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Craigslist Inc. v. 3Taps Inc.

United States District Court, N.D. California

April 30, 2013

CRAIGSLIST INC., Plaintiff,
v.
3TAPS INC. ET AL., Defendants

Decided April 29, 2013

Page 963

[Copyrighted Material Omitted]

Page 964

For Craigslist, Inc, a Delaware corporation, Plaintiff: Bobbie Jean Wilson, LEAD ATTORNEY, Jason A. Yurasek, Perkins Coie LLP, San Francisco, CA; Christopher Kao, LEAD ATTORNEY, James Patrick Corrigan, Brian Patrick Hennessy, Perkins Coie, LLP, Palo Alto, CA; Geraldine Mary Daly Alexis, Perkins Coie, LLP, San Francisco, CA; Shylah R. Alfonso, PRO HAC VICE, Perkins Coie LLP, Seattle, WA.

For 3Taps, Inc, a Delaware corporation, Defendant: Allen Ruby, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom, LLP, Palo Alto, CA; Christopher J. Bakes, LEAD ATTORNEY, M. Taylor Florence, Locke Lord LLP, Sacramento, CA; James A. Keyte, PRO HAC VICE, Four Times Square, New York, NY; Jason Erik Mueller, PRO HAC VICE, Locke Lord, LLP, Dallas, TX; Marissa E Troiano, Michael Menitove, PRO HAC VICE, Skadden, Arps, Slate, Meagher and Flom, LLP, New York, NY.

For Padmapper, Inc., a Delaware corporation, Defendant: Venkat Balasubramani, LEAD ATTORNEY, Focal PLLC, Seattle, WA.

For Discover Home Network, Inc., a Delaware Corporation doing business as Lovely, Defendant: Christopher J. Bakes, LEAD ATTORNEY, Locke Lord LLP, Sacramento, CA.

For 3Taps, Inc, a Delaware corporation, Counter-claimant: Allen Ruby, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom, LLP, Palo Alto, CA; Christopher J. Bakes, LEAD ATTORNEY, Locke Lord LLP, Sacramento, CA; James A. Keyte, PRO HAC VICE, Four Times Square, New York, NY; Jason Erik Mueller, Locke Lord, LLP, Dallas, TX; Marissa E Troiano, Michael Menitove, PRO HAC VICE, Skadden, Arps, Slate, Meagher and Flom, LLP, New York, NY.

For Craigslist, Inc, a Delaware corporation, Counter-defendant: Bobbie Jean Wilson, LEAD ATTORNEY, Perkins Coie LLP, San Francisco, CA; Christopher Kao, LEAD ATTORNEY, James Patrick Corrigan, Brian Patrick Hennessy, Perkins Coie, LLP, Palo Alto, CA; Geraldine Mary Daly Alexis, Perkins Coie, LLP, San Francisco, CA.

For Padmapper, Inc., a Delaware corporation, Counter-claimant: Venkat Balasubramani, LEAD ATTORNEY, Focal PLLC, Seattle, WA.

For Craigslist, Inc, a Delaware corporation, Counter-defendant: Bobbie Jean Wilson, LEAD ATTORNEY, Jason A. Yurasek, Perkins Coie LLP, San Francisco, CA; Christopher Kao, LEAD ATTORNEY, James Patrick Corrigan, Brian Patrick Hennessy, Perkins Coie LLP, Palo Alto, CA; Geraldine Mary Daly Alexis, Perkins Coie, LLP, San Francisco, CA.

For 3Taps, Inc, a Delaware corporation, Counter-claimant: Allen Ruby, LEAD ATTORNEY, Skadden Arps Slate Meagher & Flom, LLP, Palo Alto, CA; Christopher J. Bakes, LEAD ATTORNEY, M. Taylor Florence, Locke Lord LLP, Sacramento, CA; James A. Keyte, Four Times Square, New York, NY; Jason Erik Mueller, Locke Lord, LLP, Dallas, TX; Marissa E Troiano, Michael Menitove, Skadden, Arps, Slate, Meagher and Flom, LLP, New York, NY.

OPINION

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ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS; GRANTING MOTION TO BIFURCATE AND STAY DISCOVERY

CHARLES R. BREYER, UNITED STATES DISTRICT JUDGE.

This case is before the Court on three defendants' motions to dismiss (two of which are identical) and a motion to bifurcate and stay discovery. Plaintiff craigslist, Inc. (" Craigslist" ) has brought seventeen claims against three companies and one individual--3taps, Inc. (" 3Taps" ); Padmapper, Inc. (" Padmapper" ); Discover Home Network, Inc. d/b/a Lovely (" Lovely" ); and Brian R. Niessen, an individual affiliated with 3Taps--essentially alleging that all defendants have improperly harvested and reproduced the contents of Craigslist's website. 3Taps, Padmapper, and Lovely move to dismiss various claims.

The Court GRANTS the motions to dismiss IN PART--dismissing a subset of the copyright claims as well as the claims against Padmapper premised on civil conspiracy. The Court also GRANTS the

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motion to bifurcate and stay discovery on the antitrust counterclaims and overlapping affirmative defenses.

I. BACKGROUND

Craigslist operates a well known and widely used website that allows users to submit and browse classified advertisements. FAC (dkt. 35) ¶ ¶ 1, 25, 28-34. According to the First Amended Complaint (" FAC" ), " [m]ore than 60 million Americans visit craigslist each month, and they collectively post several hundred million classified ads each year." Id. ¶ 25. Craigslist's service is organized by geographic area, and within each given area by types of products and services. Id. ¶ 29. Craigslist provides ancillary features, such as anonymous email forwarding, to support its classified ad service. E.g., id. ¶ 34.

Use of the Craigslist website is governed by its Terms of Use (" TOU" ). Id. ¶ ¶ 14, 126; see generally Kao Decl. Ex. B (" TOU" ) (dkt. 60-3).[1] Users must affirmatively accept the TOU before posting an ad, and Craigslist alleges that " Defendants affirmatively accepted and agreed to be bound by the TOU." Id. ¶ ¶ 36-37, 128-29. The TOU include a number of restrictions on the use of Craigslist's website and content included therein. See generally TOU.

The TOU also grant Craigslist a broad license to use and republish content submitted by its users. TOU at 3. For a period in the summer of 2012, Craigslist presented users with a statement during the ad submission process " confirming" that Craigslist acquires an exclusive license to all ads submitted by users. FAC ¶ 38. Aside from that statement, the TOU do not specify whether Craigslist's license is exclusive. See TOU at 3.

Craigslist has submitted a number of copyright registration applications. FAC ¶ ¶ 51-53. The parties dispute the scope of those registrations.

Defendants 3Taps, Padmapper, and Lovely aggregate and republish ads from Craigslist. Id. ¶ ¶ 63, 65, 99, 104, 112. Craigslist alleges that 3Taps copies (or " scrapes" ) all content posted to Craigslist in real time, directly from the Craigslist website. Id. ¶ ¶ 3, 78-80. 3Taps markets a " Craigslist API" [2] to allow third parties to access large amounts of content from Craigslist, id. ¶ ¶ 3, 5, 64, and also operates the website craiggers.com, which " essentially replicated the entire craigslist website," id. ¶ 65, including " all of craigslist's posts," id. ¶ 68.

Padmapper provides real estate listings, largely consisting of real estate ads originally posted to Craigslist. Id. ¶ 99. Craigslist alleges that Padmapper initially copied content directly from Craigslist. Id. ¶ 101. After receiving a cease and desist letter, Padmapper did not use Craigslist content for several weeks, but then announced that it was " Bringing Craigslist Back," and began obtaining Craigslist content from other parties, including 3Taps. Id. ¶ ¶ 101-04.

Lovely also provides real estate listings through a website and mobile application,

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including Craigslist content that it receives from 3Taps. Id. ¶ 112.

Craigslist has sent letters to 3Taps, Padmapper, and Lovely demanding that they " cease and desist all . . . craigslist-related activities" and informing them that they were " no longer authorized to access . . . craigslist's website or services for any reason." FAC ¶ ¶ 132-34; Kao Decl. Ex. A (dkt 60-2) at 3 (cease and desist letter to 3Taps, referenced in the FAC). Craigslist filed this action against 3Taps and Padmapper on July 20, 2012, see generally Compl. (dkt. 1), and later filed the FAC, which added Lovely and Niessen as defendants, and brought additional claims. See generally FAC.

The FAC alleges claims for (1) trespass; (2) breach of contract; (3) misappropriation; (4) copyright infringement; (5) contributory copyright infringement; (6) federal trademark infringement; (7) federal false designation of origin; (8) federal dilution of a famous mark; (9) federal cyberpiracy prevention; (10) California trademark infringement; (11) common law trademark infringement; (12) California unfair competition; (13) violations of the Computer Fraud and Abuse Act (CFAA); (14) violations of the California Comprehensive Computer Data Access and Fraud Act; (15) aiding and abetting trespass; (16) aiding and abetting misappropriation; and (17) an accounting. See generally id.[3]

3Taps and Lovely have filed identical motions to dismiss the fourth and fifth claims, regarding copyright infringement, and the thirteenth and fourteenth claims, regarding the CFAA and its state-law counterpart. 3Taps Mot. (dkt. 48); Lovely Mot. (dkt. 50). Padmapper joins the other defendants' motions regarding the copyright claims, and separately moves to dismiss the trespass, trademark, and breach of contract claims, as well as civil conspiracy theories of liability that Craigslist incorporates into several claims. Padmapper Joinder (dkt. 52); Padmapper Mot. (dkt. 46).

Padmapper and 3Taps have also filed antitrust counterclaims. Padmapper Am. Counterclaim (dkt. 44); 3Taps Am. Counterclaim (dkt. 47). Craigslist moves to bifurcate the counterclaims and to stay discovery on them. Mot. to Bifurcate (dkt. 61).

II. LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in a complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). " Detailed factual allegations" are not required, but the Rule does call for sufficient factual matter, accepted as true, to " state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). " A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In determining facial plausibility, whether a complaint states a plausible claim is a " context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).

A complaint should not be dismissed without leave to amend unless it is clear that the claims could not be saved by

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amendment. Swartz v. KPMG LLP, 476 F.3d 756, 760 (9th Cir. 2007).

III. DISCUSSION

A. Motions to Dismiss CFAA Claim and Section 502 Claim

Defendants 3Taps and Lovely move to dismiss Craigslist's claims under the federal Computer Fraud and Abuse Act (" CFAA" ) and California Penal Code section 502, a state law corollary to the CFAA. The parties agree that the requirements of both statutes are functionally identical. See 3Taps Mot. at 12 (citing Multiven, Inc. v. Cisco Sys., Inc., 725 F.Supp.2d 887, 895 (N.D. Cal. 2010)); Opp'n to 3Taps Mot. at 10 n.2 (same).

The CFAA imposes criminal penalties on any person who, among other prohibitions, " intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains . . . information from any protected computer," defined as a computer " used in or affecting interstate or foreign commerce or communication." 18 U.S.C. § 1030(a)(2), (e)(2). " Any person who suffers damage or loss by reason of a violation of [the CFAA] may maintain a civil action against the violator to obtain compensatory damages and injunctive relief or other equitable relief," provided that certain factors, not in dispute for the purpose of this Motion, are satisfied. Id. § 1030(g).[4]

The Ninth Circuit clarified the scope of the CFAA in United States v. Nosal. In that case, the government brought charges under the CFAA against David Nosal for encouraging corporate employees to access confidential information on their employer's computer system and to transfer the information to Nosal. Id. at 856. The employees were authorized to access the information but violated a corporate policy by disclosing it to Nosal. Id. The Ninth Circuit held that the phrase " 'exceeds authorized access' in the CFAA is limited to violations of restrictions on access to information, and not restrictions on its use." Id. at 863-64.[5]

Craigslist alleges that Defendants accessed Craigslist's website and the " protected computers" hosting the website " without authorization or in excess of authorization as defined by craigslist's [Terms of Use ('TOU')]." FAC ¶ 214. The relationship between a website's terms of use and the CFAA is somewhat unclear in light of Nosal. On one hand, the Ninth Circuit criticized such terms, including Craigslist's TOU specifically, as " vague and generally unknown" and therefore a precarious basis on which to rest liability under a criminal statute such as the CFAA. See Nosal, 676 F.3d at 860-62 & n.8.

On the other hand, the holding in Nosal rests on the type of restriction (" restrictions on access" versus " ...


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