Craigslist Rights Grab

On Monday a federal district court in California made a remarkable ruling in Craigslist Inc. v. 3Taps Inc., et al.

In the case, Craigslist sues three companies for allegedly harvesting and reproducing the contents of Craigslist’s website. In sum, as alleged, these companies aggregate and republish Craigslist ads after “scraping” them off the Craigslist site. They then offer users the ability to search and access Craigslist postings in ways that Craigslist itself does not allow. For example, a way to search Craigslist sites in multiple cities at the same time. Craigslist alleges multiple causes of action, including trespass, breach of contract, copyright infringement, trademark infringement, and violation of the federal Computer Fraud and Abuse Act (CFAA).

In his ruling, District Judge Breyer allowed Craigslist’s copyright claim to survive a motion to dismiss. Defendants had argued that Craigslist had no standing to sue for infringement of copyright in user-created ads because those copyrights are neither owned nor exclusively licensed by Craigslist. According to the defendants, because the ads are generated by Craigslist users, they are owned by those users. As we all know, only the owner of an exclusive right under copyright is entitled to sue for infringement. A party may not assign the right to sue for infringement without also granting an exclusive license or ownership. Silvers v. Sony Pictures Entm’t, Inc. 402 F3d 881, 889 (9th Cir. 2005) (en banc). And the grant of an exclusive license requires a writing. 17 U.S.C. 204(a).

Well, the court found a written grant of such an exclusive license in the Craigslist user terms as they existed from July 16, 2012 through August 8, 2012.

During the summer of 2012, Craigslist had included in its end-user ad-creation workflow a notice as follows:

“Clicking ‘Continue’ confirms that craigslist is the exclusive licensee of this content, with the exclusive right to enforce copyrights against anyone copying, republishing, distributing or preparing derivative works without its consent.”

After some public criticism of this approach by folks like the Electronic Frontier Foundation, Craigslist removed this provision after three weeks. The EFF and other public commentators say that to include a transfer of ownership of copyright in website TOS is abusive of users. But, for a short time it was there and ads were created by users after agreeing to this grant of exclusive rights. Craigslist registered its copyrights in the ads created within the 3-week window and brought suit for infringement thereof.

All of this is remarkable for two reasons.

First, this is a case of a court validating a transfer of ownership of copyright made in a website’s click-thru terms of use. It is fair to say that US courts have not yet entirely worked out what promises made by an website user in a click-thru agreement will be enforceable and which will fall into the category of unconscionable and therefore unenforceable. That process continues at the usual snail’s pace. This ruling pushes the envelope in the direction of enforceability of what is, conceptually at least, a pretty heavy contractual provision. The transfer of an exclusive intellectual property right.

Second, it is surprising that Craigslist, after backing away from the license provision as a result of public outcry from the EFF and other do-gooding digerati, relied upon this grant of rights in its litigation. Disappointing to some. Of course, Craigslist has no copyright case without pulling the provision out of its quiver.

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