e-Commerce Docket Sheet

Unauthorized Source Code Copying
Conversion Claim Not Cognizable in PA

A conversion claim against a software licensee based on allegations of unauthorized copying of the licensed source code is not cognizable because neither copyrights nor the software at issue are subject to conversion under Pennsylvania law. Apparel Business Systems, LLC v. Tom James Co., 2008 U.S. Dist. LEXIS 26313 (E.D. Pa. Mar. 28, 2008). The court granted summary judgment in favor of the defendant on the conversion and copyright claims, concluding that the plaintiff lacked standing because it failed to establish that it owns the software copyrights at issue or make a cognizable conversion claim under state law. The court found that copyrights are not the kind of intangible rights that customarily merge in a particular document because the rights associated with copyright ownership are not embodied in the physical paper of the copyright registration, but arise as soon as the work is fixed in a tangible medium. The court also held that software is not the type of property subject to a conversion claim, because it was doubtful that the copied code amounted to chattel or deprived the plaintiff of the use of its software, as it was not the case that 'the defendants carried off a disk containing the plaintiff's program and refused to give it back.'

An arbitration provision in a consumer contract for satellite-radio service is not substantively unconscionable, because the service is a 'non-essential luxury entertainment item' rather than a necessity or a person's employment. Enderlin v. XM Satellite Radio Holdings, Inc., 2008 U.S. Dist. LEXIS 27668 (E.D. Ark., March 25, 2008). The court granted the defendant's motion to compel arbitration in a dispute between a subscriber and a satellite-radio provider, finding that the arbitration provision, which lacked mutuality, contained a class-action waiver, and had a fee-splitting arrangement requiring a $125 filing fee, was neither procedurally nor substantively unconscionable. The court also ruled that an Arkansas law requiring mutuality within arbitration agreements is unenforceable because it is preempted by the Federal Arbitration Act ('FAA'), as it places the arbitration clause on unequal footing with other contract terms that do not have to be mutual.

An arbitration provision in a software-license agreement is presumed to apply to disputes that arise subsequent to the expiration of the contract, absent evidence that the parties expressly intended or clearly implied that that legal presumption should not apply. Strasburg-Jarvis Inc. v. Radiant Systems, Inc., 2008 U.S. Dist. LEXIS 17204 (D. Kan., March 4, 2008). The court granted the defendant-licensor's motion to compel arbitration, rejecting the plaintiff-licensee's argument that the arbitration clause was inapplicable because the contract between the parties was terminated. The court held that the legal presumption of continued arbitrability disappears in two situations, namely, where the parties 'expressly or clearly imply' that the arbitration clause does not survive termination, or where the dispute does not concern the original contract ' two conditions not found in the case.

A major retailer and two data brokers that the Federal Trade Commission ('FTC') charged with failing to provide reasonable and appropriate security for sensitive consumer information agreed to enter into consent orders that require the companies to implement comprehensive information-security programs and obtain biennial audits by independent third-party security professionals for the next 20 years. In re TJX Cos. Inc., FTC, File No. 072-3055 (March 27, 2008) and In re Reed Elsevier Inc., FTC, File No. 052-3094 (March 27, 2008). According to the FTC's complaint against the retailer, the defendant failed to implement security precautions to prevent unauthorized access to the personal information contained on its computer networks, which resulted in a large-scale data breach and tens of millions of dollars in fraudulent charges on consumers' credit cards. The FTC charged that the retailer, among other things, created an unnecessary risk by storing personal information on its various computer networks in clear text; lacked preventative security measures, thereby allowing intruders to connect wirelessly to its networks without authorization; and failed to employ sufficient measures to detect unauthorized access or to conduct security investigations. As to the FTC's complaint against the data brokers, the agency alleged that the brokers' security failures allowed customers to use easy-to-guess passwords to access databases containing sensitive consumer information, resulting in instances of identity theft.

Unauthorized Source Code Copying
Conversion Claim Not Cognizable in PA

A conversion claim against a software licensee based on allegations of unauthorized copying of the licensed source code is not cognizable because neither copyrights nor the software at issue are subject to conversion under Pennsylvania law. Apparel Business Systems, LLC v. Tom James Co., 2008 U.S. Dist. LEXIS 26313 (E.D. Pa. Mar. 28, 2008). The court granted summary judgment in favor of the defendant on the conversion and copyright claims, concluding that the plaintiff lacked standing because it failed to establish that it owns the software copyrights at issue or make a cognizable conversion claim under state law. The court found that copyrights are not the kind of intangible rights that customarily merge in a particular document because the rights associated with copyright ownership are not embodied in the physical paper of the copyright registration, but arise as soon as the work is fixed in a tangible medium. The court also held that software is not the type of property subject to a conversion claim, because it was doubtful that the copied code amounted to chattel or deprived the plaintiff of the use of its software, as it was not the case that 'the defendants carried off a disk containing the plaintiff's program and refused to give it back.'

An arbitration provision in a consumer contract for satellite-radio service is not substantively unconscionable, because the service is a 'non-essential luxury entertainment item' rather than a necessity or a person's employment. Enderlin v. XM Satellite Radio Holdings, Inc., 2008 U.S. Dist. LEXIS 27668 (E.D. Ark., March 25, 2008). The court granted the defendant's motion to compel arbitration in a dispute between a subscriber and a satellite-radio provider, finding that the arbitration provision, which lacked mutuality, contained a class-action waiver, and had a fee-splitting arrangement requiring a $125 filing fee, was neither procedurally nor substantively unconscionable. The court also ruled that an Arkansas law requiring mutuality within arbitration agreements is unenforceable because it is preempted by the Federal Arbitration Act ('FAA'), as it places the arbitration clause on unequal footing with other contract terms that do not have to be mutual.

An arbitration provision in a software-license agreement is presumed to apply to disputes that arise subsequent to the expiration of the contract, absent evidence that the parties expressly intended or clearly implied that that legal presumption should not apply. Strasburg-Jarvis Inc. v. Radiant Systems, Inc., 2008 U.S. Dist. LEXIS 17204 (D. Kan., March 4, 2008). The court granted the defendant-licensor's motion to compel arbitration, rejecting the plaintiff-licensee's argument that the arbitration clause was inapplicable because the contract between the parties was terminated. The court held that the legal presumption of continued arbitrability disappears in two situations, namely, where the parties 'expressly or clearly imply' that the arbitration clause does not survive termination, or where the dispute does not concern the original contract ' two conditions not found in the case.

A major retailer and two data brokers that the Federal Trade Commission ('FTC') charged with failing to provide reasonable and appropriate security for sensitive consumer information agreed to enter into consent orders that require the companies to implement comprehensive information-security programs and obtain biennial audits by independent third-party security professionals for the next 20 years. In re TJX Cos. Inc., FTC, File No. 072-3055 (March 27, 2008) and In re Reed Elsevier Inc., FTC, File No. 052-3094 (March 27, 2008). According to the FTC's complaint against the retailer, the defendant failed to implement security precautions to prevent unauthorized access to the personal information contained on its computer networks, which resulted in a large-scale data breach and tens of millions of dollars in fraudulent charges on consumers' credit cards. The FTC charged that the retailer, among other things, created an unnecessary risk by storing personal information on its various computer networks in clear text; lacked preventative security measures, thereby allowing intruders to connect wirelessly to its networks without authorization; and failed to employ sufficient measures to detect unauthorized access or to conduct security investigations. As to the FTC's complaint against the data brokers, the agency alleged that the brokers' security failures allowed customers to use easy-to-guess passwords to access databases containing sensitive consumer information, resulting in instances of identity theft.