First Circuit Hears Oral Argument in Unusual Copyright Case

On April 6, 2017, Cyberlaw Clinic students attended oral argument in a First Circuit copyright appeal involving a curious set of facts and legal issues. The case pitted Richard Goren, a Massachusetts attorney, against Xcentric Ventures, LLC, the owner of an online consumer review website known as the Ripoff Report. Goren was upset by a review of his services posted on Ripoff Report by Christian DuPont, the defendant in a prior case where Goren had represented the plaintiff. Goren initially sued Dupont in Massachusetts state court, alleging that Dupont’s review was defamatory. Dupont failed to appear, and thus defaulted. After obtaining a default judgment, Goren requested that Xcentric remove the posting. Xcentric refused, citing the Ripoff Report’s strict “no removal policy.”

Here’s where the dispute gets weird. Upset by Xcentric’s response, Goren obtained amended relief from the same state court that presided over the defamation suit. This amended relief purported to assign Dupont’s copyright in the post to Goren, and to make Goren Dupont’s “attorney-in-fact” to effectuate the transfer. After obtaining a copyright registration, Goren sued Xcentric in federal district court, alleging inter alia that Xcentric had infringed Goren’s newfound proprietary rights as the post’s “owner.”

Goren’s strategy was dubious. He attempted to use copyright law as a backdoor to remedy the alleged defamation. This amounted to a misuse of copyright to censor speech, which is ironic given that copyright law is meant to incentivize the distribution of creative works to the public. Unfortunately, Goren’s strategy is not unprecedented. Similar attempts to use copyright as a means of censorship have been rejected in both the Eleventh and Ninth Circuits. See Katz v. Google Inc., 802 F.3d 1178, 1184 (11th Cir. 2015); Garcia v. Google, Inc., 786 F.3d 733, 736 (9th Cir. 2015) (“[A] weak copyright claim cannot justify censorship in the guise of authorship.”)

Xcentric defended the lawsuit by arguing that the copyright assignment was involuntary, and thus invalid under Section 201(e) of the Copyright Act. See 17 U.S.C. § 201(e). Section 201(e) prohibits involuntary transfers of copyright ownership. According to Xcentric, this meant that the Massachusetts state judge lacked authority to grant Goren the relief he had obtained. Instead, ownership should never have left Dupont’s hands. Since the transfer of ownership resulted from a default judgment in a state defamation suit, Xcentric argued that the transfer was involuntary, and thus invalid under Section 201(e). The district court agreed with Xcentric’s view of the law. It granted Xcentric summary judgment, acknowledging that 201(e) voided the purported transfer of ownership.

Goren appealed the district court’s ruling to the First Circuit, which heard oral argument earlier this month. It seems very likely that the First Circuit will affirm on the Section 201(e) issue. At oral argument, the First Circuit panel appeared to accept the logic of Xcentric’s argument, without questioning its counsel about 201(e). The panel instead focused on a separate attorneys’ fees issue, indicating that it might be leaning toward an affirmance on the merits.

Beyond the copyright claim, Goren also contended that Xcentric’s conduct violated state defamation and competition laws. The district court held that Section 230 of the Communications Decency Act gave Xcentric immunity from those claims. Section 230 states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c). As an online forum for user reviews, the Ripoff Report qualifies as an “interactive computer service” under the CDA. Dupont, as the post’s author, was the sole “information content provider.” Because of 230’s immunity provision, the district court held that Xcentric could not be found liable for a post it didn’t author. Instead, Goren’s only remedy was against Dupont—against whom Goren has already obtained a default judgment.

While the law clearly immunizes Xcentric from liability for defamation, the policy questions raised by this case are a bit murkier. The CDA was meant to facilitate the growth of the internet as a medium for communication, by ensuring that websites hosting user-generated content could operate without threat of liability for their users’ acts. Congress determined that the threat of liability against such sites was too onerous, given the obvious financial disincentive that the threat of money damages would provide. However, the CDA also gives sites immunity from equitable relief, which means that they can refuse to remove defamatory posts with impunity. This puts individuals like Goren in a difficult situation: Goren obtained a state court defamation judgment against Dupont, but he lacks any practical recourse to have the post removed from the internet.

While immunity from money damages makes sense, does the same hold true for equitable relief? It isn’t obvious that well-tailored equitable relief would pose too-stringent a burden on websites hosting user-generated content. While this policy consideration certainly doesn’t justify Goren’s misuse of copyright law, it might make his strategy a bit more understandable.

Given the law as it stands, the First Circuit will likely affirm the district court’s rulings in favor of Xcentric. While there might be room for debate on the CDA policy question, the law is straightforward. The law is similarly clear on the copyright issue: the purported transfer of ownership cannot be sustained given 201(e)’s ban on involuntary transfers. Goren’s attempt to hijack copyright law might have been clever, but it was suspicious from the start. For the reasons discussed above, his attempt will ultimately fail.