|Court Upholds Injunction
Under CFAA Against Use of Scraper Program
|12/17. The U.S.
Court of Appeals (1stCir) issued its opinion
v. Explorica, a case regarding application of
the Computer Fraud and Abuse Act (CFAA) and Copyright
Act to the use of scraper software to extract price
information from a competitor's web site. The Appeals Court
affirmed a district court injunction against use of the robot.
Background. EF and Explorica both provide global tours
for high school students. EF maintains a web site from which
one may acquire the price of a particular tour. Explorica
hired a programmer (named Zefer) who designed and used a
computer program called a scraper. It made made over 30,000
inquiries to EF's web site to collect tour price data. It then
organized this data in a spreadsheet. Explorica then used this
data to undercut EF's prices. Zefer was able develop this
program, including the ability to circumvent EF's security,
with the assistance of an Explorica vice president who was
previously VP for information strategy at EF. This VP had
signed a confidentiality agreement with EF.
District Court. When EF learned of the scraper, it
filed a complaint in U.S.
District Court (DMass) against Explorica alleging
violation of the CFAA, 18
U.S.C. § 1030, et seq., the Copyright Act, the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §
1961, and various related state laws. EF sought a preliminary
injunction barring Explorica from using the scraper program,
and a return of all materials generated through use of the
scraper. The District Court granted EF a preliminary
injunction under the CFAA, relying on the copyright notice to
find unauthorized access. This interlocutory appeal followed.
CFAA: Prohibition. 18 U.S.C. § 1030(a)(4) provides, in
relevant part, that "Whoever knowingly and with intent to
defraud, accesses a protected computer without authorization,
or exceeds authorized access, and by means of such conduct
furthers the intended fraud and obtains anything of value,
unless the object of the fraud and the thing obtained consists
only of the use of the computer and the value of such use is
not more than $5,000 in any 1-year period".
CFAA: Definition of Authorized Access. The definitions
section, at 18 U.S.C. § 1030(e)(6), provides that "the
term ``exceeds authorized access´´ means to access a
computer with authorization and to use such access to obtain
or alter information in the computer that the accesser is not
entitled so to obtain or alter".
CFAA: Private Right of Action. 18 U.S.C. § 1030(g)
provides, in part, that "Any person who suffers damage or
loss by reason of a violation of this section may maintain a
civil action against the violator to obtain compensatory
damages and injunctive relief or other equitable relief.
Damages for violations involving damage as defined in
subsection (e)(8)(A) are limited to economic damages.
Appeals Court: Authorized Access. The Appeals Court
wrote that the case turned on whether Explorica's access to
EF's web servers "exceeds authorized access" within
the meaning of §§ 1030(a)(4) and (e)(6). The Court noted
that the former EF VP had signed a broad confidentiality
agreement, and then provided confidential information about
the web site to the Explorica programmer writing the scraper.
The Court concluded that EF "will likely prove that
whatever authorization Explorica had to navigate around EF's
site (even in a competitive vein), it exceeded that
authorization by providing proprietary information and
know-how to Zefer to create the scraper. Accordingly, the
district court's finding that Explorica likely violated the
CFAA was not clearly erroneous."
Appeals Court: Loss. The Appeals Court next examined
whether there was "damage or loss" sufficient to
enable EF to maintain a civil action against Explorica. It
wrote that "In the absence of a statutory definition for
``loss,´´ we apply the well-known rule of assigning
undefined words their normal, everyday meaning. ... The word
``loss´´ means ``detriment, disadvantage, or deprivation
from failure to keep, have or get.´´ ... Appellees
unquestionably suffered a detriment and a disadvantage by
having to expend substantial sums to assess the extent, if
any, of the physical damage to their website caused by
appellants' intrusion. That the physical components were not
damaged is fortunate, but it does not lessen the loss
represented by consultant fees."
Copyright and CFAA. The District Court had found a
violation of the CFAA based on copyright. The Appeals Court
wrote in a footnote that "we express no opinion on the
district court's ruling that EF's copyright notice served as a
``clear statement [that] should have dispelled any notion a
reasonable person may have had the `presumption of open access´
´´ to EF's website."
First Amendment. Explorica raised the argument that the
injunction violates its First Amendment free speech rights --
but not until oral argument. Hence, the Appeals Court did not
The Appeals Court upheld the injunction. However, by relying
on the breach of the confidentiality agreement by the former
EF employee, rather than copyright law, to find unauthorized
access, the Appeals Court narrowed the class of cases to which
its holding will likely apply in the future.
|12/17. The FCC released an
imposing a $1,020,000 fine against America's Tele-Network
Corp. for slamming customers in violation of the
Communications Act and the FCC's rules. (EB-00-TC-164) See, FCC
12/17. The FCC released it Order
[69 pages in PDF], which it announced back on November 8,
regarding procedures for processing applications for submarine
cable landing licenses. See also, November
12/17. The Department of Commerce's Technology Administration
hosted a workshop titled "Understanding Broadband Demand:
Digital Content & Rights Management". See, opening
remarks of Bruce Mehlman (Asst. Sec. for the TA). See
|James Addresses Antitrust,
Telecom, and Technology
James, Assistant Attorney General for the Antitrust Division, gave
19th Annual Institute on Telecommunications Policy &
Regulation regarding antitrust enforcement and the
telecommunications industry. He summarized the Antitrust
Division's basic principles for reviewing telecom mergers. He
discussed network effects and the essential facilities
doctrine. In addition to telecom mergers and Section 271
applications by phone companies, he also discussed new
technologies, such as Internet backbone, broadband facilities,
and Third Generation wireless.
James began by stating that he has "limited
knowledge" of these issues, but praised the knowledge of
others in the Antitrust Division, including Hew
Pate and Michael
Katz. He also praised FCC Chairman Michael Powell,
and the FCC's merger review process.
Consent Decrees. James stated that "the antitrust
policy in this area has been made through consent decrees --
consensual arrangements, rather than litigated results."
He elaborated that this is the case because counsel for
merging parties are under pressure to "get the deal
done." He cautioned that people should "read our
consent decrees, but don't get married to them." He also
questioned whether many merger reviews would have had
different outcomes if they had been litigated. He specifically
referenced the wireless mergers.
He also said that "We have asserted Internet backbone
markets, and I know that that is a very complex matter in some
cases. And, we have talked about broadband delivery
mechanisms, again, another complicated and quickly evolving
area. And, one has to always worry about how these cases would
have fared in a litigation context."
Core Principles. James said that "There are three
unifying principles that ... will guide our review process in
telecommunications. First, and foremost, ... there is no such
thing as a convenient facilities doctrine, as distinguished
from an essential facilities doctrine. Second point, the
Antitrust Division is not the Federal Antitipping Agency. And
third, it is not the Antitrust Division's mission to punish
Essential Facilities Doctrine. James joked that there
is no such thing as a convenient facilities doctrine.
"Wouldn't it be nice if everybody got to free ride on
other people's facilities. That is not what rule guides our
policy," he said. Rather, "The antitrust approach
should ask whether the transaction at issue will cause real
exclusion or preclusion in a manner that maximizes or enhances
He also stated that "facilities based competition is the
thing that we are hoping will emerge ..." He also said
that "competition in the broadband world, is likely to
come ... from a variety of platforms", and that
controlling one platform may not foreclose others from entry.
However, he elaborated that "We need to protect companies
from cross subsidized predation or discriminatory access. But
we have to do so without extended preferences that are
unrelated to efficiency. One of the things that we see in
terms of our work in the merger area, and our work in the 271
area, is that the sort of overly expansive creation of duties
to deal, to share facilities, and the imposition of competitor
obligations to cooperate could potentially stifle innovation.
We should not loose sight of that point certainly in either
the regulatory or antitrust enforcement context."
Networks. James' second point was that the Antitrust
Division is not the Federal Antitipping Agency. He explained
that "tipping occurs in the network where a significant
combined penetration rate can cause certain consumers that
have not already chosen the network to go with the larger
entity. We in the Antitrust Division do not see our role as
looking for markets that are about to tip and then throwing
our bodies in the way of the process."
James continued that "Tipping in the network industry can
have actually beneficial effects that lead to the achievement
of efficiencies and a benefit to consumers that result from
the increased likelihood of systems compatibility and
changeability. Our role is not to prevent implementation or
adoption of a single industry standard, or the creation of a
dominant network, where that dominant network really flows
However, James added that the Antitrust Division is concerned
"where a participant with market power, or monopoly
power, may be engaging in anticompetitive conduct that is
designed to maintain the monopoly or to illegally extend the
monopoly into another market ..." However, he concluded
that "in the competitive market occasionally somebody
wins. And when somebody wins, that is not necessarily a ...
non competitive result.
Economies of Scale. James said that his final point is
that "the Antitrust Division does not and should not
punish success." He then elaborated on this principle in
the context of mergers involving economies of scale. He
cautioned that "one of the ways in which we see this,
very often, is that people talk about new technologies. ``Boy,
if we had all of the spectrum, we could create a 3G cellular
platform that is going to do this, that and the other thing.´´
And the fact of the matter is that these plans are not fully
fleshed out. No one knows what the technologies people are
going to be deploying, and no one knows how much spectrum is
required in order to do. And guess what. If you don't know,
you don't get to merge on the basis of an economies of scale
Charles James also testified on December 12 before the Senate Judiciary
Committee regarding the proposed settlement of the Microsoft
antitrust case. See, prepared
|People and Appointments
|12/14. FTC Commissioner Orson
Swindle was named head of the U.S. delegation to the OECD
Experts Group for Review of the 1992 OECD Guidelines for the
Security of Information Systems. See, FTC
12/17. Christopher Olsen was named Assistant Chief of
the FCC's Enforcement Bureau's
Market Disputes Resolution Division.
|The Tech Law Journal Daily E-Mail Alert will not be
published on Monday, December 24, Tuesday, December 25, or
Wednesday, December 26.
|Tuesday, Dec 18
|The House will meet at 12:30 PM for morning hour and 2:00 PM
for legislative business. No recorded votes are expected
before 6:30 PM.
9:30 AM. The Senate
Finance Committee will meet to consider amendments to HR 3005,
the Bipartisan Trade Promotion Authority Act of 2001. See, release
[PDF]. The Committee met on December 12, and approved this
bill. However, the meeting was rushed because Sen. Robert Byrd
(D-WV) invoked an ancient Senate rule which had the effect of
shutting down all committee meetings. Location: Room 215,
12:15 PM. The FCBA's
Young Lawyers Committee will host a brown bag lunch. The
speakers will be Commissioner Michael Copps' Legal Advisors:
Jordan Goldstein, Paul Margie, and Susanna Zwerling. For more
information contact Chris Moore at 202 224-9584 or moorecva @aol.com or Yaron
Dori at 202 637-5458 or firstname.lastname@example.org.
1:30 PM. The U.S. International Telecommunication Advisory
Committee (ITAC) will hold a meeting. See, notice
in Federal Register. Location: State Dept.
2:00 PM. Several groups will hold a telephone press briefing
"to discuss their new educational Web site aimed at
helping consumers better control their information
online." The participants will be Paula Bruening (Center
for Democracy and Technology), Scott Harshbarger (Common
Cause), Shirley Rooker (Call for Action), Susan Grant
(National Consumers League), Ken McEldowney (Consumer Action),
and Beth Givens (Privacy Rights Clearinghouse). For more
information, contact Paula Bruening at 202 637-9800, email@example.com.
|Wednesday, Dec 19
|LOCATION CHANGE. 10:00
AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection will hold a hearing titled Electronic
Communications Networks in the Wake of September 11th.
Rep. Stearns (R-FL) will preside. Room 2322, Rayburn
10:00 AM - 12:00 NOON. The Federal Communications Commission's
(FCC) Advisory Committee for the 2003 World Radiocommunication
Conference (WRC-03 Advisory Committee) will hold a meeting.
in Federal Register. Location: FCC, 445 12th Street, SW, Room
Deadline to submit oppositions and comments to the FCC in
response to Cingular Wireless', Nextel's, and Verizon
Wireless' petitions for reconsideration of certain provisions
of the FCC's October 12 orders addressing and conditionally
approving requests for waivers and approval of revised
deployment plans for wireless Enhanced 911 (E911) services.
Notice. (CC Docket No. 94-102.)
Deadline to submit comments to the NTIA
in response to its Request for Comments on Deployment of
Broadband Networks and Advanced Telecommunications. See, notice.
|Thursday, Dec 20
|10:00 AM. The Senate
Judiciary Committee will hold a business meeting.
Location: Room 226, Dirksen Building.
1:30 PM. The U.S. International Telecommunication Advisory
Committee (ITAC) will hold a meeting regarding preparations
for the 2002 World Telecommunication Development Conference.
in Federal Register. Location: State Dept., Room 1408.
|Friday, Dec 21
|8:30 AM. FTC Chairman Timothy
Muris will speak at the Brookings
Institute roundtable titled "Trade and Investment
Policy." Location: Brookings, Falk Auditorium, 1775
Massachusetts Ave., NW.
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