United States: Facebook v. Vachani – User Authorization Can Be Revoked By Service Providers

Last Updated: July 21 2016
Article by Brian H. Lam and Cynthia J. Larose

The U.S. Court of Appeals for the Ninth Circuit recently issued a decision that could have far reaching implications for the relationships between companies that provide online services, their customers or users, and third parties. In Facebook v. Vachani, the Ninth Circuit found that Power Ventures violated the Computer Fraud and Abuse Act ("CFAA") and California Penal Code Section 502. Power Ventures did this by continuing to access Facebook's computer system after receiving Facebook's letter to cease and desist such activity. Although Power Ventures had permission from relevant Facebook users, the users' authorization had been revoked by Facebook itself through its letter.

Vachani's Business Model

Power Ventures ("Power"), is a company founded by CEO Steven Vachani. As part of its business model, Mr. Vachani operated a social networking site, Power.com. The idea was that Power.com would act as a social network aggregator, by allowing users to see all of their social network contacts across different services on a single page. The user could then use the Power.com service to access the individual social networking sites.

Read on to understand what occurred in the case and what key takeaways it provides for senior decision makers and in-house counsel.

The Facts

Power's business model faced an issue most startups face. How would it attract new users? In December 2008, Power put a message on its website that read "First 100 people who bring 100 new friends to Power.com win $100." Power included a button with the title "Yes, I do!" When, clicked, Power would add a photo, user, or event to the user's Facebook profile, and in many cases, cause a message to be transmitted to the user's Facebook friends. The "from" line of the message claimed the message was from Facebook, and was the message body was signed "The Facebook Team."

When third-party websites or developers want to contact its users, Facebook requires they enroll in the Facebook Connect program. Facebook also requires third parties to agree to an additional Developer Terms of Use Agreement. When Facebook first learned of Power's campaign, on December 1st, 2008, it sent Power a cease and desist letter, demanding that Power terminate its activities. Instead, Power refused to sign Facebook's Developer Terms of Use Agreement and enroll in Facebook Connect. When Facebook blocked the internet protocol ("IP") addresses used by Power, Power changed the IP addresses it used.

On December 20th, 2008, Facebook filed an action in Federal Court. Power's activities ran less than two months, during which time it admitted that it took, copied and made use of data from Facebook.com without Facebook's permission.

Ninth Circuit

On review, the Ninth Circuit considered three separate causes of action brought by Facebook against Power, each of which is considered below.

  1. Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM")

CAN-SPAM prohibits messages that are "materially false" or "materially misleading." 15 U.S.C. § 7706(a)(1).

External emails created by Power's system identified Facebook as the sender and were signed "Thanks, The Facebook Team." The Ninth Circuit found that this was not misleading as three parties, Power, Power's users, and Facebook, were each considered to have "initiated" the message within the meaning of the statute. Inclusion of only one of the initiating parties in the message header is does not violate the statute. Since Facebook was one of the initiating parties, identifying Facebook as the source of the message was not materially misleading or false.

Internal emails created by Power's system did not violate CAN-SPAM as they neither "impaired the ability of the recipient to 'respond to a person who initiated the electronic mail message'" or the "ability of Facebook to locate the initiator of the messages." The message body contained Power's name and a link to its website. Further, the Facebook user identified as the sender authorized the sending by clicking the "Yes, I do!" button.

Key Takeaways for CAN-SPAM holding:

  • Users of a system can provide permission such that the service provider becomes an initiating sender of messages under CAN-SPAM. The message need not identify the specific user who provided the permission, and the provider of the computer system need not provide permission. Service providers should recognize this possibility, and if they feel that the protections of CAN-SPAM are not restrictive enough for their business model and brand protection strategy, they may wish to implement appropriate product architecture protections as well as address the issue in their service contracts with their users.
  • By including its name and website information, a third party can reduce the likelihood that messages it generates through user permission on a service provider's computer system will be found misleading under CAN-SPAM.

2. Computer Fraud and Abuse Act of 1986 ("CFAA")

The CFAA "provides for two ways of committing the crime of improperly accessing a protected computer: (1) obtaining access without authorization; and (2) obtaining access with authorization but then using that access improperly."1 Corporations wishing to use the statue through a private right of action must show that they have "suffer[ed] damage or loss by reason of a violation of this section."2

Facebook was able to satisfy the private right of action by showing that employees spent hours totaling more than $5,000 responding to Power's activities. The Ninth Circuit found that Power had violated the CFAA by accessing Facebook computer systems without authorization. Authorization had existed when Facebook users gave Power permission to access their Facebook accounts by clicking the "Yes, I do!" button provided by Power on its webpage. However, this authorization was revoked by Facebook itself, when it sent the cease and desist letter, and subsequently blocked Power's IP address block. Importantly, the Ninth Circuit noted that:

The mention of the terms of use in the cease and desist letter is not dispositive. Violation of Facebook's terms of use, without more, would not be sufficient to impose liability. Nosal I, 676 F.3d at 862–63. But, in addition to asserting a violation of Facebook's terms of use, the cease and desist letter warned Power that it may have violated federal and state law and plainly put Power on notice that it was no longer authorized to access Facebook's computers.

Key Takeaways for CFAA holding:

  • Private right of action damages for purposes of the CFAA can be shown through an estimate of the value of employee time. Loss of revenue need not be shown.
  • While users can grant authorization to access a service, the service provider can revoke such authorization. Customers of service providers should understand this, and consider providing for it in their contracts with the service provider.
  • Currently, a violation of terms of use will not support a violation of the CFAA without more within the Ninth Circuit.
  • Service providers that wish to put third parties on notice of a potential CFAA violation should warn the third party that it may have violated federal and state law and plainly put the party on notice that it is no longer authorized to access the service provider's computer system.

3. California Penal Code Section 502

Section 502 provides for liability where a person ""[k]nowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network, or takes or copies any supporting documentation, whether existing or residing internal or external to a computer, computer system, or computer network." § 502(c)(2). Unlike the CFAA, "[T]he California statute does not require unauthorized access. It merely requires knowing access."3 However, the Ninth Circuit found that Power knowingly accessed Facebook's computer system without permission after it became aware of Facebook's cease and desist letter.

The Ninth Circuit further affirmed personal liability for Mr. Vachani as he directed and controlled Power's offending actions, and the undertaking of those actions was his idea.

Key Takeaways for Section 502 holding:

  • Senior corporate decision makers may be personally liable for violations of Section 502, if their involvement is sufficient.
  • As such, these decision makers have a vested interest in making sure the business models of the corporations they control do not involve risk of violating Section 502.

What Now?

Users of online services should be aware that permission they provide to a third party may be revoked by the service provider. To the extent that such users wish to ensure that the service provider will not overrule their authorization, they may wish to explicitly provide for this in their service provider agreement.

Companies that depend on accessing user account information and resources should consider carefully how they are accessing such information and resources and what authorization they possess to do so. The legal repercussions should a service provider revoke prior user consent should need to be understood, and the company should understand its options should this occur. Companies should consult experienced legal counsel regarding these risks, especially in light of potential personal liability for senior decision makers.

We will be providing more insight into these issues as the impact of this case becomes more apparent within the technology industry.

Footnotes

1 Musacchio v. United States, 136 S. Ct. 709, 713 (2016).

2 18 U.S.C. § 1030(g). The loss must be at least $5,000. § 1030(c)(4)(A)(i)(I).

3 United States v. Christensen, 801 F.3d 970, 994 (2015).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Brian H. Lam
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions