Small Justice LLC v Xcentric Ventures LLC

Liability of Web Site Operators – After a nasty review about Boston lawyer Richard Goren was posted on Ripoff Report, Goren and his law firm (Small Justice) sued the poster in state court for defamation, took a default judgment, and executed on the judgment to seize the copyright that the poster owned in his own review. They then sued Xcentric (the owner of Ripoff Report) for copyright infringement, among other grounds. Xcentric defended against the copyright claim both by arguing that, in the course of posting the review, the poster had agreed to give the copyright in the review to Xcentric as part of Xcentric’s browsewrap agreement (hence, the poster had no copyright interest to be seized), and by arguing that copyright law forbids involuntary transfers of copyright.

After securing summary judgment on both these grounds, Xcentric moved for an award of attorney fees, and then moved to require plaintiffs to post an appeal bond for the amount of the fees plus fees anticipated on appeal. As amicus curiae, Public Citizen argued against the appeal bond motion on the ground that it interposed an unnecessary obstacle to appeal. The district judge nevertheless imposed the bond.

The plaintiff appealed the decision on summary judgment. In the appeal, Public Citizen, together with the Electronic Frontier Foundation, filed an amicus brief arguing that several aspects of copyright law compelled affirmance of summary judgment. The brief also argued the term of Xcentric’s browsewrap agreement that transferred the copyright was an unconscionable term in a contract of adhesion that violated public policy and was unenforceable. The court of appeals affirmed.