Oyster Software v. Form Processing

Citation
Oyster Software, Inc. v. Form Processing, Inc., 2001 WL 1736382, 2001 US Dist. LEXIS 22520 (N.D. Cal. Nov. 13, 2001) (defendant's motion for summary judgment); 2001 U.S. Dist LEXIS 22520 (N.D. Cal. Dec. 6, 2001) (defendant's motion for indemnity).

Factual Background
Plaintiff, a developer of document management software, operated under the name OYSTER SOFTWARE and maintained a website at "oystersoftware.com." Defendant, also engaged in document-management services, used metatags consisting of plaintiff's trademarks on its own website located at "formsprocessing.com." These metatags were placed on defendant's website by Top-Ten Promotions, a company hired by plaintiff to increase defendant's prominence on search engines. Top-Ten sent robots to plaintiff's website to copy its metatags. Defendant promptly removed the objectionable metatags after receiving a cease-and-desist letter from plaintiff.

Trial Court Proceedings
Plaintiff nonetheless brought suit asserting various claims, including trademark infringement, unfair competition, and trespass. Plaintiff sought permanent injunctive relief, an order for an accounting of profits and damages, an award of actual or statutory damages, and costs and attorney's fees.

Defendant filed a motion for partial summary judgment on numerous grounds, which the court granted in part and denied in part. Defendant argued that plaintiff's claim for injunctive relief was moot because the allegedly infringing metatags were long removed from defendant's website. The court disagreed, finding that past infringement may be sufficient to establish a threat of future infringement.

Defendant also moved to dismiss plaintiff's trespass claim because it was Top-Ten and not defendant that sent robots to plaintiff's website and the interference was caused by Top-Ten's robots. The court rejected defendant's argument because a jury could reasonably find defendant vicariously liable for Top-Ten's infringement if plaintiff could demonstrate that Top-Ten was an employee as opposed to a consultant. And defendant did not demonstrate that there was no material issue of fact regarding the relationship between it and Top-Ten.

Regarding the trespass claim, although plaintiff conceded that Top-Ten's robots placed a "negligible" load on plaintiff's computer system, the court held that the eBay, Inc. v. Bidder’s Edge decision did not impose a requirement that the interference had to be more than negligible. The court agreed with plaintiff that Top-Ten's copying of its metatags could be a sufficient "use" by Top-Ten to prevail on its trespass claim.

Defendant later filed an indemnity claim against Top-Ten regarding the surviving claims of trespass based on Top-Ten's use of robots to copy metatags from plaintiff's website. The court entered default judgment against Top-Ten when it failed to obtain new counsel despite a court order. Even though defendant assumed "all risks and liabilities regarding the use or results of [TopTen's] services" under the parties' contract, that exculpatory clause did not exempt Top-Ten from liability against intentional torts like trespass. The court held that FPI was entitled to $80,000 on its indemnity claim, the amount that defendant paid plaintiff to settle the case.

Source
This page uses content from Finnegan's Internet Trademark Case Summaries. This entry is available under the Creative Commons Attribution-Share Alike License 3.0 (Unported) (CC-BY-SA).