Canadian Corporation Meets with Mixed Success in US Internet Litigation

On February 20, 2004, the District Court for the Southern District of New York ruled on a motion to dismiss several claims advanced by a Canadian plaintiff corporation, IMS Inquiry Management Systems (IMS). The case involved the unauthorized use and alleged content appropriation of IMS' web-based advertising tracking software, "e-Basket", by the defendant, Berkshire Information Systems Inc (Berkshire). IMS alleged that Berkshire accessed the e-Basket web site via a user identification and password issued to a third party, and then copied about 85% of IMS' report formats. Shortly thereafter, Berkshire launched Marketshareinfo.com, which IMS alleged incorporated original copyrightable elements of e-Basket. In response, IMS commenced action against Berkshire under the Computer Fraud and Abuse Act (CFAA), and the Digital Millennium Copyright Act (DMCA), and for copyright infringement. Berkshire's motion to dismiss was denied in part and granted in part. First, the Court upheld IMS' claims under the CFAA. The Court rejected Berkshire's arguments that IMS had failed to adequately plead damage and found that it had a valid claim under §1030(a)(2)(C) of the CFAA. Second, the Court dismissed IMS' DMCA claim. Although the Court did find that there was an effective technological measure in place to control access to the work in accordance with §1201(a)(1)(A), it also found that there was no technological circumvention. According to the Court, the required circumvention under the DMCA would involve descrambling, decrypting, avoiding, bypassing, removing, deactivating or impairing a technological measure. Third, the Court dismissed IMS' claims of copyright infringement on the basis that it did not possess the subject matter jurisdiction to hear the claims. Under §411(a) of the US Copyright Act, registration under that statute for works of US origin is a precondition to the launching of an infringement suit. Despite IMS having received a Registration Certificate for the e-Basket web site, the Court ruled that the registered work was not the same work that had been allegedly infringed. The Court reasoned that the Registration Certificate, which identifies a work created and published on January 14, 2003, was the not the same work that was published and allegedly infringed in March 2002. In addition, the Court rejected IMS' argument that the March 2002 work was "pre-existing underlying matter" to the registered work, noting that the Registration Certificate failed to identify the pre-existing March 2002 material. The case citation is IMS Inquiry Mgmt Sys v Berkshire Info Sys, 2004 US Dist LEXIS 2673. Summary by: Colin Adams