E-COMMERCE MIDTERM CASES

Calder v. Jones (U.S. Supreme Court 1984)

Facts

- Shirley Jones, a California entertainer, sued National Enquirer reporters (Calder & South), Florida residents, for libel over an article written/edited in Florida but widely circulated in California.

- Defendants challenged personal jurisdiction in California.

Arguments

- Petitioners (Calder & South): Argued lack of contacts with California; their role was limited to writing/editing in Florida.

- Respondent (Jones): Claimed intentional targeting of her California-based career and reputation.

Ruling

The Supreme Court upheld California jurisdiction over the defendants.

Reasoning

- Established the “effects test” for personal jurisdiction:

- Defendant’s intentional conduct outside the forum can justify jurisdiction if it is expressly aimed at the forum and causes harm there.

- The article targeted a California resident, relied on California sources, and caused harm to reputation in California, making the state the “focal point” of both the story and the harm.

- Foreseeability of circulation plus intentional targeting made jurisdiction fair.

Harrods Ltd. v. Sixty Internet Domain Names (4th Cir. 2002)

Facts

- Harrods UK (London department store) sued 60 domain names registered by Harrods Buenos Aires (former affiliate turned separate company).

- Dispute arose under the Anticybersquatting Consumer Protection Act (ACPA).

- Harrods BA had registered ~300 Harrods-related domain names, including ones tied to South America, in Virginia.

Arguments

- Harrods UK: Claimed the domains infringed and diluted its U.S. trademark rights and were registered in bad faith.

- Harrods BA: Argued legitimate rights in South America and contested in rem jurisdiction.

Ruling

The Fourth Circuit:

- Affirmed judgment for Harrods UK on 54 domain names (bad faith).

- Reversed summary judgment on 6 Argentina-related domain names (premature dismissal).

- Reversed dismissal of infringement/dilution claims and remanded.

Reasoning

- Found in rem jurisdiction proper since Harrods BA registered domains in Virginia and targeted commerce tied to the U.S.

- On bad faith: Harrods BA’s actions (registering hundreds of names, copying logos, proposing to profit from UK brand recognition) demonstrated intent to exploit Harrods UK’s mark.

For the 6 Argentina names, legitimate local rights required fuller factual development.

Young v. New Haven Advocate (4th Cir. 2002)

Facts

Edward Young, warden of a Virginia prison housing Connecticut inmates, sued Connecticut newspapers for defamation.

The newspapers published online articles criticizing Connecticut’s decision to transfer inmates to Virginia.

Arguments

Plaintiff (Young): Argued Virginia courts had jurisdiction because the articles were accessible there and harmed his reputation in Virginia.

Defendants (Newspapers): Claimed they targeted a Connecticut audience, not Virginia readers.

Ruling

The Fourth Circuit held that Virginia lacked personal jurisdiction over the newspapers.

Reasoning

Applied the Calder “effects test” but emphasized that the defendants must have expressly aimed their conduct at the forum state.

Articles were focused on Connecticut policy and intended for a Connecticut audience, despite being accessible in Virginia.

Accessibility alone does not equal targeting; therefore, no jurisdiction in Virginia.

Zippo Mfg. Co. v. Zippo Dot Com, Inc. (W.D. Pa. 1997)

Facts

Zippo Manufacturing, based in Pennsylvania, sued Zippo Dot Com, a California company, for trademark infringement over the use of the “Zippo” name in domain names.

Zippo Dot Com operated a website with varying levels of interactivity (news services and subscriptions).

Arguments

Plaintiff (Zippo Mfg.): Asserted personal jurisdiction in Pennsylvania because the website was accessible there and business transactions occurred with Pennsylvania residents.

Defendant (Zippo Dot Com): Claimed lack of jurisdiction, arguing that operating a website alone should not subject it to Pennsylvania jurisdiction.

Ruling

The court held that personal jurisdiction was proper in Pennsylvania.

Reasoning

Introduced the “sliding scale” test for internet jurisdiction:

- Active websites (conducting business online) = jurisdiction is proper.

- Passive websites (only posting information) = jurisdiction not proper.

- Interactive websites (where users exchange information) = jurisdiction depends on interactivity and commercial nature.

Because Zippo Dot Com had thousands of paying Pennsylvania subscribers and contracts with Pennsylvania ISPs, the court found sufficient minimum contacts.

Chicago Lawyers' Committee v. Craigslist (2008)

Facts:

Chicago Lawyers’ Committee sued Craigslist, claiming that discriminatory housing ads (e.g., based on race, family status) appeared on its platform.

Plaintiffs argued Craigslist violated the Fair Housing Act (FHA).

Arguments:

Plaintiff: Craigslist facilitated discrimination by allowing unlawful ads.

Defendant: Craigslist is an intermediary, not the publisher; protected under CDA §230.

Ruling:

The Seventh Circuit held Craigslist was immune under CDA §230.

Reasoning:

Craigslist did not create or develop the discriminatory content—it merely provided the forum.

Liability rests with the posters, not the platform.

Blumenthal v. Drudge (1998)

Facts:

Sidney Blumenthal, a Clinton aide, sued Matt Drudge and AOL over defamatory statements in the “Drudge Report,” distributed via AOL.

Arguments:

Plaintiff: AOL should be liable as a publisher since it paid Drudge and distributed his content.

Defendant (AOL): CDA §230 immunizes interactive computer services from liability for third-party content.

Ruling:

AOL dismissed; Drudge remained as defendant. (Drudge guilty for defamation- AOL dismissed from suit under CDA §230)

Reasoning:

CDA §230 protects service providers, even if they pay or promote the content creator, as long as they do not materially contribute to the content’s creation.

Knight First Amendment Institute v. Trump (2019)

Facts:

Trump blocked critics from his Twitter account.

Plaintiffs argued this violated the First Amendment.

Arguments:

Plaintiff: Trump’s Twitter account functioned as a public forum; blocking users was unconstitutional viewpoint discrimination.

Defendant: The account was personal, not governmental.

Ruling:

Second Circuit held Trump’s blocking of users violated the First Amendment.

Reasoning:

Government officials cannot exclude individuals from an official, interactive public forum based on viewpoint.

The interactive features (replies, retweets) were integral to public discourse.

Stratton Oakmont v. Prodigy (1995)

Facts:

Investment firm sued Prodigy over defamatory content posted on its message boards.

Prodigy moderated posts and advertised itself as a “family friendly” service.

Arguments:

Plaintiff: Prodigy was acting as a publisher by exercising editorial control.

Defendant: Claimed it was just a distributor like a bookstore.

Ruling:

Court held Prodigy was liable as a publisher.

Reasoning:

By moderating and exercising editorial discretion, Prodigy assumed publisher responsibility.

This case motivated Congress to pass CDA §230 to avoid discouraging moderation.

Cubby v. Compuserve (1991)

Facts:

Cubby sued CompuServe for defamation over content posted in an electronic newsletter on its platform.

Arguments:

Plaintiff: CompuServe should be liable as a publisher.

Defendant: It did not edit or review the material, functioning only as a distributor.

Ruling:

Court ruled CompuServe was not liable.

Reasoning:

CompuServe was akin to a bookstore or newsstand.

Without knowledge or editorial control, it could not be treated as a publisher.

Reit v. Yelp (2010)

Facts:

Dentist sued Yelp and an anonymous reviewer for defamation and deceptive practices after a negative review appeared.

He alleged Yelp manipulated reviews to coerce advertising.

Arguments:

Plaintiff: Yelp acted as an information content provider by curating reviews.

Defendant: Yelp claimed CDA §230 immunity.

Ruling:

Court dismissed claims against Yelp.

Reasoning:

Section 230 immunizes platforms from liability for user-generated content.

Allegations of review manipulation did not show Yelp created the defamatory content itself.

Jones v. Dirty World Entertainment (2014)

Facts:

NFL cheerleader Sarah Jones sued TheDirty.com and its operator for defamatory user-submitted posts and comments.

Arguments:

Plaintiff: Operator encouraged and added to defamatory content.

Defendant: Claimed CDA §230 immunity.

Ruling:

Sixth Circuit Appellate reversed jury verdict for Jones, finding defendants immune.

Reasoning:

Website did not “materially contribute” to unlawful content.

Adding commentary did not amount to developing defamatory material.

Binion v. O’Neal (2015)

Facts:

Plaintiff with a genetic condition sued Shaquille O’Neal, Trey Burke, and Waka Flocka Flame for mocking photos posted on social media.

O’Neal sought dismissal for lack of personal jurisdiction in Michigan.

Arguments:

Plaintiff: Harm was suffered in Michigan, giving jurisdiction.

Defendant: Mere social media posting is not enough for Michigan jurisdiction.

Ruling:

Court dismissed O’Neal for lack of personal jurisdiction.

Reasoning:

Social media posts are accessible everywhere but do not target a specific state.

Jurisdiction requires intentional targeting of the forum state.

Ashcroft v. ACLU (2004)

Facts:

ACLU challenged the Child Online Protection Act (COPA), which criminalized posting material “harmful to minors” for commercial purposes.

Arguments:

Plaintiff: COPA was overbroad and burdened adults’ access to protected speech.

Government: Law was necessary to protect minors.

Ruling:

Supreme Court upheld a preliminary injunction against COPA.

Reasoning:

Content-based restrictions are presumptively invalid.

Less restrictive alternatives (e.g., filtering software) existed.

COPA likely violated the First Amendment.

Reno v. ACLU (1997)

Facts:

Challenged provisions of the Communications Decency Act (CDA) criminalizing “indecent” or “patently offensive” online communications to minors.

Arguments:

Plaintiff: Provisions were vague, overbroad, and chilled lawful speech.

Government: Necessary to protect children from harmful material online.

Ruling:

Supreme Court struck down CDA provisions.

Reasoning:

The Internet is a unique medium with strong First Amendment protection.

CDA imposed a broad, content-based blanket restriction on speech.

Terms like “indecent” were vague and overbroad.

MGM Studios, Inc. v. Grokster, Ltd. (U.S. 2005)

Facts

Grokster and StreamCast distributed free peer-to-peer (P2P) software allowing users to share files, often copyrighted works.

Unlike Napster, their software operated in a decentralized manner, with no central servers.

Copyright holders (MGM and others) sued for secondary infringement.

Arguments

Plaintiffs (MGM): Claimed defendants induced copyright infringement, pointing to marketing efforts targeting Napster users and knowledge of widespread infringing use.

Defendants (Grokster/StreamCast): Argued they were merely providing technology with lawful uses, citing Sony v. Universal (Betamax).

Ruling

The Supreme Court held Grokster liable for inducement of copyright infringement. - THIS CASE ESTABLISHED INDUCEMENT RULE

Reasoning

Court distinguished Sony (Betamax), which involved substantial non-infringing uses.

Evidence showed Grokster actively promoted infringement (ads aimed at Napster users, revenue model tied to infringement volume).

The doctrine of inducement liability: one who distributes a device with intent to foster infringement is liable, regardless of lawful uses.

Perfect 10, Inc. v. Google, Inc. (9th Cir. 2007)

Facts

Perfect 10, a publisher of nude photographs, sued Google over its image search, which displayed thumbnails of copyrighted images and linked to infringing third-party sites.

Arguments

Perfect 10: Claimed direct infringement (Google’s thumbnails) and secondary infringement (linking to infringing sites).

Google: Asserted fair use for thumbnails and DMCA safe harbor protection.

Ruling

Ninth Circuit:

Google’s thumbnails = fair use (transformative use providing a search tool).

Linking to infringing sites did not establish contributory liability without proof Google had knowledge of specific infringements.

Reasoning

Applied fair use analysis:

Purpose: highly transformative (search tool).

Market effect: potential harm to Perfect 10’s cell phone download business was speculative.

Contributory liability requires actual knowledge + material contribution, which was not established.

Authors Guild v. Google, Inc. (2d Cir. 2015)

Facts

Google Books project scanned millions of books (many copyrighted) to create searchable indexes and display “snippets.”

Authors Guild sued for copyright infringement.

Arguments

Authors Guild: Claimed massive reproduction violated copyright and harmed potential licensing market.

Google: Defended under fair use, emphasizing transformative nature (search, text mining, public access to knowledge).

Ruling

Second Circuit held Google Books was fair use.

Reasoning

Highly transformative: Google did not offer substitutes for books but enabled new ways of research and discovery.

Copying entire books was necessary for search functionality.

Snippets did not substitute for original works.

Public benefit outweighed speculative market harm.

Design Basics, LLC v. Lexington Homes, Inc. (7th Cir. 2017)

Facts

Design Basics, a company owning copyrights to thousands of home designs, sued Lexington Homes for infringing four designs.

District court granted summary judgment for Lexington.

Arguments

Design Basics: Claimed Lexington copied protectable design elements.

Lexington: Denied access and similarity, argued lawsuit was part of “copyright trolling.”

Ruling

Seventh Circuit affirmed summary judgment for Lexington.

Reasoning

No evidence Lexington accessed plaintiffs’ designs (mere online availability ≠ access).

No substantial similarity in protectable elements (functional design choices not copyrightable).

Court criticized Design Basics’ litigation strategy as copyright trolling.

Viacom Int'l, Inc. v. YouTube, Inc. (2d Cir. 2012)

Facts

Viacom and others sued YouTube for hosting thousands of infringing videos.

District court granted YouTube summary judgment under DMCA safe harbor.

Arguments

Viacom: Claimed YouTube knew of infringement, profited from it, and failed to act.

YouTube: Asserted safe harbor under DMCA §512(c), lacking actual knowledge of specific infringements.

Ruling

Second Circuit:

Affirmed that specific knowledge of infringement is required to lose safe harbor.

Vacated summary judgment—factual disputes existed on YouTube’s knowledge.

Remanded for further proceedings.

Reasoning

Safe harbor applies unless: service provider has actual or “red flag” knowledge of specific infringement, fails to act, or directly benefits while controlling infringement.

General awareness of infringement not enough.

Willful blindness could substitute for knowledge in some cases.

Sony Corp. v. Universal City Studios (Betamax) (U.S. 1984)

Facts

Sony manufactured Betamax VCRs, which consumers used to record TV broadcasts (including copyrighted works).

Studios sued Sony for contributory infringement.

Arguments

Studios: Claimed time-shifting copies infringed copyrights, and Sony was liable for selling the machines.

Sony: Defended on grounds of fair use and substantial non-infringing uses.

Ruling

Supreme Court held Sony not liable; private, noncommercial home recording = fair use.

Reasoning

Fair use: Time-shifting (recording to watch later) served a personal, noncommercial purpose and did not harm market value.

Contributory liability: Technology capable of substantial non-infringing uses cannot create liability merely because some infringe (the Sony safe harbor).

Preventing sale of VCRs would improperly extend copyright monopoly to new technologies.

Zeran v. America Online, Inc. (4th Cir. 1997)

Facts

An anonymous user posted defamatory ads linking Kenneth Zeran to offensive T-shirts after the Oklahoma City bombing.

Despite repeated complaints, AOL delayed removing the posts.

Arguments

Zeran: Claimed AOL negligent in failing to remove defamatory posts quickly and not issuing retractions.

AOL: Asserted immunity under §230 of the CDA.

Ruling

Fourth Circuit held AOL immune under §230 CDA.

Reasoning

§230 protects online service providers from liability for content created by third parties.

Even with notice of defamation, providers are not publishers liable for user content.

Applied retroactively to Zeran’s case.

Fair Housing Council v. Roommates.com, LLC (9th Cir. 2008, en banc)

Facts

Roommates.com ran a roommate-matching site requiring users to disclose sex, sexual orientation, and family status, then matched based on those traits.

Fair housing councils sued under FHA and state laws.

Arguments

Plaintiffs: Claimed the site engaged in unlawful housing discrimination.

Roommates.com: Asserted CDA §230 immunity for user-provided content.

Ruling

Ninth Circuit (en banc): CDA immunity did not apply to parts of the site that required discriminatory answers, but did apply to free-text “Additional Comments.”

Reasoning

Roommates.com was an information content provider itself because it designed questionnaires that required illegal discrimination.

When a website materially contributes to illegal content, it loses CDA immunity.

But providing neutral tools like open text boxes remains protected.