to restrict their
children’s access to inappropriate material; and
ensure vigorous enforcement of Federal criminal laws to deter and
punish trafficking in obscenity, stalking, and harassment by means
of computer.
47 U.S.C. § 230(b)
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Section (c) of the CDA, “Protection for Good Samaritan
blocking and screening of offensive material” provides that:
(1)
Treatment of publisher or speaker.
No provider or user of an interactive computer service shall be
treated as the publisher or speaker of any information provided by
another information content provider.” 47 U.S.C. § 230(c)(1).
[Note: The section has been described as one which “creates a
“federal immunity to any cause of action that would make service
providers liable for information originating with a third party user of
the services.” Zeran v. AOL, 129 F.3d 327 at 330 4th Cir. 1997), cert
denied 524 U.S. 937 (1998).]
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(2)
Civil Liability
No provider or user of an interactive computer service shall be
held liable on account of –
(A) any action voluntarily taken in good faith to restrict access to
or availability of material that the provider or user considers to be
obscene, lewd, lascivious, filthy, excessively violent, harassing,
or otherwise objectionable, whether or not such material is
constitutionally protected; or
(B) any action taken to enable or make available to information
content providers or others the technical means to restrict access
to material described in paragraph [A].
47 U.S.C. § 230(c)(2)
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§ 230(e) provides that it does not:
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affect intellectual property laws;
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affect the enforcement of federal obscenity or child
pornography laws or other federal crimes;
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prevent enforcement of state laws that are consistent
with the section but prohibits enforcement of state laws
that are inconsistent with the section.
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In order for a defendant to be protected under the Act in
the event of a claim against it:
1. The defendant must be a provider or user of an
interactive computer service; and
2. The cause of action asserted by the plaintiff must
“treat” the defendant “as the publisher or speaker” of the
harmful information at issue; and
3. The information must be “provided by another
information content provider.” i.e. the defendant must
not be the “information content provider” of the harmful
information at issue; and
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Who is covered?
An interactive computer service is defined in the Act as: “any
information service, system or access software provider that
provides or enables computer access to multiple users to a
computer service, including specifically a service or system that
provides access to the Internet and such systems operated or
services offered by libraries or educational institutions.”
Very broad definition - broadly applied.
Web site hosts and operators and their users are covered by the
Act. Amazon, MySpace, Craigslist and eBay are examples. The
protection covers traditional web sites, bulletin boards, classified
ads, retailers, and social networking sites.
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When does a claim treat the defendant as the publisher?
Claims that assert that the harm was due to traditional publisher
functions, such as:
due to publishing the information
due to selecting it for publication
due to screening it
due to editing it
due to taking it down
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When does the service provider become
the content provider (and thus lose the
immunity)?
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Editing poses risk, at least with respect to editing of actionable
content Whitney Information Network, Inc. v. Xcentric Ventures,
LLC 2006 WL 2243041 (11th Cir. 2006).
Shaping the message into actionable content through use of
questionnaires, profiles or drop downs – contrast with neutral
tools See, Fair Housing Council v. Roommates.com, LLC 521
F.3d 1157 (9th Cir. 2008); Chicago Lawyer’s Committee for Civil
Rights Under Law v. Craigslist, Inc. 519 F.3d 666 (7th Cir. 2008).
Providing categories that are defamatory where no other neutral
options for users GW Equity, LLC v. Xcentric Ventures, LLC 2009
WL 62173 (N.D. TX).
Soliciting specifically unlawful content See, FTC v. Accusearch,
Inc. 570 F. 3d 1187 (10th Cir. 2009)
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Broad Protection for Taking Down Material
Good Samaritan provision allows taking down and leaving up without
liability. Even where site has a policy of monitoring offensive content,
courts have not imposed liability when it did not exercise it.
Not the same as the DMCA, which requires the take down once
reach level of awareness.
Under CDA, no duty to take down, even if site aware of illegality of
content. No liability even after the provider is notified of the
objectionable content on its site. Zeran V. AOL.
However, in National Numismatic Certification, LLC ASA v. Ebay, Inc.
2008 WL 2704404 (M.D. Fla), where Ebay claimed immunity under
§ 230 for its removal of potentially counterfeit coins items, court
determined that such coins were not covered by the term
“objectionable.” Few courts have evaluated meaning of term
“objectionable” or limited the statute in this way.
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What claims have been found covered by the
immunity?
Defamation (personal and business)
Invasion of privacy (nude pictures for example)
Discriminatory statements in ads
False profiles on dating sites
Business tort of tortious interference, business disparagement
Tort claims such as negligence and gross negligence and products
liability from harm caused by third party content posted on site
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Carve Outs From Immunity (federal criminal liability,
intellectual property law, or violation of the Electronic
Communications Privacy Act)
Regarding Intellectual Property Carve Out
9th Circuit. Greater immunity under Act. Limits carve out to
just federal intellectual property law. Thus, for example, right of
publicity would be covered by the immunity.
(Perfect 10, Inc v. CCBill, LLC 488 F.3d 1102 (9th Cir. 2007),
cert. denied 128 S. Ct 709 (2007); Zango, Inc. v. Kaspersky
Lab, Inc. 568 F.3d 1169 (9th Cir. 2009)
Other courts have interpreted the phrase “intellectual property”
to mean all intellectual property claims. Thus, less immunity
under Act. Atlantic Recording Corp. v. Project Playlist, Inc. 603
F. Supp.2D 690 (S.D.N.Y. 2009); .) Doe v. Friendfinder
Network, Inc. 540 F. Supp.2d 288 (D.N.H. 2008).
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11th Cir?
Has not yet ruled on whether right of publicity claim falls
within the scope of §230 immunity. Almeida v.
Amazon.com, Inc. 456 F.3d 1316 (11th Cir. 2006)
(Although district court below held that right of publicity
claims are covered by Section 230 immunity, 11th
Circuit ruled on other grounds, while acknowledging the
issue was undecided.)
Copyright 2009 Smith
Gambrell & Russell, LLP
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