Saturday, May 30, 2009

More on Conwell v. Grey Loon

Thanks Ben, for asking me to share my thoughts on Conwell v. Grey Loon Outdoor Marketing Group, Inc. While Eugene Volokh describes it as “not the sexy sort of cyberlaw, I get tired of teaching “sexy” cases dealing with Playboy and various porn sites. But seriously, cases like this one are great teaching tools for that first part of the Property course when students wonder why we spend so much time talking about whether rights are “property” rights or not. This case also demonstrates that judges and lawyers really need to talk to people in the technology world to find out exactly what a web site is.

The plaintiffs in Conwell hired Grey Loon to design and host a web site for them. Grey Loon did so, and sometime later the plaintiffs asked for modifications. After the defendant modified the web site, plaintiffs decided that they didn’t want the modified web site, but wanted the old one. Plaintiffs didn’t pay for the modifications, so Grey Loon disabled the modified web site, which it could do, because it was the web site host. The defendant did not keep a copy of the original web site, so plaintiffs were left without a web presence. Defendant claimed breach of contract and plaintiffs counter-claimed conversion, arguing that the defendant’s action in terminating access to the original web site constituted conversion of the plaintiff’s property.

Early in the opinion, it looks like the court is going to be sympathetic to the conversion claim. The opinion does a reasonable job of explaining the roles of web site designer and web site host. It also explains that the plaintiff could have used another web site host, and if it had done so, it would have had to acquire the files from Grey Loon and transfer them to the other host. Hmm, if these files had to be acquired and transferred, they must be rivalrous, right? Otherwise, couldn’t anyone just copy them?

The court’s discussion of the contract claim previews how it will go awry on the property rights issue. First, it discusses its choice of the common law of contracts over Article 2 of the Uniform Commercial Code. The court recognizes that some courts hold that mass-market software is a good, but it rejects those decisions, stating that courts that treat software as a good simply because it is contained in a tangible medium “conflate the sale of a book with the sale of its intellectual content.” Exactly wrong! A book is a good. I own plenty of books, but I don’t hold the copyright in any of them. Likewise, I am the “owner” (okay, okay, licensee, perhaps) of the copy of Word with which I am typing this. While I’m using it, no one else can. If someone removes it from my computer without my permission, I’ll be ticked off. But I don’t own the copyright in it, so I can’t make a bunch of copies of it and sell them. Does the court think that everything that is intangible is intellectual property?

Apparently so. In its conversion discussion, the court jumps right into copyright law, finding that the web site was not a work made for hire and that Grey Loon had not transferred its copyright to the plaintiffs. It then finds that the plaintiffs, who were conducting their business through their website, were merely nonexclusive licensees of that site! Simple, according to the court: the plaintiffs did not own the web site, therefore they could not sue for conversion. 

The concurrence touches upon, or more accurately brushes against, the law of conversion, recognizing that several courts have held that intangible assets, such as electronic data and internet domain names (the “sexiest” cyberlaw case of all) can be converted. As I have argued (shameless plug warning) elsewhere, these cases are not very useful because the courts tried hard to fit a specific asset into the law of conversion without discussing the main characteristic that should make an intangible asset the subject of a conversion action: its rivalrousness. Conversion is an action for the deprivation of possession of an asset; while intangible assets cannot be manually possessed, some of them, such as domain names, can be exclusively controlled.

Can a web site be exclusively controlled and therefore converted? It seems that the answer is “yes,” but I don’t know for sure. But the people involved in resolving these disputes really have to become more familiar with how emerging intangible assets are created, possessed and transferred in order to create law that will be useful to those dealing in such assets. 

Juliet Moringiello

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Tracked on Jun 2, 2009 11:20:14 AM


"This case also demonstrates that judges and lawyers really need to talk to people in the technology world to find out exactly what a web site is."

Seems obvious that introducing the term "web site" is just pointless confusion. It's just software. There's nothing special about software that happens to serve HTTP requests.

I don't think there's any deep difference between your word processor and the software to implement some web site, for example. The fact that you think you're the only one who can use it (probably - but how good's your security, what kind of operating system do you run, etc, etc) doesn't seem interesting to me. I've certainly worked on software that implemented a word processor that was made available using HTTP - and that's a common thing these days. I'm using one right now, to type this comment. And it would be trivial to limit it to a single user at a time.

Posted by: James Moore | Jun 2, 2009 4:04:24 PM

I also don't think there's any deep difference between your word processor and the software to implement some web site.they have inner relation . dvds,free shipping

Posted by: bigboxshops | Jun 2, 2009 11:58:59 PM

I'm wondering whether the real issue here is getting buried under the complexities of intellectual property law. While I am not a lawyer, my principal occupation is web programming, so I have some familiarity with these issues.

It goes without saying that unless contractual provisions provide otherwise, any original work provided by the vendor for the client are the client's property ("meeting of the minds" concept applicable to express or implied contracts).

The problem in this case is: how do you define "property"? If you define property as the right to use work product, then clearly the client has this exclusive right in respect to the original web site files since they (assumedly) paid the vendor for the work. In other words, the vendor does not have the right to resell this work product to additional clients, and such hypothetical clients do not have the right to display such work.

Now, if you define "property" as the physical files themselves, the analysis changes. The client cheated the vendor out of his payment for the revised web site, and the vendor subsequently disabled the modified web site. It would seem he has the right to do this, and without providing the revised files to the client, as they did not pay for them.

The fact that the original files were not backed up by the client is the thorny question here. There is no question, as stated above, that the client is the "owner of the intellectual property," in the sense that the vendor cannot resell or otherwise utilize the original work product for his own gain. The question is: does the vendor have an obligation to provide the original files to the client?

Again, speaking as a layman, and not a lawyer, my answer would be no. There are two reasons for this. First, the vendor should not be obligated to provide physical services (transfer of files) to a client that refuses to pay its bills, even if the arrears are related to a technically separate job. Second, "technically separate," while applicable in the colloquial sense, may not be applicable here legally. The two projects are so closely intertwined in scope that the court may (and probably would) view the entire affair as a single "case" (as when a criminal is simultaneously charged with multiple infractions associated with a single criminal act). Under such a scenario, it becomes even clearer that the vendor cannot be expected to provide services (transfer files to the client) when the client's total debt to the vendor is in arrears for no reason other than the client changing his mind and wanting to deploy the original site instead. The point is that the client asked for the revisions, they were provided, and as such this generated an obligation on the part of the client to pay for the revisions. The fact that the client now no longer wants them is legally irrelevant.

Needless to say, I hope the court forces Conwell to make Mr. Loon whole, after which point Mr. Loon should of course provide all files requested to Conwell.

Posted by: Stewart Engelman DNI Services | Aug 17, 2009 2:17:48 PM

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