Thursday, May 06, 2010

A Hack. A Scrape. A Crash. A Lawsuit. Snap-On Business Solutions, Inc., v O'Neil Associates, Inc., 5:09-CV-1547 (ND Ohio April 16, 2010)

In today's story, we hear a tale of a business deal gone sour, the alleged hacking and crashing of a computer system, data that are free except when it's not, and words that don’t always mean what they appear to mean. And while the characters in our story managed to have at least six disputes, we once again only focus on the federal causes of action, ignoring the other stuff.

The facts of this case involve an old favorite – a relationship breakup. And as always, in our story the names have been changed to protect the innocent (and to be totally Dragnet-like, I have acquired one of those really square haircuts). The story has been reformatted to fit your screen.

In this case, Third Party Thurston hired Plaintiff Penelope to make a database of Third Thurston's products for sale. Plaintiff's databases include pictures, links, and searchability. Plaintiff hosted the database on its servers and provided host network security. Third Thurston was responsible for authorization security (issuing and maintaining user names and passwords). The parties further agreed that all the work that went into creating the database was the property of Plaintiff – but that the data in the database constituted Third Thurston's trade secrets. Thurston provided Plaintiff with all the data and information about Thurston's products in order to make the database.

After a while Third Thurston decided he wanted to go with Defendant Daffy to make the database. When Thurston asked Plaintiff Penelope for the data, Plaintiff said, "Nope." Third Thurston then asked Defendant Daffy to "scrape" Plaintiff's database for the data. This scraping took place over several months and allegedly caused spikes in traffic loads on Plaintiff's servers. Plaintiff Penelope took offense at this scraping, blocked Defendant Daffy's IP Addresses, and sued Defendant Daffy (not Third Thurston). Defendant and Plaintiff are, of course, in the same line of business.

In this decision, the Court had before it a motion for Summary Judgment. In a motion for summary judgment, the moving party argues that no facts are in dispute and that the case can be resolved on paper, without a trial. If relevant facts are in dispute, then a motion for summary judgment fails. There are two federal causes of action: (1) Computer Fraud and Abuse Act and (2) Copyright Infringement.

Computer Fraud and Abuse Act: This is another example of the CFAA being used for a civil remedy – normally we hear about the CFAA in the context of criminal convictions. The question at hand is whether Defendant Daffy's access of Plaintiff Penelope's computers was authorized. This not a case, the Court points out, where a contract has been dissolved – and one party attempts access after termination of the contract having lost authorization. The contract between Plaintiff and Third Thurston was still in place, and Third Thurston was in charge of access authorization. Doesn’t that mean that Third Thurston gets to say who gets access and who does not? Third Thurston gave Defendant authorization to access the database. It seems like the access is authorized.

But the Court is not convinced that Third Thurston had the ability to authorized access to just anyone. There is some factual ambiguity as to the full scope of Thurston's authority. A part of the contract between the parties indicates that Thurston could only authorize access by Dealers, and the Dealers could use the database only "for its intended purpose" (how's that for vague!). On the one hand its plaintiff's servers, on the other hand Thurston got to hand out authorizations, but on the other hand it was just suppose to be "for the intended purpose." Where does that leave us, asks the Court. That creates a factual dispute (what is the scope of Thurston's authority) – and therefore the motion for summary judgment is denied.

Copyright Infringement: The second cause of action is for copyright infringement. This cause of action, as they say in legal jargon, "steps in the doo-doo." First, some basics. Ideas and facts are not copyrightable. It's original creative intellectual work that is copyrightable. The fact that the Earth is the center of the universal and that the Sun revolves around the Earth – is not copyrightable. Ptolemy's treaty explaining the whole Earth-is-the-center-of-the-universe thing is copyrightable. Now if I take a whole bunch of facts, and arrange them in a database – the database is not copyrightable. But if I add original structure or navigation or content to the database in order to improve the user experience, those creative enhancements are copyrightable. And it is on this legal boundary that a long list of legal battles have been pounded out – when does data which is not protected by copyright become protected by copyright when placed in a database?

Plaintiff argues that when defendant scraped the database, it copied the improvements and the creative aspects of Plaintiff's work. Defendant argues in its motion for summary judgment, "Nut uh. Plaintiff's 'database does not possess the minimal degree of creativity required for copyright protection because its structure is obvious.'" The Court points out that when Defendant scraped the database, it took the link structure and navigation information – along with a bunch of other stuff. Defendant reiterated its argument – "yeah, but you're Honor.The structure of the data, I mean it was obvious."

"Oh yeah??" exclaimed the Court (in A Few Brave Men like moment). "If the structure of the data in the database is obvious, how come you marketing pitch to Thurston was that that you would provide a better database by altering the arrangement of the data."

Whoops. Guess you cant argue that the arrangement of the data in the database you scraped was obvious, when your whole business plan rests on the fact that there are different ways of arranging the data – and your way is better. Score one for the Judge. Since Plaintiff's enhancements to the database could arguably be protected by copyright, defendant's motion for summary judgment once again fails.

Okay class, now here is your extra credit question. In Round Two of this case, assume ultimately hypothetically that it is found that the database is the property of Third Thurston, and that it was properly within the scope of Thurston's authority to grant access authorization to the database to Daffy. Plaintiff blocked Daffy's access by blocking Daffy's IP numbers. Does Thurston have a cause of action against Plaintiff for blocking an authorized user – and if so, what would that cause of action be?

Technology & Marketing Law Blog has an excellent review of this case, going over all of the causes of action. Technology & Marketing Law Blog make a number of astute observations – including the obvious – if you contract with someone to do data work for you, include a provision that says the data and database is yours - and if you say gimme gimme, you gettie gettie.


1 comment:

Certified ethical hacker said...

Nice article, very instructive, thank you.