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June 29, 2009, Alert No. 1,962.
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9th Circuit Considers § 230's Good Samaritan Clause and Blocking of Adware

6/25. The U.S. Court of Appeals (9thCir) issued its opinion [PDF] in Zango v. Kaspersky Lab, affirming the District Court's summary judgment for a security software maker that blocked adware on the grounds that it has immunity under Section 230's good Samaritan clause.

Section 230(c) provides two types of immunity. Paragraph (1) is the publisher immunity clause. It provides that "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."

However, this case involves paragraph (2), the second type of immunity, which the statute identifies as "Good Samaritan" blocking or screening.

It provides that "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 (1)."

Good Samaritan is a Biblical allusion. See, Luke, Chapter 10, Verses 25-37.

The Court of Appeals wrote that Kaspersky makes software that "helps filter and block unwanted malicious software, known as ``malware,´´ that can compromise the security and functionality of a computer. Malware works by, for example, compromising a user's privacy, damaging computer files, stealing identities, or spontaneously opening Internet links to unwanted websites, including pornography sites."

It continued that Kaspersky's software "classifies Zango's programs as adware, a type of malware. Once installed on a user’s computer, adware monitors a user’s Internet browsing habits and causes ``pop-up ads´´ to appear on a computer screen while the user browses the Internet. Adware can also open links to websites and computer servers that host malware and expose users' computers to infection, and can swamp a computer’s memory and slow down computer speed and performance. For these reasons, pop-up ads and adware are unpopular among computer users, and consumers often install security software specifically to block adware."

In 2006, the Federal Trade Commission (FTC) filed and settled an administrative complaint [5 pages PDF] against Zango, Inc., Keith Smith and Daniel Todd alleging unfair or deceptive trade practices in violation of Section 5 of the FTC Act in connection with their adware distribution practices. See, story titled "FTC Files Administrative Complaint Against Deceptive Adware Distributor" in TLJ Daily E-Mail Alert No. 1,483, November 6, 2006.

In the present case, Zango filed a complaint in state court in Washington against Kaspersky alleging tortious interference with contractual rights, violation of the Washington Consumer Protection Act, trade libel, and unjust enrichment. It sought injunctive relief. Kaspersky removed the action to the U.S. District Court (WDWash). The District Court granted summary judgment to Kaspersky on the ground that it is entitled to immunity under § 230(c)(2)(B).

Zango brought the present appeal.

The Anti-Spyware Coalition, Business Software Alliance (BSA), Coalition Against Unsolicited Commercial E-Mail (CAUCE), Center for Democracy & Technology (CDT), Electronic Frontier Foundation (EFF), McAfee, PC Tools, and Sunbelt Software filed an amicus curiae brief [PDF] urging affirmance.

The Court of Appeals affirmed.

It concluded that "The district court correctly held that Kaspersky is a provider of an ``interactive computer service´´ as defined in the Communications Decency Act of 1996. We conclude that a provider of access tools that filter, screen, allow, or disallow content that the provider or user considers obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable is protected from liability by 47 U.S.C. § 230(c)(2)(B) for any action taken to make available to others the technical means to restrict access to that material. As its software qualifies, Kaspersky is entitled to good samaritan immunity."

Judge Fisher wrote a concurring opinion. He argued that good Samaritan blocking immunity is broad, and could be abused for anti-competitive purposes.

He wrote that "extending immunity beyond the facts of this case could pose serious problems if providers of blocking software were to be given free license to unilaterally block the dissemination of material by content providers under the literal terms of § 230(c)(2)(A)."

"Focusing for the moment on anticompetitive blocking, I am concerned that blocking software providers who flout users’ choices by blocking competitors’ content could hide behind § 230(c)(2)(B) when the competitor seeks to recover damages." For example, wrote Fisher, "a web browser configured by its provider to filter third-party search engine results so they would never yield websites critical of the browser company or favorable to its competitors."

He concluded that "It would be an abuse of this immunity to apply it to blocking activity of the kind I have hypothesized here. Nevertheless, until Congress clarifies the statute or a future litigant makes the case for a possible limitation, I agree that Kaspersky qualifies for immunity under this broadly worded statute."

This case is Zango, Inc. v. Kaspersky Lab, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 07-35800, an appeal from the U.S. District Court for the Western District of Washington, D.C. No. CV-07-00807-JCC, Judge John Coughenour presiding. Judge Pam Rymer wrote the opinion of the Court of Appeals, in which Judge Betty Fletcher joined. Judge Raymond Fisher wrote a concurring opinion.

9th Circuit Again Rejects Section 230 Defense

6/22. The U.S. Court of Appeals (9thCir) issued its amended opinion [PDF] in Barnes v. Yahoo, a Section 230 interactive computer service immunity case. The 9th Circuit continued its trend of denying Section 230 motions. The Court of Appeals also denied petitions for rehearing and rehearing en banc. The case goes back to the District Court.

Introduction. Section 230 provides that "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."

Interactive computer services have a long record of successful assertion of Section 230 immunity. However, the 9th Circuit has recently begun to reject Section 230 assertions. In some cases, the opinions of the 9th Circuit reflect an affinity with the plaintiffs trial bar, and a disregard for the language of statutes, and the holdings of the other courts.

Recently, a three judge panel, and an en banc panel, of the 9th Circuit created an inducement to speak exception to Section 230 immunity. See, April 3, 2008 divided en banc opinion in FHCSFV v., 521 F.3d 1157.

See also, stories titled "9th Circuit Holds May be Liable for Speech of Users" in TLJ Daily E-Mail Alert No. 1,581, May 15, 2007; "9th Circuit to Rehear Section 230 Case En Banc" in TLJ Daily E-Mail Alert No. 1,657, September 18, 2007; and "En Banc 9th Circuit Panel Rejects Section 230 Immunity in Case" in TLJ Daily E-Mail Alert No. 1,741, April 2, 2008.

The opinion in the present case recognizes a contract theory of promissory estoppel.

Proceedings Below. For the purposes of the appeal, the Court of Appeals accepted as true the facts alleged in the complaint and construed them in the light most favorable to the plaintiff, Cecilia Barnes.

She alleged that she broke up with her boyfriend, who is not a party to this action. He then created and published profiles of Barnes in web sites operated by Yahoo. He published nude images, and sexual solicitations. He also published her contact information. He also published statements in chat rooms. Men contacted Barnes.

Barnes contacted Yahoo to request removal of the profiles. While Yahoo said that it would, after two months, it had not.

From the perspective of plaintiff's tort lawyers, large companies like Yahoo are deep pocket defendants, capable of paying large settlements or judgments, while few internet posters are deep pocket defendants.

Barnes filed a complaint in Oregon state court against Yahoo alleging two state law causes of action, negligence and breach of contract.

The negligence claim is in the nature of negligent undertaking to provide services. Barnes alleges that it is based upon Section 323 of the Restatement (Second) of Torts

As for the contract claim, Barnes did not allege the existence of a contract. It could not; among other things, consideration is required for the formation of a contract, and there was no consideration. Rather, she alleged that Yahoo made a promise to remove the profiles, and she relied upon those promises to her detriment.

Yahoo removed the action to the U.S. District Court (DOre), and moved to dismiss for failure to state a claim upon which relief can be granted on the grounds that 47 U.S.C. § 230 provides it immunity. The District Court dismissed the complaint. Barnes brought the present appeal.

Court of Appeals. The Court of Appeals reversed on the contract claim, and remanded to the District Court.

However, it affirmed as to the negligence claim.

The Section 230 defense protects interactive computer services. It is not disputed that Yahoo is an interactive computer service. Rather, Barnes argued that in her complaint she did not treat Yahoo as the publisher or speaker of any information published on the Yahoo web site by Barnes' former boyfriend.

The Court noted that many previous successful assertions of Section 230 have involved defamation claims.

The Court of Appeals wrote that "what matters is not the name of the cause of action -- defamation versus negligence versus intentional infliction of emotional distress -- what matters is whether the cause of action inherently requires the court to treat the defendant as the ``publisher or speaker´´ of content provided by another. To put it another way, courts must ask whether the duty that the plaintiff alleges the defendant violated derives from the defendant’s status or conduct as a ``publisher or speaker.´´ If it does, section 230(c)(1) precludes liability."

The Court then examined the nature of promissory estoppel. Citing Oregon precedent (this is a diversity case to which the contract law of Oregon applies), the Court of Appeals wrote that there is a promissory estoppel when there is "(1) a promise[;] (2) which the promisor, as a reasonable person, could foresee would induce conduct of the kind which occurred[;] (3) actual reliance on the promise[;] (4) resulting in a substantial change in position.".

Barnes alleged a promise. However, the opinion ignores the questions of how or whether Yahoo foresaw inducement as a result of its alleged promise, how or whether Barnes relied on the alleged promised, and how or whether Barnes changed her position.

The Court wrote that the contract theory of promissory estoppel does not treat an interactive computer service that promises to remove the content of others as a publisher of that content.

Online publishers make decisions, and make use of their facilities, to publish content online. They also make decisions, and use their control over their facilities, to unpublish or remove content from their web sites. So, why then is Yahoo not being treated by the Court as a publisher under a theory of liability that alleges its failure to unpublish content?

The Court of Appeals reasoned that while unpublishing or removing content is the act of a publisher, promising to unpublish or remove content is not. Hence, Barnes, under the theory of promisory estoppel, does not treat Yahoo as a publisher of the boyfriend's statements, and Yahoo is therefore not entitled to Section 230 immunity.

This opinion's application of the theory of promissory estoppel might be viewed as a results oriented distortion long standing legal principles.

Consequences. This opinion holds that an interactive web site operator, such as Yahoo, can be held liable, notwithstanding Section 230 immunity, for the postings of others under the theory that is has promised to remove offensive or defamatory material.

The opinion exposes web site operators to a greater likelihood of being held liable for providing interactive features -- especially when they attempt to respond to requests to remove defamatory material.

But, the Congress added Section 230 in part to give web site operators the incentive to undertake to remove this sort of content. This opinion takes away that incentive. That is, if Yahoo had had a policy of never removing defamatory content, and had refused any request from Barnes to remove content, it could not be held liable under the 9th Circuit's theory of promissory estoppel.

And of course, this opinion undermines the main purpose of Section 230, to incent the creation and use of interactive web sites.

For example, the Congress wrote in its findings that "The Internet and other interactive computer services offer a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity" and "Americans are relying on interactive media for a variety of political, educational, cultural, and entertainment services". This opinion, like the opinion, will tend to undermine all of this.

This case is Celia Barnes v. Yahoo, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 05-36189, an appeal from the U.S. District Court for the District of Oregon, Judge Ann Aiken presiding. Judge Diarmuid O'Scannlain wrote the opinion of the Court of Appeals, in which Judges Susan Graber and Consuelo Callahan joined.

Time Warner and Comcast Announce Principles for Online Video Programming Trial

6/24. Time Warner and Comcast announced in a release some details of an online video programming trial. Comcast's cable TV subscribers will be able to view video programming, on demand, at no additional charge, via computers and other internet protocol based devices.

That is, programming that is being provided via television will also become available via the internet. Comcast will commence a "national technical trial of its ``On Demand Online´´ service in July carrying programming from Time Warner’s Turner networks TNT and TBS". The companies also use the term "TV Everywhere".

The two companies also announced a set of "principles".

One of these is that "Video subscribers can watch programming from their favorite TV networks online for no additional charge." Persons who have not paid for cable TV subscriptions will not have access.

Another principle is that "Video subscribers can access this content using any broadband connection." The companies did not elaborate in this release. This may indicate that while one must purchase a cable TV subscription to watch TV programming via the internet, one need not also subscribe to the cable operator's broadband internet access service. That is, there is no video and broadband tying. So for example, if this is the companies' intent, one could pay for Comcast cable TV service, but no broadband service, and then use Verizon broadband to view TV programming, with user authentication.

Cable and phone companies are already offering bundled discounts for combinations of video, voice and broadband. No antitrust regulator has yet challenged these offerings. By not tying video and broadband, Comcast and Time Warner have eliminated one possible allegation of anti-competitive conduct.

Another of the just announced principles is that "TV Everywhere is open and non-exclusive; cable, satellite or telco video distributors can enter into similar agreements with other programmers."

Nevertheless, Washington DC based interests groups that have a history of opposing the business practices of the large cable and phone companies, have already complained about this program.

Gigi Sohn, head of the Public Knowledge, stated in a release that this "raises substantial anti-competitive issues by restricting the availability of programming to the favored distribution methods".

She also argued that "this program violates the open nature of the Internet. By adding this additional toll lane, Comcast and Time Warner want to create their own `managed channel´ within the Internet and turn the Internet into their own private cable channel".

Finally, she said that "We ask the Federal Communications Commission, Federal Trade Commission and Justice Department to examine this arrangement closely not only for potential violations of not only Internet openness principles but as a generally anti-competitive and anti-consumer practice."

However, she did not announce the filing of any complaints or other documents with any of these agencies.

Similarly, Parul Desai of the Media Access Project (MAP), stated in a release that "These new initiatives raise serious legal and policy questions. Putting content behind a paid wall threatens the wide open model which has made the Internet innovative and diverse. Until now, users have been in control, but the ``experiment´´ announced today appears to limit customer choice. The American public must be attentive whenever choice, innovation and diversity are threatened."

Actually, restriction of access to web content, including TV shows, has long been a feature of the internet. As one example, Amazon sells TV programs via online downloads and short term video on demand.

Brian Roberts, Ch/CEO of Comcast said that "Today's announcement is all about giving our customers exponentially more free content, more choice and more HD programming online as well as on TV. We have been working for a year to bring more TV and movie content to our customers online and we are thrilled that Time Warner is joining us in our national technical trial. Ultimately, our goal is to make TV content available to our customers on all platforms."

In This Issue
This issue contains the following items:
 • 9th Circuit Considers § 230's Good Samaritan Clause and Blocking of Adware
 • 9th Circuit Again Rejects Section 230 Defense
 • Time Warner and Comcast Announce Principles for Online Video Programming Trial
 • OUSTR and Department of Commerce Write PRC Regarding Green Dam Mandate
 • 7th Circuit Comments on Chevron Deference
 • Update on FTC Scareware Case
Washington Tech Calendar
New items are highlighted in red.
Monday, June 29

The House will not meet the week of June 29 through July 3. It will next meet on July 7, 2009, at 2:00 PM.

The Senate will not meet the week of June 29 through July 3. It will next meet on July 6, 2009, at 2:00 PM. See, Senate calendar.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its public notice regarding commercial programming on school buses. This public notice is DA 09-913 in MB Docket No. 09-68.

Tuesday, June 30

10:00 AM. The Center for Democracy and Technology (CDT) will host a news briefing titled "The Emerging Privacy Landscape: Will Congress Enact Broad-based Consumer Privacy Legislation This Year?". The speakers will include Leslie Harris, Ari Schwartz, and Alissa Cooper of the CDT. To participate by phone, call 800-377-8846; the participant code is 92874158#. Breakfast will be served. Location: CDT, 1634 I St., NW.

12:15 - 1:30 PM. The Federal Communications Commission (FCC) will host a brown bag lunch titled "Bridging the Gap: Transactions 101 -- An Introduction to Communications Transactions and Related FCC Oversight". The speakers will be Neil Dellar (FCC Office of the General Counsel) and Mark Brennan (Hogan & Hartson). For more information, contact Sarah Reisert at spreisert at hhlaw dot com. The Federal Communications Bar Association (FCBA) states that this is a FCBA event. Location: Hogan & Hartson, 555 13th St., NW.

Target date for the Office of the U.S. Trade Representative's (OUSTR) to announce modifications to the list of articles eligible for duty free treatment under the GSP resulting from the OUSTR's 2008 Generalized System of Preferences (GSP) Annual Review. See, notice in the Federal Register, September 12, 2008, Vol. 73, No 178, at Pages 53054-53056.

Wednesday, July 1

Deadline to submit comments to the Office of the U.S. Trade Representative (OUSTR) regarding the complaints filed with the World Trade Organization (WTO) by Canada and Mexico regarding U.S. country of origin labeling requirements. See, notice in the Federal Register, May 22, 2009, Vol. 74, No. 98, at Pages 24059-24061.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) regarding commercial use of a radio audience measurement device developed by Arbitron named the portable people meter (PPM). The FCC adopted this NOI on May 15, 2009, and released the text on May 18, 2009. It is FCC 09-43 in MB Docket No. 08-187. See, public notice DA 09-1231, and notice in the Federal Register, June 1, 2009, Vol. 74, No. 103, at Pages 26235-26241.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its SP 800-53 Rev. 3 [220 pages in PDF] titled "Recommended Security Controls for Federal Information Systems and Organizations".

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Technology Innovation Program Advisory Board in advance of its July 7, 2009, meeting "regarding general policy for the Technology Innovation Program, its organization, its budget, and its programs within the framework of applicable national policies as set forth by the President and the Congress". See, notice in the Federal Register, June 23, 2009, Vol. 74, No. 119, at Pages 29675-29676.

Thursday, July 2

10:00 AM. The Federal Communications Commission (FCC) may hold an event titled "Open Meeting". See, agenda. Location: FCC, Room TW-C305, 445 12th St., NW.

Friday, July 3

Federal holiday. See, OPM list of holidays.

Saturday, July 4

Independence Day.

Monday, July 6

The House will not meet.

10:00 AM. The U.S. Court of Appeals (FedCir) will consider on the briefs Orenshteyn v. Citrix Systems, App. Ct. No. 2003-1427. Location: Courtroom 201.

Deadline to submit reply comments to the Federal Communications Commission (FCC) regarding the March 12, 2009, petition filed by Denali Spectrum License Sub, LLC asking the FCC to forbear from applying the unjust enrichment provisions of the FCC's competitive bidding rules. See, notice in the Federal Register, June 9, 2009, Vol. 74, No.109, at Pages 27318-27319.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its public notice regarding technical specifications for FM digital audio broadcasting (DAB). This public notice is DA 09-1127 in MM Docket No. 99-325. See, notice in the Federal Register, June 12, 2009, Vol. 74, No. 112, at Pages 27985-27988.

OUSTR and Department of Commerce Write PRC Regarding Green Dam Mandate

6/24. The Office of the U.S. Trade Representative (OUSTR) and the Department of Commerce (DOC) both asserted that Ron Kirk (USTR) and Gary Locke (Secretary of Commerce) sent a letter to the People's Republic of China's (PRC) Ministry of Industry and Information Technology (MIIT) and Ministry of Commerce (MOFCOM). See USTR release and DOC release.

Neither the OUSTR nor the DOC have published a copy of the letter in their web sites. Both declined TLJ's request for a copy of the letter. The People's Republic of China did not respond to an e-mail request from TLJ.

Both the OUSTR and DOC stated that the letter urges "China to revoke a proposed rule (Circular 226) that would mandate that all computers produced and sold in China pre-install a widely-criticized Chinese Internet filtering program called Green Dam." (Parentheses in original.)

They added that "the proposed new rule raises fundamental questions regarding regulatory transparency".

They also wrote in their releases that the policy raises "concerns about compliance with World Trade Organization (WTO) rules, such as notification obligations".

They also stated that the policy raises concerns "about the stability of the software, the scope and extent of the filtering activities and its security weaknesses".

Locke stated in the release that "China is putting companies in an untenable position by requiring them, with virtually no public notice, to pre-install software that appears to have broad-based censorship implications and network security issues".

Kirk said that "Protecting children from inappropriate content is a legitimate objective, but this is an inappropriate means and is likely to have a broader scope. Mandating technically flawed Green Dam software and denying manufacturers and consumers freedom to select filtering software is an unnecessary and unjustified means to achieve that objective, and poses a serious barrier to trade".

Ed Black, head of the Computer and Communications Industry Association (CCIA) stated in a release that "US trade officials are right that this requirement for Web-filtering software by the Chinese could violate terms of China's obligations under the World Trade Organization."

Black added that "For too long US companies have had insufficient support from the US government and have had to negotiate directly with other nations' on requests for technology and support for their efforts to censor or spy on their citizens. Our government, and those who are committed to democracy, should have been out there creating the rules of the road when it comes to freedom on the Internet."

Black also commented that "the problem is not just with the Chinese. It’s a global issue."

7th Circuit Comments on Chevron Deference

6/24. The U.S. Court of Appeals (7thCir) issued an order in Hecker v. Deere & Company, denying petitions for rehearing and rehearing en banc. This is an Employee Retirement Income Security Act of 1974 (ERISA) case. However, this order addresses, among other things, the nature and extent of judicial deference to federal agencies under Supreme Court's 1984 opinion in Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837.

At issue was deference owed to a Department of Labor interpretation of a regulation implementing the ERISA. The interpretation came in a footnote to the preamble to the regulation. The Court of Appeals wrote that "we cannot agree with the Secretary that the footnote in the preamble is entitled to full Chevron deference".

Reliance upon Chevron deference is often a key element of the Federal Communications Commission's (FCC) strategy for sustaining its orders against legal challenges.

This case is Dennis Hecker, et al. v. Deere & Company, et al., U.S. Court of Appeals for the 7th Circuit, App. Ct. Nos. 07-3605 and 08-1224, an appeal from the U.S. District Court for the Western District of Wisconsin, D.C. No. 06 C 719. See also, February 12, 2009, panel opinion, which does not discuss Chevron.

Update on FTC Scareware Case

6/23. The U.S. District Court (DMd) entered a stipulated final order [PDF] in FTC v. Innovative Marketing, Inc., a case in which the Federal Trade Commission (FTC) alleged the fraudulent sale of scareware products by a large number of parties in violation of Section 5(a) of the FTC Act.

The order addresses only two of the defendants, James Reno and ByteHosting Internet Services, LLC. They admitted no wrongdoing.

The order enjoins these two defendants from continuing their conduct. It also provides a monetary judgment for the FTC in the amount of $1,859,954.93. It also imposes record keeping requirements, and requires compliance monitoring and reporting.

The FTC filed its civil complaint [21 pages in PDF; 7 MB] on December 2, 2008. It obtained a temporary restraining order (TRO) [21 pages in PDF] on that date.

See, story titled "FTC Shuts Down Scareware Sellers" in TLJ Daily E-Mail Alert No. 1,871, December 11, 2008.

This case is FTC v. Innovative Marketing, Inc. et al., U.S. District Court for the District of Maryland, D.C. No. 08-CV-3233-RDB, Judge Richard Bennett presiding.

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