Trespass - Ebay, Inc. v. Bidder’s Edge, Inc.
Decision of May 24, 2000, 100 F. Supp. 2d 1058
In the United States District Court for the
Northern District of California
NO. C-99-21200 RMW
Order granting preliminary
injunction
[Docket Nos. 6, 12]
Plaintiff eBay, Inc.'s
("eBay") motion for preliminary injunction was heard by the court on
April 14, 2000. The court has read the moving and responding papers1
and heard the argument of counsel. For the reasons set forth below, the court
preliminarily enjoins defendant Bidder's Edge, Inc. ("BE") from
accessing eBay's computer systems by use of any automated querying program
without eBay's written authorization.
I.
BACKGROUND
eBay is an
Internet-based, person-to-person trading site. (Jordan Decl. ¶ 3.) eBay offers
sellers the ability to list items for sale and prospective buyers the ability to
search those listings and bid on items. (Id.) The seller can set the terms and
conditions of the auction. (Id.) The item is sold to the highest bidder. (Id.)
The transaction is consummated directly between the buyer and seller without
eBay's involvement. (Id.) A potential purchaser looking for a particular item
can access the eBay site and perform a key word search for relevant auctions and
bidding status. (Id.) eBay has also created category listings which identify
items in over 2500 categories, such as antiques, computers, and dolls. (Id.)
Users may browse these
category listing pages to identify items of interest. (Id.) Users of the eBay
site must register and agree to the eBay User Agreement. (Id. ¶ 4.) Users agree
to the seven page User Agreement by clicking on an "I Accept" button
located at the end of the User Agreement. (Id. Ex. D.) The current version of
the User Agreement prohibits the use of "any robot, spider, other automatic
device, or manual process to monitor or copy our web pages or the content
contained herein without our prior expressed written permission." (Id.) It
is not clear that the version of the User Agreement in effect at the time BE
began searching the eBay site prohibited such activity, or that BE ever agreed
to comply with the User Agreement.
eBay currently has over
7 million registered users. (Jordan Decl. ¶ 4.) Over 400,000 new items are
added to the site every day. (Id.) Every minute, 600 bids are placed on almost 3
million items. (Id.) Users currently perform, on average, 10 million searches
per day on eBay's database. Bidding for and sales of items are continuously
ongoing in millions of separate auctions. (Id.) A software robot is a computer
program which operates across the Internet to perform searching, copying and
retrieving functions on the web sites of others.2 (Maynor Decl. ¶ 3;
Johnson-Laird Decl. ¶ 15.)
A software robot is
capable of executing thousands of instructions per minute, far in excess of what
a human can accomplish. (Maynor Decl. ¶ 3) Robots consume the processing and
storage resources of a system, making that portion of the system's capacity
unavailable to the system owner or other users. (Id.) Consumption of sufficient
system resources will slow the processing of the overall system and can overload
the system such that it will malfunction or "crash." (Id.) A severe
malfunction can cause a loss of data and an interruption in services. (Id.)
The eBay site employs
"robot exclusion headers." (Id. ¶ 5.) A robot exclusion header is a
message, sent to computers programmed to detect and respond to such headers,
that eBay does not permit unauthorized robotic activity. (Id.) Programmers who
wish to comply with the Robot Exclusion Standard design their robots to read a
particular data file, "robots.txt," and to comply with the control
directives it contains. (Johnson-Laird Decl. ¶ 20.)
To enable computers to
communicate with each other over the Internet, each is assigned a unique
Internet Protocol ("IP") address. (Maynor Decl. ¶ 6.) When a computer
requests information from another computer over the Internet, the requesting
computer must offer its IP address to the responding computer in order to allow
a response to be sent. (Id.) These IP addresses allow the identification of the
source of incoming requests. (Id.) eBay identifies robotic activity on its site
by monitoring the number of incoming requests from each particular IP address.
(Id. ¶ 7.) Once eBay identifies an IP address believed to be involved in
robotic activity, an investigation into the identity, origin and owner of the IP
address may be made in order to determine if the activity is legitimate or
authorized. (Id. ¶ 8.) If an investigation reveals unauthorized robotic
activity, eBay may attempt to ignore ("block") any further requests
from that IP address. (Id.) Attempts to block requests from particular IP
addresses are not always successful. (Id. ¶ 9; Johnson-Laird Decl. ¶ 27.)
Organizations often
install "proxy server" software on their computers. (Johnson-Laird
Decl. ¶ 12.) Proxy server software acts as a focal point for outgoing Internet
requests. (Id.) Proxy servers conserve system resources by directing all
outgoing and incoming data traffic through a centralized portal. (Id.) Typically,
organizations limit the use of their proxy servers to local users. (Id.) However,
some organizations, either as a public service or because of a failure to
properly protect their proxy server through the use of a "firewall,"
allow their proxy servers to be accessed by remote users. (Id. ¶ 13.) Outgoing
requests from remote users can be routed through such unprotected proxy servers
and appear to originate from the proxy server. (Id.) Incoming responses are then
received by the proxy server and routed to the remote user. (Id.) Information
requests sent through such proxy servers cannot easily be traced back to the
originating IP address and can be used to circumvent attempts to block queries
from the originating IP address. (Id. ¶ 14.) Blocking queries from innocent
third party proxy servers is both inefficient, because it creates an endless
game of hide-and-seek, and potentially counterproductive, as it runs a
substantial risk of blocking requests from legitimate, desirable users who use
that proxy server. (Id. ¶ 22.)
BE is a company with 22
employees that was founded in 1997. (Carney Decl. ¶ 2.) The BE web site debuted
in November 1998. (Id. ¶ 3.) BE does not host auctions. (Id. ¶ 2.) BE is an
auction aggregation site designed to offer on-line auction buyers the ability to
search for items across numerous on-line auctions without having to search each
host site individually. (Id.) As of March 2000, the BE web site contained
information on more that five million items being auctioned on more than one
hundred auction sites. (Id. ¶ 3.) BE also provides its users with additional
auction-related services and information. (Id. ¶ 2.) The information available
on the BE site is contained in a database of information that BE compiles
through access to various auction sites such as eBay. (Id. ¶ 4.) When a user
enters a search for a particular item at BE, BE searches its database and
generates a list of every item in the database responsive to the search,
organized by auction closing date and time. (Id. ¶ 5.) Rather than going to
each host auction site one at a time, a user who goes to BE may conduct a single
search to obtain information about that item on every auction site tracked by
BE. (Id. ¶ 6.) It is important to include information regarding eBay auctions
on the BE site because eBay is by far the biggest consumer to consumer on-line
auction site. (Id.)
On June 16, 1997, over
a year before the BE web site debuted, Peter Leeds3 wrote an email in
response to an email from Kimbo Mundy, co-founder of BE. (Ritchey Decl. Ex 6.)
Mundy's email said, "I think the magazines may be overrating sites' ability
to block. The early agent experiments, like Arthur Anderson's BargainFinder were
careful to check the robots.txt file on every site and desist if asked."
(Id.) (underline in original). Mundy wrote back: "I believe well-behaved
robots are still expected to check the robots.txt file. . . . Our other concern
was also legal. It is one thing for customers to use a tool to check a site and
quite another for a single commercial enterprise to do so on a repeated basis
and then to distribute that information for profit." (Id.) In early 1998,
eBay gave BE permission to include information regarding eBay-hosted auctions
for Beanie Babies and Furbies in the BE database. (Id. ¶ 7.)
In early 1999, BE added
to the number of person-to-person auction sites it covered and started covering
a broader range of items hosted by those sites, including eBay. (Id. ¶ 8.) On
April 24, 1999, eBay verbally approved BE crawling the eBay web site for a
period of 90 days. (Id.) The parties contemplated that during this period they
would reach a formal licensing agreement. (Id.) They were unable to do so.
It appears that the
primary dispute was over the method BE uses to search the eBay database. eBay
wanted BE to conduct a search of the eBay system only when the BE system was
queried by a BE user. (Ploen Decl. Ex. 9.) This reduces the load on the eBay
system and increases the accuracy of the BE data. (Id.) BE wanted to recursively
crawl the eBay system to compile its own auction database. (Carney Decl. ¶ 18.)
This increases the speed of BE searches and allows BE to track the auctions
generally and automatically update its users when activity occurs in particular
auctions, categories of auctions, or when new items are added. (Id.)
In late August or early
September 1999, eBay requested by telephone that BE cease posting eBay auction
listings on its site. (Id. ¶ 9; Rock Decl. ¶ 5.) BE agreed to do so. (Rock
Decl. ¶ 5.) In October 1999, BE learned that other auction aggregations sites
were including information regarding eBay auctions. (Carney Decl. ¶ 12.) On
November 2, 1999, BE issued a press release indicating that it had resumed
including eBay auction listings on its site. (Rock Decl. Ex. H.) On November 9,
1999, eBay sent BE a letter reasserting that BE's activities were unauthorized,
insisting that BE cease accessing the eBay site, alleging that BE's activities
constituted a civil trespass and offering to license BE's activities. (Id. Ex.
I.) eBay and BE were again unable to agree on licensing terms. As a result, eBay
attempted to block BE from accessing the eBay site; by the end of November,
1999, eBay had blocked a total of 169 IP addresses it believed BE was using to
query eBay's system. (Maynor Decl.¶ 12.) BE elected to continue crawling eBay's
site by using proxy servers to evade eBay's IP blocks. (Mundy Depo. at 271:18-19
("We eventually adopted the rotating proxy servers."))
Approximately 69% of
the auction items contained in the BE database are from auctions hosted on eBay.
(Carney Decl. ¶ 17.) BE estimates that it would lose one-third of its users if
it ceased to cover the eBay auctions. (Id.)
The parties agree that
BE accessed the eBay site approximate 100,000 times a day. (Felton Decl. ¶ 33.)
eBay alleges that BE activity constituted up to 1.53% of the number of requests
received by eBay, and up to 1.10% of the total data transferred by eBay during
certain periods in October and November of 1999. (Johnson-Laird Decl. ¶ 64.) BE
alleges that BE activity constituted no more than 1.11% of the requests received
by eBay, and no more than 0.70% of the data transferred by eBay. (Felton Decl.
¶ 60.) eBay alleges that BE activity had fallen 27%, to 0.74% of requests and
0.61% of data, by February 20, 2000. (Johnson-Laird Decl. ¶¶ 70-71.) eBay
alleges damages due to BE's activity totaling between $45,323 and $61,804 for a
ten month period including seven months in 1999 and the first three months in
2000. (Meyer Decl. ¶ 28.) However, these calculations appear flawed in that
they assume the maximal BE usage of eBay resources continued over all ten months.
(Id.) Moreover, the calculations attribute a pro rata share of eBay expenditures
to BE activity, rather than attempting to calculate the incremental cost to eBay
due to BE activity. (Id.) eBay has not alleged any specific incremental damages
due to BE activity. (See Rock Depo., 192:8-10.)4
It appears that major
Internet search engines, such as Yahoo!, Google, Excite and AltaVista, respect
the Robot Exclusion Standard. (Johnson-Laird Decl. ¶¶ 81-85.)5
eBay now moves for
preliminary injunctive relief preventing BE from accessing the eBay computer
system based on nine causes of action: trespass, false advertising, federal and
state trademark dilution, computer fraud and abuse, unfair competition,
misappropriation, interference with prospective economic advantage and unjust
enrichment. However, eBay does not move, either independently or alternatively,
for injunctive relief that is limited to restricting how BE can use data taken
from the eBay site.6
II. LEGAL
STANDARD
To obtain preliminary
injunctive relief, a movant must demonstrate "either a likelihood of
success on the merits and the possibility of irreparable injury, or that serious
questions going to the merits were raised and the balance of hardships tips
sharply in its favor." Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d
1510, 1517 (9th Cir. 1992) (citations omitted). The alternatives in the above
standard represent "extremes of a single continuum," rather than two
separate tests. Benda v. Grand Lodge of Int'l Ass'n of Machinists &
Aerospace Workers, 584 F.2d 308, 315 (9th Cir. 1978). "The critical element
in determining the test to be applied is the relative hardship to the parties.
If the balance of harm tips decidedly toward the plaintiff, then the plaintiff
need not show as robust a likelihood of success on the merits as when the
balance tips less decidedly." Alaska v. Native Village of Venetie, 856 F.2d
1384, 1389 (9th Cir. 1988). A "serious question" is one on which the
movant has a "fair chance of success on the merits." Sierra On-Line,
Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1421 (9th Cir. 1984). Generally,
the "balance of harm" evaluation should precede the "likelihood
of success analysis" because until the balance of harm has been evaluated
the court cannot know how strong and substantial the plaintiff's showing of the
likelihood of success must be. See Village of Venetie, 856 F.2d at 1389.
III.
ANALYSIS
A. Balance of Harm
eBay asserts that it
will suffer four types of irreparable harm if preliminary injunctive relief is
not granted: (1) lost capacity of its computer systems resulting from to BE's
use of automated agents; (2) damage to eBay's reputation and goodwill caused by
BE's misleading postings; (3) dilution of the eBay mark; and (4) BE's unjust
enrichment.7 (Mot. at 23:18-25.) The harm eBay alleges it will suffer
can be divided into two categories. The first type of harm is harm that eBay
alleges it will suffer as a result of BE's automated query programs burdening
eBay's computer system ("system harm"). The second type of harm is
harm that eBay alleges it will suffer as a result of BE's misrepresentations
regarding the information that BE obtains through the use of these automated
query programs ("reputational harm").
As noted above, eBay
does not seek an injunction that is tailored to independently address the manner
in which BE uses the information it obtains from eBay.8 Even without
accessing eBay's computer systems by robot, BE could inflict reputational harm
by misrepresenting the contents of eBay's auction database or by misusing eBay's
trademark. Moreover, allowing frequent and complete recursive searching of
eBay's database (which would presumably exacerbate the system harm), requiring
appropriate disclaimers regarding the accuracy of BE's listings, or limiting
BE's use of the eBay mark would all reduce or eliminate the possibility of
reputational harm, without requiring the drastic remedy of enjoining BE from
accessing eBay's database.9 Since eBay does not move independently or
alternatively for injunctive relief tailored toward the alleged reputational
harm, the court does not include the alleged reputational harm in the balance of
harm analysis, nor does the court address the merits of the causes of action
based on the alleged reputational harm in the likelihood of success analysis.
According to eBay, the
load on its servers resulting from BE's web crawlers represents between 1.11%
and 1.53% of the total load on eBay's listing servers. eBay alleges both
economic loss from BE's current activities and potential harm resulting from the
total crawling of BE and others. In alleging economic harm, eBay's argument is
that eBay has expended considerable time, effort and money to create its
computer system, and that BE should have to pay for the portion of eBay's system
BE uses. eBay attributes a pro rata portion of the costs of maintaining its
entire system to the BE activity. However, eBay does not indicate that these
expenses are incrementally incurred because of BE's activities, nor that any
particular service disruption can be attributed to BE's activities.10
eBay provides no support for the proposition that the pro rata costs of
obtaining an item represent the appropriate measure of damages for unauthorized
use. In contrast, California law appears settled that the appropriate measure of
damages is the actual harm inflicted by the conduct:
Where the conduct
complained of does not amount to a substantial interference with possession
or the right thereto, but consists of intermeddling with or use of or
damages to the personal property, the owner has a cause of action for
trespass or case, and may recover only the actual damages suffered by reason
of the impairment of the property or the loss of its use.
Zaslow v. Kroenert, 29
Cal. 2d 541, 551 (1946). Moreover, even if BE is inflicting incremental
maintenance costs on eBay, potentially calculable monetary damages are not
generally a proper foundation for a preliminary injunction. See e.g., Sampson v.
Murray, 415 U.S. 61, 90 (1974). Nor does eBay appear to have made the required
showing that this is the type of extraordinary case in which monetary damages
may support equitable relief. See In re Estate of Ferdinand Marcos, Human Rights
Litigation, 25 F.3d 1467, 1480 (9th Cir. 1994) ("a district court has
authority to issue a preliminary injunction where the plaintiffs can establish
that money damages will be an inadequate remedy due to impending insolvency of
the defendant or that defendant has engaged in a pattern of secreting or
dissipating assets to avoid judgment.").
eBay's allegations of
harm are based, in part, on the argument that BE's activities should be thought
of as equivalent to sending in an army of 100,000 robots a day to check the
prices in a competitor's store. This analogy, while graphic, appears
inappropriate. Although an admittedly formalistic distinction, unauthorized
robot intruders into a "brick and mortar"11 store would be
committing a trespass to real property. There does not appear to be any doubt
that the appropriate remedy for an ongoing trespass to business premises would
be a preliminary injunction. See e.g., State v. Carriker, 214 N.E.2d 809, 811-12
(Ohio App. 1964) (interpreting Ohio criminal trespass law to cover a business
invitee who, with no intention of making a purchase, uses the business premises
of another for his own gain after his invitation has been revoked); General
Petroleum Corp. v. Beilby, 213 Cal. 601, 605 (1931). More importantly, for the
analogy to be accurate, the robots would have to make up less than two out of
every one-hundred customers in the store, the robots would not interfere with
the customers' shopping experience, nor would the robots even be seen by the
customers. Under such circumstances, there is a legitimate claim that the robots
would not pose any threat of irreparable harm. However, eBay's right to
injunctive relief is also based upon a much stronger argument.
If BE's activity is
allowed to continue unchecked, it would encourage other auction aggregators to
engage in similar recursive searching of the eBay system such that eBay would
suffer irreparable harm from reduced system performance, system unavailability,
or data losses. (See Spafford Decl. ¶ 32;12 Parker Decl. ¶ 19;13
Johnson-Laird Decl. ¶ 85.14) BE does not appear to seriously contest
that reduced system performance, system unavailability or data loss would
inflict irreparable harm on eBay consisting of lost profits and lost customer
goodwill. Harm resulting from lost profits and lost customer goodwill is
irreparable because it is neither easily calculable, nor easily compensable and
is therefore an appropriate basis for injunctive relief. See, e.g., People of
State of California ex rel. Van De Kamp v. Tahoe Reg'l Planning Agency, 766 F.2d
1316, 1319 (9th Cir. 1985). Where, as here, the denial of preliminary injunctive
relief would encourage an increase in the complained of activity, and such an
increase would present a strong likelihood of irreparable harm, the plaintiff
has at least established a possibility of irreparable harm.15
In the patent
infringement context, the Federal Circuit has held that a preliminary injunction
may be based, at least in part, on the harm that would occur if a preliminary
injunction were denied and infringers were thereby encouraged to infringe a
patent during the course of the litigation. See Atlas Powder Co. v. Ireco Chems,
773 F.2d 1230, 1233 (Fed. Cir. 1985). In the absence of preliminary injunctive
relief, "infringers could become compulsory licensees for as long as the
litigation lasts." Id. The Federal Circuit's reasoning is persuasive.
"The very nature of the patent right is the right to exclude others. . . .
We hold that where validity and continuing infringement have been clearly
established, as in this case, immediate irreparable harm is presumed. To hold
otherwise would be contrary to the public policy underlying the patent laws."
Smith Intern., Inc. v. Hughes Tool Co., 718 F.2d 1573, 1581 (Fed. Cir. 1983) (footnotes
omitted). Similarly fundamental to the concept of ownership of personal property
is the right to exclude others. See Kaiser Aetna v. United States, 444 U.S. 164,
176 (1979) (characterizing "the right to exclude others" as "one
of the most essential sticks in the bundle of rights that are commonly
characterized as property"). If preliminary injunctive relief against an
ongoing trespass to chattels were unavailable, a trespasser could take a
compulsory license to use another's personal property for as long as the
trespasser could perpetuate the litigation.
BE correctly observes
that there is a dearth of authority supporting a preliminary injunction based on
an ongoing to trespass to chattels. In contrast, it is black letter law in
California that an injunction is an appropriate remedy for a continuing trespass
to real property. See Allred v. Harris, 14 Cal. App. 4th 1386, 1390 (1993) (citing
5 B.E. Witkin, Summary of California Law, Torts § 605 (9th ed. 1988)). If eBay
were a brick and mortar auction house with limited seating capacity, eBay would
appear to be entitled to reserve those seats for potential bidders, to refuse
entrance to individuals (or robots) with no intention of bidding on any of the
items, and to seek preliminary injunctive relief against non-customer
trespassers eBay was physically unable to exclude. The analytic difficulty is
that a wrongdoer can commit an ongoing trespass of a computer system that is
more akin to the traditional notion of a trespass to real property, than the
traditional notion of a trespass to chattels, because even though it is ongoing,
it will probably never amount to a conversion.16 The court concludes
that under the circumstances present here, BE's ongoing violation of eBay's
fundamental property right to exclude others from its computer system
potentially causes sufficient irreparable harm to support a preliminary
injunction.
BE argues that even if
eBay is entitled to a presumption of irreparable harm, the presumption may be
rebutted. The presumption may be rebutted by evidence that a party has engaged
in a pattern of granting licenses to engage in the complained of activity such
that it may be reasonable to expect that invasion of the right can be
recompensed with a royalty rather than with an injunction, or by evidence that a
party has unduly delayed in bringing suit, thereby negating the idea of
irreparability. See Polymer Technologies, Inc. v. Bridwell, 103 F.3d 970, 974 (Fed.
Cir. 1996) (discussing presumption of irreparable harm in patent infringement
context). BE alleges that eBay has both engaged in a pattern of licensing
aggregators to crawl its site as well as delayed in seeking relief. For the
reasons set forth below, the court finds that neither eBay's limited licensing
activities nor its delay in seeking injunctive relief while it attempted to
resolve the matter without judicial intervention are sufficient to rebut the
possibility of irreparable harm.
If eBay's irreparable
harm claim were premised solely on the potential harm caused by BE's current
crawling activities, evidence that eBay had licensed others to crawl the eBay
site would suggest that BE's activity would not result in irreparable harm to
eBay. However, the gravamen of the alleged irreparable harm is that if eBay is
allowed to continue to crawl the eBay site, it may encourage frequent and
unregulated crawling to the point that eBay's system will be irreparably harmed.
There is no evidence that eBay has indiscriminately licensed all comers. Rather,
it appears that eBay has carefully chosen to permit crawling by a limited number
of aggregation sites that agree to abide by the terms of eBay's licensing
agreement. "The existence of such a [limited] license, unlike a general
license offered to all comers, does not demonstrate a decision to relinquish all
control over the distribution of the product in exchange for a readily
computable fee." Ty, Inc. v. GMA Accessories, Inc., 132 F.3d 1167, 1173
(7th Cir. 1997) (discussing presumption of irreparable harm in copyright
infringement context). eBay's licensing activities appear directed toward
limiting the amount and nature of crawling activity on the eBay site. Such
licensing does not support the inference that carte blanche crawling of the eBay
site would pose no threat of irreparable harm.
eBay first learned of
BE in late 1997 or early 1998 when BE sought to retain the same public relations
firm used by eBay. (See Ploen Decl. Ex. 1.) This motion was filed on January 18,
2000. An unexplained delay of two years would certainly raise serious doubts as
the irreparability of any alleged harm. See Playboy Enters., Inc. v. Netscape
Communications Corp., 55 F. Supp. 2d 1070, 1090 (C.D. Cal. 1999) (noting that
delay of as little as 60 days to three months has been held sufficient to rebut
the presumption of irreparable harm). Here, the circumstances establish that any
delay resulted from eBay's good faith efforts to resolve this dispute without
judicial intervention and do not rebut a finding of the possibility of
irreparable harm.
In April 1999, eBay
agreed to allow BE to crawl the eBay site for 90 days while the parties
negotiated a license. In late August or early September 1999, after the parties
had failed to negotiate a license, eBay requested that BE stop crawling the eBay
site, and BE complied. It was not until November 2, 1999, that BE issued a press
release indicating that it had resumed including eBay auction listings on its
site. In response, on November 9, 1999, eBay sent BE a letter again informing BE
that its activities were unauthorized and again offering to license BE's
activities.17 After eBay and BE were again unable to agree on
licensing terms, eBay attempted to block BE from accessing the eBay site. By the
end of November 1999, despite blocking more than 150 IP addresses, it became
apparent that eBay was unable to prevent BE's crawling of the eBay system via
rotating proxy servers. Having failed in its attempt at self-help, eBay filed
this suit on December 10, 1999, and filed this motion five weeks later. The fact
that eBay's primary concern is the threat from the likely increase in crawling
activity that would result if BE is allowed to continue its unauthorized conduct,
combined with eBay's repeated attempts to resolve this dispute without judicial
intervention, and BE's continuing attempts to thwart eBay's protection of its
property, convinces the court that eBay's delay in seeking preliminary relief
was justified.
BE argues that even if
eBay will be irreparably harmed if a preliminary injunction is not granted, BE
will suffer greater irreparable harm if an injunction is granted. According to
BE, lack of access to eBay's database will result in a two-thirds decrease in
the items listed on BE, and a one-eighth reduction in the value of BE, from $80
million to $70 million. (Sweeny Decl. ¶¶ 42, 43.) Although the potential harm
to BE does not appear insignificant, BE does not appear to have suffered any
irreparable harm during the period it voluntarily ceased crawling the eBay site.
Barring BE from automatically querying eBay's site does not prevents BE from
maintaining an aggregation site including information from eBay's site. Any
potential economic harm is appropriately addressed through the posting of an
adequate bond.
Moreover, it appears
that any harm alleged to result from being forced to cease an ongoing trespass
may not be legally cognizable. In the copyright infringement context, once a
plaintiff has established a strong likelihood of success on the merits, any harm
to the defendant that results from the defendant being preliminarily enjoined
from continuing to infringe is legally irrelevant. See Triad Sys. Corp. v.
Southeastern Exp. Co., 64 F.3d 1330, 1338 (9th Cir. 1995) (defendant "cannot
complain of the harm that will befall it when properly forced to desist from its
infringing activities."). The Ninth Circuit has held it to be reversible
error for a district court to even consider "the fact that an injunction
would be devastating to [defendant's] business" once the plaintiff has made
a strong showing of likely success on the merits of a copyright infringement
claim. Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 830 (9th Cir.
1997). The reasoning in these cases appears to be that a defendant who builds a
business model based upon a clear violation of the property rights of the
plaintiff cannot defeat a preliminary injunction by claiming the business will
be harmed if the defendant is forced to respect those property rights. See
Concrete Mach. Co., Inc. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 613 (1st
Cir. 1988) ("If a strong likelihood of success is demonstrated, then the
court should issue the injunction even if the defendant will incur the
relatively greater burden; a probable infringer simply should not be allowed to
continue to profit from its continuing illegality at the copyright owner's
expense."). The Federal Circuit has crafted a similar rule with respect to
patent infringement. See Windsurfing Int'l Inc. v. AMF, Inc., 782 F.2d 995, 1003
n.12 (Fed. Cir. 1986) ("One who elects to build a business on a product
found to infringe cannot be heard to complain if an injunction against
continuing infringement destroys the business so elected."). Accordingly,
the court concludes that eBay has demonstrated at least a possibility of
suffering irreparable system harm and that BE has not established a balance of
hardships weighing in its favor.
B. Likelihood of
Success
As noted above, eBay
moves for a preliminary injunction on all nine of its causes of action. These
nine causes of action correspond to eight legal theories: (1) trespass to
chattels, (2) false advertising under the Lanham Act, 15 U.S.C. § 1125(a), (3)
federal and state trademark dilution, (4) violation of the Computer Fraud and
Abuse Act, 18 U.S.C. § 1030, (5) unfair competition, (6) misappropriation, (7)
interference with prospective economic advantage and (8) unjust enrichment. The
court finds that eBay has established a sufficient likelihood of prevailing on
the trespass claim to support the requested injunctive relief. Since the court
finds eBay is entitled to the relief requested based on its trespass claim, the
court does not address the merits of the remaining claims or BE's arguments that
many of these other state law causes of action are preempted by federal
copyright law. The court first addresses the merits of the trespass claim, then
BE's arguments regarding copyright preemption of the trespass claim, and finally
the public interest.
1. Trespass
Trespass to chattels
"lies where an intentional interference with the possession of personal
property has proximately cause injury." Thrifty-Tel v. Beznik, 46 Cal. App.
4th 1559, 1566 (1996). Trespass to chattels "although seldom employed as a
tort theory in California" was recently applied to cover the unauthorized
use of long distance telephone lines. Id. Specifically, the court noted "the
electronic signals generated by the [defendants'] activities were sufficiently
tangible to support a trespass cause of action." Id. at n.6. Thus, it
appears likely that the electronic signals sent by BE to retrieve information
from eBay's computer system are also sufficiently tangible to support a trespass
cause of action.
In order to prevail on
a claim for trespass based on accessing a computer system, the plaintiff must
establish: (1) defendant intentionally and without authorization interfered with
plaintiff's possessory interest in the computer system; and (2) defendant's
unauthorized use proximately resulted in damage to plaintiff. See Thrifty-Tel,
46 Cal. App. 4th at 1566; see also Itano v. Colonial Yacht Anchorage, 267 Cal.
App. 2d 84, 90 (1968) ("When conduct complained of consists of
intermeddling with personal property 'the owner has a cause of action for
trespass or case, and may recover only the actual damages suffered by reason of
the impairment of the property or the loss of its use.'") (quoting Zaslow
v. Kroenert, 29 Cal. 2d 541, 550 (1946)). Here, eBay has presented evidence
sufficient to establish a strong likelihood of proving both prongs and
ultimately prevailing on the merits of its trespass claim.
a. BE's Unauthorized
Interference
eBay argues that BE's
use was unauthorized and intentional. eBay is correct. BE does not dispute that
it employed an automated computer program to connect with and search eBay's
electronic database. BE admits that, because other auction aggregators were
including eBay's auctions in their listing, it continued to "crawl"
eBay's web site even after eBay demanded BE terminate such activity.
BE argues that it
cannot trespass eBay's web site because the site is publicly accessible. BE's
argument is unconvincing. eBay's servers are private property, conditional
access to which eBay grants the public. eBay does not generally permit the type
of automated access made by BE. In fact, eBay explicitly notifies automated
visitors that their access is not permitted. "In general, California does
recognize a trespass claim where the defendant exceeds the scope of the consent."
Baugh v. CBS, Inc., 828 F.Supp. 745, 756 (N.D. Cal. 1993).
Even if BE's web
crawlers were authorized to make individual queries of eBay's system, BE's web
crawlers exceeded the scope of any such consent when they began acting like
robots by making repeated queries. See City of Amsterdam v. Daniel Goldreyer,
Ltd., 882 F. Supp. 1273, 1281 (E.D.N.Y. 1995) ("One who uses a chattel with
the consent of another is subject to liability in trespass for any harm to the
chattel which is caused by or occurs in the course of any use exceeding the
consent, even though such use is not a conversion."). Moreover, eBay
repeatedly and explicitly notified BE that its use of eBay's computer system was
unauthorized. The entire reason BE directed its queries through proxy servers
was to evade eBay's attempts to stop this unauthorized access. The court
concludes that BE's activity is sufficiently outside of the scope of the use
permitted by eBay that it is unauthorized for the purposes of establishing a
trespass. See Civic Western Corp. v. Zila Industries, Inc., 66 Cal. App. 3d 1,
17 (1977) ("It seems clear, however, that a trespass may occur if the party,
entering pursuant to a limited consent, . . . proceeds to exceed those limits .
. .") (discussing trespass to real property).
eBay argues that BE
interfered with eBay's possessory interest in its computer system. Although eBay
appears unlikely to be able to show a substantial interference at this time,
such a showing is not required. Conduct that does not amount to a substantial
interference with possession, but which consists of intermeddling with or use of
another's personal property, is sufficient to establish a cause of action for
trespass to chattel. See Thrifty-Tel, 46 Cal. App. 4th at 1567 (distinguishing
the tort from conversion). Although the court admits some uncertainty as to the
precise level of possessory interference required to constitute an intermeddling,
there does not appear to be any dispute that eBay can show that BE's conduct
amounts to use of eBay's computer systems. Accordingly, eBay has made a strong
showing that it is likely to prevail on the merits of its assertion that BE's
use of eBay's computer system was an unauthorized and intentional interference
with eBay's possessory interest.
b. Damage to eBay's
Computer System
A trespasser is liable
when the trespass diminishes the condition, quality or value of personal
property. See Compuserve, Inc. v. Cyber Promotions, 962 F. Supp. 1015 (S.D. Ohio
1997). The quality or value of personal property may be "diminished even
though it is not physically damaged by defendant's conduct." Id. at 1022.
The Restatement offers the following explanation for the harm requirement:
The interest of a
possessor of a chattel in its inviolability, unlike the similar interest of
a possessor of land, is not given legal protection by an action for nominal
damages for harmless intermeddlings with the chattel. In order that an actor
who interferes with another's chattel may be liable, his conduct must affect
some other and more important interest of the possessor. Therefore, one who
intentionally intermeddles with another's chattel is subject to liability
only if his intermeddling is harmful to the possessor's materially valuable
interest in the physical condition, quality, or value of the chattel, or if
the possessor is deprived of the use of the chattel for a substantial time,
or some other legally protected interest of the possessor is affected . . .
. Sufficient legal protection of the possessor's interest in the mere
inviolability of his chattel is afforded by his privilege to use reasonable
force to protect his possession against even harmless interference.
Restatement (Second) of
Torts § 218 cmt. e (1977) .
eBay is likely to be
able to demonstrate that BE's activities have diminished the quality or value of
eBay's computer systems. BE's activities consume at least a portion of
plaintiff's bandwidth and server capacity. Although there is some dispute as to
the percentage of queries on eBay's site for which BE is responsible, BE admits
that it sends some 80,000 to 100,000 requests to plaintiff's computer systems
per day. (Ritchey Decl. Ex. 3 at 391:11-12.) Although eBay does not claim that
this consumption has led to any physical damage to eBay's computer system, nor
does eBay provide any evidence to support the claim that it may have lost
revenues or customers based on this use,18 eBay's claim is that BE's
use is appropriating eBay's personal property by using valuable bandwidth and
capacity, and necessarily compromising eBay's ability to use that capacity for
its own purposes. See CompuServe, 962 F.Supp. at 1022 ("any value [plaintiff]
realizes from its computer equipment is wholly derived from the extent to which
that equipment can serve its subscriber base.").
BE argues that its
searches represent a negligible load on plaintiff's computer systems, and do not
rise to the level of impairment to the condition or value of eBay's computer
system required to constitute a trespass. However, it is undisputed that eBay's
server and its capacity are personal property, and that BE's searches use a
portion of this property. Even if, as BE argues, its searches use only a small
amount of eBay's computer system capacity, BE has nonetheless deprived eBay of
the ability to use that portion of its personal property for its own purposes.
The law recognizes no such right to use another's personal property. Accordingly,
BE's actions appear to have caused injury to eBay and appear likely to continue
to cause injury to eBay. If the court were to hold otherwise, it would likely
encourage other auction aggregators to crawl the eBay site, potentially to the
point of denying effective access to eBay's customers. If preliminary injunctive
relief were denied, and other aggregators began to crawl the eBay site, there
appears to be little doubt that the load on eBay's computer system would qualify
as a substantial impairment of condition or value. California law does not
require eBay to wait for such a disaster before applying to this court for
relief. The court concludes that eBay has made a strong showing that it is
likely to prevail on the merits of its trespass claim, and that there is at
least a possibility that it will suffer irreparable harm if preliminary
injunctive relief is not granted. eBay is therefore entitled to preliminary
injunctive relief.
2. Copyright Preemption
BE argues that the
trespass claim, along with eBay's other state law causes of action, "is
similar to eBay's originally filed but now dismissed copyright infringement
claim, and each is based on eBay's assertion that Bidder's Edge copies eBay's
auction listings, a right within federal copyright law." Opp'n at 8:10-12.
BE is factually incorrect to the extent it argues that the trespass claim arises
out of what BE does with the information it gathers by accessing eBay's computer
system, rather than the mere fact that BE accesses and uses that system without
authorization.
A state law cause of
action is preempted by the Copyright Act if, (1) the rights asserted under state
law are "equivalent" to those protected by the Copyright Act, and (2)
the work involved falls within the "subject matter" of the Copyright
Act as set forth in 17 U.S.C. §§ 102 and 103. Kodadek v. MTV Networks, Inc.,
152 F.3d 1209, 1212 (9th Cir. 1998). "In order not to be equivalent, the
right under state law must have an extra element that changes the nature of the
action so that it is qualitatively different from a copyright infringement claim."
Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. 1542, 1550 (N.D. Cal. 1990).
Here, eBay asserts a right not to have BE use its computer systems without
authorization. The right to exclude others from using physical personal property
is not equivalent to any rights protected by copyright and therefore constitutes
an extra element that makes trespass qualitatively different from a copyright
infringement claim. But see, Ticketmaster Corp. v. Tickets.com, Inc., No.
CV-99-7654 (C.D. Cal. minute order filed Mar. 27, 2000) (dismissing trespass
claim based on unauthorized Internet information aggregation as preempted by
copyright law).
3. Public Interest
The traditional
equitable criteria for determining whether an injunction should issue include
whether the public interest favors granting the injunction. American
Motorcyclist Ass'n v. Watt, 714 F.2d 962, 965 (9th Cir. 1983). The parties
submit a variety of declarations asserting that the Internet will cease to
function if, according to eBay, personal and intellectual property rights are
not respected, or, according to BE, if information published on the Internet
cannot be universally accessed and used. Although the court suspects that the
Internet will not only survive, but continue to grow and develop regardless of
the outcome of this litigation, the court also recognizes that it is poorly
suited to determine what balance between encouraging the exchange of information,
and preserving economic incentives to create, will maximize the public good.
Particularly on the limited record available at the preliminary injunction stage,
the court is unable to determine whether the general public interest factors in
favor of or against a preliminary injunction.
BE makes the more
specific allegation that granting a preliminary injunction in favor of eBay will
harm the public interest because eBay is alleged to have engaged in
anticompetitive behavior in violation of federal antitrust law. The Ninth
Circuit has noted that in evaluating whether to issue a preliminary injunction,
the district court is under no obligation to consider the merits of any
antitrust counterclaims once the plaintiff has demonstrated a likelihood of
success on the merits. See Triad Sys. Corp. v. Southeastern Exp. Co., 64 F.3d
1330, 1336 n.13 (9th Cir. 1995) (discussing claim of copyright infringement).
Although anticompetitive behavior may be appropriately considered in the context
of a preliminary injunction based on trademark infringement, where misuse is an
affirmative defense, see Helene Curtis Indus. v. Church & Dwight Co., 560
F.2d 1325 (7th Cir. 1977), it does not appear to be appropriately considered
here, because there is no equivalent affirmative defense to trespass to chattels.
Accordingly, the court concludes the public interest does not weigh against
granting a preliminary injunction.
IV. ORDER
Bidder's Edge, its
officers, agents, servants, employees, attorneys and those in active concert or
participation with them who receive actual notice of this order by personal
service or otherwise, are hereby enjoined pending the trial of this matter, from
using any automated query program, robot, web crawler or other similar device,
without written authorization, to access eBay's computer systems or networks,
for the purpose of copying any part of eBay's auction database. As a condition
of the preliminary injunction, eBay is ordered to post a bond in the amount of
$2,000,000 to secure payment of any damages sustained by defendant if it is
later found to have been wrongfully enjoined. This order shall take effect 10
days from the date on which it is filed.
Nothing in this order
precludes BE from utilizing information obtained from eBay's site other than by
automated query program, robot, web crawler or similar device. The court denies
eBay's request for a preliminary injunction barring access to its site based
upon BE's alleged trademark infringement, trademark dilution and other claims.
This denial is without prejudice to an application for an injunction limiting or
conditioning the use of any information obtained on the theory that BE's use
violates some protected right of eBay.
FOOTNOTES
1 On April 21, 2000, defendant
Bidder's Edge, Inc. filed an ex parte motion for leave to file a supplemental
declaration in order to respond to factual assertions in the reply. Although the
court suspects that with reasonable diligence BE could have prepared the
declaration at least by the hearing date, the declaration consists merely of the
results of four searches performed on major Internet search engines. eBay's
opposition did not cite any prejudice that would result from its filing.
Accordingly, BE's motion is granted.
2 Programs that
recursively query other computers over the Internet in order to obtain a
significant amount of information are referred to in the pleadings by various
names, including software robots, robots, spiders and web crawlers.
3 It is unclear who Peter Leeds is,
except that his email address at the time was <peter@biddersedge.com>.
4 Q: Are you aware of any complaints
from eBay users about slowdowns that were caused by aggregators?
A: No.
5 BE appears to argue that this cannot
be the case because searches performed on each of these search engines will
return results that include eBay web pages. (Supp. Ploen Decl. ¶¶ 1-9.)
However, this does not establish that these sites do not respect robot exclusion
headers. There are numerous ways in which search engines can obtain information
in compliance with exclusion headers, including; obtaining consent, abiding by
the robot.txt file guidelines, or manually searching the sites. BE did not
present any evidence of any site ever complaining about the activities of any of
these search engines.
6 The bulk of eBay's moving papers and
declarations address the alleged misuse of the eBay mark and the information BE
obtains from the eBay computers. The court does not address the facts specific
to these claims, nor the merits of these claims. Even if eBay were able to
establish a likelihood of success on the merits as to these causes of action,
such a showing would only support injunctive relief addressing BE's use of the
eBay mark and BE's use of the eBay auction listings (the appropriate relief for
which would appear to be a disclaimer regarding the lack of affiliation between
eBay and BE and explicitly alerting customers to the limited scope of BE's
information). Such a showing would not be sufficient to enjoin BE from accessing
eBay's computer systems, which is the only relief eBay appears to request.
7 eBay does not appear to offer any
support for the proposition that unjust enrichment is an independent cause of
action, let alone an independently adequate basis for preliminary injunctive
relief.
8 Although, as a
practical matter, enjoining BE from accessing eBay's computers or searching
eBay's auction database may result in BE's inability to make effective use of
information from eBay's auction site.
9 Thus, eBay's motion appears to be,
in part, a tactical effort to increase the strength of its license negotiating
position and not just a genuine effort to prevent irreparable harm.
10 This case was filed on December 10,
1999. BE decommissioned a number of its servers in mid-December 1999. (See Mundy
Depo. at 75:12-14.) Reformatting the hard drives resulted in the destruction of
the server logs that may have indicated the actual duration of access to eBay's
system. (See id. at 74:17-24.) eBay argues this should support an adverse
inference against BE because eBay is unable to correlate BE's access to eBay's
system with service disruptions. BE responds that these actions were a result of
hardware failures unrelated to the litigation. The court agrees that these
actions may support an inference that the information BE destroyed was
prejudicial. However, final resolution of the fact-dependent questions regarding
the circumstances under which this information was destroyed requires a more
complete record. Accordingly, eBay is not entitled to a conclusive presumption
of harm at this juncture in the proceedings, and eBay's motion to strike all
evidence submitted by BE relating to a lack of harm is denied.
11 The phrase "brick and mortar"
is often used to designate a traditional business when contrasting it with a
predominantly, or entirely, on-line business. The phrase appears to refer to the
historical reliance on conducting commerce within the context of a physical
space made from materials such as brick and mortar, as opposed to the modern
trend toward conducting commerce in a cyberspace made from computers programs.
12 "If 30 or 40 companies spring
into existence using similar business models, what will be the total load and
impact on eBay's servers?"
13 "One crawler may currently use
1% of eBay's resources. What if hundred of users used similar crawlers?"
14 "Given that Bidder's Edge can
be seen to have imposed a load of 1.53 % on eBay's listing servers, simple
arithmetic and economics reveal how only a few more such companies deploying
rude robots [that do not respect the Robot Exclusion Standard] would be required
before eBay would be brought to its knees by what would be then a debilitating
load."
15 As discussed below, eBay has a
established a strong likelihood of success on the merits of the trespass claim,
and is therefore entitled to preliminary injunctive relief because it has
established the possibility of irreparable harm. Accordingly, the court does not
reach the issue of whether the threat of increased activity would be sufficient
to support preliminary injunctive relief where the plaintiff has not made as
strong of a showing of likelihood of success on the merits.
16 As other courts have noted,
applying traditional legal principles to the Internet can be troublesome. See
ImOn, Inc. v. ImaginOn, Inc., — F. Supp. 2d —, —, 2000 WL 310373, at *1 (S.D.N.Y.
Mar. 27, 2000) ("Both parties are suppliers of 'services or products' on
the Internet which, as I recognize and grapple with hereafter, is one of the
most fluid, rapidly developing, and virtually daily changing areas of commerce
that the law has had to focus upon and endeavor to apply established principles
to.")
17 Because BE was expressly notified
that its conduct was unauthorized, it does not matter whether BE ever agreed to
a version of the eBay User Agreement that prohibited robotic activity.
18 Plaintiff believes that it may have
experienced system failures and a decrease in system performance during the
times that defendant was searching its system, however, it is unable to produce
any correlation between its outages and defendant's activities. Plaintiff
contends that it would likely be able to produce such a correlation but for
defendant's alleged destruction of logs that recorded the details of its robotic
search activities.
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