TechLaw

Justice Sotomayor's Potential Cyberlaw Influence? Not Much

It was pleasant to note the other day that Judge Sonia Sotomayor, President Obama's choice for Associate Supreme Court Justice, has written a few opinions relating to Internet law during her time as judge in the lower federal courts. A first, apparently, and a sign of the centrality of the Internet in our business and personal affairs. From now on, the high court nominee who doesn't have a few cyberlaw decisions on his or her resume will be the remarkable case.

But does a Justice Sotomayor mean anything for the future direction of the laws that regulate online activity? No, not really. Not in the near future.

Consider this:

The Supreme Court has never reviewed a case involving the Computer Fraud and Abuse Act.

The Supreme Court has never reviewed a case involving the Electronic Communications Privacy Act.

The Supreme Court has never reviewed a case involving Section 230 of the Communications Decency Act (which gives interactive computer services immunity from most claims arising from the publication of third-party content), though it did consider, and strike down, the prohibitions against indecent online speech contained in another part of the CDA in Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).

The Supreme Court has never reviewed a case involving the CAN-SPAM Act or the Digital Millennium Copyright Act.

The Supreme Court has never reviewed a case involving electronic contracting, jurisdiction arising from online activities, cybersquatting or any other domain name-related dispute.

Aside from Doe v. Chao, a case involving standing to sue the federal government under the Privacy Act, the Supreme Court has never taken a case involving online privacy or security (GLB, COPPA, FTC Act, you name it). If you want to count Bartnicki v. Vopper, go ahead, though I don't think that obscure decision in any way undermines the point I am trying to make here.

So that covers that vast majority of what I consider to fall under the general heading of cyberlaw. None of it is even on the Supreme Court's radar. And I don't see that situation changing anytime soon. The Web is a welter of contracts (a state law issue), and all of the afore-mentioned statutes need many more years of intermediate appellate scrutiny before they'll make good candidates for Supreme Court review. Sure, there are plenty of prosecutorial and judicial missteps to feed our blogs. But, as the Supreme Court often reminds us (see Rule 10), the Supreme Court is not in the business of correcting erroneous applications of settled law.

What's left? Copyright, patent, and First Amendment law. The last (and only) time the high court decided a digital copyright case was Metro-Goldwyn-Mayer Studios Inc. v. Grokster, 545 U.S. 913 (2005), a case in which Justice Souter (whom Judge Sotomayor will replace) wrote for a unanimous court that Grokster, a distributor of peer-to-peer file-sharing software, was a secondary infringer of the movie studios' copyrights. Not only did Grokster lose the case, but it inspired the high court to create a new theory of secondary liability -- "inducing" copyright infringement -- along the way. Given the apparently entrenched views already on the court, Judge Sotomayor's ascent to the Supreme Court offers little hope of benefiting copyright fair use advocates anytime soon, if at all.

First Amendment issues have traditionally been a leading source of Supreme Court activity, and it is not too far-fetched to imagine high court review of a case involving a federal government (FCC?) attempt to impose broadcast-style regulation on Internet transmissions. Here alone, I think, we have an area where Judge Sotomayor could exert some influence on cyberlaw issues. Without question, the Internet would be a far different -- and worse -- place if Reno v. American Civil Liberties Union had come out the other way. On First Amendment issues, Judge Sotomayor appears to have a rather unremarkable though liberal-leaning view of the First Amendment. About the same as the departing Justice Souter. No gain or loss for free speech proponents.

That leaves patents. In re Bilski, No. 08-964 (certiorari petition filed Jan. 28, 2009), is an important case in which the Federal Circuit curtailed the patentability of software-implemented business methods. According to SCOTUSBlog, there is a good chance the Supreme Court will grant review of the Bilski decision. Bilski was up for discussion yesterday at the Supreme Court's private cert-consideration conference, so we could know as early as Monday if Judge Sotomayor will have that one facing her in the fall. I have no idea what Judge Sotomayor's views are on the patentability of software-implemented business method patents, and I don't think anyone else does either. The Inventive Step blog unearthed a couple district court decisions. Not much there to go on.

Feel free to e-mail me (as usual) all the cases I've missed!

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CAN-SPAM Preemption Ruling Leaves State Spam Laws in Jeopardy

Every state's anti-spam statute is in jeopardy of CAN-SPAM Act preemption under the test set out by the court in Hoang v. Reunion.com Inc., No. 06-3518 (N.D. Calif. Oct. 6, 2008). In a case involving spammy invitations to join a social networking site, the court ruled that unless the plaintiffs' allegations established all of the elements of common law fraud, it would be preempted.

That's a lot to ask. Let's see how the court got there:

CAN-SPAM preempts state statutes that “expressly regulate[ ] the use of electronic mail to send commercial messages,” except to the extent such statutes prohibit “falsity or deception in any portion of a commercial electronic mail message or information attached thereto.” See 15 U.S.C. § 7707(b)(1). Section 7701(b)(1) has been interpreted to preempt state law claims, unless such claims are for “common law fraud or deceit.” See Omega World Travel, Inc. v. Mummagraphics, Inc., 469 F. 3d 348, 353-56 (4th Cir. 2006) (affirming dismissal of claim under Oklahoma statute based on defendant’s having sent email containing “immaterial” false statement, because common law fraud claim cannot be based on “immaterial” false statement); Kleffman v. Vonage Holdings Corp., 2007 WL 1518650, *3 (C.D. Cal. 2007) (holding claim under § 17529.5(a) preempted, where claim not based on “traditional tort theory” of “fraud and deceit”).

“The necessary elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.” Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239 (1995) (internal quotation and citation omitted). Here, plaintiffs fail to allege facts to support a claim of fraud, which must be alleged with particularity. See Fed. R. Civ. P. 9(b). In that regard, plaintiffs fail to allege with the requisite specificity why the statements at issue were false and why defendant knew they were false when made. Further, plaintiffs fail to allege plaintiffs relied to their detriment on any misrepresentation and that, as a result of such reliance, they incurred damage.

Accordingly, plaintiffs’ claims are preempted and subject to dismissal. (bolded emphasis mine).

Think about that. Plaintiffs are required to show detrimental reliance and actual damages or their claim is preempted by CAN-SPAM. Proof that an individual detrimentally relied on an e-mail message's routing information or subject line would seem to be a near-impossible hurdle. What "detriment" is there to opening an e-mail that appears to be from a friend but is in fact spam? As for damages, even CAN-SPAM itself does not require proof of actual damages.

The plaintiffs in the Hoang case alleged that Reunion.com's e-mail invitations for them to sign-up were false and misleading because (1) the "From" line falsely indicated that the message originated with a friend rather than from Reunion.com, and (2) the "Subject" line falsely indicated that the friend wanted to connect with them on Reunion.com.

It will be interesting to see if the court's preemption analysis stands up to additional scrutiny. Other than the obvious fact that every state anti-spam law now on the books fails the court's preemption analysis, the court's reading of the available caselaw is a little suspect. This the first time I have seen the Fourth Circuit's Omega World decision described as holding that only claims for common law fraud are not preempted by CAN-SPAM. I couldn't find anything close to that in the Omega World opinion. Omega World, it seems to me, held that CAN-SPAM preempts state-law claims for immaterial errors in e-mail messages. (See also Ferron v. Echostar Satellite LLC, No. 2:06-cv-00453 (S.D. Ohio Sept. 24, 2008), where the court, following Omega world, held that claims that e-mail advertisements violated an Ohio law prohibiting inaccurate address information are preempted by the CAN-SPAM Act absent a showing that the inaccuracy included an intentional or misleading falsity.)

As for the Kleffman ruling, the concern is the same. Kleffman just didn't say what the court here says it did. In Kleffman, a case in which the plaintiff challenged Vonage's tactic of using multiple message origination addresses to avoid spam filters, the court called the plaintiff's theory of liability a novel one because the Vonage origination addresses were not false or misrepresented in any ordinary sense of these terms. The court said: "[Congress] left states room only to extend their traditional fraud prohibitions to the realm of commercial emails because it was confident that legitimate businesses would not unwittingly transgress such well-established prohibitions."

Do anyone see in that language a holding that state-law causes of action that fall short of requiring proof of all elements of common law fraud are preempted? I don't either.

The Hoang case is different than any prior preemption case because the plaintiffs have a much stronger claim that the messages at issue were false and misleading. Omega World involved a mere immaterial error; Kleffman involved a tactic to evade spam filters that did not employ the use of false information; and Ferron involved an "inaccurate" originating address.

The Hoang court gave the plaintiff leave to amend so perhaps the issue of CAN-SPAM preemption will be revisited, and we'll see if the court meant what it said in this opinion.