Ebay, Inc. v. Bidder's Edge, Inc.

• Decision Date: 24 May 2000
• Docket Number: No. C-99-21200RMW.,C-99-21200RMW.
• Citation: 100 F.Supp.2d 1058
• Court: U.S. District Court — Northern District of California
• Parties: EBAY, INC., Plaintiff, v. BIDDER'S EDGE, INC., Defendant.

100 F.Supp.2d 1058

EBAY, INC., Plaintiff, v. BIDDER'S EDGE, INC., Defendant.

No. C-99-21200RMW.

United States District Court, N.D. California.

May 24, 2000.

COPYRIGHT MATERIAL OMITTED

Janet L. Cullum, Mark B. Pitchford, Charles A. Schwab, Cooley Godward LLP, Palo Alto, CA, for plaintiff.

David J. Byer, John J. Cotter, Sara Hinchey, Marc E. Betinsky, Sean C. Ploen, Testa Hurwitz & Thibeault LLP, Boston, MA, Timothy C. Hale, Russo & Hale, Palo Alto, CA, for defendant.

ORDER GRANTING PRELIMINARY INJUNCTION

WHYTE, District Judge.

Plaintiff eBay, Inc.'s ("eBay") motion for preliminary injunction was heard by the court on April 14, 2000. The court has read the moving and responding papers¹ and heard the argument of counsel. For the reasons set forth below, the court preliminarily enjoins defendant Bidder's Edge, Inc. ("BE") from accessing eBay's computer systems by use of any automated querying program without eBay's written authorization.

I. BACKGROUND

eBay is an Internet-based, person-to-person trading site. (Jordan Decl. ¶ 3.) eBay offers sellers the ability to list items for sale and prospective buyers the ability to search those listings and bid on items. (Id.) The seller can set the terms and conditions of the auction. (Id.) The item is sold to the highest bidder. (Id.) The transaction is consummated directly between the buyer and seller without eBay's involvement. (Id.) A potential purchaser looking for a particular item can access the eBay site and perform a key word search for relevant auctions and bidding status. (Id.) eBay has also created category listings that identify items in over 2500 categories, such as antiques, computers, and dolls. (Id.) Users may browse these category listing pages to identify items of interest. (Id.)

Users of the eBay site must register and agree to the eBay User Agreement. (Id. ¶ 4.) Users agree to the seven page User Agreement by clicking on an "I Accept" button located at the end of the User Agreement. (Id. Ex. D.) The current version of the User Agreement prohibits the use of "any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained herein without our prior expressed written permission." (Id.) It is not clear that the version of the User Agreement in effect at the time BE began searching the eBay site prohibited such activity, or that BE ever agreed to comply with the User Agreement.

eBay currently has over 7 million registered users. (Jordan Decl. ¶ 4.) Over 400,000 new items are added to the site every day. (Id.) Every minute, 600 bids are placed on almost 3 million items. (Id.) Users currently perform, on average, 10 million searches per day on eBay's database. Bidding for and sales of items are continuously ongoing in millions of separate auctions. (Id.)

A software robot is a computer program which operates across the Internet to perform searching, copying and retrieving functions on the web sites of others.² (Maynor Decl. ¶ 3; Johnson-Laird Decl. ¶ 15.) A software robot is capable of executing thousands of instructions per minute, far in excess of what a human can accomplish. (Maynor Decl. ¶ 3) Robots consume the processing and storage resources of a system, making that portion of the system's capacity unavailable to the system owner or other users. (Id.) Consumption of sufficient system resources will slow the processing of the overall system and can overload the system such that it will malfunction or "crash." (Id.) A severe malfunction can cause a loss of data and an interruption in services. (Id.)

The eBay site employs "robot exclusion headers." (Id. ¶ 5.) A robot exclusion header is a message, sent to computers programmed to detect and respond to such headers, that eBay does not permit unauthorized robotic activity. (Id.) Programmers who wish to comply with the Robot Exclusion Standard design their robots to read a particular data file, "robots.txt," and to comply with the control directives it contains. (Johnson-Laird Decl. ¶ 20.)

To enable computers to communicate with each other over the Internet, each is assigned a unique Internet Protocol ("IP") address. (Maynor Decl. ¶ 6.) When a computer requests information from another computer over the Internet, the requesting computer must offer its IP address to the responding computer in order to allow a response to be sent. (Id.) These IP addresses allow the identification of the source of incoming requests. (Id.) eBay identifies robotic activity on its site by monitoring the number of incoming requests from each particular IP address. (Id. ¶ 7.) Once eBay identifies an IP address believed to be involved in robotic activity, an investigation into the identity, origin and owner of the IP address may be made in order to determine if the activity is legitimate or authorized. (Id. ¶ 8.) If an investigation reveals unauthorized robotic activity, eBay may attempt to ignore ("block") any further requests from that IP address. (Id.) Attempts to block requests from particular IP addresses are not always successful. (Id. ¶ 9; Johnson-Laird Decl. ¶ 27.)

Organizations often install "proxy server" software on their computers. (Johnson-Laird Decl. ¶ 12.) Proxy server software acts as a focal point for outgoing Internet requests. (Id.) Proxy servers conserve system resources by directing all outgoing and incoming data traffic through a centralized portal. (Id.) Typically, organizations limit the use of their proxy servers to local users. (Id.) However, some organizations, either as a public service or because of a failure properly to protect their proxy server through the use of a "firewall," allow their proxy servers to be accessed by remote users. (Id. ¶ 13.) Outgoing requests from remote users can be routed through such unprotected proxy servers and appear to originate from the proxy server. (Id.) Incoming responses are then received by the proxy server and routed to the remote user. (Id.) Information requests sent through such proxy servers cannot easily be traced back to the originating IP address and can be used to circumvent attempts to block queries from the originating IP address. (Id. ¶ 14.) Blocking queries from innocent third party proxy servers is both inefficient, because it creates an endless game of hide-and-seek, and potentially counterproductive, as it runs a substantial risk of blocking requests from legitimate, desirable users who use that proxy server. (Id. ¶ 22.)

BE is a company with 22 employees that was founded in 1997. (Carney Decl. ¶ 2.) The BE web site debuted in November 1998. (Id. ¶ 3.) BE does not host auctions. (Id. ¶ 2.) BE is an auction aggregation site designed to offer on-line auction buyers the ability to search for items across numerous on-line auctions without having to search each host site individually. (Id.) As of March 2000, the BE web site contained information on more that five million items being auctioned on more than one hundred auction sites. (Id. ¶ 3.) BE also provides its users with additional auction-related services and information. (Id. ¶ 2.) The information available on the BE site is contained in a database of information that BE compiles through access to various auction sites such as eBay. (Id. ¶ 4.) When a user enters a search for a particular item at BE, BE searches its database and generates a list of every item in the database responsive to the search, organized by auction closing date and time. (Id. ¶ 5.) Rather than going to each host auction site one at a time, a user who goes to BE may conduct a single search to obtain information about that item on every auction site tracked by BE. (Id. ¶ 6.) It is important to include information regarding eBay auctions on the BE site because eBay is by far the biggest consumer to consumer on-line auction site. (Id.)

On June 16, 1997, over a year before the BE web site debuted, Peter Leeds³ wrote an email in response to an email from Kimbo Mundy, co-founder of BE. (Ritchey Decl. Ex 6.) Mundy's email said, "I think the magazines may be overrating sites' ability to block. The early agent experiments, like Arthur Anderson's Bargain-Finder were careful to check the robots.txt file on every site and desist if asked." (Id.) (underline in original). Mundy wrote back: "I believe well-behaved robots are still expected to check the robots.txt file.... Our other concern was also legal. It is one thing for customers to use a tool to check a site and quite another for a single commercial enterprise to do so on a repeated basis and then to distribute that information for profit." (Id.)

In early 1998, eBay gave BE permission to include information regarding eBay-hosted auctions for Beanie Babies and Furbies in the BE database. (Id. ¶ 7.) In early 1999, BE added to the number of person-to-person auction sites it covered and started covering a broader range of items hosted by those sites, including eBay. (Id. ¶ 8.) On April 24, 1999, eBay verbally approved BE crawling the eBay web site for a period of 90 days. (Id.) The parties contemplated that during this period they would reach a formal licensing agreement. (Id.) They were unable to do so.

It appears that the primary dispute was over the method BE uses to search the eBay database. eBay wanted BE to conduct a search of the eBay system only when the BE system was queried by a BE user. (Ploen Decl.Ex. 9.) This reduces the load on the eBay system and increases the accuracy of the BE data. (Id.) BE wanted to recursively crawl the eBay system to compile its own auction database. (Carney Decl. ¶ 18.) This increases the speed of BE searches and allows BE to track the auctions generally and automatically update its users when activity occurs in particular auctions, categories of auctions, or when new items are added. (Id.)

In late August or early September 1999, eBay requested by telephone that BE cease posting eBay auction listings on its site. (Id. ¶ 9; Rock Decl. ¶ 5.) BE agreed to do so. (Rock Decl. ¶ 5.) In October...