Facebook, Inc. v. Power Ventures, Inc.

Filing 82

Transcript of Proceedings held on 06/07/2010, before Judge James Ware. Court Reporter/Transcriber Summer Fisher, Telephone number 408-288-6150. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 9/7/2010. (Fisher, Summer) (Filed on 6/8/2010)

F a c e b o o k , Inc. v. Power Ventures, Inc. Doc. 8 1 2 3 4 IN T H E U N I T E D S T A T E S DISTRICT COURT FOR T H E N O R T H E R N D I S T R I C T O F CALIFORNIA SAN JOSE DIVISION FACEBOOK, I N C., ) ) ) ) ) ) ) ) ) ) CV -08 -5780- JW SAN JOSE , CALIFORNIA JUNE 7, 2010 PAGES 1- 52 5 PLAINTIFF, 6 VS . 7 CISCO SYSTEMS, INC ., 8 DEFENDANT. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FOR THE DEFENDANT : FOR THE PLAINTIFF : A P P E A R A N C E S: TRANSCRIPT O F PROCEEDINGS BEFORE THE HONORABLE JAMES WARE UNITED STATES DISTRICT JUDGE ORRICK HERRINGTOPN SUTCLIFFE BY : NEEL CHATTERJEE JULIO AVALOS 1000 MARSH ROAD MENLO PARK, CA 94025 LAW OFFICES OF SCOTT BURSOR BY : SCOTT BURSOR 3 6 9 LEXINGTON AVE , 1 0TH FL NEW YORK , N Y 10017 (APPEARANCES CONTINUED O N T H E NEXT PAGE ) OFFICIAL COURT REPORTER : SUMMER FISHER , C S R, C R R CERTIFICATE NUMBER 13185 1 Dockets.Justia.co 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FOR THE PLAINTIFF : ORRICK HERRINGTON & SUTCLIFFE BY : JESSICA PERS 405 HOWARD STREET S A N FRANCISCO, CA 94105 BRAMSON PLUTZIK BY : LAWRENCE TIMOTHY F I S H E R 2125 OAK GROVE ROAD, S T E 1 2 0 W A L N U T C R E E K, CA 94598 JENNIFER GRANICK FOR THE DEFENDANT : ALSO PRESENT: 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SAN JOSE , CALIFORNIA JUNE 7, 2010 PROCEEDINGS (WHEREUPON, COURT CONVENED A N D T H E FOLLOWING PROCEEDINGS WERE HELD: ) T H E C L E R K: CALLING CASE N U M B E R 08- 5780. FACEBOOK , I N C. V. POWER VENTURES , I N C. , E T A L. ON F O R PLAINTIFF' S M O T I O N FOR JUDGMENT ON T H E P L E A D I N GS AND F O R PARTIAL SUMMARY JUDGEMENT . PLAINTIFF'S M O T I O N T O DISMISS COUNTERCLAIMS AND TO S T R I K E A F F I R M A T I V E DEFENSE S, AND DEFENDANT'S M O T I O N F O R SUMMARY JUDGEMENT O N C O U N T T H R E E. 30 MINUTES EACH SIDE F O R A L L MOTIONS. COUNSEL, P L E A S E COME FORWARD AND STATE YOUR APPEARANCES . MR . B U R S O R: GOOD MORNING, YOUR HONOR. SCOTT B U R S O R F O R THE DEFENDANTS POWER VENTURES AND STEVEN VACHANI . AND WITH ME IS MY COLLEAGUE T I M F I S H E R, A N D M Y C L I E N T IS WITH U S T O D A Y A S WELL . THIS IS ROB POLLOCK, T H E C E O OF POWER. COM . T H E C O U R T: THANK YOU FOR COMING . GOOD MORNING , WITH M E MR . CHATTERJEE : YOUR HONOR. NEEL CHATTERJEE FOR FACEBOOK . IS JULIO A V A L O S A N D JESSICA PERS FROM MY OFFICE . T H E C O U R T: THANK Y O U. HAVE A SEAT . YOU D O N'T HAVE TO SIT DOWN, T H E A DVOCATES, I WAS 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TALKING ABOUT THE REST OF THEM. B U T L E T' S S E E, WHAT DO I HAVE ? I HAVE A M O T I O N B Y F A C E B O O K F O R JUDGMENT ON THE PLEADINGS O R IN T H E A L T E R N A T I V E F O R PARTIAL SUMMARY JUDGEMENT UNDER THIS 502 STATUTE, A N D A DEFENDANT'S M O T I O N FOR SUMMARY JUDGEMENT. A N D I HAVE A M O T I O N TO DISMISS THE COUNTERCLAIMS, S T R I K E A F F I R M A T I V E DEFENSES -- I CAN S E E W H Y MY STAFF SAID 3 0 MINUTES EACH SIDE I F W E A R E GOING TO ADDRESS A L L OF THIS. ACTUALLY , THE ISSUE THAT I THOUGHT WOULD BE IMPORTANT F O R US TO DISCUSS I S THIS 5 0 2 I S S U E. AND I UNDERSTAND THAT THERE ARE CERTAIN AMICUS B R I E F S THAT HAVE BEEN F I L E D WITH RESPECT TO THIS. SO I WOULD ACTUALLY CALL UPON COUNSEL FOR FACEBOOK FIRST TO ADDRESS THE QUESTION OF WHETHER OR NOT THERE IS A SUFFICIENT ALLEGATION OF A VIOLATION OF 5 0 2. MR . CHATTERJEE : HAPPY TO . FIRST , I F I M A Y ADDRESS T H E AMICUS BRIEF, WE H A D CONTACTED CHAMBERS BECAUSE I T A C T U A L L Y H A D NEVER BEEN FILED. THERE WAS A MOTION REQUESTING I T SURE, YOUR H O N O R, I'M AND YOUR HONOR ISSUED A N ORDER SETTING A DEADLINE A N D THEN IT W A S N E V E R F I L E D. IF YOUR HONOR IS GOING TO CONSIDER THAT 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BRIEF , W E W O U L D LIKE TO HAVE AN OPPORTUNITY TO FILE A RELATIVELY S H O R T R E S P O N S E T O I T. I CAN ALSO ADDRESS IT DURING T H E A R G U M E N T T O D A Y. AFTER YOU GAVE LEAVE , THE AMICUS BRIEF W A S A C T U A L L Y N O T FILED PER YOUR ORDER. A N D IT' S A PROCEDURAL HOUSEKEEPING ISSUE , ALTHOUGH W E THINK THAT BECAUSE THEY DIDN' T FILE IT , I T S H O U L D NOT BE CONSIDERED AT THIS P O I N T. T H E C O U R T: WELL, I HAD -- THERE W A S A DOCUMENT FILED WHICH W A S A M O T I O N F O R LEAVE TO FILE. A N D IT' S THAT , THAT I HAD READ. A N D SO YOUR POSITION IS THAT THIS I S N O T THE BRIEF THAT WAS SORT OF FOLLOWED ON THAT W A S GOING TO COME FROM THIS. MR . CHATTERJEE : THEY A T T A C H E D A BRIEF ON T H E M O T I O N AND THEN YOUR H O N O R I S S U E D AN ORDER G I V I N G THEM UNTIL , I BELIEVE THE 14 TH, TO ACTUALLY FILE THAT B R I E F. IT W A S, IN FACT, NEVER FILED. WE HAD CONTACTED YOUR HONOR TO F I G U R E O U T WHAT W E S H O U L D DO , I F A N Y T H I N G. AND ALL I ASK YOUR HONOR I S THAT IF IN FACT YOU A R E G O I N G T O C O N S I D E R T H E I R SUBMISSION, WE BE GIVEN LEAVE TO FILE A F A I R L Y SHORT RESPONSE TO IT . SO IF YOU A R E C O N S I D E R I N G THE ISSUE - - ANY ISSUES RAISE D THEREIN , W E CAN 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 E N S U R E W E'V E H A D AN OPPORTUNITY TO BE HEARD. T H E C O U R T: A L L R I G H T. I HAD ASSUMED THAT I H A D B E F O R E ME THE A M I C U S M A T E R I A L A N D HAD L O O K E D A T I T. SO TO T H E E X T E N T THAT I FIND T H E R E'S A NEED F O R YOU TO S A Y ANYTHING MORE, PERHAPS YOU C A N RESPOND TO THAT AS WELL. MR . CHATTERJEE : SURE, YOUR H O N O R. IF I CAN GRAB SOME A I D E S F O R OUR ARGUMENT TODAY ON T H E 5 0 2( C) ISSUE. T H E C O U R T: SURE. YOUR H O N O R, I WILL GIVE I WILL ALSO GIVE MR . CHATTERJEE : OPPOSING COUNSEL A COPY OF THIS. A COPY F O R YOU , A N D I'M HAPPY TO GIVE ONE F O R YOUR LAW CLERK A S WELL . THE AIDES A R E F A I R L Y STRAIGHTFORWARD, ALMOST ALL O F I T ARE MATERIALS THAT ARE ALREADY SUBMITTED . THERE' S ONLY O N E ADDITIONAL PIECE OF WORK PRODUCT . L E T'S START WITH KIND O F, I G U E S S T H E FUNDAMENTAL ISSUE THAT' S PRESENTED BY THIS M O T I O N. T H E F U N D A M E N T A L I S S U E THAT 'S PRESENTED BY THIS M O T I O N I S WHETHER FACEBOOK C A N R E G U L A T E A C C E S S TO I T S WEBSITE BY THIRD PARTIES AND OTHER COMMERCIAL ENTITIES . AND IT IS N O T, AS VARIOUS P E O P L E IN THE BRIEF ING ON THIS CASE SUGGEST , P U R E L Y ABOUT A TERM S 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OF U S E I S S U E. I WAS VERY INTERESTED I N YOUR HONOR 'S COMMENTS ABOUT T H E M U L T I V E N CASE THAT WAS JUST HERE BECAUSE IT WASN'T A MATTER OF FACEBOOK LOCKING A DOOR, IT W A S F A R MORE THAN THAT. FACEBOOK HAD A TERMS OF U S E THAT RESTRICTED ACCESS TO I T S WEBSITE FOR PARTICULAR PURPOSES . WHEN I T WAS CLEAR THAT POWER WAS INCENTIVISING ITS USERS T O VIOLATE THAT TERMS OF U S E, FACEBOOK SAID D I R E C T L Y T O P O W E R, AND POWER DOESN 'T DISPUTE THIS , D O N' T A C C E S S OUR WEBSITE. POWER AGREED. THEY ACTUALLY SAID, OKAY, WE W O N'T A C C E S S I T, WE ARE GOING TO T R Y T O WORK THROUGH A MECHANISM THAT FACEBOOK DOES ALLOW FOR THAT ACCESS . BUT THEN AT THE LAST MINUTE THEY CHANGED THEIR MIND A N D THEY SAID , W E A R E GOING TO CONTINUE ACCESSING F A C E B O O K'S WEBSITE DESPITE FACEBOOK 'S EXPRESS REQUEST S A Y I N G, DO NOT A C C E S S OUR WEBSITE . AT THAT POINT IN TIME F A C E B O O K P U T UP TECHNICAL B A R R I E R S, THEY BLOCKED T H E I P ADDRESS OF POWER TO FORECLOSE P O W E R FROM ACCESSING T H E WEBSITE. WHEN THAT HAPPENED POWER, N O W THAT THERE H A D BEEN A LOCK O N T H E DOOR, THERE HAD BEEN AN EXPRESS REQUEST N O T TO TRESPASS AND THERE H A D BEEN 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A FENCE BUILT AROUND THE FACEBOOK WEBSITE , POWER DECIDED TO JUMP OVER IT . THAT, YOUR HONOR, IS AN UN AUTHORIZED TRESPASS TO A COMPUTER SYSTEM . AND AT T H E VERY TIME THAT THEY WERE JUMPING OVER THOSE FENCES, THEY THEN ACCESSED THE FACEBOOK WEBSITE AND THEY START SENDING COMMERCIAL MESSAGES THROUGH A CALENDARING FUNCTION OF FACEBOOK TO I N V I T E P O T E N T I A L L Y THOUSANDS O F P E O P L E TO JOIN T H E POWER WEBSITE. YOUR HONOR, THAT IS THE CLASSIC CASE, IT IS AN EXTREME CASE O F C O M P U T E R T R E S P A S S, WHICH IS WHAT CALIFORNIA P E N A L CODE IN 5 0 2(C ) SEEK S T O COVER . T H E C O U R T: THAT JUST A B I T. SO DO I UNDERSTAND FROM YOUR ARGUMENT THAT FACEBOOK IS NOT CONTENDING THAT P O W E R'S INITIAL ACCESS WHERE IT D I D N O T INVADE A N Y TECHNOLOGICAL BARRIER, WAS A VIOLATION OF 5 0 2? VIOLATION CAME AFTER FACEBOOK INITIATED THE TECHNOLOGICAL BARRIER; AND POWER , U S I N G SOME MECHANISM THAT 'S NOT CLEAR TO ME AT THIS POINT, OVERCAME THAT BARRIER? MR . CHATTERJEE : GOOD QUESTION. 8 N O W L E T ME SEE IF I CAN PARSE THE YOUR H O N O R, IT' S A VERY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THAN THAT. T H E A N S W E R IS A L I T T L E MORE C O M P L I C A T E D THE ISSUE YOUR HONOR RAISED WITH RESPECT TO THE MULTIVEN CASE WAS O N E O F, AT WHAT POINT DOES SOMETHING BE COME A KNOWING VIOLATION ? IT W A S T H E KNOWLEDGE REQUIREMENT THAT I T H I N K YOUR HONOR WAS CONCERNED A B O U T I N A S K I N G THE QUESTIONS ABOUT THE DIRECTOR LEVEL PERSON AND WHAT HE -- WOULD HE KNOW ABOUT OR NOT KNOW ABOUT OR THE OTHER P E R S O N W H O WAS USING H I S P A S S W O R D THAT WOULD KNOW ABOUT THE A C C E S S T O T H E CISCO COMPUTER SYSTEM . WHEN YOU A R E JUST TALKING ABOUT A T E R M S OF U S E VIOLATION, WE A R E N O T SAYING THAT, IN A N D O F I T S E L F W O U L D N E C E S S A R I L Y RISE TO A KNOWING VIOLATION; THAT'S AN ISSUE F O R ANOTHER D A Y. BUT IN THIS INSTANCE WITH THESE FACTS THAT ARE ADMITTED, THERE IS NO QUESTION THAT THE STOP SIGN W A S ON THE OUTSIDE OF THE FACEBOOK WEBSITE. THERE WASN' T O N E INSTANCE OF A TERM S O F USE GIVING NOTICE , THERE WAS A DIRECT MESSAGE SENT TO POWER THAT THEY ACKNOWLEDGED AND RECOGNIZED THAT T H E W E LCOME SIGN WASN'T ON A N D THEN AFTER THEY CHOSE N O T T O H O N O R I T, THEY A D M I T T E D THAT THEY KNEW WE P U T I N P L A C E TECHNICAL BARRIERS AND THEY CHOSE TO JUMP OVER THAT FENCE . WITH THOSE THREE THINGS , THE KNOWING 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ELEMENT IS UNDISPUTABLE . AND THAT IS THE POINT AT WHICH THERE 'S NO QUESTION THERE WOULD BE A VIOLATION U N D E R CALIFORNIA PENAL CODE 502 (C) . DOES THAT ANSWER YOUR QUESTION, YOUR HONOR? T H E C O U R T: I THINK SO. Y O U SAID T H E A N S W E R IS NOT AS STRAIGHTFORWARD A S THAT . I DIDN 'T GET AN A N S W E R, B U T I T S E E M S THAT T H E A N S W E R IS YES . I N D E E D, THERE' S N O C L A I M - - Y O U ARE M A K I N G YOUR CLAIM BASED UPON THE STATE OF T H E AFFAIRS THAT EXISTED AFTER OVERC O M I N G THE TECHNICAL BARRIER, A N D PERHAPS IT 'S MOOT WHAT HAPPENED EARLIER. B U T A S I W A S READING THROUGH THE HISTORY OF T H E CASE , A N D AS YOU RECITED IT, THERE W A S A N EARLY ENTRY UNDER DIFFERENT CIRCUMSTANCES . THERE W A S SOME C O RRESPONDENCE BETWEEN THE PARTIES WITH RESPECT TO THAT. SOME EFFORT W A S MADE TO S E E WHETHER OR NOT POWER WOULD BE COME A N A C C E P T E D USER BECAUSE THIS I S A PROCESS THAT FACEBOOK ALLOWS PERHAPS, A N D EVEN ENGAGES IN, B U T DIDN 'T HAVE P O W E R AMONG I T S AUTHORIZED VENDORS FOR PURPOSES OF THIS GATHERING O F INFORMATION THROUGH FACEBOOK . A N D THEN IN T H E C O U R S E OF TIME, AS I 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNDERSTAND IT, FACEBOOK P U T I N P L A C E VARIOUS TECHNOLOGICAL BARRIERS AND THOSE WERE CIRCUMVENTED . A N D I T'S THAT STATE OF AFFAIRS, THE CIRCUMVENTION THAT I A M LOOKING AT , T O DETERMINE WHETHER O R N O T THERE 'S A 5 0 2 VIOLATION . MR . CHATTERJEE : CORRECT, YOUR H O N O R. WE A R E N O T MOVING S O L E L Y UPON T H E T E R M S OF U S E VIOLATION, ALTHOUGH IT 'S AN ADMITTED FACT THAT IS RELEVANT FOR YOUR HONOR TO CONSIDER. T H E C O U R T: WELL, AS A HISTORICAL PURPOSE IT SEEMS TO ME -- SO MAYBE THIS IS AN INVITATION F O R T H E COURT TO RENDER AN ORDER WHETHER OR NOT TERMS OF U S E VIOLATIONS ALONE CONSTITUTE A VIOLATION O F 5 0 2 SO AS TO REMOVE THAT FROM A QUESTION . SO IT 'S A Q U E S T I O N I 'M RAISING, NOT A STATEMENT O F SOMETHING I'M GOING TO DO , B U T YOU 'VE R A I S E D A T L E A S T E N O U G H OF A CONCERN IN T H E C O U R T'S MIND THAT A N A N S W E R TO THAT Q U E S T I O N M I G H T B E NECESSARY. LET M E HEAR FROM YOUR OPPONENT AND I WILL COME BACK. MR . CHATTERJEE : YOUR H O N O R, IF I C A N JUST SAY , A N A N S W E R TO THAT Q U E S T I O N I S N O T NECESSARY HERE BECAUSE YOU C A N RELY S O L E L Y O N T H E 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CIRCUMVENTION AFTER THE REQUEST WAS MADE NOT TO A C C E S S A N D THE BARRIERS WERE JUMPED OVER. T H E C O U R T: COUNSEL? MR . B U R S O R: YOUR HONOR , I THINK THE I UNDERSTAND. COURT IN I T S C O L L O Q U Y WITH MR . CHATTERJEE H A S J U M P E D PAST A DIS POSITIVE ISSUE THAT R E A L L Y OUGHT TO BE T H E F O C U S O F T H E ANALYSIS ON THIS M O T I O N, WHICH IS N O T WHETHER THERE W A S A VIOLATION O F 5 0 2 D U E T O AUTHORIZE OR LACK O F AUTHORIZE, A N D I C A N ADDRESS WHY WE THINK THERE W A S N O VIOLATION OF 502 BECAUSE THE USERS WERE AUTHORIZED T O A C C E S S THEIR ACCOUNTS ; HOWEVER , THAT DISCUSSION JUMPS OVER A VERY BIG H U R D L E A N D THAT I S T H E BASIS FOR O U R MOTION FOR SUMMARY JUDGEMENT. WE THINK T H E C O U R T D O E S N'T EVEN GET THERE BECAUSE FACEBOOK LACKS STANDING TO ASSERT A N Y C L A I M FOR 502 EVEN I F THERE WAS A VIOLATION. A N D THE REASON I S BECAUSE YOUR HONOR, CALIFORNIA' S P E N A L CODE SECTION 5 0 2 IS, OF C O U R S E, A C R I M I N A L STATUTE , IT 'S MEANT TO BE ENFORCED BY THE GOVERNMENT. IT DOES, HOWEVER, C R E A T E A PRIVATE RIGHT OF A C T I O N I N CERTAIN LIMITED CIRCUMSTANCES. AND THOSE A R E SPELLED O U T I N SECTION 5 0 2 ( E)( 1) WHICH CREATES PRIVATE L I T I G A T E S T A N D I N G F O R THE OWNER OR 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 L E S S E E O F A COMPUTER W H O H A S SUFFERED DAMAGE OR LOSS BY REASON OF A VIOLATION . AND OUR MOTION FOR SUMMARY JUDGEMENT, YOUR HONOR, IS PREMISED ON T H E C O M P L E T E ABSENCE OF A N Y ALLEGATION THAT FACEBOOK SUFFERED DAMAGE OR LOSS COGNIZABLE U N D E R T H E STATUTE O R THAT IT MADE WHAT' S C A L L E D A V I C T I M EXPENDITURE, WHICH IS A PARTICULAR TYPE O F LOSS , RECOGNIZED UNDER SECTION 5 0 2. WHAT HAPPENED IN THIS CASE , YOUR HONOR , IS THAT FACEBOOK USERS WHO WERE AUTHORIZED, HAD ACCOUNTS ON FACEBOOK , H A D PASSWORDS A N D L O GI N N A M E S I S S U E D B Y F A C E B O O K, HAD PERMISSION TO ACCESS THEIR FACEBOOK ACCOUNTS , D I D SO THROUGH A DIFFERENT BROWSER OFFERED B Y POWER THAT PROVIDED ADDITIONAL UTILITIES THAT FACEBOOK DIDN' T WANT TO HAVE PROVIDED . AND WHEN THOSE USERS ACCESSED THEIR OWN ACCOUNTS THEY DID N O T TAKE A N Y A C T I O N THAT C A U S E D A D A M A G E O R LOSS TO FACEBOOK ; THEY H A D N O E F F E C T ON FACEBOOK WHATSOEVER. SO A FUNDAMENTAL PREREQUISITE F O R A PRIVATE LITIGANT LIKE FACEBOOK T O ASSERT A CLAIM UNDER 5 0 2 I S THEY HAVE TO SHOW O N E OF TWO T H I N G S: THEY HAVE T O SHOW AN I N J U R Y A S DEFINED BY 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 T H E STATUTE , W H I C H I S DEFINED BY 5 0 2 ( B)( 8) AS THE ALTERATION, DELETION , D A M A G E OR DESTRUCTION OF A COMPUTER SYSTEM, COMPUTER NETWORK, COMPUTER PROGRAM OR DATA, OR T H E D E N I A L OF ACCESS TO LEGITIMATE USERS ; THAT 'S ONE THING THEY COULD SHOW. OR ALTERNATIVELY THEY C O U L D SHOW WHAT' S CALLE D A V I C T I M E X P E N D I T U R E W H I C H I S IDENTIFIED IN 5 0 2(B )(9 ) W H I C H I S T H E EXPENDITURE OF RESOURCES REASONABLY AND NECESSARILY INCURRED BY T H E O W N E R O R L E S S E E O F T H E COMPUTER SYSTEM TO V E R I F Y THAT T H E INJURIES DESCRIBED I N ( B)( 8), NAMELY T H E ALTERATION, DELETION , D A M A G E, OR DESTRUCTION OF THEIR COMPUTER S Y S T E M, NETWORK O R DATA , E I T H E R DID OR D I D N O T OCCUR. N O W, IN THIS CASE FACEBOOK FILED A COMPLAINT AND THEY FILED A N AMENDED COMPLAINT. AND IN PLEADING THEIR 5 0 2 C L A I M I N BOTH INSTANCES T H E ONLY INJURY THEY ALLEGE W A S I N J U R Y TO THEIR "R E PUTATION A N D GOOD WILL. " AND YOUR HONOR, THAT' S AT PARAGRAPHS 118 A N D 1 1 9 OF FACEBOOK' S AMENDED COMPLAINT. THAT' S T H E ONLY INJURY THEY ALLEGE. THEY SAY , " OUR REPUTATION AND GOOD WILL W A S HARMED." N O W, IN POWER' S A N S W E R WE DENY THAT . AND SO ON T H E 1 2(C ) M O T I O N IT HAS TO BE PRESUMED FALSE . 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 B U T T H E MORE IMPORTANT POINT, YOUR HONOR, IS WHETHER THAT ALLEGATION IS TRUE OR FALSE ABOUT AN INJURY T O REPUTATION A N D GOOD WILL, THAT TYPE O F I N J U R Y DOES N O T QUALIFY AS AN I N J U R Y U N D E R 5 0 2 (B )(8 ). IT DOES NOT QUALIFY AS A V I C T I M EXPENDITURE UNDER 5 0 2(B )(9 ) A N D DOES N O T QUALIFY UNDER DAMAGE O R LOSS UNDER 5 0 2(B )(1 ). SO B E F O R E F A C E B O O K C A N BE HEARD TO COMPLAIN THAT SOMEONE H A S VIOLATED 502 (C) , THEY HAVE TO SHOW O N E OF THOSE TWO T H I N G S. T H E C O U R T: DO Y O U E Q U A T E INJURY A N D VICTIM EXPENDITURE UNDER THE STATUTE WITH DAMAGE O R LOSS? IN OTHER WORDS , A R E THE ONLY THINGS THAT A R E D A M A G E OR LOSS, WHAT I S DEFINED UNDER S U BPARAGRAPHS 8 A N D 9, DEFINED A S I N J U R Y OR VICTIM EXPENDITURE ? MR . B U R S O R: T H E C O U R T: MR . B U R S O R: Y E S. WHERE DO Y O U G E T THAT? WHERE I GET THAT , YOUR HONOR, IS FROM THE FACT THAT 5 0 2( E)( 1) USES T H E E X A C T SAME LANGUAGE VERBATIM AS (B )(9 ) W H I C H DEFINES VICTIM EXPENDITURE . IF Y O U LOOK AT (E )(1 ), THE LANGUAGE THAT TALKS ABOUT ANY EXPENDITURE REASONABLY AND 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NECESSARILY INCURRED BY T H E O W N E R O R L E S S E E TO VERIFY THAT A COMPUTER SYSTEM , COMPUTER NETWORK , COMPUTER PROGRAM OR DATA W A S OR WAS N O T ALTERED D A M A G ED OR DELETED B Y T H E ACCESS . THAT LANGUAGE IS IDENTICAL TO T H E DEFINITION OF VICTIM EXPENDITURE IN (B )(9 ). AND IF Y O U LOOK TO T H E DEFINITION OF I N J U R Y I N ( B)( 8), IT SAYS "INJURY M E A N S DAMAGE. " INJURY I S A DEFINED TERM T O INCLUDE D A M A G E A N D SOME O T H E R - - A N D TYPES OF DAMAGE LIKE ALTERATION, DELETION , O R DESTRUCTION O F A COMPUTER SYSTEM O R COMPUTER DATA . SO THERE IS NO FORM OF DAMAGE OR LOSS THAT COULD GIVE RISE TO STANDING UNDER 5 0 2(E )(1 ) THAT WOULD NOT ALSO QUALIFY A S A N I N J U R Y OR VICTIM EXPENDITURE UNDER (B )(8 ) O R ( B)( 9). T H E C O U R T: L E T'S A S S U M E I GO THAT WAY , A N D I C A N S E E WHY Y O U A R G U ED THAT, ALTHOUGH THE STATUTE USES T E R M S THAT A R E N O T ALWAYS AS DEFINED AS SYMMETRICALLY AS YOU A R E ARGUING . W H Y W O U L D N' T A CIRCUMSTANCE SUCH AS THIS WHERE THIS CIRCUMSTANCE WHERE FACEBOOK INVESTIGATED WHATEVER W A S G O I N G O N A N D UNDERTOOK MEASURES TO PROTECT THE INTEGRITY, AS IT DEFINED I T, OF ITS S Y S T E M, WHY W O U L D N'T THOSE QUALIFY AS DAMAGE OR 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 LOSS? MR . B U R S O R: WELL , THEY WOULDN'T QUALIFY YOUR HONOR BECAUSE THEY D O N'T MEET THE CRITERIA THAT ARE SPELLED OUT IN T H E STATUTE . I THINK FACEBOOK CONCEDES THAT THEY HAVE N O T S U F F E R E D A N I N J U R Y AS DEFINED B Y T H E STATUTE. THEIR ARGUMENT IS WE MADE THESE EXPENDITURES TO INVESTIGATE WHAT WAS HAPPENING, TO HAVE D I S C U S S I O N S WITH MR. VACHANI AND THEN TO THEN B L O C K T H E IP ADDRESS. A N D BECAUSE WE MADE THOSE EXPENDITURES WHICH A R E N O T REALLY SPECIFIED I N A N Y WAY , E I T H E R IN T H E P L E A D I N GS OR EVIDENTIARY MATERIALS B E F O R E T H E C O U R T, FACEBOOK' S INTENTION IS ANY EXPENDITURE WILL DO. YOUR HONOR, IN O U R R E P L Y B R I E F W E B R O K E THESE O U T O N E BY ONE A N D EXPLAINED WHY EACH ONE OF THEM FAILED T H E TEST UNDER 5 0 2(B )(9 ) A N D 502 (E) (1) . N O W, WE HAD T H E DISCUSSION ABOUT (B )(8 ) A N D T H E DEFINITION O F I N J U R Y AND I THINK THAT'S IMPORTANT, BUT IT 'S IMPORTANT TO RECOGNIZE THAT FACEBOOK HAS CONCEDE D THAT POINT . AN I N J U R Y. THEY D O N' T HAVE THEY RELY ENTIRELY O N THESE EXPENDITURES. SO IT 'S ENTIRELY A ( B)( 9)/ (E) (1) ISSUE 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WHERE (B )(9 ) A N D (E) (1) U S E T H E IDENTICAL LANGUAGE . A N D T H E R E'S THREE REQUIREMENTS F O R AN EXPENDITURE TO FALL UNDER ONE OF THOSE STATUTES . N U M B E R O N E, IT H A S T O B E REASONABLY INCURRED . IT H A S T O B E N E C E S S A R I L Y I N C U R R E D. AND NUMBER TWO , THREE , I T H A S TO BE BY REASON OF -- IT H A S T O B E INCURRED TO V E R I F Y " WHETHER A N ALTERATION , D E L E T I O N OR D A M A G E H A S OCCURRED TO THE DATA OR THE COMPUTER NETWORK. " NOW FACEBOOK - T H E C O U R T: WHERE DO Y O U G E T THE REASONABLY INCURRED -- THERE' S N O S T A N D A R D A S T O A N AMOUNT HERE , CORRECT ? MR . B U R S O R: T H E R E'S NO STANDARD AS TO AN A M O U N T, BUT I GET REASONABLY AND NECESSARILY FROM T H E L A N G U A G E O F ( E)( 1) AND (B )(9 ) W H I C H SAYS THAT T H E E X P E N D I T U R E H A S TO BE REASONABLY A N D NECESSARILY INCURRED . A N D I T H A S TO BE REASONABLE A N D NECESSARILY INCURRED FOR A PARTICULAR PURPOSE. THAT PURPOSE B E I N G " TO VERIFY THAT A C O M P U T E R SYSTEM, COMPUTER NETWORK, COMPUTER PROGRAM O R DATA W A S O R W A S NOT ALTERED, DAMAGED, OR DELETED BY THE ACCESS." SO T H E STATUTE DOESN 'T SAY A N Y 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXPENDITURE , I T D O E S N'T S A Y I T H A S TO BE A CERTAIN AMOUNT. T H E C O U R T: IS THIS A T H I R D P A R T Y STANDARD , REASONABLE AND NECESSARILY INCURRED? MR . B U R S O R: YOUR HONOR , I THINK WHEN THE L A W USES T H E TERM "REASONABLE ," THAT'S AN OBJECTIVE STANDARD , Y E S. SO YOUR HONOR, WHEN THE M O T I O N CAME IN , FACEBOOK SAID VERY LITTLE ABOUT WHAT THEY DID OTHER THAN THEY T R A C KED A N D BLOCKED T H E A S S E S S. THEY NEVER SAID I N THEIR MOVING PAPERS THAT THE A S S E S S C A U S E D ANY I N J U R Y, ALTERATION, OR DELETION OF DATA. THEY DIDN' T P U T IN ANY EVIDENCE THEY DIDN'T P U T THAT SUGGESTED THAT THAT HAPPENED. ANY EVIDENCE THAT THEY EVEN HAD A CONCERN THAT THAT HAPPENED . THEY DIDN 'T PUT IN EVIDENCE THAT THE R E A S O N THEY TRACKED THE A C C E S S W A S OUT OF CONCERN THAT THERE WAS AN ALTERATION OR DELETE OF DATA. NOTHING ABOUT THIS. WE THEN FILED A C R O S S M O T I O N FOR SUMMARY JUDGEMENT O N THIS POINT S A Y I N G F A C E B O O K H A S NO STANDING BECAUSE THEY HAVE NO I N J U R Y. THEY' VE ONLY PLEADED HARM T O REPUTATION , THAT DOESN 'T QUALIFY. THEY THEN CAME BACK -T H E C O U R T: LET M E SLOW YOU DOWN BECAUSE 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THESE A R E IMPORTANT ENOUGH THAT I WANT TO UNDERSTAND BECAUSE THIS IS A L L STATUTORY INTERPRETATION . I DON 'T HAVE MUCH TO GO ON IN TERMS OF H O W T O LOOK AT T H E STATUTE , B U T IT SEEMS TO ME AS I HEAR YOUR A R G U M E N T, IF A T H I R D P A R T Y S T A N D A R D O F REASONABILITY IS TO BE APPLIED A N D THE OWNER OF T H E SYSTEM KNOWS THAT THERE HAS BEEN THIS INTRUSION AND THEY WANT T O I N V E S T I G A T E WHETHER IT H A S ALTERED , DAMAGED ANYTHING, WHETHER OR NOT IT ACTUALLY H A S TAKEN PLACE A N D SOME EXPENDITURE IS INCURRED F O R THAT. YOUR ARGUMENT IS THAT THAT 'S NOT COVERED BY T H E STATUTE ; I S THAT CORRECT? MR . B U R S O R: YOUR HONOR , I N ORDER T O B E COVERED IT WOULD HAVE T O B E REASONABLY INCURRED A N D THERE WOULD HAVE TO BE EVIDENCE OF THAT B U T THAT SKIPS OVER -T H E C O U R T: HYPOTHETICAL. I INCLUDED THAT I N M Y I SAID I F THEY REASONABLY AND NECESSARILY , MEETING A THIRD PARTY STANDARD, DECIDED THEY A R E GOING TO INVESTIGATE AND WHAT THEY FIND IS THERE' S N O LOSS , THAT THAT EXPENSE O F T H E INVESTIGATION IS NOT COVERED; IS THAT CORRECT? THAT YOUR ARGUMENT? 20 IS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ISSUE . STANDARD . REQUIRED ? MR . B U R S O R: N O, THAT'S N O T. YOUR HONOR, I THINK THAT WOULD B E COVERED . IF THEY MADE AN EXPENDITURE F O R T H E PURPOSE O F VERIFYING -T H E C O U R T: H O W MUCH OF AN EXPENDITURE IS MR . B U R S O R: MINIMUS EXPENDITURE. T H E C O U R T: MR . B U R S O R: EXPENDITURE . T H E C O U R T: SOMETHING BEYOND A DE WHERE DO Y O U G E T THAT? WELL , T H E R E H A S TO BE SOME RIGHT . BUT THERE 'S NO MR . B U R S O R: T H E C O U R T: T H E R E'S NO A M O U N T S T A T E D. IF A N Y E X P E N D I T U R E I S MADE TO INVESTIGATE , T O V E R I F Y, EVEN IF THERE' S N O HARM T H E PARTY HAS STANDING? MR . B U R S O R: T H E C O U R T: CORRECT . A L L R I G H T. N O W L E T ME TURN T O YOUR OPPONENT ON THIS I WILL COME BACK. I WILL COME BACK, B U T I WANT TO HEAR O N T H E STANDING ISSUE. MR . CHATTERJEE : YOUR HONOR. FIRST OF A L L T H E R E A R E TWO CASES THAT I THINK A R E PARTICULARLY IMPORTANT TO READ WITH 21 I W O U L D B E H A P P Y T O, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 RESPECT TO THE D A M A G E O R LOSS ISSUE . ONE IS T H E COMPUTER FRAUD A N D A B U S E A C T CASE A N D THE OTHER IS ACTUALLY A CALIFORNIA P E N A L CODE 5 0 2(C ) CASE O U T OF , O F A L L PLACES , T H E DISTRICT OF JEW J E R S E Y. T H E C O U R T: WHY I S THAT NOTEWORTHY? THE ONLY REASON IS IT 'S MR . CHATTERJEE : A NEW J E R S E Y C O U R T INTERPRETING CALIFORNIA P E N A L CODE 502 (C) WHICH IS A LITTLE B I T U NUSUAL . T H E C O U R T: I SEE . AND T H E N E W JERSEY CASE MR . CHATTERJEE : IS J O S E P H O A T HOLDINGS, A N D T H E CITE O N I T I S 2009 , U. S. DISTRICT LEXIS 95909. AND THEN THE OTHER I S THE SHURGARD STORAGE CENTERS, INC . CASE O U T O F WESTERN DISTRICT OF WASHINGTON, 1 1 9 F . S U PP 2D 1121. IN BOTH OF THOSE CASES -- ONE IS UNDER T H E C O M P U T E R F R A U D A N D ABUSE ACT , THAT 'S THE SHURGARD STORAGE CASE, AND T H E J O S E P H OAT HOLDINGS CASE IS UNDER 502 (C) , THEY BOTH ENDORSE YOUR HONOR' S Q U E S T I O N W H I C H I S, IF YOU A R E S P E N D I N G E F F O R T T O T R Y AND STOP AN INTRUSION , THAT IS D A M A G E OR LOSS. N O W T H E R E'S A STATUTORY INTERPRETATION QUESTION THAT I THINK YOUR HONOR CORRECTLY NOTICED ABOUT T H E 5 0 2( E)( 1) STANDING REQUIREMENT. 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 T H E F I R S T T H I N G T O N O T I C E ABOUT THE D A M A G E O R LOSS LANGUAGE IS THAT DAMAGE OR LOSS IS NOT SOMETHING THAT I S EXPRESSLY DEFINED I N THE STATUTE. I THINK YOUR HONOR' S QUESTIONS PROPERLY NOTED THAT THE DEFINITIONS THAT MR. B U R S O R R E L I E D UPON ARE N O T A B O U T D A M A G E OR LOSS, THEY A R E DEFINING OTHER TERMS . W H Y I S THAT SO ? BECAUSE THE STATUTE UNDER 5 0 2(E )(1 ) SAYS THAT FACEBOOK, OR A PERSON W H O IS A VICTIM OF THIS CRIME, C A N FILE A CIVIL ACTION AGAINST THE VIOLATOR F O R COMPENSATORY DAMAGES A N D INJUNCTIVE RELIEF OR OTHER EQUITABLE R E L I E F. FOLLOWING THAT PORTION OF 502 (E) (1) THERE IS O N E O F T H E THINGS THAT COMPENSATORY DAMAGES SHALL INCLUDE. B U T THE STATUTE IN AND OF I T S E L F IDENTIFIES THAT T H E R E C A N BE OTHER FORMS OF HARM B E Y O N D COMPENSATORY DAMAGES BECAUSE IT A L L O W S F O R INJUNCTIVE OR OTHER FORMS OF EQUITABLE RE LIEF. IT 'S PRECISELY T H E R E L I E F WE ARE SEEKING HERE. IN THIS CASE, WHEN P O W E R DECIDED TO E N G A G E I N I T S COMPUTER INTRUSION , W E H A D TO COMMIT RESOURCES T O SEND ING A CEASE AND D E S I S T L E T T E R, WE HAD T O SEND RESOURCES T O ENGAGING I N NEGOTIATION WHICH THEY LATER BAILED O U T O F, WE HAD TO E N G A G E I N E F F O R TS AND EXPENDITURES I N O RD E R T O P U T UP 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TECHNICAL B A R R I E R S, AND THEN WE HAD TO E N G A G E I N EFFORTS TO EVALUATE WHAT H A D ACTUALLY BEEN DONE BY POWER . THOSE A R E A L L THE SORTS OF DAMAGES AND LOSSE S THAT 5 0 2(C ), THE SHURGARD STORAGE CASE A N D JOSEPH OAT RECOGNIZED ARE PROPER . T H E C O U R T: WELL, L E T M E D O THIS . I TAKE SERIOUSLY THIS QUESTION ABOUT STANDING AND I WILL TAKE A LOOK AT IT . MY INITIAL R E A C T I O N I S THAT I S H O U L D A C C O R D TO FACEBOOK, STANDING TO A S S E R T A 5 0 2 VIOLATION S O THAT I CAN G E T T O T H E MERITS OF WHETHER OR NOT THIS CONSTITUTES SUCH A VIOLATION, BECAUSE IT SEEMS TO ME THAT I D O N'T WANT TO SET T O O HIGH A BARRIER OF ALLEGED VICTIM TO AT LEAST BRING T H E M A T T E R TO A C O U R T. A N D S O I F I WERE TO SAY FACEBOOK H A S N O STANDING I WOULD SAY I' M N O T EVEN G O I N G T O L I S T E N OF WHETHER OR NOT THERE 'S BEEN A VIOLATION O F 5 0 2, BECAUSE I T H I N K T H E LANGUAGE OF THE STATUTE HAVING TO DO WITH VERIFICATION A N D T H O S E K I N D S O F T E R M S ADMIT TO LEGITIMATE, REASONABLE, INVESTIGATION AND WHETHER OR NOT A HARM I S A C T U A L L Y F O U N D A N D GIVES STANDING F O R SOMEONE TO BRING THAT TO A C O U R T. SO GO TO T H E Q U E S T I O N O F WHETHER OR N O T THERE IS A VIOLATION OF 5 0 2 O N T H E MERITS . 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR . B U R S O R: YOUR HONOR , I F I M A Y, I THINK -- I DIDN'T G E T A CHANCE T O ADDRESS T H E R E A L L Y CRUCIAL ISSUE ON T H E S T A N D I N G P O I N T W H I C H I S T H E PURPOSE OF T H E E X P E N D I T U R E, NOT T H E A M O U N T. WHEN YOU LOOK AT THE EXPENDITURES DESCRIBED I N F A C E B O O K'S P A P E R S A N D THE EXPENDITURES DESCRIBED B Y M R. CHATTERJEE A T THIS ARGUMENT , NONE OF THEM HAVE A N Y T H I N G T O D O WITH T H E PURPOSE DESCRIBED I N ( E)( 1). THE EXPENDITURES THEY LIST ARE THEY HIRED OUTSIDE COUNSEL T O SEND A CEASE AND D E S I S T L E T T E R. OUTSIDE COUNSEL D O N O T DO THINGS LIKE VERIFY IF T H E COMPUTER SYSTEM WAS INJURED. THEY SAY THEY EXPENDED RESOURCES TO BLOCK FUTURE ACCESS. THE PURPOSES PERMITTED UNDER 5 0 2(E )(1 ) HAVE NOTHING TO DO WITH F U T U R E ACCESS , THEY ARE A L L I N T H E PAST T E N S E T O V E R I F Y IF THERE W A S A N I N J U R Y TO THE COMPUTERS C A U S E D BY THE ACCESS. SO I THINK, YOUR HONOR, WHEN -- IF THE COURT IS TO FOCUS ON T H E A M O U N T OR OTHER ASPECTS O F THE EXPENDITURE THAT WAS MADE , THAT REALLY MISSES THE POINT THAT THESE EXPENDITURES WERE NOT MADE FOR THE PURPOSE DESCRIBED I N THE STATUTE. A N D YOUR HONOR , THIS IS A SUMMARY 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUDGEMENT MOTION. AND A SUMMARY JUDGEMENT MOTION IS N O T A B O U T T H E O R I E S THAT LAWYERS PUT INTO A BRIEF , I T'S ABOUT EVIDENCE . SO IF THERE W A S A N E X P E N D I T U R E MADE F O R THESE PURPOSES , I T W A S INCUMBENT ON T H E DEFENDANTS TO COME FORWARD WITH EVIDENCE . T H E C O U R T: MAYBE Y O U MISUNDERSTOOD ME . I' LL LOOK A T YOUR STANDING ISSUE , I 'M NOT DISMISSING IT, I' M N O T RULING AGAINST YOU . I'M A S K I N G Y O U TO MOVE O N T O T H E MERITS BECAUSE IF I G E T OVER IT A N D I HAVEN 'T HEARD FROM Y O U ON THE M E R I T S THEN Y O U A R E IN TROUBLE. MR . B U R S O R: YOUR HONOR , O N THE MERITS , THERE W A S N O - - EVEN IF FACEBOOK H A D S T A N D I N G B A S E D ON THIS EPHEMERAL T H E O R Y O F I N J U R Y BECAUSE THEY HIRED LAWYERS, THERE IS NO VIOLATION O F 5 0 2( C) BY POWER BECAUSE EVERY ACCESS TO FACEBOOK 'S WEBSITE W A S MADE BY AN AUTHORIZED FACEBOOK USER WITH LEGITIMATE LOG IN CREDENTIALS WHO UN DENIABLY HAD P E RMISSION TO ACCESS THEIR O W N USER DATA ON FACEBOOK ; T H E R E I S I S N' T EVEN A DISPUTE A B O U T THAT . POWER NEVER ACCESSED FACEBOOK DIRECTLY , IT W A S ONLY FACEBOOK SUBSCRIBERS ACCESSING T H E FACEBOOK WEBSITE THROUGH THE POWER BROWSER. THE SAME WAY A N Y USER WOULD A C C E S S F A C E B O O K THROUGH T H E 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTERNET EXPLORER BROWSER OR THE FIREFOX BROWSER O R THE SAFARI BROWSER. A L L P O W E R D I D WAS GIVE USERS A MEANS TO A C C E S S T H E I R O W N DATA W H E R E THEY WERE AUTHORIZED TO DO SO. A N D YOUR HONOR , T H E R E I S SOME CASE LAW A N D MUCH OF IT IS DISCUSSED I N T H E ELECTRONIC FRONTIER FOUNDATION AMICUS BRIEF . WE FOCUSE D HEAVILY ON THE STANDING ARGUMENT , A N D WE ARGUED AUTHORIZATION AS WELL A N D EFF FOCUSED ON THAT A S WELL IN THEIR AMICUS BRIEF . B U T T H E R E A R E SEVERAL C A S E S, YOUR H O N O R, THAT STAND FOR T H E P R O P O S I T I O N THAT A C C E S S I S N O T UNAUTHORIZED U N D E R 5 0 2 IF IT' S MADE BY A PERSON W H O H A S AUTHORIZATION TO A C C E S S T H E COMPUTER BUT THEN ACCESSES T H E C O M P U T E R F O R A PURPOSE OR IN A MANNER THAT GOES B E Y O N D THE DEFINED AUTHORIZATION. I WILL GIVE TWO EXAMPLES. CHRIS MAN V. IN L O S ANGELES, THE CASE BEFORE T H E CALIFORNIA COURT OF APPEAL , A P O L I C E OFFICER H A D GONE AND USED THE P O L I C E DEPARTMENT 'S COMPUTERS , T H E CITY 'S COMPUTERS , T O LOOK UP INFORMATION ABOUT CELEBRITIES A N D O T H E R MATTERS THAT HE HAD NO BUSINESS LOOKING AT. SO HE W A S AUTHORIZED TO U S E T H E COMPUTER S Y S T E M B U T HE WAS ONLY AUTHOR I Z E D T O U S E IT FOR 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROPER POLICE BUSINESS. AND WHEN H E WENT AND L O O K E D A T CELEBRITY GOSSIP TYPE GOSSIP T H I N G S, HE E X C E E DED WHAT HE WAS AUTHORIZED TO DO. AND THE CALIFORNIA COURT O F APPEALS SAID NO , THAT IS N O T UNAUTHORIZED ASSESS UNDER 5 0 2 BECAUSE THE P O L I C E OFFICER W A S AUTHORIZED TO U S E T H E C O M P U T E R, HE SIMPLY WENT BEYOND T H E P R O P E R PURPOSES . T H E C O U R T: I' M F A M I L I A R WITH THAT CASE. L E T M E S E E IF I C A N PUT IT IN T H E CONTEXT OF WHAT' S HAPPENING HERE . HERE, L E T'S ASSUME THAT OFFICER GOES I N A N D H E'S LOOKING FOR INFORMATION F O R A PERSONAL PURPOSE, A N D T H E CITY O R WHOEVER IS OPERATING T H E SYSTEM KNOWS THAT PEOPLE ARE DOING THAT S O THEY PUT IN CERTAIN PROTECTIONS WHERE YOU NEED A P O L I C E CASE N U M B E R A N D YOU NEED THE SERGEANT W H O I S I N V O L V E D I N T H E CASE A N D A L L THAT INFORMATION T O B E A D D E D. A N D THIS P E R S O N D O E S N'T HAVE THAT, AND SO T H E TECHNOLOGY IS S E T U P S O THAT HE NEEDS TO G E T A R O U N D T H O S E REQUIREMENTS AND HE S T A R T S T O U S E SOME D E V I C E T O G E T AROUND IT . WOULD THAT CHANGE THE CIRCUMSTANCES WHERE IT BE COMES A HACK AS OPPOSED TO SOMEONE W H O HAS ACCESS? 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HERE? MR . B U R S O R: I D O N'T KNOW THE A N S W E R T O THAT, YOUR HONOR, BECAUSE I D O N' T T H I N K T H E R E'S A CASE THAT ADDRESSES THAT I S S U E. T H E C O U R T: I S N'T THAT WHAT'S RAISED IN OTHER WORDS , WHAT FACEBOOK SAID THEY D I D W A S IT PUT IN A TECHNOLOGICAL BARRIER TO T H E KIND OF ACCESS THAT WAS C O M I N G I N. FOR EXAMPLE , I T IDENTIFIED MAYBE POWER' S, AS A WEBSITE , THAT THROUGH WHICH IT WOULD NOT ALLOW . SO IN ORDER TO G E T A R O U N D THAT, POWER MADE SOME MODIFICATIONS TO I T S E L F O R T O H O W IT ACCESSED FACEBOOK TO DIS GUISE WHAT' S G O I N G O N, AND THAT THEN B ECAME SOMETHING OTHER THAN THE USER SIMPLY USING P O WER AS T H E K E Y TO ENTERING INTO THEIR OWN ACCOUNT. MR . B U R S O R: WELL , ACTUALLY THE LAST PART THE OF YOUR HONOR' S STATEMENT IS NOT ACCURATE . USERS WERE STILL USING THEIR AUTHORIZED USERNAMES A N D P A S S W O R DS TO GET INTO THEIR ACCOUNT. THERE WAS A DISPUTE BETWEEN POWER AND FACEBOOK AS TO WHETHER POWER WAS GOING TO BE ALLOWED TO OFFER THOSE SERVICES SO THAT P E O P L E COULD ACCESS THEIR ACCOUNTS THROUGH POWER . A N D I THINK IF YOUR HONOR TAKES A LOOK AT T H E E V I D E N C E THAT W A S SUBMITTED BY FACEBOOK 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ATTACHED TO MR . A V A L O S' S D E C L A R A T I O N W H E R E H E SUBMITTED T H E BACK A N D FORTH BETWEEN M R. VACHANI A N D T H E FACEBOOK FOLKS. Y O U CAN S E E T H E R E'S A BACK A N D F O R T H W H E R E P O W E R I S A N E W B U S I N E S S THAT 'S START ING A N D THEY WANT TO BE ON GOOD T E R M S WITH FACEBOOK SO THEY ARE CONSTANTLY TRYING TO E N G A G E FACEBOOK TO SOLVE WHATEVER PROBLEM FACEBOOK HAS A N D ATTACH I N A N APPROPRIATE WAY WITHOUT - - WHETHER POWER H A D A LEGAL ENTITLEMENT TO DO WHAT THEY WERE DOING , W H I C H THEY BELIEVE THEY D I D, NEVER THE LESS BECAUSE THEY W A N T E D GOOD RELATIONS, THEY WANTED TO WORK WITH FACEBOOK. A N D F A C E B O O K H A D THROWN UP THIS BARRIER A N D P O W E R D I D CIRCUMVENT THAT BARRIER, A N D THAT IS ESTABLISHED BY T H E PLEADINGS. B U T POWER' S CIRCUMVENTION STILL DID NOTHING OTHER THAN A L L O W USERS TO CONTINUE TO A C C E S S T H E I R O W N ACCOUNTS WITH THE KEYS AND PASSWORDS THAT FACEBOOK HAD GIVEN THEM. WHAT POWER DID W A S T O D E F E N D ITSELF SO THAT IT WOULD BE ON THE SAME FOOTING WITH EVERY OTHER BROWSER SO THE USER USI N G THE FACEBOOK BROWSER COULD ACCESS IT T H E SAME AS SOMEONE USING INTERNET EXPLORER OR FIREFOX OR SAFARI T H E C O U R T: SO I SHOULD S A Y A S A M A T T E R 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OF L A W THAT A N Y TECHNOLOGICAL BARRIER WHICH FACEBOOK E R E C T S T O I T S USERS' A C C E S S C A N N O T, AS A M A T T E R O F L A W, VIOLATE 502 ? MR . B U R S O R: W E A R E NOT A S K I N G Y O U TO DO THAT AT THIS HEARING , YOUR HONOR . T H E C O U R T: WELL, WHERE IS T H E LINE ? IN OTHER WORDS , I F I -- IF THERE IS A TECHNOLOGICAL BARRIER THAT FACEBOOK COULD ERECT WHERE I T S U S E R S, GOING THROUGH P O W E R, WOULD VIOLATE 5 0 2, DON 'T I NEED TO KNOW WHERE THAT I S S O THAT I C A N S A Y CLEARLY I 'M NOT AT THAT LINE I N THIS CASE? SO THAT' S W H Y I A S K E D T H E QUESTION. MR . B U R S O R: THAT 'S A DIFFICULT QUESTION, YOUR HONOR, PARTICULARLY I N A CASE WHERE THERE' S N O EVIDENTIARY R E C O R D PERTINENT TO THAT Q U E S T I O N. T H E C O U R T: REASON I 'M CONCERNED . L E T M E TAKE THAT AS THE THIS I S A MOTION FOR SO IF THERE IS A - - JUDGEMENT O N THE PLEADINGS . THAT MOTION REQUIRES THAT EVERYTHING I ASSUME O N H I S SIDE C A N B E P R O V E D AND I' VE GOT TO CONSTRUE T H E EVIDENCE FAVORABLY T O P O W E R I N THIS CASE. THIS IS VERY E A R L Y I N THIS LITIGATION AND I CAN APPRECIATE WHERE BOTH S I D E S W O U L D WANT TO HAVE EARLY COURT DETERMINATION, BUT AM I IN A POSITION WHERE S I M P L Y T H E ADM ISSION ON T H E PART OF 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 POWER THAT IT USES I T S TOOLS TO ALLOW THOSE WHO WOULD WISH TO ACCESS FACEBOOK THROUGH POWER, AREN' T I TOO EARLY IN THIS CASE T O MAKE A JUDGMENT THAT THAT ALONE VIOLATES 502 ? MR . CHATTERJEE : NO, YOUR HONOR. Y O U CAN ISSUE AN ORDER ON JUDGMENT ON T H E PLEADINGS IN OUR FAVOR N O W. T H E C O U R T: W H Y? BECAUSE THEY ADMITTED AN MR . CHATTERJEE : EXTRA ORDINARY AMOUNT OF FACTS IN THEIR A N S W E R, AND THAT IS A K E Y ISSUE BECAUSE I T'S T H E SAME AS A STIPULATION , A REQUEST FOR ADMISSION. T H E C O U R T: HAVE THEY ADMITTED FACTS H A V I N G T O D O WITH T H E N A T U R E OF THE TECHNOLOGICAL BARRIER AND T H E N A T U R E OF HOW THEY OVERCAME IT THAT I CAN S A Y, AS A M A T T E R OF LAW , THAT CONSTITUTES HACKING? MR . CHATTERJEE : D I D. N O T ONLY D I D W E S U B M I T IT, MR . VACHANI HIMSELF PUT IN TESTIMONY S A Y I N G THAT H E DIDN 'T THINK PUTTING UP A TECHNICAL BARRIER W A S ALL THAT HARD AND HE CIRCUMVENTE D I T. T H E C O U R T: ARE ALL TECHNO LOGICAL YES , YOUR HONOR ; THEY BARRIERS TREATED EQUALLY? 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IN OTHER WORDS , A R E THERE SOME TECHNOLOGICAL BARRIERS SUCH A S MAYBE - - I KNOW THERE A R E I N U S E CERTAIN E N T R Y DEVICES SUCH AS, TYPE THE WORD THAT APPEARS BELOW , A N D IT' S KIND OF A LITTLE ASKEW SO AS TO A S S U R E T H E R E'S A REAL H U M A N BEING ON T H E O T H E R SIDE , THAT 'S A TECHNOLOGICAL BARRIER. B U T THERE COULD BE OTHERS THAT MAY OR M A Y N O T S E R V E A S A LINE OVER W H I C H Y O U CAN OR C A N N O T CROSS UNDER 5 0 2. A N D AREN 'T I T O O EARLY IN THIS BECAUSE A CASE TO BE DOING THE LINE DRAWING? JUDGMENT ON T H E PLEADINGS MEANS CASE OVER . MR . CHATTERJEE : SURE, YOUR H O N O R. BUT THIS IS A CASE THAT' S CONSIDERABLY MORE THAN THAT, RIGHT ? BECAUSE NOT ONLY WERE THERE TECHNOLOGICAL BARRIERS , W E TOLD THEM WE DIDN'T WANT THEM T O ACCESS. THE REGISTER V . VERIO CASE , WHICH W E CITE, IT W A S A CASE WHERE A C &D WAS SENT AND THEY SAID, P L E A S E D O N' T A C C E S S OUR WEBSITE IN THIS W A Y. A N D THAT 'S ENOUGH -- IF YOUR HONOR IS PUT IN T H E P O S I T I O N O F D E C I D I N G WHAT KIND OF TECHNICAL BARRIER IS ENOUGH , T H E R E'S NO SUPPORT FOR THAT KIND OF LANGUAGE IN T H E STATUTE . IN THIS CASE I T'S N O T A PLACE WHERE T H E LINE IS CLOSE, THEY CROSSE D I T R E A L L Y FAR . WHAT 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MORE COULD FACEBOOK HAVE DONE ? WE HAD A TERMS OF U S E; WE ALERTED THEM TO T H E TERM S O F U S E; WE SENT THEM A CEASE AND DESIST ; W E TRIED T O WORK WITH THEM; THEY ASSURED U S THEY WERE GONNA WORK WITH US . A L L O F T H E S E A R E ADMITTED IN THE PLEADINGS. WE THEN ERECTE D A TECHNICAL BARRIER . THEY SAID, MAYBE YOU SHOULDN' T A P P L Y 5 0 2( C) IN THIS INSTANCE BECAUSE IT WAS N'T R E A L L Y THAT HARD TO WORK AROUND I T. AT WHAT POINT DOES T H E COURT COME I N A N D S A Y, WELL, WE A R E N O T GOING TO RECOGNIZE WHAT 5 0 2(C ) SAYS BECAUSE THE BARRIER WASN'T E N O U G H - T H E C O U R T: SO Y O U D O N' T T H I N K A N Y TECHNOLOGICAL BARRIER I S SUFFICIENT ? MR . CHATTERJEE : I W O U L D S A Y UNDER THE FACTS THAT ARE ADMITTED IN THIS CASE, THE ESCALATION THAT W A S FOLLOWED AND T H E I N T E N T I O N A L DECISION THAT CONSTANTLY D I D NOT HONOR FACEBOOK 'S REQUESTS . THERE WAS A KNOWI N G A N D WITHOUT PERMISSION ACCESS TO T H E F A C E B O O K WEBSITE . THEY MET T H E EXPRESS -- THOSE ADMISSIONS MEET THE EXPRESS LANGUAGE OF CALIFORNIA P E N A L CODE 5 0 2(C ). MR . B U R S O R: T H E C O U R T: MR . B U R S O R: YOUR HONOR , M A Y I? CERTAINLY. THE ACTUAL ACCESS THAT 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OCCURRED IN THIS CASE A L L OCCURRED WITHIN A TWO MONTH SPAN, T W O A N D A HALF MONTHS - - LATE DECEMBER OF '0 8 THROUGH FEBRUARY OF '0 9. AND THE VERY SPARSE EVIDENCE THAT I S I N THE RECORD FROM THE VACHANI DECLARATION AND FROM MR . A V A L O S' S D E C L A R A T I O N ATTACHING A C O RR E S P O N D E N C E BETWEEN FACEBOOK AND MR . VACHANI , WHAT THAT SHOWS IS THAT THE PARTIES AT THAT TIME WERE ATTEMPTING T O RESOLVE THIS THROUGH H A V I N G P O W E R CONNECT TO FACEBOOK THROUGH MEANS THAT WERE GOING TO BE ACCEPTABLE TO BOTH S I D E S. WHAT IS NOT IN T H E R E C O R D IS THE T I M I N G OF WHEN THE SUPPOSED BARRIER OF THE IP BLOCKING W A S IMPLEMENTED , WHAT IS N O T I N T H E RECORD IS WHAT THE CIRCUMVENTION WAS THAT GOT A R O U N D T H E IP BLOCKING. WHAT IS NOT IN T H E R E C O R D IS WHERE THE PARTIES WERE IN THEIR DISCUSSIONS A N D WHETHER T H E CIRCUMVENTION WAS NECESSARY. T H E C O U R T: C A N I -- L E T M E A S K YOU THIS: C A N I S A Y A T L E A S T, HOWEVER, THAT I F FACEBOOK E R E C T S A TECHNOLOGICAL BARRIER, ANY CONDUCT TO OVERCOME IT IS WITHOUT PERMISSION, BY DEFINITION? MR . B U R S O R: I D O N'T THINK YOUR HONOR HAS THE RECORD BEFORE YOU T O MAKE A SWEEPING PRONOUNCEMENT OF THAT N A T U R E. 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IF THERE 'S GOING TO BE A B R O A D GENERAL STATEMENT T O THAT E F F E C T, IT OUGHT TO BE MADE O N A FULL EVIDENTIARY RECORD BY A COURT THAT K N O W S WHAT HAPPENED IN THIS CASE, KNOWS IT HAS AN A C T U A L CASE OR CONTROVERSY B E F O R E I T THAT CALLS F O R RESOLUTION IN THAT MATTER . T H E C O U R T: THAT MAY BE . IN OTHER WORDS , I S N' T T H E ESSENCE O F PERMISSION THAT Y O U DON 'T HAVE T O D O SOMETHING TO OVERCOME A BARRIER, PERMISSION M E A N S T H E GATE I S OPEN. S O I F THEY DO ANYTHING TO LOCK THE GATE, AREN' T Y O U, BY DEFINITION, THEN ENTERING WITHOUT PERMISSION? MR . B U R S O R: CLEARLY N O T, YOUR H O N O R, BECAUSE THAT W O U L D CLEARLY BE WRONG , WITH A L L D U E RESPECT, BECAUSE THERE WAS A GATE A N D THERE WAS A LOCK ON THE GATE, WHICH W A S T H E USERNAME AND PASSWORD ISSUED T O T H E FACEBOOK USERS. FACEBOOK USERS H A D P E RMISSION TO U S E THAT K E Y A N D THAT GATE BY USING T H E L O GI N NAME A N D PASS WORD; THAT'S A BARRIER. T H E C O U R T: TO T H E USER . THAT' S A FORM OF PERMISSION AND I CAN WORD IT IN A W A Y SUCH THAT IF T H E TECHNOLOGICAL BARRIER STILL ALLOWED A C C E S S S I M P L Y U S I N G T H E USERNAME AND PASSWORD , THAT 'S NOT 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A TECHNOLOGICAL BARRIER , I T'S ACTUALLY T H E SAME . BUT I F THE BARRIER I S ANYTHING MORE THAN THAT -- I'M T R Y I N G T O G E T TO WHETHER O R N O T I'M IN A 502 WORLD BECAUSE THE CLAIM IS UNDER 5 0 2, AND IF I' M I N T H E 502 WORLD IT STILL R A I S E S T H E QUESTION OF T H E M E R I T S OF THE CLAIM . T H E Q U E S T I O N THAT I' M PUTTING IS , A N D I P U T I T T O BOTH SIDES QUITE FRANKLY IS, IF THERE WERE TECHNOLOGICAL B A R R I E R S AREN 'T I, AS OPPOSED T O USERNAME A N D P A S S W O R D, ISN 'T THAT WHAT 5 0 2 I S A L L ABOUT ? MR . B U R S O R: L E T ME EXPLAIN, YOUR H O N O R, I THINK VERY QUICKLY AND PRECISELY, WHY THE COURT C A N'T MAKE THAT DETERMINATION N O W. T H E C O U R T D O E S N'T HAVE A R E C O R D OF WHAT T H E BARRIER W A S O R CIRCUMVENTION W A S. SO IF T H E PARTIES ARE IN T H E C O U R S E OF NEGOTIATING A RESOLUTION OR ATTEMPTING T O, WHICH IS CLEARLY T H E CASE, S E E T H E AVALOS DECLARATION , A N D FACEBOOK SAYS WE D O N'T WANT YOU ACCESSING O U R SITE I N THIS M A N N E R FROM THIS I P THEREFORE WE' VE BLOCKED I T, AND POWER IS WORKING ON A DIFFERENT MEANS OF ACCESS , T R Y I N G TO IMPLEMENT F A C E B O O K CONNECT A N D I S D O I N G S O THROUGH A DIFFERENT IP ADDRESS - - A N D I'M N O T S A Y I N G T H O S E A R E THE FACTS . I'M SAYING YOUR HONOR 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOESN 'T HAVE T H E FACTS BECAUSE F A C E B O O K P U T IN NO EVIDENCE . IF THAT WAS T H E CASE , T H E COURT DOESN' T HAVE A R E C O R D OF WHAT T H E BARRIER W A S, W H Y I T W A S IN PLACE , H O W IT WAS CIRCUMVENTED, WHETHER T H E CIRCUMVENTION WAS PART OF THE JOINT PROJECT BETWEEN T H E T W O COMPANIES OF T R YI N G T O FIND C O M M O N G R O U N D ON IMPLEMENTING THIS FACEBOOK CONNECT TECHNOLOGY. THESE A R E A L L OPEN QUESTIONS IN THE CASE BECAUSE FACEBOOK BROUGHT ITS MOTION BEFORE ANY EVIDENCE W A S DEVELOPED, WITHOUT ANY DISCOVERY. THEY COULD HAVE SUBMITTED A DECLARATION FROM AN EMPLOYEE SAYING , THIS IS T H E M E A N S W E USED TO BLOCK , A N D SPECIFIED IT , A N D HERE'S H O W I T W A S OVERCOME A N D HERE 'S WHY WE D I D THAT . T H E C O U R T: BY BRINGING T H E M O T I O N IT GIVES T H E C O U R T A N O P P O R T U N I T Y T O N A R R O W THE CASE. SO A R E Y O U SAYING I SHOULD R E S I S T EVEN T H E TEMPTATION TO S A Y I N O R D E R T O S T A T E A CLAIM UNDER THIS YOU MUST ALLEGE A TECHNOLOGICAL BARRIER A N D GIVE ME FACTS ? A N D I T S E E M S T O B E YOUR POSITION IS I SHOULDN' T EVEN SAY THAT , THE TECHNOLOGICAL BARRIER BY DEFINITION -- THERE' S N O BARRIER THAT CAN BE T O O HIGH OR TOO L O W. A N D SOMEHOW I' M B O T H E R E D B Y T H E 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NOTION THAT I SHOULDN'T S A Y A N Y T H I N G. N O W, I A M INTRIGUED BY THE N O T I O N THAT THERE 'S A SETTLEMENT BECAUSE I ALWAYS BELIEVE I N WORLD PEACE A N D I BELIEVE IT STARTS RIGHT HERE. SO IF Y O U TELL ME THAT THE PARTIES ARE WORKING OUT SOME KIND O F A RESOLUTION TO THIS PROBLEM WHICH WOULD AVOID THE COURT H A V I N G T O COMMENT AT ALL ON 5 0 2 A N D WHERE IT STANDS , BECAUSE I SEE T H E A M I C U S AND THAT MEANS THAT T H E R E'S A COMMUNITY O F P E O P L E OUT THERE , N O T SAYING Y O U T W O D O N'T REPRESENT THAT COMMUNITY, BUT THAT ARE CONCERNED WITH T H E STATUTE A N D H O W FAR IT GOES. SO QUITE FRANKLY I THOUGHT THAT IT WOULD BE BENEFICIAL TO STATE SOMETHING ON IT , B U T I D O N' T BELIEVE IN ACTING IF THERE 'S NO REASON TO A C T. SO IF Y O U TELL ME THAT THESE TWO PARTIES WILL RESOLVE THIS AND I WILL L E A V E I T T O SOME OTHER JUDGE TO D E F I N E T H E S E MATTERS , I 'M HAPPY TO DO THAT. MR . CHATTERJEE : YOUR H O N O R, WE DID T R Y MEDIATION I N THIS CASE THROUGH T H E COURT' S PROGRAM . WE MADE ZERO P R O G R E S S. JUST TO BE CLEAR, WHAT DOES F A C E B O O K WANT OUT O F THIS LITIGATION? WHAT FACEBOOK WANTS OUT O F THIS LITIGATION A T T H E END OF T H E D A Y IS THAT I F POWER CHOOSES TO ACCESS T H E F A C E B O O K WEBSITE , I T 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A C C E S S I T THROUGH T H E CONNECT PROGRAM WHICH IS WHAT HUNDREDS OF THOUSAND S O F O T H E R COMPANIES DO, INCLUDING POWER COMPETITORS. THAT' S A L L WE WANT. EVER WANTED IN THIS CASE. W H Y THEY C A N'T DO THAT. THAT' S A L L WE' VE A N D W E D O N' T UNDERSTAND INSTEAD , THEY WANT TO ENGAGE I N THIS UNRESTRICTED INTRUSION INTO O U R COMPUTER , A N D THEY P U T IT UNDER THE GUISE OF USER REQUESTS . IF Y O U LOOK AT PARAGRAPH 7 5 A N D 66 OF THEIR O W N A N S W E R, THEY ADMIT THEY A R E THE ONES DOING IT , P O W E R I S, NOT T H E U S E R S. T H E C O U R T: WELL, I' M A B O U T T O TAKE THIS M A T T E R U N D E R SUBMISSION , B U T I WILL GIVE YOU EACH KIND OF A CLOSING WORD. MR . B U R S O R: T H E C O U R T: YOUR HONOR -I UNDERSTAND I 'VE G O T T H E S E ANTI- TRUST CLAIMS , B U T I'M N O T DEALING WITH THOSE TODAY . MR . B U R S O R: A L L RIGHT. I CAN YOUR HONOR, MY CLOSING WORD WILL BE THIS: UNDERSTAND HOW IN THIS SORT O F N O V E L AREA OF T H E L A W, WE ARE AT A DIFFICULT SORT OF STITCH IN A SOMEWHAT N E W AREA OF T H E L A W AND T H E C O U R T W A N T S T O STATE A RULE WITH SOME CLARITY S O THAT NOT ONLY 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THESE PARTIES BUT OTHER P E O P L E O U T THERE IN THE WORLD IN THIS FIELD CAN KNOW WHAT T H E I R RESPONSIBILITIES AND WHAT THEIR OBLIGATIONS ARE . C A N UNDERSTAND T H E C O U R T'S DESIRE T O D O THAT . B U T I THINK T H E C O U R T H A S TO FOCUS IN ON T H E M O T I O N BEFORE IT . AND T H E M O T I O N THAT'S B E F O R E I IT DOES NOT PRESENT THE OPPORTUNITY F O R SUCH A SWEEPING PRONOUNCEMENT. A N D THE R E A S O N I T DOES N O T PRESENT THE OPPORTUNITY IS BECAUSE AS A M O T I O N FOR SUMMARY JUDGEMENT , T H E COURT HAS TO LOOK TO WHETHER FACEBOOK H A S M E T ITS EVIDENTIARY B U R D E N. A SUMMARY JUDGEMENT MOTION IS AN EVIDENTIARY M O T I O N, YOU HAVE TO PUT ON EVIDENCE . A N D THEY HAVE NOT P U T O N A N Y EVIDENCE THAT C O U L D ALLOW T H E C O U R T T O FORM A COGENT A N S W E R T O A N Y OF T H E VERY -- Y O U KNOW , T H E QUESTIONS T H E C O U R T A S K E D WERE VERY O N P O I N T, VERY IMPORTANT, THEY GO TO THE HEART OF T H E M A T T E R. B U T THAT D O E S N'T CHANGE T H E FACT THAT F A C E B O O K HASN 'T PUT IN EVIDENCE TO MEET ITS EVIDENTIARY BURDEN UNDER RULE 5 6 T O GET SUMMARY JUDGEMENT. WE HAVE -- ON THE STANDING POINT , W E D I D PUT I N EVIDENCE. WE P U T I N A DECLARATION F O R MR . VACHANI THAT SAID NONE OF THESE INJURIES HAPPENED , THEY NEVER COULD HAVE HAPPENED, FACEBOOK 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HAD N O CONCERN EVER THAT THEY WOULD HAVE HAPPENED. A N D I F Y O U GO AND LOOK AT THE CORRESPONDENCE BETWEEN MR. VACHANI AND FACEBOOK , T H E CONTEMPORANEOUS COR RESPONDENCE, THERE 'S NO CONCERN EXPRESSED BY A N Y P A R T Y T O T H O S E COMMUNICATIONS ABOUT ANY O F THESE THINGS TALKED ABOUT IN 5 0 2(E )(1 ) O R 5 0 2( B)( 9). A N D S O Y O U HAVE A CASE WHERE YOU HAVE A TOTALLY UNINJURED PARTY THAT' S T R Y I N G TO BULLY SOME SMALLER START UP THAT WANT S T O COMPETE WITH THEM. A N D THEY HAVEN 'T SHOWN AN INJURY A N D THEY HAVEN 'T PUT O N EVIDENCE O F A VIOLATION T O GET SUMMARY JUDGEMENT. SO THEIR M O T I O N F O R SUMMARY JUDGEMENT S H O U L D B E D E N I E D, OURS SHOULD BE GRANTED BECAUSE THEY DON 'T HAVE S T A N D I N G U N D E R 5 0 2( E)( 1). IF Y O U WANT TO COME INTO THIS COURT A N D G E T R E L I E F UNDER 502 , Y O U HAVE T O SHOW Y O U MADE AN EXPENDITURE REASONABLY OR NECESSARILY INCURRED FOR THESE PURPOSES . THEY DIDN 'T DO THAT. OR Y O U HAVE TO SHOW YOU HAVE AN INJURY , A N D THEY CONCEDE THEY DIDN' T HAVE AN I N J U R Y. THANK Y O U, YOUR H O N O R. T H E C O U R T: COUNSEL. 42 VERY WELL. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR . CHATTERJEE : I GUESS I WILL START WITH THE CORE DIS AGREEMENT AS TO WHETHER THIS I S I N FACT A N O V E L Q U E S T I O N O F L A W; IT I S N'T . C O U R T S HAVE RECOGNIZED FOR A LONG TIME THAT COMPUTER INTRUSIONS ARE PROTECTED . THEY HAVE BEEN PROTECTED UNDER THE COMPUTER FRAUD AND ABUSE A C T A N D THEY HAVE BEEN PROTECTED AS T H E NINTH CIRCUIT CASE O F E BAY V. BITTERS EDGE THAT I' M SURE YOUR H O N O R I S F A M I L I A R WITH THAT TRESPASS TO CHATTELS , A N D CALIFORNIA P E N A L CODE 5 0 2(C ). JUDGE SEEBORG IN THE CONNECTU CASE RECOGNIZED THAT THIS TYPE OF ACTION , A F A R LESS AGGRESSIVE FORM O F THIS TYPE OF ACTION , I S ACTIONABLE UNDER CALIFORNIA P E N A L CODE 5 0 2(C ). T H E J O S E P H OAT HOLDINGS CASE THAT I R E F E R RED TO Y O U GRANTED SUMMARY JUDGEMENT F O R A COMPUTER INTRUSION, YOUR H O N O R. WE 'RE N O T A S K I N G YOU TO DO ANYTHING H I G H L Y UNUSUAL HERE, WE A R E A S K I N G YOU TO F O L L O W WHAT THE LEGIONS OF CASES HAVE SAID IN T H E PAST THAT WHEN Y O U SAY T H E W E LCOME LIGHT IS N O T O N A N D P E O P L E D E C I D E TO WALK R I G H T PAST IT , THAT THAT IS CONSIDERED AND S H O U L D B E CONSIDERED A TRESPASS. WHEN WE HAVE T O C O N T I N U A L L Y E X P E N D MONEY TO NOTIFY THEM AND KEEP THE TRESPASSERS O U T, THAT THAT IS A 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O P E R D A M A G E OR LOSS U N D E R T H E LAW . THESE ARE ALL ADMISSIONS UNDER THE COMPLAINT. IN T A B A OF T H E B I N D E R I GAVE Y O U, YOUR HONOR, WE ACTUALLY WENT THROUGH EACH O N E O F T H E E L E M E N T S O F CALIFORNIA PENAL CODE 502 (C) A N D W E MARRIED IT TO THE VERY ADMISSIONS O R O T H E R E V I D E N C E SUBMITTED B Y THE PARTIES T O SHOW HOW EACH ELEMENT IS M E T. YOUR HONOR, THERE 'S NO QUESTION HERE THAT POWER MADE THE DECISION N O T T O COME INTO FACEBOOK THROUGH THE AUTHORIZED CHANNELS, B U T A F T E R THEY WERE EXPRESSLY TOLD AND REPEATEDLY TOLD THAT THAT' S T H E ONLY W A Y THEY S H O U L D COME IN , THEY CHOSE N O T T O DO THAT AND DECIDED TO HACK A R O U N D THE TECHNICAL MEASURES THAT FACEBOOK PUT IN PLAY. THOSE ARE THE PRECISE TYPE S O F THINGS THAT CALIFORNIA P E N A L CODE 5 0 2(C ) S E E K S T O PROTECT . T H E PREMISE THAT THE PLAINTIFF I S - WE 'RE T H E PLAINTIFF, I' M S O R R Y - - THAT POWER IS ARGUING, IS THAT IT SHOULDN'T BE -- IT S H O U L D HAVE TO BE A REALLY , R E A L L Y BIG DEAL. YOUR HONOR, T H E STATUTE DOES NOT D E F I N E AT WHAT POINT A TECHNICAL MEASURE H A S TO BE SO SUBSTANTIAL THAT IT COULD CONSTITUTES AN INTRUSION . 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COULD . HERE, FACEBOOK D I D EVERYTHING IT POSSIBLY POWER DECIDED N O T TO HONOR ANY OF IT . AND AT THAT POINT THEY S H O U L D BE ENJ O I N E D FROM E N T E R I N G FACEBOOK WITHOUT OUR EXPRESS PERMISSION. IT 'S THE ONLY WAY WE C A N G E T THAT R E L I E F, A N D THAT 'S WHAT 5 0 2(C ) S E E K S T O PROTECT . T H E C O U R T: THANK YOU BOTH . I THOUGHT THAT I WAS GOING TO ACTUALLY HEAR FROM A N AMICUS. M Y S T A F F GAVE ME A NOTE THAT WE H A D A C T U A L L Y CONSIDERED THAT THEIR BRIEF WAS FILED A N D WHAT WE W A N T E D W A S TO HAVE I T F I L E D SEPARATELY FROM THEIR REQUEST FOR PERMISSION . SO I SHOULD S A Y THAT NOTWITHSTANDING T H E PARTIES' UNDERSTANDING PERHAPS THAT THE COURT DID N O T HAVE THAT BRIEF UNDER CONSIDERATION BECAUSE IT W A S N O T FILED, I READ I T A N D I CONSIDERED IT A N D I T IS PART OF THE CONSIDERATIONS THAT THE COURT B R I N G S TO AT LEAST A PART O F THIS QUESTION . AND PERHAPS T H E A R G U M E N T T O D A Y H A S ADVANCED THE QUESTION B E Y O N D THAT TERMS OF USE ISSUE , B U T I H A D THOUGHT I T W O U L D BE WORTHWHILE TO ADDRESS I T. VERY WELL. MS . GRANICK : Y E S? I'M JENNIFER GRANICK AND I' M A L A W Y E R F O R THE ELECTRIC FRONTIER FOUNDATION. WE FILED T H E A M I C U S BRIEF IN QUESTION. 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 LEAVE . T H E C O U R T: MS . GRANICK : POINT , I F I M A Y. VERY WELL. JUST O N THE PROCEDURAL O U R UNDERSTANDING OF T H E - T H E C O U R T: MS . GRANICK : COME FORWARD. OUR UNDERSTANDING OF THE ORDER THAT THE COURT H A D F I L E D W A S THAT T H E BRIEF WHICH H A D BEEN ATTACHED TO O U R M O T I O N FOR LEAVE WOULD BE FILED ON T H E C O U R T D O C K E T. I DIDN' T UNDERSTAND FROM T H E MOTION THAT WE WERE S U P P O S E D T O TAKE ADDITIONAL A C T I O N TO FILE T H E BRIEF. T H E C O U R T: MS . GRANICK : MOTION F O R LEAVE. T H E C O U R T: MS . GRANICK : OKAY. NOW GIVEN YOUR DISCUSSION I SEE . WE HAD ATTACHED IT WITH THE TODAY I UNDERSTAND THAT WHAT WAS BEING ASKED F O R U S W A S T O TAKE T H E B R I E F A N D GO THROUGH E CF AND FILE IT AGAIN . T H E C O U R T: SEPARATE FROM THE M O T I O N F O R B U T I HAVE IT, SO I WILL C O N S I D E R - U N L E S S T H E R E'S SOME OBJECTION , I T SOUNDED LIKE THE NAMED PARTIES BELIEVED THAT S I N C E Y O U HADN'T DONE ANYTHING FURTHER THEY NEED N O T RESPOND TO IT . AND 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PERHAPS WHAT I UNDERSTAND THERE TO BE A REQUEST B E F O R E I ISSUE AN ORDER , I GIVE THEM A N O P P O R T U N I T Y TO RESPOND. MS . GRANICK : RIGHT. A N D YOUR HONOR IT M A Y B E A P P R O P R I A T E, GIVEN T H E DISCUSSION WE H A D I N T H E COURT TODAY, IT M A Y B E APPROPRIATE A T THIS POINT F O R U S T O, GIVEN T H E W A Y THE ARGUMENT H A S GONE A N D WHAT IT SEEMS THAT YOUR H O N O R'S CONCERN IS AND T H E PARTICULAR QUESTION OF TECHNOLOGICAL MEASURES AND CIRCUMVENTION, IT MIGHT BE APPROPRIATE F O R U S T O AMEND OUR BRIEF T O ADDRESS MORE SPECIFICALLY THE I S S U E S THAT WERE RAISED IN T H E HEARING TODAY A N D THEN TO FILE THAT AT SOME POINT IN TIME. T H E C O U R T: SURE. I W E LCOME YOUR I N P U T, U N L E S S T H E R E'S AN OBJECTION FROM T H E PARTIES . SO WHATEVER WE DO TODAY , S I N C E I PRESUME I HAVE A REQUEST FOR Y O U T O HAVE LEAVE TO RESPOND TO T H E A M I C U S. MR . CHATTERJEE : YES , YOUR HONOR , W E D O. ALTHOUGH WE WOULD P R E F E R F O R THINGS TO BE S E T, SUBMITTED BECAUSE THIS H A S BEEN LINGERING AROUND. T H E C O U R T: YOU LIKE CLOSURE, AND EVERYBODY DOES AND S O D O I . 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CAN -ME . VERY LONG. B U T I T DOES SEEM TO ME THE INITIAL CONCERN WITH TERMS O F USE STILL REMAINS WITH THE COURT A N D I I N T E N D T O ADDRESS IT . BUT IF Y O U HAVE CONCERNS THAT WOULD ADVANCE T H E ISSUE FOR T H E AMICUS T O EVEN TECHNOLOGICAL BARRIERS, HOW LONG WOULD IT TAKE YOU TO PROVIDE THE COURT WITH YOUR SUPPLEMENTAL B R I E F? MS . GRANICK : I D O N' T T H I N K I T W O U L D TAKE I, FRANKLY, THINK IT COULD BE SOMETHING WE COULD DO IN T W O W E E K S. T H E C O U R T: TWO WEEKS I S A LONG TIME FOR I WILL BE ON VACATION . MS . GRANICK : YOU A R E T H E JUDGE, SO I T H E C O U R T: T W O W E E K S? Y O U G O T IT. HOW LONG WILL Y O U NEED A F T E R T H E TWO -WEEK PERIOD THAT COUNSEL IS ASKING F O R F O R HER SUPPLEMENTAL T O RESPOND TO THAT? MR . CHATTERJEE : O N E T O T W O WEEKS. T H E C O U R T: MR . B U R S O R: T H E C O U R T: AND SIMULTANEOUSLY - W E W O U L D LIKE TO RESPOND. SO T H E W H O L E T H I N G WILL BE YOUR H O N O R, I W O U L D S A Y B E F O R E M E THEN IN FOUR WEEKS? MR . CHATTERJEE : YOUR H O N O R, IF I M A Y ASK 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A QUESTION, SHOULD THESE - - I JUST WANT T O MAKE SURE WE ARE N O T G O I N G THROUGH A N D REHASHING ALL OF THE PAST . S H O U L D W E B E FOCUSSING ON THE QUESTION YOUR HONOR ASKED ABOUT TECHNOLOGICAL MEASURE S AND WHERE S H O U L D T H E LINE B E D R A W N, OR SHOULD IT BE ANYTHING P E O P L E WANT TO S A Y? T H E C O U R T: CONCERNED A B O U T. WELL, THAT IS THE AREA I'M I WOULD HAVE YOU RESPOND T O THE E X T E N T Y O U WISH T O, TO TWO AREAS . FIRST IS T H E I S S U E O F T H E TERMS OF USE BARRIER AND WHETHER THAT QUALIFIES UNDER 502 , W H I C H WAS THE INITIAL POSITION I HAD FROM THE AMICUS. A N D T O T H E EXTENT THAT THE A M I C U S B R I E F WOULD A D D FURTHER ARGUMENT BEYOND WHAT Y O U'V E ALREADY ARGUED ON TECHNOLOGICAL TERMS AS PLED. Y O U C A L L E D IT A M O T I O N FOR SUMMARY JUDGEMENT, BUT TECHNICALLY IT 'S A M O T I O N FOR JUDGMENT ON T H E PLEADINGS. S O I ACCEPT WHATEVER POWER H A S ALLEGED AS PROVABLE , A N D SO WHAT I HAVE BEFORE M E I S F A C E B O O K'S ARGUMENT THAT THAT CONSTITUTES A VIOLATION OF 5 0 2. YOUR AMICUS BRIEF HAS T O MAKE THE SAME ASSUMPTION TO BE USEFUL . SO YOU HAVE AN OPPORTUNITY IN YOUR BRIEF TO RESPOND T O W H A T E V E R 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NEW INFORMATION I S SUBMITTED. MR . CHATTERJEE : THE TECHNOLOGICAL MEANS ? T H E C O U R T: Y E S. OKAY. THANK Y O U. SO WE ARE FOCUSSING O N MR . CHATTERJEE : MS . GRANICK : BUT I THINK ALSO, IF I UNDERSTAND CORRECTLY , THE SUBSTANTIVE, THE BRIEF W E ATTACHED -T H E C O U R T: Y E S, I SAID THAT INITIALLY . IN OTHER WORDS , T H E R E I S A N INITIAL M A T T E R I T S E E M S T O M E W E'V E OVER COME, BUT I WASN'T CLEAR WE H A D OVER COME I T WITH AN ACKNOWLEDGEMENT THAT IT WAS N O T A VIOLATION. I DO INTEND TO ADDRESS IT. FIRST AMICUS B R I E F. THAT 'S IN THE SO TO T H E E X T E N T YOU HAVEN 'T RESPONDED T O THAT A N D Y O U WISH T O, YOU M A Y I N THIS BRIEF . MR . CHATTERJEE : YOUR HONOR. MR . B U R S O R: YOUR HONOR , C A N I A S K FOR RIGHT. T H A N K Y O U, ONE SUBTLE CLARIFICATION. THERE W A S ALSO A MOTION ON O U R COUNTERCLAIMS THAT W A S NOTICED F O R TODAY. DOES THE COURT I N T E N D T O RULE ON THOSE OR TO HAVE ARGUMENT ON THOSE AT SOME DATE I N T H E FUTURE A N D THEN RULE 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ON THEM? T H E C O U R T: KNOW. I DON 'T -- I WILL L E T Y O U THIS WAS THE ONLY MOTION, THE MOTION HAVING TO DO WITH THE 5 0 2 THAT I THOUGHT W A S RIPE F O R A DECISION O N E W A Y OR THE OTHER , DENY IT , G R A N T I T. A N D T H E OTHER MOTIONS I WILL SET FORWARD TO ANOTHER TIME. MR . B U R S O R: T H A N K Y O U, YOUR HONOR. THANK YOU , YOUR HONOR . MR . CHATTERJEE : MS . GRANICK : YOUR HONOR. T H E C O U R T: THANK YOU VERY MUCH, VERY WELL. THAT COMPLETES O U R L A W AND M O T I O N C A L E N D A R. (WHEREUPON, T H E PROCEEDINGS I N THIS MATTER WERE CONCLUDED.) 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 52 CERTIFICATE OF REPORTER I, T H E UNDERSIGNED O F F I C I A L C O U R T REPORTER OF T H E U N I T E D STATES DISTRICT COURT F O R THE NORTHERN DISTRICT O F CALIFORNIA , 280 SOUTH FIRST S T R E E T, SAN JOSE, CALIFORNIA, DO H E R E B Y CERTIFY: THAT THE FOREGOING TRANSCRIPT , CERTIFICATE INCLUSIVE, CONSTITUTES A TRUE , FULL AND CORRECT TRANSCRIPT O F M Y SHORTHAND NOTES TAKEN AS SUCH OFFICIAL COURT REPORTER OF THE PROCEEDINGS HEREINBEFORE E N T I T L E D A N D REDUCED B Y C O M P U T E R-A I D E D TRANSCRIPTION TO THE BEST OF MY ABILITY. __ ___ ___ ___ ___ ___ ___ ___ ___ S U M M E R A . F I S H E R, C S R, CRR CERTIFICATE NUMBER 13185