December 5, 2002 5:31 PM PST

Wal-Mart backs away from DMCA claim

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Wal-Mart said on Thursday that it would not pursue copyright claims against a bargain-shopping site that posted details about "Black Friday" sales.

In a closely watched move, the mega-retailer invoked the controversial Digital Millennium Copyright Act (DMCA) last month to force FatWallet.com to delete a list of products and prices scheduled to appear in Black Friday advertisements. Wal-Mart then sent a special DMCA subpoena to FatWallet asking for the identity of the person who posted the details on the site. Black Friday is the day after Thanksgiving each year when retailers, legend has it, go "in the black" and start to make money.

But after a law clinic at the University of California at Berkeley stepped in and said it would represent FatWallet and fight the subpoena, Wal-Mart backed down.

"We're satisfied that our copyrights were protected in this case," said Tom Williams, a spokesman for Wal-Mart. "Accordingly, we withdrew the subpoena."

Wal-Mart's subpoena invoked an obscure part of the DMCA that allows a copyright holder to ask for "identification of an alleged infringer" without filing a lawsuit first.

Deirdre Mulligan, the Berkeley clinic's director, said she was glad that Wal-Mart abandoned its legal demands, but said the case highlights how the DMCA can be misused.

"People are using the DMCA as an extremely flexible tool that gets ISPs (Internet service providers) to take down information," Mulligan said. "ISPs are not in a position to fight back. It requires resources--it puts them in a position where they could assume liability. The ability to silence speakers even where the underlying claim does not have any merit is worrying."

The Berkeley center, called the Samuelson Law, Technology and Public Policy Clinic at Boalt Hall, is part of a coalition of groups that run the ChillingEffects.org site, which is devoted to highlighting and fighting misuses of intellectual property law.

A controversial law
Wal-Mart's lawyers relied on two different sections of the DMCA. The first letter to FatWallet, dated Nov. 18, requested that the price information be deleted from posts to its "Hot Deals" section. Then Jeffrey Gitchel, a lawyer at Kirkpatrick & Lockhart, sent a subpoena on behalf of Wal-Mart on Nov. 22 asking for "information sufficient to identify the individual who posted the infringing material."

The requests raised eyebrows in the legal community because Wal-Mart claimed copyright on a compilation of facts, an approach the U.S. Supreme Court rejected in the 1991 Feist v. Rural Telephone Service case. The 9-0 opinion said that republishing facts "cannot constitute infringement" under copyright law.

Berkeley's Mulligan and Washington, D.C., attorney Megan Gray, who also is representing FatWallet, say Wal-Mart's claims abused the DMCA and the retailing giant should pay attorneys' fees and damages. "We sent letters asking for attorneys' fees," Mulligan said. "We haven't decided what we're going to do next."

Wal-Mart won't agree to the request, which could mean a court battle in the Northern District of Illinois where the subpoenas were filed. "The claim for damages and attorneys' fees we believe is frivolous," Wal-Mart's Williams said.

Williams called the information posted on FatWallet "a compilation of data belonging to Wal-Mart on product and pricing." He added: "I would say that along those lines if necessary Wal-Mart will issue similar DMCA notifications in the future and when required will issue proper subpoenas."

To Berkeley's Mulligan, standing up for FatWallet was a way to set a good precedent the next time a similar situation arises.

"We certainly see plenty of uses of the DMCA that appear to be appropriate," Mulligan said. "But we also see notices under the DMCA that are alleging trade secret or trademark. The DMCA gives copyright holders, businesses, people who are alleging copyright infringement a really enormous tool. They can take information down by a mere allegation. I think it's important that FatWallet is pushing back not just on the subpoena but saying this is an abuse of the law."

Other cases
Wal-Mart was not the only retailer to send a DMCA "notice and takedown" order to FatWallet. OfficeMax, Best Buy and Staples were among other companies to do the same thing--but Wal-Mart was the only company that subsequently sent a DMCA subpoena asking for information about who posted the price data.

In stiffly worded letters sent to the other companies, FatWallet's attorneys said that false claims of copyright made the retailers liable for damages. "Sanctions for perjury may also be applicable, as well as penalties for violations of the ethical canons governing attorneys," the letters said.

Tim Storm of FatWallet said in a statement: "Wal-Mart?s subpoena gave us no choice but to fight back. Unless a court rules otherwise, we?re not going to give up personal information about our users when the underlying copyright claim is baseless."

Attorneys for Verizon Communications and the Recording Industry Association of America (RIAA) are sparring in federal court in Washington, D.C., in a similar case involving the disclosure of the identity of an alleged peer-to-peer pirate.

The RIAA has relied on a DMCA subpoena in asking U.S. District Judge John Bates to order Verizon to turn over the name of a Kazaa subscriber who allegedly was sharing copies of more than 600 music recordings. That case is different from the Wal-Mart request, however, because Verizon claims DMCA subpoenas do not apply to Internet companies that are acting as conduits and do not host infringing material on their servers.

 

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