Craigslist Gets Favorable $1.3 Million Judgment

By Kerrie Spencer, staff technology writer – April 20, 2010

This case is about a $1.3 million default judgment against Powerpostings.com (owned by Naturemarket) and a man named Igor Gasov. Powerpostings decided to sell software, referred to as an autoposting facilitator, which let customers automatically post listings on Craigslist. On the surface that may sound innocent enough, but as with most lawsuits, there are more details that make a difference – and this case is no exception.

Powerpostings advertised that their software made it easy to post both single and multiple ads, and to manage them as well. Easy posting to Craigslist was the bait. They might have been OK had they stopped there, but they didn’t. They also advertised agent services where Powerpostings would list ads for customers. And if that didn’t draw enough attention, then this surely did: they swiped email addresses from the Craigslist site. I think we can safely call that a major faux pas, and the preverbal last straw.

The Craigslist versus Powerpostings (Naturemarket) lawsuit fell under copyright law; the Digital Millenium Copyright Act; the Computer Fraud and Abuse Act; trademark law; breach of contract and terms of use. You might want to call this a kitchen sink lawsuit, but it made the point, and the defendants didn’t contest the suit. That may have been a smart thing to do given what they did, as they could have been hit with an even higher judgment. As it was, the court granted a default judgment against Powerpostings.

Let’s quickly look at the various issues. For instance, when Craigslist sued under copyright law, they were saying they registered protectable elements of their site and that Powerpostings copied those elements when creating the new software. The court accepted this argument at face value even though there would have been some very real questions about precisely what parts of Craigslist were copyright protected – and we’re not referring to the actual listings.

There would also have been the question about how the copying by Powerpostings was any different from search engine copying under an implied license. It might be difficult to draw the conclusion that browsing more than the terms of use actually adds up to copyright infringement.

With regard to the Digital Millennium Copyright Act infringement allegation, the court agreed the defendants violated two provisions. The first was making available pre-verified Craigslist accounts and CAPTCHA credits. CAPTCHA (acronym for Completely Automated Public Turing test to tell Computers and Humans Apart) refers to a challenge-response test often used on web forms to determine if the user is human to prevent spam. If Powerpostings had attended their trial, they may have been able to challenge this because there is precedent that indicates some of these acts do not violate the Digital Millennium Copyright Act.

With regard to the Computer Fraud and Abuse Act: the claims here were predicated on access of Craigslist computers in violation of the Craigslist terms of service. And, with regard to trademark infringement, the plaintiff stated the defendant used their mark “in the text and . . . the headings of sponsored links on internet search engines to advertise their auto-posting products and services.” This basically refers to initial customer confusion. Whether or not it was a valid argument and would have withstood counsel argument in court, we’ll never know, but it was an odd argument for Craigslist because you’d expect this to be made against them not by them.

And lastly, in reference to the breach of contract/terms of service argument, Craigslist said its terms of use prohibit the use of automated means and posting agents to post listings, and that was spelled out quite clearly. They said Powerpostings acted in contravention of those provisions and encouraged Craigslist users to act illegally as well.

Unfortunately, since Powerpostings didn’t make an appearance, the legal back and forth on this issue went begging. However, there is no doubt they learned an expensive lesson.

Sources

http://blog.ericgoldman.org/

http://drupal.org/project/captcha

http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Act

http://www.panix.com/~eck/computer-fraud-act.html

http://copyrightlitigation.blogspot.com/2010/03/beware-of-default-judgments-captcha.html

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