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Last week my firm distributed an article I wrote on the Ninth Circuit’s recent decision in Douglas v. United States District Court for the Central District of California as a Client Alert entitled Don’t Try This on Your Site: Changing Contracts via Website Notice Alone.

Ultimately I think the Ninth Circuit was justified in granting this writ of mandamus because the district court never clearly held that Douglas had notice of the new terms to be added to the contract. So it is a clear error of law for the district court to compel arbitration pursuant to a contract that it held binding on Douglas without a clear finding that he had notice of the new terms.

However, the district court’s more problematic error is never really reached. It’s entirely possible that the original agreement had a change of terms clause that would have provided for website only notice, and if so, perhaps the new contract was binding on Douglas. I really think there shouldn’t have been a ruling compelling arbitration until we’ve had a look at the original contract.

Alternatively, perhaps it was the plaintiff’s burden to come forward with something more than a declaration to overcome defendant’s production of the more recent contract. That burden issue is far more tricky than it at first appears. There are two separate lines of cases regarding how to assign the burdens on motions compelling arbitration that reach opposite conclusions. As a policy matter, I think the Federal Arbitration Act shows that Congress wanted to encourage arbitration and if all a plaintiff need do is declare he didn’t have notice, then we’re going to get to arbitration far less often. Seems like something a little more than a self-serving declaration ought to be required here.

On July 3rd the 9th Circuit filed its opinion in Perfect 10 v. Visa Int’l Serv. Assoc., (9th Cir. 2007). The majority (Reinhardt and Smith) takes itself to be following the recent P10 decisions from the 9th Circuit, Perfect 10, Inc. v. CCBill LLC, (9th Cir. 2007). and Perfect 10, Inc. v. Amazon, Inc., (9th Cir. 2007), finds the claims against Visa were rightly dismissed, and has an interesting discussion of secondary liability–worth reading even if you’re intimately familiar with CCbill and Amazon. Kozinski’s dissent is classic Kozinski and also worth a read. He ends in exasperation, “In straining to escape the strictures of our caselaw, the majority draws a series of ephemeral distinctions that are neither required nor permitted; the opinion will prove to be no end of trouble.”

When one recalls that Kozinski penned the opinion in the rightly-maligned Fair Housing Council v. Roommates.com, LLC, (9th Cir. 2007) decision from May of this year, one can see how divergent Kozinski’s views are on these topics from his fellow judges.

I wrote a detailed analysis of the opinions, No End of Trouble? Perfect 10 v. Visa International and Secondary Liability.

The Supreme Court said no today in Powerex Corp. v. Reliant Energy Services, Inc., but civil procedure buffs should be sure to read Breyer’s dissent. I think he likely makes the better argument here, arguing that appeal of a remand order has to be available in a case like this or

the FSIA [Foreign Sovereign Immunity Act] would otherwise fail to achieve Congress’ basic objectives. Context and purpose make clear that few if any members of Congress could have wanted to block appellate review here. Were the Court to pay greater attention to statutory objectives and purposes and less attention to a technical parsing of language, it might agree. Were it to agree, we would exercise our interpretive obligation, not “lawmaking power,” ante, at 13, n. 5, with increased fidelity to the intention of those to whom our Constitution delegates that lawmaking power, namely the Congress of the United States. And, law in this democracy would be all the better for it.

Whew! Who said civil procedure wasn’t a testy subject?

The Perfect 10 v. CCBill decision from the 9th Circuit on March 29 was amended last Thursday to add a footnote regarding the meaning of “intellectual property” in Sec. 230 (the CDA). It responds to a point in Perfect 10′s petitions for rehearing and rehearing en banc (which were denied) that the 9th Circuit’s holding created a conflict with the 1st Circuit in Univ. Communication. In the added footnote (reproduced in full below) the 9th Circuit takes an even stronger stand that “intellectual property” under 230 can only mean federal “intellectual property” laws and not state laws. It also denies the existence of any circuit split.

The opinion filed on March 29, 2007, is amended as fol-lows:

On slip opinion page 3577, line 33, after “federal intellec-tual property.” insert the following footnote:

In its petition for rehearing, Perfect 10 claims that our deci-sion on this point conflicts with Universal Communication Systems, Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir. 2007). But neither party in that case raised the question of whether state law counts as “intellectual property” for purposes of § 230 and the court seems to simply have assumed that it does. We thus create no conflict with Universal Communication.

We note that Universal Communication demon-strates the difficulties inherent in allowing state laws to count as intellectual property for CDA purposes.

In that case, the district court struggled with the question of whether the “trademark dilution” claim brought under Florida Law counted as intellectual property for purposes of the CDA, and concluded that it was more like a defamation claim than a trade-mark claim. Id. at 423 n.7. Rather than decide how to draw the line between defamation and trademark, the First Circuit held that “because of the serious First Amendment issues that would be raised” if Lycos were found liable, defendant had not violated the Florida statute. Id. at 423.

The First Circuit was able to sidestep the question of what counted as intellectual property on First Amendment grounds. But we cannot do so here. States have any number of laws that could be characterized as intellectual property laws: trademark, unfair competition, dilution, right of publicity and trade defamation, to name just a few. Because such laws vary widely from state to state, no litigant will know if he is entitled to immunity for a state claim until a court decides the legal issue. And, of course, defendants that are otherwise entitled to CDA immunity will usually be subject to the law of numerous states. An entity otherwise entitled to § 230 immunity would thus be forced to bear the costs of litiga-tion under a wide variety of state statutes that could arguably be classified as “intellectual property.” As a practical matter, inclusion of rights protected by state law within the “intellectual property” exemption would fatally undermine the broad grant of immunity provided by the CDA.

With this amendment, the panel has voted to deny the peti-tion for rehearing and petition for rehearing en banc. The full court has been advised of the petition for rehearing en banc, and no judge of the court has requested a vote on it.

Earlier this week the 9th Circuit released an amended opinion in Kahle v. Gonzalez and denied the motion for rehearing en banc. The 9th Circuit saw it as an attempt to relitigate Eldred v. Ashcroft, which I would argue is not accurate, but I think this does not bode well for getting the Supreme Court to grant certiorari.

The 9th Circuit put some limits on immunity under section 230 of the CDA in Fair Housing Council v. Roommates.com, LLC. Read this analysis.

Then, in a decision that gets far more right than I expected, the 9th Circuit found, among other things, that Google’s image search can make use of thumbnails as a fair use (in the inaptly named) Perfect 10, Inc. v. Amazon, Inc., so named because Perfect 10 also sued Amazon on similar grounds and the cases were consolidated. Read this analysis.

The Supreme Court of the United States has just handed down two important patent rulings that could be especially relevant for software and technology companies. In a ruling that alters the analysis of when a patent is obvious the Supreme Court found that lower courts had too rigidly interpreted the requirements for finding a patent obvious, allowing some bad patents to slip through. (Read full opinion.) In a separate opinion the Court addressed part of the U.S. patent law that prevents companies from getting around a patent by shipping the components of the patented invention from the U.S. to a foreign country for assembly and sale. The Court found that supplying software to a foreign country for sale therein did not constitute a “component” of a patented invention and hence was not prohibited. This was a victory for Microsoft who had been accused of violating an AT&T patent simply on the basis of shipping Windows to foreign countries. Regardless of one’s usual feelings about the world’s largest software company, enforcing limits on the extra-territorial application of U.S. patent law, especially in the software context, is generally a good thing for innovation. If the first ruling results in more software patent applications being deemed “obvious” then that could be even better. Read analyses of the Microsoft and the obviousness rulings.

This nice work by Larisa, Alison, David, and other borgers gets a write-up in The Daily Californian entitled: Radio Tags in ID Cards Raise Privacy Issues.

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Doug Tygar has pointed out that Google’s efforts to assist the Chinese government censor the web are not yet perfected. Tygar points to an example of a technological glitch that, to me, also illustrates why one should have moral qualms about Google’s actions to aid the Chinese government.

	When using Google.cn’s Image search for ‘Tiananmen’ (capitalized) one currently receives almost exclusively images of the lone student protestor halting a line of Chinese tanks as well other images of the Tiananmen square protest. Presumably this is not what the Chinese government wants.
	However, when one uses Google.cn’s Image search for ‘tiananmen’ (uncapitalized) one currently receives almost exclusively non-descript scenic images of The Tiananmen (the entrance to the Imperial Palace Grounds). Presumably this is what the Chinese government wants both searches to produce.

(I’ve archived both pages for when Google fixes this.)

If you take a look at both of those pages you get a graphic illustration of what censorship looks like. Information related to non-violent political dissent has vanished, as if it never happened, and as if we have nothing to learn from acknowledging, recalling, or studying it. Anyone is entitled to put their head in the sand if they so choose, that’s freedom. But when a government decides on behalf of all of its citizens that they must not be allowed access to such materials, that’s the opposite of freedom.

Given two questions put to Google recently by John Battelle, we should be even more concerned:

“Given a list of search terms, can Google produce a list of people who searched for that term, identified by IP address and/or Google cookie value?”

“Given an IP address or Google cookie value, can Google produce a list of the terms searched by the user of that IP address or cookie value?”

I put these to Google. To its credit, it rapidly replied that the answer in both cases is “yes.”

Combine that ability with the Chinese government’s desire to imprison people who search for the wrong sorts of things and Google agreeing to assist the Chinese government in its censorship efforts becomes all the more disconcerting. Will Google turn over this information about Chinese dissidents? Let’s hope not. Chinese prisons do not have a sterling reputation for humane treatment of prisoners.

But even if they don’t go that far, there is a fairly simple pair of arguments that explain the logic behind the outrage over Google’s censorship of google.cn. Maybe Google didn’t think it through like this, so I’d like to help them out with the following:

1. If a government engages in a comprehensive campaign to censor information related to non-violent a) political dissent or b) religious expression then that government is engaged in a morally reprehensible course of action. (Premise)
2. If a corporation willingly and knowingly provides essential assistance to a government in a morally reprehensible course of action, when refusing to provide that essential assistance produces no greater harm, then that corporation is itself engaged in a morally reprehensible course of action. (Premise)
3. The Chinese government is engaged in a comprehensive campaign to censor information related to non-violent political dissent and religious expression. (Premise)
4. Therefore, the Chinese government is engaged in a morally reprehensible course of action. (Follows from 1 and 3).
5. By (among other things) implementing filtering technologies at google.cn that censor information related to non-violent political dissent and religious expression, Google is willingly and knowingly providing essential assistance to the Chinese government in a morally reprehensible course of action, when refusing to provide that essential assistance would produce no greater harm. (Premise)
6. Therefore, Google is itself engaged in a morally reprehensible course of action. (Follows from 2, 4, and 5).

I welcome counter-arguments or challenges to any of these premises, but I currently believe all the premises are uncontrovertibly true, and consequently that the above argument is valid and sound. I hope Google comes to the same set of beliefs.

Oh my, this post from Fafblog on our omnipotent president is too funny.

A. Well if you want, the president can stop the illegal wiretapping just for you.
Q. Really? Well thanks, that’d be great!
A. And then the terrorists can come and eat you.
Q. Wait! What?
A. Cause without the wiretaps there’s nothin to stop the terrorists from eatin you, yknow. The terrorists and their army of bees.

via boing boing.