By Thomas Long, J.D.
The Texas "anti-SLAPP" law did not preclude the claims because that law was procedural and did not apply in federal court. In addition, the website operators failed to challenge the sufficiency of Southwest’s pleadings, which the court deemed plausible.
Southwest Airlines Co. adequately pleaded claims for trademark infringement and dilution, breach of contract, and violations of the Computer Fraud and Abuse Act and its Texas state-law counterpart, the Texas Harmful Access by Computer Act (THACA), against the developers and operators of a website that "scraped" Southwest fare data to assist fee-paying users in obtaining ticket discounts, the federal district court in Dallas has decided. The court rejected the defendants’ motion to dismiss two state-law counts under the Texas Citizens Participation Act (Texas’s "anti-SLAPP" law), holding that that statute was procedural in nature and did not apply in federal court. The court also determined that Southwest plausibly pleaded all of its claims, and the defendants’ motion to dismiss failed to challenge the sufficiency of the pleadings, but instead raised a contractual estoppel defense that was not appropriate to consider in the context of a motion to dismiss for failure to state a claim (Southwest Airlines Co. v. Roundpipe LLC, March 22, 2019, Fish, A.).
The defendants were the developers and operators of a website called SWMonkey, at the URL www.SWMonkey.com. The original version of the SWMonkey website operated by scraping information about ticket fares off Southwest’s website and using that information to alert customers who signed up through www.SWMonkey.com that their ticket prices had dropped. The original www.SWMonkey.com website also required consumers pay a three-dollar charge to utilize the automatic price-checking service, provided the customer saved 10 dollars or more through using the defendants’ website.
Southwest began to send cease-and-desist letters to the defendants regarding the wwww.SWMonkey.com website. The first letter explained that Southwest had become aware that the defendants’ website was using Southwest’s proprietary and trademarked names and logos in connection with the defendants’ business and demanded that they cease doing so. The letter warned that the defendants that if they did not comply, Southwest would "vigorously pursue all remedies and actions available." Two days later, Southwest sent a second letter, which additionally stated that Southwest had become aware that www.SWMonkey.com was violating the terms of Southwest’s use agreement by offering third party services not approved by Southwest and by extracting or scraping Southwest’s flight and fare information from its servers and websites. Southwest’s use agreement did not permit page-scraping or the use of other automated tools designed to access or monitor Southwest’s website, its content, or its underlying fare databases.
When the defendants did not stop operating the website, Southwest sent a third cease-and-desist letter. After additional communications between counsel for both sides, the defendants disabled their website’s functionality on November 21, 2017. However, Southwest maintained that the defendants did not stop using their automatic scraping tool on Southwest’s website until November 28, 2017.
Even though the defendants removed the scraping functionality from their website, they kept www.SWMonkey.com online as a modified ("disabled") website. The disabled site contained a new "thank you" section, explaining why the website was no longer in operation. The disabled site also included a "Frequently Asked Questions" section, which customers could use to find a link posted by the defendants to another website that contained an open source tool for checking Southwest’s flight and fare information individually. Southwest then sent the defendants an email demanding that the defendants take down their entire website, "including the recently revised FAQ." Southwest also sent another cease-and-desist letter threatening to take legal action if the site were not removed and the defendants failed to comply with Southwest’s terms and conditions. The defendants refused to shut down the site and contended that it did not infringe any of Southwest’s marks.
The defendants filed a declaratory judgment action in the federal district court for the district of Utah. Southwest then filed the current suit against the defendants in the Northern District of Texas. The defendants moved to dismiss all counts of Southwest’s complaint for failure to state a claim and to dismiss two state-law counts under the Texas Citizens Participation Act (TCPA).
TCPA. The TCPA is Texas’s anti-SLAPP statute, "SLAPP" being an acronym for "strategic litigation against public participation." The TCPA is intended to protect citizens who petition or speak on matters of public concern from retaliatory lawsuits that seek to intimidate or silence them. Southwest argued that the TCPA was procedural in nature and therefore was inapplicable in federal court because it conflicted with the Federal Rules of Civil Procedure. In particular, Southwest argued that the TCPA established different procedures and evidentiary standards for pre-trial dismissal of certain suits that infringe upon speech rights protected by the constitution. The court agreed with Southwest, reasoning that the TCPA only provided the procedural means by which a party may seek to quickly dismiss a suit predicated on that party’s exercise of certain First Amendment rights. Distinguishing the Texas law from the Maine anti-SLAPP law—which had been found by the First Circuit to be substantive—the court pointed out that Texas’s anti-SLAPP statute contained certain elements that placed it in direct conflict with Federal Rules of Civil Procedure 12(b)(6) and 56. The court also found that even if the TCPA were substantive, it still must yield to federal law because it conflicted with Rules 12(b)(6) and 56. Finally, even if the TCPA were substantive and thus applicable in federal court, the court noted that the defendants had failed to obtain a hearing on this issue within 90 days, as required by the TCPA, which itself would mandate dismissal. The court therefore concluded that the TCPA provided no basis for dismissing Southwest’s state law claims.
Failure to state a claim. The defendants contended that Southwest’s entire complaint failed to state a claim upon which relief may be granted and thus should be dismissed under Federal Rule of Civil Procedure 12(b)(6). However, the defendants neither discussed nor provided any analysis as to why Southwest’s complaint fails to satisfy pleading standards. Instead, they argued that Southwest’s claims relating to the original www.SWMonkey.com failed because Southwest had made a "promise" not to sue during communications between the parties’ counsel, and that Southwest’s claims against the disabled website failed because the defendants had ceased all offending conduct. In the court’s view, Southwest’s complaint was sufficiently well-pleaded to state claims upon which relief may be granted.
Specifically, the court concluded that Southwest’s complaint stated a plausible claim for breach of contract because Southwest’s complaint identified the existence of a valid contract (Southwest’s use agreement) but it also explained how the defendants’ use of automated scraping tools breached the contract and caused damage to Southwest. Southwest’s complaint also stated plausible claims for violations of the CFAA and THACA because Southwest’s complaint contained factual allegations that the defendants accessed Southwest’s website without authorization in violation of Southwest’s use agreement, thereby causing damage to Southwest. Finally, complaint stated plausible claims for unfair competition, trademark infringement, and dilution because Southwest’s complaint alleged Southwest’s ownership and registration of various marks and explained how the defendants’ unauthorized use of Southwest’s famous marks on www.SWMonkey.com tarnished Southwest’s trademarks and likely caused consumer confusion.
In the court’s view, the defendants’ first argument was an attempt to raise the affirmative defense of contractual estoppel, and not a challenge of the sufficiency of Southwest’s pleading. "Without any argument as to how Southwest’s complaint is flawed or how it fails to state any plausible claim upon which relief can be granted, the court is convinced, for the reasons articulated above, that Southwest’s complaint succeeds in stating multiple plausible claims," the court said.
This case is No. 3:18-cv-00033-G-BK.
Attorneys: Jason A. Wietjes (Polsinelli PC) for Southwest Airlines Co. Charles Lynn Roberts (Wasatch-IP) for Roundpipe LLC.
Companies: Southwest Airlines Co.; Roundpipe LLC
MainStory: TopStory TechnologyInternet Trademark TexasNews
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