New.Net, Inc. v. Lavasoft

Decision Date20 May 2004
Docket NumberNo. CV 03-3180 GAF.,CV 03-3180 GAF.
Citation356 F.Supp.2d 1090
CourtU.S. District Court — Central District of California
PartiesNEW.NET, INC., Plaintiff, v. LAVASOFT; Nicolas Stark Computing AB, Defendant.

Daniel Scott Schecter, David M. Simonds, Latham & Watkins, Los Angeles, CA, Ryan C. Squire, Stephen C. Chuck, Garrett & Tully, Pasadena, CA, for Plaintiff.

Louis J. Levy, Leventhal Senter and Lerman, Tobey B. Marzouk, Marzouk and Parry, Washington, DC, Thomas M. Norminton, Norminton & Wiita, Beverly Hills, CA, Henry D. Fetter, Doniger & Fetter, Los Angeles, CA, Richard J.J. Scarola, Scarola Reavis & Parent, New York City, for Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANT'S MOTION TO STRIKE AND DISMISS PLAINTIFF'S COMPLAINT PURSUANT TO CAL. CIV. PROC. CODE SEC. 425.16 AND FED. R. CIV. P. 12(c)

FEESS, District Judge.

I. INTRODUCTION & BACKGROUND1

This case presents a dispute between two downloadable software providers, New.net whose software, NewDotNet, is downloaded onto individual computers often without the knowledge or request of the computer owner, and Lavasoft whose software, Ad-aware, is purposefully downloaded by the computer user to detect and remove programs like the one written by New.net. New.net complains that the injuries caused by Ad-aware's inclusion of NewDotNet in its database are actionable under both state and federal law.

The Court previously denied New.net's motion for a preliminary injunction to halt Lavasoft from including NewDotNet in its database. In ruling on that motion the Court concluded, among other things, that Lavasoft, through its software, was engaging in First Amendment protected speech. Now Lavasoft moves to dismiss the state claims in their entirety under California's anti-SLAPP statute, which provides an expedited procedure for dismissing lawsuits designed to stifle speech on issues of public importance. The Court concludes that the motion is well taken and should be GRANTED. Further, the Court concludes that the remaining federal question claims should be dismissed under Rule 12(c).

A. THE PARTIES AND THEIR SOFTWARE
1. New.net and the NewDotNet Software

New.net describes itself as a "leading domain name registry and provider of domain name extensions." (Compl. at 2). It apparently generates revenue through the sale of domain names in nonstandard format such as .free and .shop as opposed to "true" domain names, e.g., .edu, .gov, .org., and.com. Without special software, the internet user who types a nonstandard domain name into his or her browser will not be able to locate the website. New.net deals with this problem by providing its software, NewDotNet, that recognizes the nonstandard extension and connects the user to the site without requiring the user to know and enter the site's true nonstandard domain name.

Because New.net generates its revenue through the sale of these nonstandard domain names, its ultimate success and, indeed, its very survival, depends on maximizing the value of these names by generating traffic to these sites. That is, it needs to enable increasing numbers of users — most of whom have never sought to do business with New.net — to access New.net's customers' websites. In order to accomplish this goal, New.net must distribute and install NewDotNet on as many computers in the hands of the general public as possible. (Sheehy Decl. ¶ 10 (conceding that New.net's "success depends on its ability to distribute as many copies of the New.net Software as possible.")). How that is done is at the heart of the present dispute. New.net attempts to realize its objective by surreptitiously "bundling" NewDotNet with other popular software programs, a process by which an individual who intentionally requests and downloads certain desired software actually gets a bundle of other software that was not sought by the user.2

2. Lavasoft and Its Ad-aware Software

Defendant Lavasoft/Nicolas Stark Computing, AB is a public information service which began as a project to bring public notice to the fact that unwanted software applications were being downloaded onto personal computers without the user's knowledge or consent. To this end, Lavasoft developed a software program, Ad-aware which is available for free on the internet, with enhanced versions also available for sale. Ad-aware is enormously popular and one of the most downloaded software applications on the internet. (See August 22, 2003 Amabile Decl. ¶ 4 ("Ad-aware is the eighth most downloaded software application with over 270,000 downloads in the week of August 17, 2003 alone, and more than 19 million downloads in total.")). Lavasoft's homepage describes Ad-aware as a program that "detect[s] and remove [s] the worst that the Internet and shareware/ freeware have to offer" and gives the user information regarding programs, that without the user's knowledge or permission, are downloaded onto the user's computer and can effect the computer's operation, and tells the user that Ad-aware can keep the user's computer or network free of compromising and intrusive threats to privacy. (8/25/03 Sheehy Decl. Exh. B).

Ad-aware functions as follows: it performs a scan of the user's computer, detects specific programs on a user's personal computer, alerts the user to their presence with a text box providing a cryptic description of the programs, asks the user if they wish to delete identified programs, and, if prompted, removes unwanted applications from the user's computer. Ad-aware does not tell a user to remove a program. Nor does it delete a program unless the user decides to exercise that option. Rather it empowers the user with the choice of uninstalling the program or keeping it. New.net's complaint concedes this point, stating on more than one occasion that "Ad-aware gives the users the option to remove" a program. (Compl. at ¶¶ 10, 24).

Lavasoft relies on reviews of submissions from the public and other sources of publicly available information in order to make a determination as to whether certain software programs should be included in the Ad-aware database. NewDotNet is one of the programs that Ad-aware identifies and, if directed, assists the user in deleting. NewDotNet is included in the Ad-aware database because of its purported negative impact on internet connectivity and its surreptitious method of distribution — both of which are topics of discussion in the internet privacy community on sites which refer to NewDotNet as commercial "foistware" and discuss various system problems associated with NewDotNet.

B. THE PENDING MOTION

Although Lavasoft won a decisive victory in defeating Plaintiff's attempt to obtain a preliminary injunction in this case, New.net has continued its pursuit of this lawsuit. Accordingly, Defendants Lavasoft and Nicolas Stark Computing AB (hereinafter "Defendant") now move to strike, pursuant to California's anti-SLAPP statute, Plaintiff's causes of action for (1) unfair competition; (2) trade libel; (3) and tortious interference with prospective economic advantage. Defendant also seeks judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) as to Plaintiff's federal Lanham Act false advertising claim. Finally, because the only remaining claim — Plaintiff's claim for declaratory relief — is intertwined with and dependent on the other claims for relief, Defendant seeks dismissal of that claim as well.

The Court's November 4, 2003, ruling on New.net's motion for preliminary injunction distills the essence of the present dispute and describes the foundation of the Court's ruling, which applies on this motion as well. There the Court wrote:

New.net brings this suit ... to protect its ability to surreptitiously download its New.net software by silencing a company whose computer program, at the request of the computer owner, calls attention to NewDotNet's presence on the user's hard drive. Correctly understood, the contest in this case is between computer users, who acquire software precisely to determine what programs they may have unsuspectingly downloaded onto their hard drives, and New.net, which apparently needs the ability to deliver its program to as many unwitting users as possible to further its business plan.

(Order at 2) (emphasis in original). This Court noted, among other things, that New.net present[ed] no persuasive evidence that any of Lavasoft's statements are false, (Order at 3), and that "Lavasoft's speech addresses a matter of legitimate public concern." (Order at 21). Accordingly, as explicated more fully below, the Court GRANTS Defendant's motion in its entirety, and orders the present lawsuit DISMISSED WITH PREJUDICE.

II. DEFENDANT'S MOTION TO STRIKE SHOULD BE GRANTED
A. LEGAL STANDARD FOR A SPECIAL MOTION TO STRIKE

In 1992, responding to the "disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances," the California Legislature enacted the Anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute. CAL. CIV. PROC. CODE § 425.16(a). The statute was intended to "encourage continued participation in matters of public significance" and to prevent the chilling of such participation "through abuse of the judicial process. Id. To that end, the statute directs courts to construe the statute broadly." Id.

The statute is designed to allow for early dismissal of non-meritorious cases aimed at chilling First Amendment expression through costly, time-consuming litigation. Under the statute, a civil defendant, at the infant stages of the litigation, may move to strike a plaintiff's SLAPP complaint, which is defined as a non-meritorious action brought against a person arising "from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public...

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