Craigslist v. 3taps [1]

Craigslist is a classified advertisements website with one section of its site dedicated to housing. With a simple design that has not been significantly updated since its creation, craiglist allows users to post (among other things) apartment rental listings. In order to make the material on craigslist more user-friendly, PadMapper takes the information from craigslist's apartment listings and plots these on an easily searchable map, adding search filters. 3taps is a startup committed to collecting and distributing public data, which partnered with PadMapper to assist with its access to the apartment information on craigslist.

In response to their use of craigslist's listings, craigslist sent PadMapper a cease and desist letter [2]. After PadMapper refused to comply, craigslist filed a complaint [3] in the U.S. District Court for the Northern District of California on July 20, 2012, against PadMapper and 3Taps. In its complaint, craigslist asserted ten claims for relief, including contract (asserting breaches of craigslist's terms of use), copyright, and trademark/unfair competition claims.

3taps answered [4] the complaint on September 24 and filed a counterclaim, asserting claims of antitrust violations, unfair competition, and interference with economic advantage. Overall, 3taps' defense and counterclaims focused on the premise that the facts drawn from craigslist's website are not craigslist's property, but in public domain, and that craigslist has maintained an unlawful monopoly through sham lawsuits, copyright misuse, improperly restrictive terms of use, and "ghosting." In its answer [5] on October 30, PadMapper raised similar counterclaims alleging anticompetitive conduct by craigslist.

Craigslist filed a first amended complaint [6] on November 20, 2012. In this amended complaint, craigslist added seven additional claims, for a total of 17. The claims were as follows (with new claims in italics)

1. Trespass: Defendants have gained unlawful access to and interfered with craigslist's computer system, servers, and network.
2. Breach of Contract: Defendants affirmatively accepted and agreed to be bound by the Terms of Use, which they willfully, repeatedly and systematically breached by accessing the craiglist website to copy and distribute the content posted therein.
3. Misappropriation: As competitors with craigslist, Defendants wrongfully accessed craigslist's website and computer systems to make craigslist's content available to their customers, constituting free-riding on craigslist's substantial investment of time, effort, and expense.
4. Copyright Infringement: Defendants reproduced and distributed the copyrighted material on the craigslist website without authorization from the copyright holder, craigslist.
5. Contributory Copyright Infringement (against 3taps): 3taps provides its users with copies and derivative works of craigslist's copyrighted works without craigslist's consent, and knowingly permits its users to copy, reproduce, and prepare derivative works from the copyrighted works.
6. Federal Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark in interstate commerce in connection with the sale or advertising of goods is likely to cause consumer confusion.
7. Federal False Designation of Origin: Defendants' unauthorized use of the CRAIGSLIST mark is likely to create the false and misleading impression that Defendants' products or services are provided or sponsored by craigslist.
8. Federal Dilution of a Famous Mark (against 3taps): CRAIGSLIST is a famous and distinctive mark, and 3taps' use of the mark is likely to cause dilution by blurring, particularly depleting the strength of the mark by impairing its distinctiveness.
9. Federal Cyberpiracy Prevention (against 3taps): 3taps' use of CRAIGGERS in the craiggers.com domain is confusingly similar to and dilutive of the famous, registered CRAIGSLIST mark.
10. California Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark in connection with the sale or advertising of goods/services in California is likely to cause confusion as to the source and/or sponsorship of the goods/services.
11. Common Law Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark is likely to cause confusion as to the source and/or sponsorship of the goods/services.
12. California Unfair Competition: Defendants have engaged in unfair business practices, injuring craigslist's business, reputation, and trademarks.
13. Violations of the Computer Fraud and Abuse Act: Defendants accessed craigslist's computers and servers without authorization or in excess of authorization and obtained valuable information in transactions involving interstate or foreign communications.
14. California Comprehensive Computer Data Access and Fraud Act: Defendants accessed and copied data from craigslist's computer systems and servers without authorization.
15. Aiding and Abetting Trespass (against 3taps): 3taps has encouraged and facilitated access to craigslist's computers by supporting the collection, transfer, and storage of craigslist's content.
16. Aiding and Abetting Misappropriation (against 3taps): 3taps has knowledge that the time-sensitive "scraped" craigslist content they provide PadMapper is to compete with craigslist, therefore aiding PadMapper's misappropriation.
17. Accounting: As Defendants have benefited financially as a result of their misconduct at craigslist's expense, craigslist is entitled to a full accounting to determine the amount of money due to craigslist.

In response, PadMapper and 3taps amended their counterclaims on December 21. PadMapper updated its counterclaims [7] to include (attempted) illegal maintenance of a monopoly in violation of the Sherman Act and California unfair business practices, and to seek declaratory relief for noninfringement of craigslist's copyrights. 3taps alleged similar counterclaims [8], including multiple monopoly and contract claims under the Sherman Act, California unfair competition, and interference with economic advantage.

PadMapper and 3taps also filed motions to dismiss on December 21, 2012. PadMapper, which first filed a motion to dismiss [9] on October 30, 2012, amended this motion [10] to dismiss craigslist's claims for trespass (claim 1), breach of contract (2), federal trademark infringement (6), federal false designation of origin (7), California trademark infringement (10), and common law trademark infringement (11). PadMapper argued that the Copyright Act preempts the breach of contract claim and that craigslist failed to state a trespass claim against PadMapper. PadMapper also argued that the four trademark claims are precluded under the U.S. Supreme Court's decision in Dastar v. Twentieth Century Fox Film, which narrowed the scope of the Lanham Act so not to cover claims where the core issue is a copyright claim, primarily the improper reproduction of copyrighted material.

3taps moved to dismiss [11] craigslist's claims of copyright infringement (claim 4), contributory copyright infringement (5), violations of the Computer Fraud and Abuse Act (13), and California Comprehensive Computer Data Access and Fraud Act (14). With respect to the copyright claims, 3taps argued that craigslist has no standing to assert copyright infringement of user-generated content and its asserted copyright registrations are invalid. 3taps also argued that the statutory elements of the CFAA and California statute could not be satisfied, as establishing unauthorized access requires proof of hacking which craigslist judicially admitted did not occur.

In an opposition [12] filed on January 31, 2013, craigslist reasserted the sufficiency of its pleadings and the validity of its copyrights. PadMapper [13] and 3taps replied [14] in support of their respective motions to dismiss on February 13.

On February 8, 2013, noting the complexity of the lawsuit, craigslist filed a motion to bifurcate [15] and stay Defendants' amended counterclaims pending resolution of craigslist's claims. Craigslist argued that the counterclaims would be made moot or significantly narrowed if craigslist prevailed on its claims, and consideration of the antitrust counterclaims in conjunction with craigslist's claims would increase the legal and factual complexity of the case, delaying the proceedings. PadMapper [16] and 3taps [17] both opposed this motion on March 1. The defendants argued that the claims at issue are intertwined and would not be rendered moot if craigslist prevails, such that bifurcation would be inappropriate. The defendants further argued that a decision on bifurcation would be premature, and a stay of discovery would result in prejudice. In a reply [18] on March 15, craigslist maintained that resolving craigslist's claims would at least streamline the antitrust claims, while the balance of potential prejudice weighs heavily towards bifurcation. Craigslist also argued that the motion was not premature and the bifurcation should occur before the start of discovery.  

On April 29, 2013, Judge Charles Breyer issued an order [19] granting in part and denying in part the defendants' motions to dismiss, and granting craigslist's motion to bifurcate.  The district court denied 3taps' motion to dismiss the Computer Fraud and Abuse Act and California Comprehensive Computer Data Access and Fraud Act claims, noting that the defendant's continued access after clear statements regarding authorization in the cease and desist letters and terms of use sufficiently constitutes unauthorized access under these statutory provisions. The Court also denied PadMapper's motion to dismiss the trespass claim and the breach of contract claim, which it it ruled was not preempted by the Copyright Act. PadMapper's motion to dismiss the trademark claims was also denied, as the Court held that they were not precluded by Dastar. With respect to the copyright claims, the Court held that craigslist sufficiently established the originality of the compilation of the posts to warrant copyright protection, even in the individual posts themselves, and sufficiently registered copyright for this content.

However, the Court ruled that craigslist was the exclusive licensee of this content only from July 16, 2012 through August 8, 2012, during which period users were presented with a notice to click confirming craigslist's position as the exclusive licensee of the post. Outside of those weeks when the exclusive license confirmation statement was in use, the court found that craigslist could not sue for copyright infringement. Accordingly, the Court granted the motions to dismiss the copyright claims with respect to user-created posts submitted before July 16 or after August 8, 2012. Lastly, the Court concluded that "the likelihood of streamlining discovery for and adjudication of the antitrust counterclaims based on the outcome of Craigslist's claims-even if those counterclaims must ultimately proceed-warrants bifurcation," and therefore granted craigslist's motion to bifurcate and stay discovery on the antitrust counterclaims.