Did Globe violate CAN-SPAM?

Did Globe violate CAN-SPAM?

Were the subject headers on Globe’s emails false, misleading or misrepresentative of material facts regarding the subject matter of the emails in violation of CA law?

Were MySpace’s Terms of Service unenforceable as unconscionable?

Was the liquidated damages clause in MySpace’s Terms of Service enforceable, and if so, were they enforceable against all Globe’s emails, notwithstanding the fact that some of Globe’s messages came from MySpace accounts opened before the liquidated damages clause was added to the terms of Service?

Regarding the CA cause of action, with very little discussion, the court found that based on the evidence of record, there was no triable issue as to whether Globe violated the law against false and misleading subject headers .

Regarding the Terms of Service, the court held that they were not unconscionable because MySpace gave Globe alternative means of marketing through MySpace, the terms were not harsh, oppressive or one-sided, and the wording of the Terms were not hidden in prolix. Furthermore, the court held that the liquidated damages clause was enforceable in general because the damages would have been otherwise difficult to calculate; and the liquidated damages clause was enforceable with respect to all Globe’s emails because the Terms of Service always had specifically provided that future modifications of the Terms were binding.

The primary issue in MySpace was whether Globe violated CAN-SPAM. CAN-SPAM provides a private cause of action to (1) providers of “Internet access service" that (2) provide access to electronic mail, and (3) are harmed by violations of that law. The court easily determined that Globe’s actions plainly constituted violations of CAN-SPAM. The more important discussion upon which the CAN-SPAM claim hinged, seemed to be over the issue of whether MySpace had standing to sue under CAN-SPAM (i.e., whether MySpace was an internet access provider that provided access to electronic mail.)

As the court stated, CAN-SPAM defines "internet access service" as a "service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers." 15 U.S.C. § 7702(11), referencing 47 U.S.C. § 231(e)(4). The court held therefore, that internet access services "includes traditional Internet Service Providers (ISPs), any email provider, and even most website owners," (citing White Buffalo Ventures, LLC v. University of Texas at Austin, 420 F.3d 366, 373 (5th Cir. 2005); and Hypertouch v. Kennedy Western, 2006 WL 648688 at *3 (N.D. Cal. Mar. 8, 2006).) As such, the court held that MySpace was an internet access provider under CAN-SPAM.

With respect to whether MySpace provided access to email, the court stated that CAN-SPAM defines "electronic mail messages" as messages sent to "a unique electronic mail address." 15 U.S.C. § 7702(6). And an "electronic mail address" is defined as "a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox… and a reference to an Internet domain…, whether or not displayed, to which an electronic mail message can be sent or delivered." 15 U.S.C. § 7702(5).

• Standing to sue under CAN-SPAM might¹⁶⁵ no longer be limited to traditional ISP’s.

  • This has the potential consequence of increasing the plaintiff pool

• Under CAN-SPAM, the scope of the word “email” might¹⁶⁶ go beyond the traditional definition of the word.

  • This may increase the scope of what constitutes a violation under CAN-SPAM

1. 
   Does the PA District Court have personal jurisdiction over Mr. Rosedale?
   

2. 
   Should Mr. Bragg be compelled to submit his claims to arbitration because he clicked an “accept” button indicating acceptance of a Terms of Service, which included an arbitration provision and forum selection clause?
   

3. 
   What rights and obligations grow out of the relationship between the owner and creator of a virtual world and its resident-customers?
   

1. 
   The Court finds that Mr. Rosedale’s representations “which were made as part of a national campaign to induce persons, including [Mr.] Bragg, to visit Second Life and purchase virtual property” rise to the level of minimum contacts in Pennsylvania and allow the Court to exercise specific personal jurisdiction over Mr. Rosedale.
   

The Court based this finding on the fact that Mr. Bragg’s injuries were related to the distribution of the advertisements in the forum state, indeed they “constitute part of the alleged fraudulent and deceptive conduct at the heart of [Mr.] Bragg’s claims in this case.” In addition, the Court found that since Mr. Rosedale’s marketing efforts were interactive (Mr. Rosedale’s avatar on Second Life during town hall meetings that he held on the topic of virtual property) they provide the necessary support for specific personal jurisdiction. Finally, the Court found it would not offend due process to exercise personal jurisdiction over Mr. Rosedale in part because “Pennsylvania has a substantial interest in protecting its residents from allegedly misleading representations that induce them to purchase virtual property.”

2. 
   No, because under California contract law, the Terms of Service are unconscionable and Linden made no showing that “business realities” created a special need to justify the “one-sidedness of the dispute resolution scheme” in the agreement.
   

The Court found that Second Life’s Terms of Service were a contract of adhesion, which rendered the arbitration clause procedurally unconscionable. The Terms of Service were offered on a “take-it-or-leave-it basis” by a party (Linden) with “superior bargaining strength” and there were no reasonably available market alternatives (“Second Life was the first and only virtual world to specifically grant its participants property rights in virtual land”). The Court also found that the arbitration provision was “buried” in a lengthy paragraph under the benign heading “GENERAL PROVISIONS” and it failed to provide the costs and rules of arbitration in the ICC by way of summary or a hyper-link.

3. 
   While this issue has not been addressed yet in this case, the Court in this opinion does seem to be leaning towards a finding that virtual property in Second Life be treated the same as any other intangible property right. In just one example, the Court characterizes Linden’s freezing of Mr. Bragg’s account as “effectively confiscating all of the virtual property and currency that he maintained on his account with Second Life.”
   

There are several aspects of this case that are interesting and should be noted by anyone running an online virtual world or game system:

• 
  It demonstrates a broad view of personal jurisdiction reaching an entity that has used the national media to advertise an online virtual world, citing Second Life’s town hall meetings on a touted feature of their product as creating “interactive” marketing that supports a finding of specific personal jurisdiction.
  

• 
  It brings into question the enforceability of point and click Terms of Service contracts by finding Second Life’s Terms of Service to be a contract of adhesion based on of procedural unconscionability. Because Mr. Bragg entered into the contract because of a feature that no other virtual world offered, there were no available market alternatives and even though Mr. Bragg was an experienced attorney, since he had no way to negotiate the terms of the contract if he wanted to participate in Second Life, the arbitration clause in the Terms of Service is unenforceable.
  

• 
  This case demonstrates that arbitration clauses in Terms of Service agreements should be carefully scrutinized for enforceability. If a company running an online game or virtual world has such a clause in their Terms of Service, they should at least provide a link to the rules and think about adding clauses which attempt to keep the arbitration costs for customers low, by providing for exemptions from arbitration rules requiring more than one arbitrator and mandatory venue. This Court does not look kindly on a requirement that an individual customer is required by the contract to travel to California and pay arbitration fees significantly higher than the costs of finally in state or federal court.
  

• 
  Finally, while this case does not get to the merits of virtual property rights, it does seem to indicate that, this Court at least, is willing to entertain the notion that virtual rights (at least as here where Second Life has advertised this as feature of its environment) are equivalent to any other intangible property right and a company offering such a benefit may not be able to contract around these rights, once given, by providing themselves unilateral self-help remedies in their Terms of Service.
  

Plaintiff is a producer of fantasy baseball games. Plaintiff initially licensed use of the names and statistics from Defendant. After license/contract expired, Plaintiff sought to clarify its rights.

1. First amendment rights supersede rights of publicity. Under Missouri law, right

of Plaintiff to use the names and statistical information of baseball players took precedence over player’s rights of publicity, inasmuch as the information was already available in the public domain. The court cited Gionfriddo v. Major League Baseball 94 Cal.App. 4^th 400 which concluded that the “recitation and discussion of factual data concerning the athletic performance of [players] command a substantial public interest, and therefore, is a form of expression due substantial constitutional protection.”
2. A clause in the contract between Plaintiff and Defendant specifying that

Defendant owned players’ publicity rights was determined faulty, inasmuch as Defendant had no rights in the first place, given the first amendment analysis, supra. The Court stated that the Doctrine of Licensee Estoppel gives way when “strong federal policy favoring the full and free use of ideas in the public domain...outweighs the competing demands ... of contract law.” Lear, Inc. v. Adkins 395 U.S. 653.

In contract/license negotiations, venue choice is crucial. Plaintiff would have lost if California publicity statutes applied.