A.V. ex rel. Vanderhye v. Iparadigms, LLC

• Decision Date: 16 April 2009
• Docket Number: No. 08-1424.,No. 08-1480.,08-1424.,08-1480.
• Citation: 562 F.3d 630
• Parties: A.V., a minor, by his next friend Robert VANDERHYE; K.W., a minor, by his next friend Kevin Wade, Sr.; E.N., a minor, by her next friend Scott Nelson; M.N., a minor, by her next friend Scott Nelson, Plaintiffs-Appellants, v. IPARADIGMS, LLC, Defendant-Appellee. A.V., a minor, by his next friend Robert Vanderhye; K.W., a minor, by his next friend Kevin Wade, Sr.; E.N., a minor, by her next friend Scott Nelson; M.N., a minor, by her next friend Scott Nelson, Plaintiffs-Appellees, v. iParadigms, LLC, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

562 F.3d 630

A.V., a minor, by his next friend Robert VANDERHYE; K.W., a minor, by his next friend Kevin Wade, Sr.; E.N., a minor, by her next friend Scott Nelson; M.N., a minor, by her next friend Scott Nelson, Plaintiffs-Appellants, v. IPARADIGMS, LLC, Defendant-Appellee.

A.V., a minor, by his next friend Robert Vanderhye; K.W., a minor, by his next friend Kevin Wade, Sr.; E.N., a minor, by her next friend Scott Nelson; M.N., a minor, by her next friend Scott Nelson, Plaintiffs-Appellees, v. iParadigms, LLC, Defendant-Appellant.

No. 08-1424.

No. 08-1480.

United States Court of Appeals, Fourth Circuit.

Argued: December 4, 2008.

Decided: April 16, 2009.

ARGUED:

Robert Arthur Vanderhye, McLean, Virginia, for Appellants/Cross-Appellees. James F. Rittinger, SatterLee, Stephens, Burke & Burke, New York, New York, for Appellee/Cross-Appellant. On Brief: Joshua M. Rubins, Justin E. Klein, Satterlee, Stephens, Burke & Burke, New York, New York, for Appellee/Cross-Appellant.

Before WILKINSON, MOTZ, and TRAXLER, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge TRAXLER wrote the opinion, in which Judge WILKINSON and Judge MOTZ joined.

OPINION

TRAXLER, Circuit Judge:

Plaintiffs brought this copyright infringement action against defendant iParadigms LLC, based on its use of essays and other papers written by plaintiffs for submission to their high school teachers through an online plagiarism detection service operated by iParadigms. See 17 U.S.C. § 501. iParadigms asserted counterclaims alleging that one of the plaintiffs gained unauthorized access to iParadigms' online service in violation of the Computer Fraud and Abuse Act, see 18 U.S.C. §§ 1030(a)(5)(A)(iii) & (B)(i), and the Virginia Computer Crimes Act, see Va.Code Ann. § 18.2-152.1-18.2-152.16. The district court granted summary judgment in favor of iParadigms on plaintiffs' copyright infringement claim based on the doctrine of fair use. See 17 U.S.C. § 107. On the counterclaims, the district court granted summary judgment against iParadigms based on its conclusion that iParadigms failed to produce evidence that it suffered any actual or economic damages.

The parties cross appeal. We affirm the grant of summary judgment on the plaintiffs' copyright infringement claim, but reverse the summary judgment order as to iParadigms' counterclaims and remand for further consideration.

I.

Defendant iParadigms owns and operates "Turnitin Plagiarism Detection Service," an online technology system designed to "evaluate[ ] the originality of written works in order to prevent plagiarism." S.J.A. 1. According to iParadigms, Turnitin offers high school and college educators an automated means of verifying that written works submitted by students are originals and not the products of plagiarism. When a school subscribes to iParadigms' service, it typically requires its students to submit their written assignments "via a web-based system available at www.turnitin.com or via an integration between Turnitin and a school's course management system." S.J.A. 1-2. In order to submit papers online, students "must be enrolled in an active class" and must "enter the class ID number and class enrollment password" supplied by the assigning professor. J.A. 240.

After a student submits a writing assignment, Turnitin performs a digital comparison of the student's work with content available on the Internet, including "student papers previously submitted to Turnitin, and commercial databases of journal articles and periodicals." S.J.A. 2.¹ For each work submitted, Turnitin creates an "Originality Report" suggesting a percentage of the work, if any, that appears not to be original. The assigning professor may, based on the results of the Originality Report, further explore any potential issues.

The Turnitin system gives participating schools the option of "archiving" the student works. When this option is selected, Turnitin digitally stores the written works submitted by students "so that the work becomes part of the database used by Turnitin to evaluate the originality of other student's works in the future." S.J.A. 2.² The archived student works are stored as digital code, and employees of iParadigms do not read or review the archived works.

To submit a paper to Turnitin, a student must create a user profile on the web site, a process that requires the student to click on "I Agree" under the "terms of agreement" or "Clickwrap Agreement." The Clickwrap Agreement provided, among other things, that the services offered by Turnitin are "conditioned on [the user's] acceptance without modification of the terms, conditions, and notices contained herein," and that "[i]n no event shall iParadigms . . . be liable for any . . . damages arising out of or in any way connected with the use of this web site." J.A. 340.

When they initiated the lawsuit, the four plaintiffs were minor high school students and thus appeared in this litigation via their next friends. Plaintiffs A.V. and K.W. attended McLean High School in Fairfax County, Virginia, which began using Turnitin in 2006 and opted to have its student papers archived in the Turnitin data base. Plaintiffs E.N. and M.N. attended Desert Vista High School in Tucson, Arizona, which also subscribed to the Turnitin service and elected the archiving option. According to the complaint, both schools required students to submit their written assignments via Turnitin.com to receive credit; failure to do so would result in a grade of "zero" for the assignment under the policy of both schools.

Plaintiffs K.W., E.N. and M.N. allege that their teachers adhered to school policy and required them to submit their written assignments to Turnitin. Using the passwords provided by the schools, K.W., E.N. and M.N. submitted their papers, each of which included a "disclaimer" objecting to the archiving of their works.³ As requested by the two high schools, however, each of these submissions was archived. A.V., the fourth plaintiff, did not submit his paper for credit in a high school course; instead, he submitted his work to Turnitin using a password designated for students enrolled in a college course at the University of California, San Diego ("UCSD"). The password was provided to A.V. by plaintiffs' counsel who obtained it by conducting an internet search.

According to iParadigms, "no one at iParadigms read[ ] or review[ed] the [p]apers submitted" by plaintiffs, and iParadigms did not send any "[p]aper at issue in this action . . . to anybody other than the instructor to whom plaintiffs[ ] submitted their own papers." S.J.A. 2.

Plaintiffs filed a complaint alleging that iParadigms infringed their copyright interests in their works by archiving them in the Turnitin database without their permission.⁴ The district court granted summary judgment to iParadigms on two bases. First, the court found that the students and iParadigms entered into binding agreements when the students clicked on "I Agree," and that the agreements shielded iParadigms from liability arising out of plaintiffs' use of the Turnitin website. Furthermore, the court concluded that the disclaimers included on plaintiffs' written submissions did not "modify the Agreement or render it unenforceable."

J.A. 50.⁵

Second, the court determined that iParadigms' use of each of the plaintiffs' written submissions qualified as a "fair use" under 17 U.S.C. § 107 and, therefore, did not constitute infringement. In particular, the court found that the use was transformative because its purpose was to prevent plagiarism by comparative use, and that iParadigms' use of the student works did not impair the market value for high school term papers and other such student works.

iParadigms asserted four counterclaims, but only two are now at issue: (1) that plaintiff A.V. gained unauthorized access to Turnitin by using passwords designated for use by college students enrolled at UCSD, in violation of the Computer Fraud and Abuse Act ("CFAA"), see 18 U.S.C. § 1030; and (2) that plaintiff A.V., based on the aforementioned unauthorized access, violated the Virginia Computer Crimes Act ("VCCA"), see Va.Code Ann. § 18.2-152.3.

The district court rejected both counterclaims, granting summary judgment to plaintiff A.V. on the grounds that there was no evidence of actual or economic damages suffered by iParadigms as a result of the alleged violations under the CFAA and the VCCA.

II. Plaintiffs' Appeal

We first consider the summary judgment order as to plaintiffs' copyright infringement claim. The owner of a copyright enjoys "a bundle of exclusive rights" under section 106 of the Copyright Act, Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 546, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985), including the right to copy, the right to publish and the right to distribute an author's work, see id. at 547, 105 S.Ct. 2218; see also 17 U.S.C. § 106 (also including among fundamental rights in copyrighted works rights to display, to perform, and to prepare derivative works). These rights "vest in the author of an original work from the time of its creation." Harper & Row, 471 U.S. at 547, 105 S.Ct. 2218. "`Anyone who violates any of the exclusive rights of the copyright owner,' that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work . . . `is an infringer of the copyright.'" Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (quoting 17 U.S.C. § 501(a)).

The ownership rights created by the Copyright Act, however, are not absolute; these rights, while exclusive, are "limited in that a copyright does not secure an exclusive right to the use of facts, ideas, or other knowledge." Bond v. Blum, 317 F.3d 385, 394 (4th Cir.2003). Rather, copyright protection extends only to the author's manner of expression. See 17 U.S.C. § 102(b) ("In no case does copyright ...