STATEMENT OF AMICI IDENTITY AND INTEREST
For each of the Amici identified below, the source of their authority to file
this brief is based on a motion being concurrently filed pursuant to Fed. R. App. P.
29(a).
Reed Elsevier Inc.
Reed Elsevier Inc. is a leading publisher of various types of copyrighted
works for the business and academic communities, including scientific journals,
law-related materials, reference books and textbooks, and magazines.
Reed
Elsevier’s LEXIS-NEXIS business provides an extensive online database of legal
authorities and news sources; its subscribers include many state colleges,
universities, law schools, law libraries, and legal departments. Reed Elsevier's
science publishing subsidiary, Elsevier Science Inc. provides an online service,
ScienceDirect, licensed to most of the major research universities, which provides
full-text access, abstracts and indexes for more than 1,100 academic journals in all
disciplines published by Reed Elsevier as well as the journals of 15 other
publishers. Furthermore, two other Reed Elsevier companies, Matthew Bender &
Co., Inc. and Lexis Law Publishing, are major publishers of legal materials,
including Nimmer on Copyright, Chisum on Patents and annotated codes. Reed
Elsevier’s is interested in this case because of the extent to which it implicates
wide-ranging issues and theories regarding the legal protection afforded to
providers of information made available via the Internet.
National Association of Realtors
NAR is an Illinois not-for-profit professional association of persons engaged
in all phases of the real estate business, including, but not limited to, brokerage,
appraising, management and counseling. NAR was founded in 1908 and maintains
its headquarters in Chicago, Illinois. The membership of NAR includes 54 State
and Territorial Associations of Realtors, approximately 1600 local associations and
boards, and over 720,000 active Realtor® and Realtor-Associate® members. A
substantial number of these members are engaged in residential real estate
brokerage activities.
NAR, as well as many of its local and State associations of Realtors®,
operate or have interests in compilations of information about property available
for sale or lease. Many, but not all, of these compilations are made publicly
available on the Internet. Some compilations of this type may contain various
kinds of confidential business information, the distribution of which is intended
only to other real estate professionals. Other compilations are made available for
view and use by the public on particular Internet sites, but are not intended to be
reproduced except as may be specifically authorized. As a result, NAR and its
constituents are interested in this case to the extent it may impact the protection
afforded to its members, as providers of information made available via the
Internet.
The e-commerce Coalition
The e-commerce Coalition (“Coalition”) is a trade association representing
hundreds of individual companies that each have harnessed the power of the
Internet to run its business. All Coalition companies share the desire to maintain
the Internet as a safe and credible business environment for consumers. Thus, the
Coalition has been active in sponsoring legislation and in other ways to protect the
Internet environment and the whole of the information economy. The Coalition is
interested in this case because it may implicate issues affecting the legal protection
afforded to its members.
ARGUMENT
I.
Introduction
This case presents a stark choice between two property rights regimes to
organize ordinary businesses in cyberspace. Appellant Bidder’s Edge (“BE”) and
supporting amici (the “Amici Professors”) seek to impose on eBay what amounts
to a system of uncompensated compulsory licenses that permit anyone to enter the
home site of any Internet firm, and to commandeer at will its computers, storage
facilities and servers. The district court rejected defendant’s radical invitation, and
held that the normal rules of private property applied to businesses on the Internet
Highway just as they apply to businesses along Main Street. Each owner of a
private site has the right to determine the terms and conditions under which others
may enter its premises and use its equipment, unless the restriction is forbidden for
reasons plainly irrelevant to this case such as discrimination on grounds of race,
sex, age or disability. Accordingly, the district court’s decision to enjoin BE from
exceeding the extent of its invitation from eBay should be affirmed.
II.
The Traditional Regime That Allows for Private Property to
Operate Along Side Public Highways Works as Well in Cyberspace as in Real
Space.
The district court’s injunction followed well-established legal principles.
While the district court appropriately based its injunction on trespass to chattels
(BE’s use of software robots that diminished the capacity of eBay’s computer
servers), there is also an appropriate analogy here to the law governing real
property rights, which weaves together, almost seamlessly, two distinct forms of
property. The central nervous system is the network of public roads and highways
that link together privately owned lands. The public highways are so configured
that any individual can move from any private site to any other private site over the
network of public roads. Given their function, these roads are common property
open to all who use them in the proper fashion. The plots of land located beside
the highways operate under a very different regime. Each owner of the private
land has unquestioned access to the highway network, but each person using the
network does not have the unlimited right to enter and interfere with any private
property beside the highway network. Rather each property owner ordinarily has
the right to exclude others from entrance into their own property.
That
configuration of rights is critical to encouraging owners to improve their real
estate, for they will not do so if they know their improvements can be used at will
or expropriated by any other person.
The right to exclude is important in commercial contexts, not because a
business owner typically desires privacy or exclusion, but because it gives that
owner the right to determine the terms and conditions under which that entry or use
will take place. Business owners in real space and cyberspace all have strong
financial incentives to increase traffic to the sites. Thus, owners like eBay may
routinely grant leases, easements, and licenses to other individuals, often in
exchange for fees, in order to increase the value of their site.
Without the default right to exclude, it would be virtually impossible to
invest in property. The owner could seek to make individual deals to exclude
outsiders, but a transaction with any one outsider would be fruitless because the
next could enter in his place. For an application of this rule with cattle trespass,
see Kenneth Vogel, The Case Theorem and California Animal Trespass Law, 16 J.
Legal Stud. 149 (1987). Moreover, the transaction cost of negotiating countless
contracts for nonentry would be simply prohibitive. Without an effective right to
exclude, the owner cannot charge others for their entry and use; and without the
possibility of a financial return, investment activity would cease. In sum, only a
system that respects the right to exclude by a single owner will permit the effective
deployment of resources.
This regime of private property applies to all ordinary forms of business,
auction houses among them.
Christie’s and Sotheby’s may occupy dominant
positions as auction houses, but they still have the right to determine the rules and
conditions under which they conduct auctions, whether private or public. They
could decide to hold their auctions in the dark of night, admitting only a select few
to bid. They are under no duty to advertise their sales or to allow reporters or
consumer affairs editors to enter their premises in order to spread the news about
the auction to the four corners of the globe. But the system of private ownership
works well precisely because private owners are under no legal duty to disseminate
notice of their affairs. In a market system, the efficient matching of buyers and
sellers takes place not through state coercion, which the Amici Professors propose
to use, but through voluntary action. Quite simply, economic incentive works
better than state force to secure the full dissemination of information. In order to
attract owners to use their services, the auction houses reach out to the largest
possible market. They advertise, use web pages, seek publicity and otherwise
promote their sales. Yet at no point does the state step in to require auction houses
to admit the media or auction aggregators onto their premises.
The same analysis applies to businesses that operate on the Internet. In
cyberspace, as in real space, private property coexists quite happily with the
uniform Internet Highway. The Internet works because any individual can connect
to the Internet through an ordinary telephone line. A regime of private property
that prevented some people from gaining access to the net while allowing it to
others would indeed spell the death knell of the Internet as a public institution. But
Internet interconnections are not at stake here, for nothing in this case even hints at
a right of eBay or any other private site owner on the Internet to exclude others
from the information highway. Rather this case is about whether or not private
property can coexist with public highways in cyberspace as it does on land. And
there is no reason why it cannot. eBay labors in the same kind of business
environment as Sotheby’s and Christie’s. It could, if it chose, exclude all publicity
about its services, but only if it is prepared to watch its customers migrate to rival
sites that deliver a larger bidding audience. At this point, the sensible legal regime
is one that allows eBay, like BE, to determine which individuals can visit its site,
and under what terms. If there is some fault in the contracts that they propose,
these can be addressed on a case-by-case, clause-by-clause basis, in settings where
the contract proponents can defend these provisions on grounds of public policy.
But there is no need for a per se negation of all internet site license agreements,
regardless of content. In contrast, any legal regime that allows individuals to enter
someone else’s site against the will of their owner poses a profound threat to the
institution of private property and to the entire complex network of voluntary
transactions that this system, and only this system, can perform.
III.
Principles Rooted in the Common Law of Trespass to Real
Property Should Be Applied to Protect Privately Owned Computer Systems.
The original eBay complaint did not, of course, make a claim for trespass to
real property. Rather, the claim was for the interference with eBay’s computer
equipment that it used to support its web site activities. The precedents from real
property therefore apply only by way of analogy, given that eBay’s equipment is
technically chattel, notwithstanding the evident differences between complex
equipment and ordinary chattels which are sold as goods in the ordinary course of
commerce. The laws that evolved with respect to trespass, both to real property
and to chattel, provide an apt approach here because the right to exclude is
provided under both sets of laws.
The intuition supporting this real property analogy is fortified by the
universal descriptions applied to the central features of the Internet, which
inevitably are drawn from the lexicon of real property. Common language speaks
of Internet “addresses,” for, of course, individuals and firms occupy private “sites”
along the Internet “highway.” It also speaks of the “architecture” of the Internet
which may direct and influence conduct in both real and virtual “space.” See,
Lawrence Lessig, Code and Other Laws of Cyberspace, ch. 7, p. 91-92 (1999).
Reference is common to “cybersquatters.” To think of a fixed Internet site, or the
equipment that supports it, as though it were a chattel or personal property is to
miss the operative distinction of the earlier law, where “movables” was often used
as a synonym for personal property and “immovables” as a synonym for real
property. The blunt truth is that an Internet Site is fixed in its cyberspace location;
to move from one address to another risks the loss of its customer base, just like
any ordinary store runs the risk of losing its customers when it changes locations.
In practice, therefore, web site owners cannot protect their equipment in the
same fashion as holders of ordinary chattels. The computer equipment is already
on land for safekeeping but its usefulness requires connection to the outside world.
Given this state of affairs, the only way to preserve the integrity of web sites is to
allow owners to enjoin outsiders from using them, subject to the same limitations
that are applied to trespasses to land. The Amici Professors seek to avoid that
result by taking refuge in Section 218, comment e, of the Second Restatement. But
they conveniently omit to quote the last sentence of that comment which shows
how little sense this regime makes for web sites on the Internet. The Restatement
states “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.” Thus, the traditional law indisputably allows for effective
self-help to keep BE from entering into eBay’s site. But the costly and erratic
cyberchase between BE’s rotating proxies and eBay’s defensive maneuvers is a
poor analogy to the chattel owner’s ability to regain possession of the chattel by
force. In short, the concept of forceful self-help is ill-suited to cyberspace. Thus,
the standard rule that allows injunctive relief against trespasses to real or personal
property applies to enforce the right to exclude.
The single most important rule with respect to land provides: Deliberate
entry onto the land of another without authorization and consent is an actionable
trespass. See, Restatement (Second) Torts, § 158, where the definition of entry
covers “not only coming upon land, but also remaining on it, and in addition, to
include the presence upon the land of a third person or thing which the actor has
caused to be or to remain there.” Id. comment b. The trespasser can accordingly be
sued for trespass to land even in the absence of actual harm, id. § 163, and sued for
actual damages should they occur. In addition, the holder of land may obtain an
injunction that prevents the continuation of that entry, with or without proof of
harm. “As a general rule, landowners and tenants have a right to exclude persons
from trespassing on private property; the right to exclude persons is a fundamental
aspect of private property ownership.” Allred v. Harris, 14 Cal. App. 4th 1386,
1390, 18 Cal. Rptr. 2d 530, 533 (1993);
see also
Loretto v. Teleprompter
Manhattan CATV Corp. 458 U.S. 419, 435 (1982). An injunction is an appropriate
remedy for a continuing trespass. (5 Witkin, Summary of Cal. Law (9th ed. 1988)
Torts § 605, pp. 704-705.
The right to exclude is uncontroversially extended to financial exchanges,
which provide services similar to eBay’s. Indeed, in a case analogous to the
present one, the New York Stock Exchange attempted, in the late 19th century, to
negotiate an agreement with the Commercial Telegram Company whereby the
latter could transmit price information from the floor of the Exchange, just as
another telegram company was then doing under contract. The parties initially
failed to reach agreement, and the telegram company argued that public policy
forbade the exchange from excluding it. The court dismissed the argument out of
hand, noting that “no case has been cited where a man has been allowed to trespass
upon private property simply because, in the opinion of courts of law, a refusal to
permit such trespass would be against public policy.” Commercial Telegram Co.
v. Smith, 54 N.Y. Sup. Ct. Rep. 494, 506-07 (1888). Courts have also routinely
recognized the right of an exchange to exclude a member for failure to comply
with the membership agreement. See, e.g., Turner v. Board of Trade, 244 F. 108
(7th Cir.), cert. denied 245 US 667 (1917). The reasons apply with equal force to
cyberspace.
This rule on exclusion holds even if the entry is one that promises great
benefit to the entrant and poses little threat to the original owner. In Edwards v.
Sims, 232 Ky. 791, 24 S.W.2d 619 (1929) and Edward’s v. Lee’s Administrator,
265 Ky. 418, 96 S.W.2d 1028 (1936), the defendants, who had possession of the
mouth of the Great Onyx cave, were required to pay restitution for the past use of
that portion of the cave that lay under the plaintiff’s land and were enjoined from
its subsequent use without the plaintiff’s consent, even in circumstances where the
plaintiff had no independent means of access to the portion of the cave that lay
under his land.
In that case, as in this, injunctive relief was awarded not to foster the
plaintiff’s right to economic isolation, but to induce parties to enter voluntary
transactions under mutually beneficial terms. Because it is usually a simple matter
to identify and negotiate with the owner of land, the stringent right of exclusion
does not interfere with value-creating uses by non-owners; it merely assures that
the terms of such use will be set by the owner and non-owner rather than by a
court. Indeed, eventually the Great Onyx cave was condemned by the state for its
more effective use, given the holdout problem between its two owners. But again,
unlike the uncompensated licenses sought by BE, the transfer for public use is
permissible only if just compensation is paid to the owner of the resource. See,
U.S. Const. Amend V.
Sensible devices thus exist to correct any excesses
associated with the private right to exclude, but none of them are implicated here.
The basis which supports injunctive relief against invasions of real property
should apply equally to protect the equipment that supports an extensive web site.
The most obvious difference between real and personal property is that a defendant
can abscond with personal property because it is movable. It is for that reason that
the initial writ of trespass to personal property was called de bonis asportatis, or the
asportation (carrying away) of goods. See Prosser and Keeton on Torts, 85 (5th
Ed. W. Page Keeton, et al. ed. 1984). Real property for its part is immovable and
could at most be occupied by the defendant. The defendant who runs off with a
chattel could be asked to return it, but it is rare to find reason to seek a permanent
injunction against taking that chattel a second time. The wrongs of a defendant
who from time to time touches plaintiff’s chattel can usually be thwarted by
moving it to a safer place, so injunctions against continued trespasses to personal
property, while sound as a matter of general legal theory, are not frequently sought
in practice. See Douglas Laycock, The Death of the Irreparable Injury Rule 242243 (1991). Repeated entries are much more common for real estate, and the
heavy burden of requiring the plaintiff to bring multiple actions to vindicate that
claim surely argue in favor of a single action for injunctive relief that settles the
matter once and for all. See, e.g., Pardee v. Camden Lumber Co., 73 S.E. 82
(W.Va. 1911). The ability to obtain that injunction does not, moreover, depend on
a showing of actual damages. The plaintiff can ask the defendant to leave his
property if the defendant is just standing there looking at cloud formations. The
right to exclude is just that, not a mere right to receive compensation for partial
dispossession from one’s own property.
The Amici Professors overstate the more limited relief that the law of
trespass affords to personal property. See, e.g., Restatement (Second) of Torts, §
218, comment e. They argue that the general rule prohibits the award of damages
in the absence of actual harm, and infer that injunctive relief should not issue at all
absent actual damages. But this does not follow. An injunction enforces the right
to exclude from both real and personal property. As a factual matter, the Amici
Professors have failed to engage in any thoughtful inquiry as to how the older
categories for trespass should carry over into cyberspace.
IV.
Granting Injunctive Relief Will Foster the Development of
Sophisticated Markets on the Internet.
In attacking the decision below, the Amici Professors exaggerate the
ostensible weaknesses of a system of private property, but wholly gloss over the
far greater weaknesses that come from the adoption of their proposed regime. In a
voluntary market, a license agreement requires a good deal of thought and
attention. The present “eBay Deep Link, Trademark, Copyright and Banner Ad
Agreement,” for example, runs for seven pages and contains, inter alia, provisions
that govern the way in which its licensees can “deep link” to the eBay site; the
default display of eBay content on the licensee’s site; the protection and use of
eBay’s intellectual property and advertisement content; basic compensation
provisions, including front end licensing fees and additional payments by the
auction aggregator for visits from its users to the eBay site and from eBay for each
customer who registers with eBay when referred to it by an auction aggregator;
restrictions on assignments and sublicensees; provisions governing termination and
renewal of licenses; limitations on warranties for consequential damages; and
provisions governing the cessation of services during emergencies.
provisions naturally evolve over time and with experience.
Such
The great advantage of a competitive market is that it allows the parties to
negotiate licenses that contain specific terms that regulate these multidimensional
issues of compensation, presentation and system capacity, as well as a host of
subsidiary issues that arise in the ordinary course of business. Indeed, even the use
of take-it-or-leave it terms would be consistent with the operation of a competitive
market. Site operators have strong incentive to negotiate licenses that balance the
plusses and minuses of access by outside parties. They have an incentive to supply
terms that offer cost advantages to potential licensees. The use of standard form
provisions has the additional benefit of reducing the costs of negotiation and of
keeping parity among potential licensees, e.g. auction aggregators, who fall within
the same class. See, generally, Richard A. Posner, Economic Analysis of Law
§4.7 (5th ed. 1998).
In contrast, the compulsory arrangement advocated by the Amici Professors
provides in a nutshell free access until the system crashes, without more.
Everything is left without compass or rudder to the judicial imagination. It is the
crudeness and rigidity of compulsory licenses that has led able scholars to warn
against their use under the copyright law. It is better to let voluntary organizations
like ASCAP operate as market clearing houses. See Robert P. Merges, Contracting
into Liability Rules:
Intellectual Property Rights and Collective Rights
Organizations, 84 Calif. L. Rev. 1293, 1295 (1996) (noting the ability of collective
rights organizations “to break the transactional bottleneck,” and to supply “expert
tailoring and reduced political economy problems.”).
Consistent with this
approach, the general rule requires that all licenses be acquired in voluntary
transactions. Only on rare occasions does Congress by statute institute a regime of
compulsory licensing, and then only with immense care.
For example, The
Copyright Act of 1976, 17 U.S.C. § 115, contains detailed provisions for
compulsory licenses for nondramatic musical works. That legislative scheme
contains explicit provisions for royalties payable under the license, and sets out
conditions as to who is able to obtain these licenses and the terms and conditions of
their use. In sharp contrast, the crude compulsory licensing regime championed by
BE and the Amici Professors does not address any of these compensation and
management questions at all, but quite frighteningly could make redundant all the
license agreements of eBay and other auction hosts. In their view, BE is entitled to
enter as of right, without cost, to collect data from a site without regard to the harm
being caused to eBay’s system.
Notwithstanding the sensible analogies between trespass to land and trespass
to computer systems, the Amici Professors state somewhat hysterically that the
decision below “effectively” applies trespass doctrine “to give one company
ownership of information about the price of a commercial product sold on the open
market.” The statement itself contains an obvious internal contradiction in that no
one can keep information private on goods and services offered for sale in the
open, i.e. public, market. And it wholly ignores the limited scope of the injunction
that was sought and granted in this case, which only applies to robotic entry and
offers no protection of the information displayed on the eBay site.
While
denouncing a set of remote hypotheticals, the Amici Professors fail to mention
anywhere in their brief that eBay in fact has entered into ongoing licenses with a
number of BE’s competitors, and that BE itself apparently continues to have access
to the eBay site consistent with the terms of the injunction. It is one thing for a
disappointed competitor to fail to gain the access it covets to a particular site on
precisely its own terms. It is quite another thing to infer market disarray from the
disappointment of this single firm. In this case, the Amici Professors fail to point
to any evidence that consumers are unable to obtain low cost information about
various auction items from eBay direct, from any of BE’s competitors, or indeed
from BE itself. Yet their entire claim of market failure rests on the assumption that
eBay and other auction sites will self-destruct unless required to let auction
aggregators comb their sites at will.
Likewise, the Amici Professors offer no evidence at all that eBay or any
other auction host has prevented consumer reporting groups, or ordinary
consumers, from accessing their Web pages or commenting on how they are
organized. See Amici Professors’ Brief, at 5-6. Nor will they. For if they did, the
adverse fallout on their novel practices would spell a quick marketplace death.
After all, how many restaurants post signs in their windows saying “no restaurant
critics allowed,” or “as a condition of service, no customer may disparage the food
or service received at any time to any person.” eBay thrives on the thousands of
articles of free publicity that it has received, and it would create a public relations
disaster of the first order for itself by trying to block the entry to the site of any
person who might utter a harsh word about it.
The Amici Professors speculate that the power to exclude will invite eBay
and others to compile profile information about specific consumers that will allow
clever sellers to engage in price discrimination or other illegal forms of pricing
behavior. But in order to attract customers to its site, eBay has put into place a
privacy policy that in so many words holds that it will not use its information in
ways that are inconsistent with the consumers’ own stated expectations. And if
there is any particular practice that could be shown to facilitate illegal pricing
behavior, then it could be challenged directly instead of by an overbroad attack on
all commercial licenses.
Elsewhere the Amici Professors’ litany of horribles
suggests that large site operators will cut deals with a single search engine while
excluding all the others, or adopt practices of staying out of these services
altogether in order to keep consumers “ignorant of cheaper prices and better
service that may be available.” They claim (at p. 8) that “the District Court’s
theory threatens to make search engines illegal.” But no state prohibition, and
certainly nothing in this order prevents these search engines from entering the
thousands of sites that welcome their use. They indulge (at p. 6) in the hyperbolic
statement that this opinion gives “companies the power to block such a pricecomparison service altogether.” Yet at no point do the Amici Professors explain
why any auction host will adopt that strategy when potential sellers are free to
move to other auction host sites that do not impose this impediment. Nor do they
acknowledge that under the worst case scenario consumers may still do
comparison shopping by clicking between web sites, which is far easier than
having to call Macy’s in order to find out whether its prices are cheaper than
Gimbel’s. The ability to link on the web is no more compromised by allowing sites
to exclude their entry than the integrity of the public highway is compromised by
allowing private property owners to keep other vehicles out of their garage.
V.
The District Court Properly Issued a Preliminary Injunction to
Prevent the Uncompensated, One-directional Risk of Harm That BE’s Actions
Hold Out to eBay’s Computer System.
The district court properly issued a preliminary injunction to protect eBay’s
property interest in its computer system against repeated incursions by BE’s
robotic crawlers.
Writing in opposition to the court’s decision, the Amici
Professors take the position that the right to exclude should not be so protected
unless it can be shown that eBay’s site is subject to the risk of imminent disruption.
Amici Professors’ Brief at 13-19. That mischievously high standard has never
been applied to admitted trespasses to privately owned land located beside ordinary
highways or to chattels, and it should not be applied to businesses on the Internet
highway either. In those ordinary land disputes when the law relaxes its strict
protection of boundaries, the interferences always take place in a reciprocal
pattern.
The rule of live-and-let-live allows each ordinary landowner to create
some low-level interference with the exclusive rights of possession of others. See,
e.g., Restatement (Second) Torts, § 822, comment g, & § 831; for the origin of the
test, see Bamford v. Turnley, 122 Eng. Rep. 27, 32-33 (Ex. 1863); for a general
explanation, see Richard A. Epstein, Torts § 14.9 (1999). These are nuisances, for
the rule in general does not apply to trespasses. See Thomas Merrill, Trespass,
Nuisance, and the Costs of Determining Property Rights, 14 J. Legal Studies 13
(1985). On average, each nuisance imposes trivial costs but create a substantial
expansion in the sphere of permissible operations for both owners. Neither side is
obliged to remain dead silent, for each obtains the benefit of speaking on his own
property at the cost of having to endure the slight noise from the like speech by
neighbors. But once the interference by one side becomes disproportionate (as
when one owner plays the stereo at full blast late at night), so that the reciprocal
relationship is broken, then the usual rules that allow an injunction against a
deliberate and substantial interference with property take over, as in this case.
The same logic of reciprocal advantage, moreover, applies in privacy cases,
of obvious concern on the Internet, even in the absence of trespass. The defendant
is certainly allowed to look at plaintiff’s house, but cannot eavesdrop on private
conversation. See, generally, Restatement (Second) Torts, § 652B (intrusion on
seclusion); Nader v. General Motors Corp. 255 N.E.2d 765 (N.Y. 1970) (noting
that eavesdropping and overzealous surveillance constitute an invasion of privacy,
while the “mere observation” of plaintiff in public places does not).
One key feature in the present dispute is the utter want of any reciprocity
between auction hosts and auction aggregators. The auction hosts have no reason
whatsoever to use the sites of the aggregators in order to promote their wares. All
the risks from mishaps or miscarriage to equipment and good will run in only one
direction. The auction aggregator is capable of inflicting harm on the auction host,
but the host could never harm the aggregator. The Amici Professors go to great
length to explain why they believe that the possible harms in question should be
regarded as remote and speculative insofar as it relates to possible damage to the
eBay site. But on this point, the district court’s more perceptive analysis stressed
the danger of uncompensated loss to an auction host. Dist. Ct. at 10, 13, 18. Once
it is decided that injunctive relief is not possible against a robotic crawler, then it
will be far more difficult for eBay to persuade any auction aggregator, or indeed
any other potential visitor to the site, to obtain a site license for use. As that is the
case, then multiple parties will be able to cruise, or surf—both of which are
appropriate metaphors for real property—the eBay computer system at will. At
this point the excess capacity may well disappear, or worse, the company may
shrink, or not expand, its capacity to justify its keeping out robotic crawlers. These
increased demands on the underlying computer system may well create shortages
of processing power or storage space that render the system less responsive to the
needs of bidders and sellers. Yet if the site should crash, then eBay would be in
the unhappy position of trying to determine which of a half dozen or more robotic
crawlers was responsible for the breakdown in order to seek damages or an
injunction.
The district court had sufficient foresight to recognize that the dangers in the
operation of this system could be far greater than those posed under the current
system in which the sole ostensible defect is BE’s failure to negotiate its preferred
access license with eBay, even when many of its prominent rivals have done so.
The Amici Professors claim that the district court abdicated its duty to evaluate the
public interest when it conceded that “it is poorly suited to determine what balance
between encouraging the exchange of information, and preserving incentives to
create, will maximize the public good.” Dist. Ct. at 21. But in truth the Amici
Professors have offered no indication that the judge misread the situation or
misunderstood the relevant tradeoffs. Thus, as noted above, their brief is wholly
silent on one of the great dangers of BE’s compulsory access scheme: it would
undercut the incentives for investors to create sites like eBay in the first instance.
In this connection the district court made apt reference to the law of patents which
is deeply concerned with the tradeoff between the initial incentive to innovate and
the free dissemination of that information once it has been created. The same kind
of tradeoffs exist with the creation of web sites. A market with strong property
rights should not be dubbed inefficient simply on claims—let alone claims that
ignore market behavior to the contrary—that it fails to generate efficient matches
between buyers and sellers once the trading sites are up and running. An efficient
legal regime for markets also needs to spur the creation of trading sites in the first
place, just as the patent has to encourage new inventions before it can worry about
their widespread dissemination of the technology they embody.
VI.
On the Current State of Facts the District Court’s Injunction
Should Be Made Permanent.
Preliminary injunctions may raise hard questions because it is unclear which
party should bear the interim harm when it is uncertain that some violation of right
has taken place. See Laycock, supra XXX, at 111-132. The Amici Professors note
the rules governing the issuance of injunctions in patent cases, but these rules
apply where it is unclear whether the defendant’s conduct has infringed the
plaintiff’s patent. In cases of uncertainty, a court necessarily has to choose between
two errors, that of denying an injunction for an infringing device, or that of
allowing the injunction for a device that does not infringe. See, e.g., Atlas Powder
Co. v. Ireco Chemicals, 773 F.2d 1230, 1233 (Fed. Cir. 1985); H.H. Robertson,
Co., v. United Steel Deck, Inc., 820 F.2d 384, 387 (Fed. Cir. 1987). Seeking that
balance is a delicate matter, but in making that judgment the courts have
consistently held that the potential ruination of the defendant is not relevant to the
determination. Windsurfing Int’l Inc. v. AMF Inc. 782 F.2d 995, 1003 n.12 (Fed.
Cir.), cert. denied 477 US 905 (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.”) The public interest in
these cases is confined rightly to situations where shutting down an infringing
invention could cause damages to public health. See, e.g., Hybritech Inc. v. Abbott
Labs, 849 F.2d 1446 (Fed. Cir. 1988).
This case has no public health concerns, and indeed raises no third party
risks at all. It also presents none of the hard questions for preliminary injunction
because there is no uncertainty whether the defendant’s activities have trespassed
against the plaintiff’s property interest.
BE’s unauthorized robotic crawling
activities unquestionably constitute an invasion of the eBay’s computer system. At
this point, the only danger comes from a delay in awarding the injunctive relief.
Therefore, unless BE can demonstrate some good reason why its use of software
robots to patrol eBay’s site should be allowed in perpetuity, then the injunction
should be made permanent as well: BE can point to no residual uncertainty about
the lawfulness of its action that has to be resolved at trial. See Laycock, at 117.
CONCLUSION
This case involves only the narrow question whether the owners of complex
computer equipment used to service a web site are entitled to injunctive relief to
prevent an admitted, unauthorized use of that equipment. The traditional law of
trespass allows this recovery, and thereby leaves it for the owner of property to
determine who shall enter and on what conditions.
That rule is necessary to
facilitate the emergence of voluntary licenses, which would be rendered
unnecessary if parties could interfere with web site operations at will, as BE seeks
to do in this case. eBay’s position makes as much sense in cyberspace as in real
space. For these reasons, the decision below should be affirmed.
Dated: July 12, 2000
Respectfully Submitted,
Reed Elsevier Inc.
By:____________________
Richard A. Epstein, Esq.
Counsel for Amici Curiae
By:____________________
Henry Horbaczewski
Senior Vice President and General Counsel
National Association of Realtors
The e-commerce Coalition
By:______________________
Ralph Holmen
Associate General Counsel
By:______________________
Julie H. Beaumont
Director of Policy
CONTRIBUTORS ON THE BRIEF:
Professor Paul Mahoney
Univ. of Virginia Law School
_______________________
Professor Lilian Bevier
Univ. of Virginia Law School
_______________________
CERTIFICATE OF COMPLIANCE
[Circuit Rule 32 - 1]
I certify that pursuant to Fed. R. App. P. 29(d) and 9th Cir. R. 32-1, the
attached amicus brief is proportionally spaced, has a typeface of 14 points or more
and contains 7000 words or less.
DATED: July 12, 2000
JON A. BAUMGARTEN
AARON P. ALLAN
PROSKAUER ROSE LLP
By:__________________________
Aaron P. Allan
Attorneys for Reed Elsevier Inc.
TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT
i
TABLE OF CONTENTSii
TABLE OF AUTHORITIES
iii
STATEMENT OF AMICI IDENTITY AND INTEREST vi
ARGUMENT
I.
1
Introduction 1
II.
The Traditional Regime That Allows for Private Property to
Operate Along Side Public Highways Works as Well in
Cyberspace as in Real Space. 2
III. Principles Rooted in the Common Law of Trespass to Real
Property Should Be Applied to Protect Privately Owned
Computer Systems.
6
IV.
Granting Injunctive Relief Will Foster the Development of
Sophisticated Markets on the Internet. 12
V.
The District Court Properly Issued a Preliminary Injunction to Prevent
the Uncompensated, One-directional Risk of Harm
That BE’s Actions Hold Out to eBay’s Computer System.
18
VI. On the Current State of Facts the District Court’s Injunction
Should Be Made Permanent. 22
CONCLUSION. 25
CERTIFICATE OF COMPLIANCE 27
TABLE OF AUTHORITIES
State CasesPage No.
Allred v. Harris, 18 Cal. Rptr. 2d 530, 533, 14 Cal. App. 4th 1386, 1390 (1993) 12
Commercial Telegram Co. v. Smith, 54 N.Y. Sup. Ct. Rep. 494, 506-07 (1888) 13
Edward v. Sims, 232 Ky. 791, 24 S.W.2d 619 (1929)
13
Edward’s v. Lee’s Administrator, 265 Ky. 418, 96 S.W.2d 1028 (1936)
14
Nader v. General Motors Corp., 255 N.E.2d 765 (N.Y. 1970) 24
Pardee v. Camden Lumber Co., 73 S.E. 82 (W.Va. 1911)15
Federal Cases
Atlas Powder Co. v. Ireco Chemicals, 773 F.2d 1230, 1233 (Fed. Cir. 1985) 27
Bamford v. Turnley, 122 Eng. Rep. 27, 32-33 (Ex. 1863) 23
H.H. Robertson, Co., v. United Steel Deck, Inc., 820 F.2d 384, 387 (Fed. Cir.
1987) 27
Hybritech Inc. v. Abbott Labs, 849 F.2d 1446 (Fed. Cir. 1988) 27
TABLE OF AUTHORITIES (continued)
Page No.
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982) 12
Turner v. Board of Trade, 244 F. 108 (7th Cir. 1917)
13
Windsurfing Int’l Inc. v. AMF Inc., 782 F.2d 995, 1003 n.12 (Fed. Cir. 1986)
27
Journals, Books and Treatises
5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, 605, pp. 704-705
13
Douglas Laycock, The Death of the Irreparable Injury Rule 242-243 (1991) 15,
26, 28
Kenneth Vogel, The Case Theorem and California Animal Trespass Law,
16 J. Legal Stud. 149 (1987)
7
Lawrence Lessig, Code and Other Laws of Cyberspace, ch. 7, p. 91-92 (1999) 10
Prosser and Keeton on Torts, § 85 (5th ed. 1984) 15
Restatement (Second) Torts, § 218 16
Restatement (Second) Torts,
§ 158 12
Restatement (Second) Torts, § 652B 24
TABLE OF AUTHORITIES (continued)
Page No.
Restatement (Second) Torts, § 822, comment g, & § 83123
Richard A. Epstein, TORTS § 14.9 (1999) 23
Richard A. Posner, Economic Analysis of Law §4.7(5th ed. 1998)
18
Robert P. Merges, Contracting into Liability Rules: Intellectual Property Rights
and Collective Rights Organizations, 84 Calif. L. Rev. 1293, 1295 (1996)
18
Thomas Merrill, Trespass, Nuisance, and the Costs of Determining Property
Rights, 14 J. Legal Studies 13 (1985) 23
Other
U.S. Constitution, Amendment V
14
The Copyright Act of 1976, 17 U.S.C. § 115
18